A.C. No. 7494, June 27, 2008] WILSON CHAM, COMPLAINANT, VS. ATTY. EVA PAITA-MOYA, RESPONDENT.

RESOLUTION

CHICO-NAZARIO, J.:

Before Us is a Complaint[1] for disbarment filed by complainant Wilson Cham against respondent Atty. Eva Paita-Moya, who he alleged committed deceit in occupying a leased apartment unit and, thereafter, vacating the same without paying the rentals due. According to the Complaint, on 1 October 1998, respondent entered into a Contract of Lease[2] with Greenville Realty and Development Corp. (GRDC), represented by complainant as its President and General Manager, involving a residential apartment unit owned by GRDC located at No. 61-C Kalayaan Avenue, Quezon City, for a consideration of P8,000.00 per month for a term of one year. Upon the expiration of said lease contract, respondent informed the complainant that she would no longer renew the same but requested an extension of her stay at the apartment unit until 30 June 2000 with a commitment that she would be paying the monthly rental during the extension period. Complainant approved such request but increased the rental rate to P8,650.00 per month for the period beginning 1 October 1999 until 30 June 2000. Respondent stayed at the leased premises up to October 2000 without paying her rentals from July to October 2000. She also failed to settle her electric bills for the months of September and October 2000. The Statement of Account as of 15 October 2004[3] shows that respondent's total accountability is P71,007.88. Sometime in October 2000, a report reached complainant's office that respondent had secretly vacated the apartment unit, bringing along with her the door keys. Also, respondent did not heed complainant's repeated written demands for payment of her obligations despite due receipt of the same, compelling complainant to file the present Complaint. In her Answer,[4] respondent alleged that she had religiously paid her monthly rentals and had

not vacated the apartment unit surreptitiously. She also averred that she transferred to another place because she was given notice by the complainant to vacate the premises to give way for the repair and renovation of the same, but which never happened until presently. Respondent actually wanted to ask that complainant to account for her deposit for the apartment unit, but she could not do so since she did not know complainant's address or contact number. For the same reason, she could not turn over to the complainant the door keys to the vacated apartment unit. After the mandatory preliminary conference conducted by the Commission on Bar Discipline of the Integrated Bar of the Philippines (IBP) at the IBP Building, Ortigas Center, Pasig City, the parties were given time to submit their respective Position Papers per Order[5] dated 17 February 2006. On 29 March 2006, complainant filed his Position Paper.[6] Respondent, despite the extension given, did not file hers. Hence, the case was deemed submitted for resolution. On 8 September 2006, Investigating Commissioner Acerey C. Pacheco submitted his Report and Recommendation,[7] recommending the imposition of the penalty of three-month suspension on respondent for violation of the Code of Professional Responsibility, to wit: WHEREFORE, it is respectfully recommended that herein respondent be held guilty of having violated the aforequoted provision of the Code of Professional Responsibility and imposed upon her the penalty of three (3) months suspension from the practice of law. The IBP Board of Governors, however, passed Resolution No. XVII-2006-585[8] dated 15 December 2006, amending the recommendation of the Investigating Commissioner and approving the dismissal of the Complaint, thus: RESOLVED to AMEND, as it is hereby AMENDED, the Recommendation of the Investigating Commissioner, and to APPROVE the DISMISSAL of the above-entitled case for lack of merit. We do not agree with the foregoing Resolution of the IBP Board of Governors. The Complaint should not be dismissed and respondent must face the consequences of her actions. It is undisputed that by virtue of a lease contract she executed with GRDC, respondent was able to occupy the apartment unit for a period of one year, from 1 October 1998 to 30 September 1999, paying a monthly rental of P8,000.00.

Upon the expiration of the lease contract[9] on 30 September 1999, the same was renewed, but on a month-to-month basis at an increased rental rate of P8,650.00. Under such an arrangement, respondent was able to stay at the leased premises until October 2000, undoubtedly incurring electric bills during the said period. A review of the records would reveal that respondent is, indeed, guilty of willful failure to pay just debt. Complainant is able to fully substantiate that respondent has existing obligations that she failed to settle. Annex "D"[10] of the Complaint is a letter dated 11 September 2000 signed by complainant and addressed to respondent demanding that she settle her unpaid rentals for the period of three months, particularly, from 1 July to 30 September 2000. The letter appears to have been received by one Purificacion D. Flores. Annex "H" of the same Complaint is another letter dated 30 August 2004 by complainant reiterating his earlier demand for respondent to settle her unpaid rentals, as well as her unpaid Meralco bills. This second letter of demand was sent through registered mail and received by one Nonie Catindig. Respondent did not expressly deny receipt of both letters of demand in her Answer to the Complaint. Having failed to rebut the foregoing allegations, she must be deemed to have admitted them. Section 11, Rule 8 of the Rules of Court, provides: SECTION 11. Allegations not specifically denied deemed admitted. - Material averment in the complaint, other than those as to the amount of unliquidated damage, shall be deemed admitted when not specifically denied. Moreover, a settled rule of evidence is that the one who pleads payment has the burden of proving it. Even where it is the plaintiff (complainant herein) who alleges non-payment, the general rule is that the burden rests on the defendant (respondent herein) to prove payment, rather than on the plaintiff to prove non-payment. The debtor has the burden of showing with legal certainty that the obligation has been discharged by payment.[11] Apropos is another well-settled rule in our jurisprudence that a receipt of payment is the best evidence of the fact of payment. [12] In Monfort v. Aguinaldo,[13] the receipts of payment, although not exclusive, were deemed to be the best evidence. A receipt is a written and signed acknowledgment that money or goods have been delivered. In the instant case, the respondent failed to discharge the burden of

proving payment, for she was unable to produce receipts or any other proof of payment of the rentals due for the period of 1 July to 20 September 2000. It is thus evident to this Court that respondent willfully failed to pay her just debts. Her unpaid rentals and electric bills constitute "just debts," which could be any of the following: (1) claims adjudicated by a court of law; or (2) claims the existence and justness of which are admitted by the debtor.[14] Having incurred just debts, respondent had the moral duty and legal responsibility to settle them when they became due. Respondent should have complied with just contractual obligations, and acted fairly and adhered to high ethical standards to preserve the court's integrity, since she is an employee thereof. Indeed, when respondent backtracked on her duty to pay her debts, such act already constituted a ground for administrative sanction. Respondent left the apartment unit without settling her unpaid obligations, and without the complainant's knowledge and consent. Respondent's abandonment of the leased premises to avoid her obligations for the rent and electricity bills constitutes deceitful conduct violative of the Code of Professional Responsibility, particularly Canon I and Rule 1.01 thereof, which explicitly state: "CANON 1- A lawyer shall uphold the constitution, obey the laws of the land and promote respect for law and legal processes. "Rule 1.01- A lawyer shall not engage in unlawful, dishonest, immoral or deceitful conduct." Respondent's defense that she does not know where to find the complainant or his office is specious and does not inspire belief considering that she had been occupying the apartment unit and paying the rents due (except for the period complained of) for almost two years. How she could have dealt with complainant and GRDC for two years without at all knowing their office address and contact numbers totally escapes this Court. This is only a desperate attempt to justify what is clearly an unjustifiable act. Lawyers are instruments for the administration of justice. As vanguards of our legal system, they are expected to maintain not only legal proficiency but also a high standard of morality, honesty, integrity and fair dealing.[15] In so doing, the people's faith and confidence in the

judicial and legal system is ensured. Verily, lawyers must at all times faithfully perform their duties to society, to the bar, to the courts and to their clients. As part of those duties, they must promptly pay their financial obligations. Their conduct must always reflect the values and norms of the legal profession as embodied in the Code of Professional Responsibility. On these considerations, the Court may disbar or suspend lawyers for any professional or private misconduct showing them to be wanting in moral character, honesty, probity and good demeanor -- or to be unworthy to continue as officers of the Court.[16] The Court stresses that membership in the legal profession is a privilege.[17] It demands a high degree of good moral character, not only as a condition precedent to admission, but also as a continuing requirement for the practice of law. [18] In this case, respondent fell short of the exacting standards expected of her as a guardian of law and justice.[19] Any gross misconduct of a lawyer in his or her professional or private capacity is a ground for the imposition of the penalty of suspension or disbarment because good character is an essential qualification for the admission to the practice of law and for the continuance of such privilege.[20] The Court has held that the deliberate failure to pay just debts and the issuance of worthless checks constitute gross misconduct,[21]for which a lawyer may be sanctioned with one year's suspension from the practice of law,[22] or a suspension of six months upon partial payment of the obligation. [23] Accordingly, administrative sanction is warranted by respondent's gross misconduct. The case at bar merely involves the respondent's deliberate failure to pay her just debts, without her issuing a worthless check, which would have been a more serious offense. The Investigating Commissioner of the IBP recommended that she be suspended from the practice of law for three months, a penalty which this Court finds sufficient. WHEREFORE, Atty. Eva Paita-Moya is found guilty of gross misconduct and is herebySUSPENDED for one month from the practice of law, effective upon her receipt of this Decision. She is warned that a repetition of the same or a similar act will be dealt with more severely.

Let copies of this Resolution be entered in the record of respondent and served on the IBP, as well as on the court administrator who shall circulate it to all courts for their information and guidance.

FILINVEST CREDIT vs. PHILIPPINE ACETYLENE G.R. No. L-50449 January 30, 1982 Facts: Philippine Acetylene Co. purchased from Alexander Lim a motor vehicle described as Chevorlet 1969 model for P55K to be paid in instalments. As security for the payment of said promissory note, the appellant executed a chattel mortgage over the same motor vehicle in favor of said Alexander Lim. Then, Lim assigned to the Filinvest all his rights, title, and interests in the promissory note and chattel mortgage by virtue of a Deed of Assignment. Phil Acetylene defaulted in the payment of nine successive installments. Filinvest sent a demand letter. Replying thereto, Phil Acetylene wrote back of its desire to return the mortgaged property, which return shall be in full satisfaction of its indebtedness. So the vehicle was returned to the Filinvest together with the document Voluntary Surrender with Special Power of Attorney To Sell. Filinvest failed to sell the motor vehicle as there were unpaid taxes on the said vehicle. Filinvest requested the appellant to update its account by paying the installments in arrears and accruing interest. Filinvest offered to deliver back the motor vehicle to the appellant but the latter refused to accept it, so appellee instituted an action for collection of a sum of money with damages. Phil Acetylenes defense: The delivery of the motor vehicle to Filinvest extinguished its money obligation as it amounted to a dation in payment. Assuming arguendo that the return did not extinguish, it was justified in refusing payment since the appellee is not entitled to recover the same due to the breach of warranty committed by the original vendor-assignor Alexander Lim. Issue: WON there was dation in payment that extinguished Phil Acetylenes obligation? NO. Held: The mere return of the mortgaged motor vehicle by the mortgagor does not constitute dation in

payment in the absence, express or implied of the true intention of the parties. Dacion en pago is the transmission of the ownership of a thing by the debtor to the creditor as an accepted equivalent of the performance of obligation. In dacion, the debtor offers another thing to the creditor who accepts it as equivalent of payment of an outstanding debt. The undertaking really partakes in one sense of the nature of sale, that is, the creditor is really buying the thing or property of the debtor, payment for which is to be charged against the debtors debt. As such, the essential elements of a contract of sale, namely, consent, object certain, and cause or consideration must be present. In its modern concept, what actually takes place in dacion en pago is an objective novation of the obligation where the thing offered as an accepted equivalent of the performance of an obligation is considered as the object of the contract of sale, while the debt is considered as the purchase price. In any case, common consent is an essential prerequisite, be it sale or innovation to have the effect of totally extinguishing the debt or obligation. The evidence on the record fails to show that the Filinvest consented, or at least intended, that the mere delivery to, and acceptance by him, of the mortgaged motor vehicle be construed as actual payment, more specifically dation in payment or dacion en pago. The fact that the mortgaged motor vehicle was delivered to him does not necessarily mean that ownership thereof, as juridically contemplated by dacion en pago, was transferred from appellant to appellee. In the absence of clear consent of appellee to the proferred special mode of payment, there can be no transfer of ownership of the mortgaged motor vehicle from appellant to appellee. If at all, only transfer of possession of the mortgaged motor vehicle took place, for it is quite possible that appellee, as mortgagee, merely wanted to secure possession to forestall the loss, destruction, fraudulent transfer of the vehicle to third persons, or its being rendered valueless if left in the hands of the appellant. As to the strength of the Voluntary Surrender with Special Power of Attorney To Sell, it only authorized Filinvest to look for a buyer and sell the vehicle in behalf of the appellant who retains ownership thereof, and to apply the proceeds of the sale to the mortgage indebtedness, with the undertaking of the appellant to pay the difference, if any, between the selling price and the mortgage obligation. Filinvest in essence was constituted as a mere agent to sell the motor vehicle which was delivered not as its property.

If it were, he would have full power of disposition of the property, not only to sell it. G.R. No. L-9160 April 30, 1957

ADRIANO GOLEZ, plaintiff-appellee, vs. CARMELO S. CAMARA, defendant-appellant. Hilado and Corua, Jose P. Laurel, Marciano Almario for appellee. Benedicto, Sumbingco and Associates for appellant. CONCEPCION, J.: On appeal from a decision of the Court of First Instance of Negros Occidental, dated October 6, 1950, in the case at bar, this Court rendered, on October 3, 1953, a decision (G.R. No. L-446O) the dispositive part of which reads as follows: WHEREFORE, it being understood that the appellant is indebted to the appellee upon account of the repurchase price of the land in question only in the sums of P1,956.00, with twelve percent compound interest from January, 1932, and P296.18 with compound interest of twelve percent from January 24, 1945, which indebtedness should first be settled by the appellant before he is entitled to a conveyance of the land in question, the appealed judgment is in all other respects affirmed, except further that the 90-day period fixed therein shall be computed from the date this decision becomes final. So ordered without costs. (Record on Appeal, pp. 30-31.) When the records of the case were returned to the court of origin, or on March 26, 1954, plaintiff Adriano Golez deposited the sum of P25,386,33 (P386.33 in cash and P25,00 in P.N.B. Manager's check No. 444021) with said court and prayed that defendant Carmelo S. Camara be ordered to make the conveyance directed in our aforementioned decision. Presently, an issue arose on whether Camara should convey to Golez seven (7) parcels of land, as claimed by the former, or twenty-four (24) lots, as urged by the latter. Thereafter, Camara assailed the validity of said deposit, upon the ground that it had been made in check. The lower court upheld the legality of the deposit, but, it sustained Camara's pretense, as regards the number of lots he should assign to Golez. After several motions for reconsideration filed by the latter, which were, at first, denied, the court by an order dated March 1, 1955, eventually accepted plaintiff's contention, to the effect he is entitled to a deed of conveyance of said twenty four (24)

lots. Hence the present appeal taken by defendant Camara. The first question for determination is the effect of the judicial consignation aforementioned, which Camara challenges as ineffective, because it, or most of it (P25,000) had not been made in cash. Article 1249 of the Civil Code of the Philippines, on which Camara relies in support of his aforesaid pretense, provides: 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. It will be noted, however, that even the delivery of bills of exchange and hence, of checks, shall pursuant to the second paragraph of said Article 1249 "produce the effect of payment . . . when they have been cashed". In the case at bar, the manager's check deposited by Golez had, in fact, been cashed, for, upon its receipt, the clerk of court indorsed the check to the Provincial Treasurer of Negros Occidental, who deposited it with the Philippine National Bank, and the latter honored the check and placed the amount thereof (P25,000 or P25,396.33) to the credit of the Provincial Treasurer. The effect of these facts, in contemplation of law, was the same as if the aforementioned amount had been deposited, in cash, with the clerk of court, for, thereafter, said sum became available to him in cash. Besides, Camara had, in effect, accepted said deposit as good, not only by not objecting thereto or questioning it from March 26, 1954, to December 11, 1954, but, also by praying in a motion dated October 16, 1954, that he be allowed to withdraw the amount of said deposit, despite the fact that plaintiff's motion of April 6, 1954 copy of which had been duly served on defendant's counsel explicitly stated that the deposit had been made in a manager's check. Although, in a subsequent motion dated December 11, 1954, Camara prayed, among other things, that his aforesaid motion of October 16, 1954 be deemed withdrawn, because no cash deposit had been made, it is

apparent that this move was prompted, not by any objection to said manager's check, he being aware of it long before he filed said motion dated October 16, 1954, but by the fact that, in an opposition filed by the plaintiff on October 23, 1954, he asserted that defendant should convey to him, not seven (7) lots, but twenty-four (24) lots. At any rate, said Article 1249 deals with a mode of extinction of debts and Golez is not indebted to Camara. The former merely had, under our decision of October 3, 1953, a right to demand the conveyance of the property in dispute, provided he paid the sum stated in said decision to the later. In other words, Golez had, for all intents and purposes, an option valid for the period set forth in said decision to acquire, for the amount fixed therein, the property in dispute. He had no obligation to pay said amount, if he did not care to get said property. In fact, Camara does not regard Golez bound to make said payment. What is more, the former does not want the latter to make it, and holds that he (Golez) cannot now legally make it, even if he (Golez) should wish to do so. Perhaps the nature of the judicial relation between Golez and Camara could be visualized with greater precision, if we remembered that said relation is essentially and objectively an outgrowth of the fact that Golez is the ultimate beneficiary of the right of redemption of Isidoro Jimenez, Aurelia Jimenez and Vicente Jimenez Yanson, except that this right has been broadened, in point of time for its exercise, as well as with respect to the properties subject thereto, as held in the order appealed from and hereinafter demonstrated. Surely, there is no legal obligation to exercise the right of redemption (Cordero vs. Siosoco, 43 Off. Gaz., 4664; Rosales vs. Reyes y Ordoveza, 25 Phil., 495). In connection with said option or right of redemption, no judicial consignation is, however, necessary. A bona fide tender of payment suffices. Such tender was validly and effectively made when, on March 26, 1954, Golez made the deposit aforementioned and prayed that Camara be ordered to make the conveyance in question. (Paez vs. Magno, 83 Phil., 403, 46 Off. Gaz., 5425, 5427; Javellana vs. Mirasol, 40 Phil., 761.) In short, Article 1249 of the Civil Code of the Philippines is inapplicable to Golez, for he is not indebted to Camara (Salvante vs. De la Cruz 88 Phil., 236; Del Rosario vs. Sandico, 85 Phil., 170, 47 Off. Gaz., 2886; Arzaga vs. Rumbaboa, et al., 91 Phil., 4999.) But even if he were, the judicial

deposit made by Golez would be valid and effective, not only because Camara had already accepted it (Gutierrez vs. Carpio, 53 Phil., 334), but, also, because the manager's check in question has been cashed. The next issue is: What lots must be conveyed by Camara to Golez? In order to settle this question, a brief review of the background of this case is necessary. It appears that two (2) haciendas known as Aurelia and Buenavista, both situated in the Municipality of Isabela, province of Negros Occidental, belonged to Adriano Golez, Jose Locsin, Augusto Locsin, Isidro Jiminez, Filomena Jimenez, Aurelia Jimenez, and Vicente Jimenez Yanson, as co-owners thereof. Prior to December, 1930, judgment was rendered in Civil Case NO. 4912 of the Court of First Instance of Negros Occidental, entitled "Philippine National Bank vs. Vicente Jimenez Yanson, Isidro Jimenez and Aurelia Jimenez," sentencing the defendants therein to pay a sum of money to said Bank. In order to satisfy this judgment, the Provincial Sheriff of said province sold at public auction the interest of said defendants in the aforementioned haciendas, which interest was purchased by the Bank, subject to the usual right of redemption of the judgment debtors. Not being, apparently, in a financial condition to pay the redemption price and, at the same time, being unwilling to give up their interest in thehaciendas, said judgment debtors sought the assistance of Golez, who, seemingly, did not have, as yet, the means necessary therefore. Said judgment debtors and Golez, accordingly, contacted Camara, and these three (3) parties, in turn, entered into a negotiations with the Bank. As a consequence of said negotiations, two (2) deeds were executed, namely: a. The first, notarized on December 29, 1931, was a "compromiso de venta," executed by the Philippine National Bank, Carmelo S. Camara and Isidoro Jimenez, Aurelia Jimenez and Vicente Jimenez Yanson, whereby the Bank promised to sell to Camara, its interest, not only in the seven (7) lots, constituting the Haciendas Aurelia and Buenavista, but, also in seventeen (17) lots, specifically described in said instrument, situated in the Municipalities of Isabela, La Carlota and Bago, Negros Occidental. The agreed price was P55,160.00, payable as follows: P5,516, on or before March 31, 1932, and the balance, of P49,644, by an annual delivery of 1,000 piculs of centrifugal sugar, the proceeds of the sale of which shall be applied to the satisfaction first, of the stipulated interests, and then of said price, beginning from the crop year 1932-1933.

Likewise, Isidro Jimenez, Aurelia Jimenez and Vicente Jimenez Yanson, assigned, sold and conveyed to Camara the right to redeem their respective interests in said haciendas from the Bank. b. The second was a deed, dated December 31, 1931, and entitled "Escritura de Arrendamiento." It was executed by three (3) parties, viz: Vicente Jimenez Yanson, as attorney-in-fact for Adriano Golez, and Jose J. Locsin and Augusto Locsin, as lessors, and parties of the first part; Carmelo S. Camara and Antero Mijares as lessees, and parties of the second part; and Isidoro Jimenez, Filomena Jimenez, Aurelia Jimenez and Vicente Jimenez Yanson (this time in his own behalf), as parties of the third part. The stipulations in said instrument are prefaced with several whereas, pertinent parts of which read: Por CUANTO consta otorgada y estipulada en escritura de compromiso de venta concluida por el Banco Nacional Filipino como vendedor y el Sr. Carmelo. de la SEGUNDA PARTE de este contrato, comprador, escritura en la cual dio su conformidad la TERCER PARTE de este contrato, . . . que dicho Banco Nacional Filipino se compromente y se obliga a vender y a traspasar . . . ciertos y determinados terrenos de la propiedad de dicho Banco Nacional Filipino . . . . Por Cuanto en dicho compromiso de venta arriba dicho el Sr. Carmelo S. Camara, ... adquire derecho sobre parte solamente de los menciados terrenos, sucendiendole al Banco Naciocanal Filipino segun solamente los derechos de este, . . . y en virtud que dicha parte objeto del compromiso de venta del Banco Nacional Filipino a favor del susodicho Sr. Carmelo S. Camara de la segunda parte, de este contrato, de los citados terrenos es como sigue: Lotes Cadastro Extension

1. No. 552

Isabela

277,088 sq. m. 1,237,756 sq. m. 376,151 sq. m. 155,352 sq. m.

2. No. 559

Isabela

3. No. 597-A

Isabela

4. No. 914

La Carlota

5. No. 915

La Carlota

6. No. 916 7. No. 999

La Carlota La Carlota

8. No. 1138

La Carlota

9. No. 920

La Carlota

10. No. 1001 11. No. 904

La Carlota La Carlota

de Total venta arriba descrito . . . que los derechos de recompra de los Sres. Isidoro Jimenez, Vicente Jimenez Yanson, Filomena Jimenez y Aurelia Jimenez de la participacion o, participaciones los 11,162 sq. m. Total mismos sobre los susodichos terrenos que son de la propiedad en parte ahora deI Banco 165,521 sq. Total Nacional Filipino, sean renunciados a favor del m. Sr. Adriano Clolez, . . . con la conformidad y consentimiento de los Sres. Jose Locsin y 492,791 sq. Total Augusto J. Locsin, pero con mediacion de la m. compra establecida en el repetido compromiso de venta por el Sr. Carmelo S. Camara, . . . y que ello de dicho modo se verifique y se lleve a 277,861 sq. Total efecto por y para dicho Sr. Adriano Golez m. solamente, o en consideracion y a favor del mismo; y 40,156 sq. m. Total 134,511 sq. m. Por Cuanto entre los supradichos terrenos Total objecto de la citada escritura con el Banco Nacional Filipino . . . estan los lotes Nos. 547, 1208, 1209 y 1377, de la medicion cadastral de Isabela, que constituyen lahacienda azucarera 148,638 sq. Total denominada hacienda buenavista, . . ." y los m. lotes Nos. 443, 511 y 597, de la misma medicion cadastral de Isabela, que constituyen la 63,213 sq. m. Total hacienda azucarera denominada hacienda aurelia, (Record on Appeal, pp. 106-110.) 17,905 sq. m. Total Then the instrument goes on to say that, in consideration of the facts thus stated and of the 151,546 sq. Total mutual advantages that the parties expected to m. drive therefrom and from the lease agreement set forth in said document, the party of the first 732,856 sq. 1/10 part thereby leased their respective shares m. in Haciendas Aurelia and Buenavista to the party of the second part, for a period of eight (8) 156,888 sq. 3/10 years, beginning for the crop-year 1932-1933, m. extendible for two (2) years, subject to the terms and conditions therein stated, among which are 1,429 sq. m. 8/10 the following: 143,960 sq. m. 352 sq. m. 1,483 sq. m. 1,800 sq. m. 140,432 sq. m. 141,432 sq. m. 301 sq. m. 7.a Que como condicion sine-qua-non de que 3/10 este contrto en toda su fuerza y vigor, . . . la SEGUNDA PARTE, pagara . . . al Banco Nacional 3/10 Filipino en o antes del mes de Marzo de 1932 la cantidad de cinco mil quinientos diez y seis, 8/10 moneda filipina, como primer pago a cuenta de la compra estipulada por el Sr. Carmelo S. Camara, . . . de los terrenos tales como se 8/10 describen al comienzo de esta presente escritura, y que se hallan mas detalladamente descritas en la escritura de compromiso de venta Total de dicho senor con el Banco Nacional Filipino como al principio de este mismo entrato se hace constar, para adquirir la propiedad de los que no Total son del Sr. Adriano Golez, de la primera lo parte de este contrato, como en este misma escritura al comienzo igualmente se hace constar; y que una vez hecho el pago de la cantidad dicha al citado Banco Nacional Filipino

12. No. 903

La Carlota

13. No. 902 14. No. 1000 15. No. 913

La Carlota La Carlota La Carlota

16. No. 1377

Isabela

17. No. 547

Isabela

18. No. 443 19. No. 1208 20. No. 1209 21. No. 511 22. No. 219

Isabela Isabela Isabela Isabela Isabela

23. No. 1215

Isabela

24. No. 2245

Bago

POR CUANTO ha sido convenido, concluido y estipulado entre todas las partes de este contrato, . . . en virtud del referido compromiso

dichas propiedades cubiertas por dicho escritura de compromiso de venta con al precitado Banco Nacional Filipino, estaran todas entregadas y en posesion del mismo Sr. Adriano Golez, . . . (Emphasis ours.) 9.a Que los alquileres de las fincas o haciendas, Buenavista y Aurelia aqui objeto de este arrendamiento, seran pagados por la Segunda Parte, a razon de mil picos (1,000 pp.) de azucar centrifugado cada ano de las dos primera zafras correspondientes a los aos agricolas a 1932-1933 y 1933-1934 de este arrendamiento, y cada ao sucesivo despues durante el tiempo de este contrato . . . . 10.a Que la forma de pago de dichos alquileres provisto en la condicion o clausula 9.a de este contrato, . . . sera de conformidad con los mismos plazos, tiempo y condiciones todos convenidos con el Banco Nacional Filipino por el Sr. Carmelo S. Camara, . . . . en eI compromiso de venta de que se hace meneion repetidas veces en esta escritura, . . . que dicho pago de parte del Sr. Carmelo S. Camara, . . . del precio estipulado de la venta concluida en virtud del compromiso de venta otorgado por dicho Sr. Carmelo S. Camara con el Banco Nacional Filipino . . . es el mismo pago de los alquileres debidos y por deber, que veneran y seran pagaderos por la SEGUNDA PARTE para todos los efectos, fines legales y contractuales de este contrato, y para la recompra de las fincas segun aqui se conviene estiptula y otorga en esta escritura por y para el Sr. Adriano Golez, . . . y que dicha SEGUNDA PARTE de este contrato se compromete y se obliga a hacer y verificar el expresado pago y todos los pagos debidos al Banco Nacional Filipino, exactamente, como en el mismo compromiso de venta se express el Banco Nacional Filipino en cumplimiento de dicho compromiso de venta, para cumplir y obtener la compra definitiva de las propiedades objeto del repetido compromiso de venta, por y para el Sr. Adriano Golez, en y durante todo el tiempo de la vigencia de este contrato. Entendiendose sin embargo, que CIENTO VEINTE PICOS (120 pp.) de AZUCAR CENTRIFUGADO de los dos CIENTOS PICOS (200 pp.) de Azucar Centrifugado que se pagare con arreglo a esta clausula y todas las condiciones de este contrato, anualmente por alquileres por la SEGUNDA PARTE a favor de la PRIMERA PARTE, corresponderan y seraii entregados y pagados en cualquier ao y en todos los aos en que tales alquileres segun la condirion o clausula 9.a de este contrato fuesen del 1,200 pp. anuales, a los Sres. Jose J. Locsin y Augusto J. Locsin, de la primera parte de este contrato, no obstante cualquier otra provision en contrario.

11.a Que la cantidad de CINCO MIL QUINIENTOS DIEZ Y SEIS (P5,516,00,) moneda filipina, que hubiere pagado con arreglo a la condicion o clausula 7.a de este contrato al Banco Nacional Filipino la SEGUNDA PARTE, de este contrato, seri obligacion y deuda del Sr. Adriano Golez, de la PRIMERA PARTE del presente, personalmente, a favor del Sr. Carmelo S. Camara, de la SEGUNDA PARTE de este mismo contrato, que devengara para dicho acreedor un interes anual de doce por ciento (120%) a liquidar anualimente desde que al mismo Banco Nacional Filipino sea pagada (dicha suma de P5,516.00) y, que del mismo modo, sera una deuda y obligacion del mismo Sr. Adriano Golez a favor del Sr. Carmelo S. Camara toda otra cantidad remanente y balance no cubierto despues por la aplicacion a los ingresos de los mil picos (1,000 pp.) y de los OCHENTA PICOS (80 pp.) de AZUCAR CETRIFUGADO anuales provistos bajo la condicion 9.a en relacion con la de 10.a de este contrato, tambien con intereses que correspondeiran bajo el mismo tipo de doce por ciento (12%) anual, y todo ellomientras la deuda no fuese enteramente pagada, o totalmente saldada por el Sr. Adriano Golez a favor del Sr. Carmelo S. Camaran. 14.a Que una vez terminado el arrendamiento con arreglo a los terminos y condiciones de este contrato, con su proroga de los dos anos que estipula la condicion 13.a en su caso, independinte de cualquiera obligacion que aun resultare remanente del Sr. Adriano Golez bajo las estipulaciones aqui en este contrato puestas, la SEGUNDA PARTE tendra, los terrenos y propiedades todas cubiertas por el compromiso de venta del Banco Nacional Filipino, de que se hace mencion repetidas veces en esta escritura, completamente liberadas de deuda y obligacion para con dicho Banco; y tan pronto entonces como fuere factible sus titulos de propiedad seran por dicha SEGUNDA PARTE transferidos, saneados, exentos y libres de toda carga y gravamen al susodicho Sr.Adriano Golez en lo que corresponde al mismo, segon los derechos adquiridos del Banco Nacional Filipino, y todo lo cual sera corao obligacion de dicha SEGUNDA PARTE; y, entonces la PRIMERA PARTE, y el Sr. Adriano Golez en particular, convendra con dicha SEGUNDA PARTE la forma de pago de cualquiera obligacion remanente que a la sazon hubeire proveniente de la transaccion que en virtud de este contrato y sus estipulaciones de lugar a la adquisicion de dichas propiedades para el mencionado Sr. Adriano Golez la cual transaccion por la presente repetidamente se hace constar forma parte integrante y es condicion esencial de este contrato de

arrendamiento siendo la consideracion bajo la cual el mismo se cede y se estipula con la Segunda Parte. Entendiendose que entonces, cuando esto se hiciera los gastos de propiedad seran por cuenta de la Primera Parte. (Emphasis ours.) 15.a Que el presente contrato se otorga por ambas partes Primera Parte y Segunda Parte, y en todas sus estipulaciones se conforma y a las mismas da su consentimiento expreso la Tercera Parte, para tener efecto y ser obligatorio en todas sus partes y para todos los respectos, despues de las mismas partes, sobre las mismas propiedades, para los herederos, sucesores causahabientes, cesionarios, administradores, albaceas y ejecutores testamentarios de todas las mismas partes aqui otorgantes, en todas y en cada una de sus estipulaciones, condiciones y terminos aqui pactados y estipulados. It should be noted, at this juncture, that although said escritura de arrendamiento" names Carmelo S. Camara and Antero Mijares Jr. as lessees, Camara is, and has been, considered as the only lessee under said agreement. The record suggests no explanation therefor and none has been offered by the parties. But, since all of them are seemingly aggregated on the status of Camara as the sole lessee, under said "escritura, de arrendamiento," we will regard him as such for the purpose of this decision. Pursuant to the provisions of said two (2) contracts, Camara paid P5,516 to the Philippine National Bank in March, 1932, and delivered to said Bank, 1,000 piculs of sugar, each year thereafter, up to the outbreak of the war in the Pacific. In January, 1945, while Negros Occidental was still under Japanese occupation, Camara paid the Bank P35,541.18 in Japanese military notes, balance of the price stipulated in the aforementioned "Compromiso de venta", after deducting the partial payments thus made by Camara. Thereafter, Golez and Camara failed to agree on the amount to be paid by the former in order that the latter could be required to make the conveyance stipulated in the contract of lease. The main point of disagreement was then the amount which would be subject to the payment of interests, compounded annually. Camara claimed that said interests were due on any and all sums paid by him to the Bank, including the value of the centrifugal sugar delivered to the latter by the former whereas Golez contended that interests were chargeable only on the initial cash payment of P5,516, and on such other sums as he may have paid to the Bank, in excess of the price of said centrifugal sugar. Such disagreement led to the institution

of the present case, which culminated in a decision of the Court of First Instance of Negros Occidental dated October 6, 1950, and mentioned at the beginning of this decision favoring Camara's pretense, but, which, on appeal, was modified in our aforementioned decision of October 3, 1953, which adopted the theory of Golez. The pertinent of said decision of this Court reads: There is now no question as to the right of the appellant to redeem the properties in question from the appellee, the latter not having appealed, and the only point that arises refers to the amount which the appellant has to pay. From the foregoing observations we are inclined to hold that the appellant should pay to the appellee the sum of P5,516, less P3,560 already paid on said item, or P1,956 with 12 per cent interest compounded annually from January, 1932 (it being admitted under appellant's evidence transcript, pp. 37-38 that the sum of P3,560 was paid at the commencement of the lease contract executed on December 31, 1931),plus the sum of P35,541.38. The latter amount, which was paid by the appellee on January 24, 1945, in Japanese military notes must be reduced to actual Philippine Currency under the Ballantyne Scale, since said disbursement could have been rapid in the same currency by the appellant during the Japanese occupation. After being so reduced, it shall also bear compound interest of twelve per cent per annum from January 24, 1945. It is clear from the foregoing facts that Camara is bound to convey to Golez, not only the interest of Isidro Jimenez, Aurelia Jimenez and Vicente Jimenez Yanson in the seven (7) lots constituting the Haciendas Aurelia and Buenavista, but, also, the other seventeen (17)lots described in the "'promise to sell" and in the, contract of lease" above-mentioned. It is true that the sale at public auction of the share of Isidoro Jimenez, Aurelia Jimenez and Vicente Jimenez Yanson, in said haciendas, was the factor responsible for the intervention of Camara in the contracts already adverted to. This fact, and the circumstances that the property leased to Camara were said haciendas, explain the emphasis given thereto in the pleadings and in the former decision of the Court of First Instance and of this Court. Again, the issues then submitted for determination revolved on the amount to be paid by Golez to Camara, which hinged primarily on the interpretation of said "escritura de arrendamiento" thus focusing attention on said contract of lease and on the

property leased Haciendas Aurelia and Buenavista. However, neither said "compromiso de venta", nor the aforementioned "escritura de arrendamiento," was limited to a promise to sell or to a contract of lease. The former involved, also, a cession of the right of redemption, which, although ostensibly made (in the promise to sell) in favor of Camara, turns out, in the language of the contract of lease which was part of one whole scheme agreed upon by the parties to be "por y para el Sr. Adriano Golez". The latter (contract of lease) contained, also, a promise to assign or sell in favor of Golez. In any event, said "compromiso de venta" expressly referred, not only to said haciendas, but also, to the seventeen (17) other lots therein describe. Similarly, the aforementioned "escritura de arrendamiento," explicitly states that one of the considerations therefor is said "compromiso de venta" of twenty-four (24) lots, the identification number of, and the location, area, and the interest held in each of which are specified therein. Said deed of lease, moreover, stipulates clearly that "una vez hecho el pago de la cantidad dicha al citado Banco Nacional Filipino, dischas propiedades cubiertas por dicha escritura de compromiso de venta . . . estaran todas entergados y en posesion del . . . Sr. Adriano Golez." In the light of the foregoing, and considering that the decision of this Court of October 3, 1953, and that of the former decision of the lower court, fixing the amount to be paid by Golez, obviously regarded that payment thereof is a condition precedent to, or the consideration for the conveyance undertaken to be made by Camara, there is no doubt in our mind that the phrase "land in question" used in the dispositive part of our aforementioned decision, referred to the twenty-four (24) lots to Golez. Wherefore, the order appealed from is hereby affirmed with costs against the appellant, Carmelo S. Camara NEW PACIFIC TIMBER & SUPPLY CO. INC. VS. SENERIS 10 SCRA 686 FACTS: Petitioner, New Pacific Timber & Supply Co. Inc. was the defendant in a complaint for collection of money filed by private respondent, Ricardo A. Tong. In this complaint, respondent Judge rendered a compromise judgment based on the amicable settlement entered by the parties wherein petitioner will pay to private respondent P54,500.00 at 6% interest per annum and P6,000.00 as attorneys fee of which

P5,000.00 has been paid. Upon failure of the petitioner to pay the judgment obligation, a writ of execution worth P63,130.00 was issued levied on the personal properties of the petitioner. Before the date of the auction sale, petitioner deposited with the Clerk of Court in his capacity as the Ex-Officio Sheriff P50,000.00 in Cashiers Check of the Equitable Banking Corporation and P13,130.00 in cash for a total of P63,130.00. Private respondent refused to accept the check and the cash and requested for the auction sale to proceed. The properties were sold for P50,000.00 to the highest bidder with a deficiency of P13,130.00. Petitioner subsequently filed an ex-parte motion for issuance of certificate of satisfaction of judgment which was denied by the respondent Judge. Hence this present petition, alleging that the respondent Judge capriciously and whimsically abused his discretion in not granting the requested motion for the reason that the judgment obligation was fully satisfied before the auction sale with the deposit made by the petitioner to the Ex-Officio Sheriff. In upholding the refusal of the private respondent to accept the check, the respondent Judge cited Article 1249 of the New Civil Code which provides that payments of debts shall be made in the currency which is the legal tender of the Philippines and Section 63 of the Central Bank Act which provides that checks representing deposit money do not have legal tender power. In sustaining the contention of the private respondent to refuse the acceptance of the cash, the respondent Judge cited Article 1248 of the New Civil Code which provides that creditor cannot be compelled to accept partial payment unless there is an express stipulation to the contrary. ISSUE: Can the check be considered a valid payment of the judgment obligation? RULING: Yes. It is to be emphasized that it is a well-known and accepted practice in the business sector that a Cashiers Check is deemed cash. Moreover, since the check has been certified by the drawee bank, this certification implies that the check is sufficiently funded in the drawee bank and the funds will be applied whenever the check is presented for payment. The object of certifying a check is to enable the holder to use it as money. When the holder procures the check to be certified, it operates as an assignment of a part of the funds to the creditors. Hence, the exception provided in Section 63 of the Central Bank Act which states that checks which have been cleared and credited to the account of the creditor shall be

equivalent to a delivery to the creditor in cash the amount equal to that which is credited to his account. The Cashiers Check and the cash are valid payment of the obligation of the petitioner. The private respondent has no valid reason to refuse the acceptance of the check and cash as full payment of the obligation SINGSON, petitioner, vs. CALTEX (PHILIPPINES), INC. respondent. DECISION GONZAGA-REYES, J.: Petitioner seeks a review on certiorari of the decision of the former Special Second Division of the Court of Appeals dated November 27, 1998, [1] affirming the decision of the Regional Trial Court of Manila, Branch 25[2] which dismissed petitioners action for reformation of contract and adjustment of rentals. The facts of the case are undisputed --Petitioner and respondent entered into a contract of lease on July 16, 1968 over a parcel of land in Cubao, Quezon City. The land, which had an area of 1,400 square meters and was covered by Transfer Certificates of Title No. 43329 and 81636 issued by the Register of Deeds of Quezon City, was to be used by respondent as a gasoline service station. The contract of lease provides that the lease shall run for a period of twenty (20) years and shall abide by the following rental rates: xxx xxx xxx xxx

default has actually been delivered to the General Manager of Caltex (Philippines), Inc. LESSOR shall then have the right to terminate this lease on thirty (30) days written notice to LESSEE. xxx xxx xxx [3] Thus, based on the foregoing provisions of the lease contract, the monthly rental was fixed at P3,500.00 for the first ten years, and at P4,200.00 for the succeeding ten years of the lease. On June 23, 1983, or five years before the expiration of the lease contract, petitioner asked respondent to adjust or increase the amount of rentals citing that the country was experiencing extraordinary inflation. In a letter dated August 3, 1983, respondent refused petitioners request and declared that the terms of the lease contract are clear as to the rental amounts therein provided being the maximum rental which the lessor may collect during the term of the lease.[4] On September 21, 1983, petitioner instituted a complaint before the RTC praying for, among other things, the payment by respondent of adjusted rentals based on the value of the Philippine peso at the time the contract of lease was executed. The complaint invoked Article 1250 of the Civil Code, stating that since the execution of the contract of lease in 1968 an extraordinary inflation had supervened resulting from the deterioration of worldwide economic conditions, a circumstance that was not foreseen and could not have been reasonably foreseen by the parties at the time they entered into contract. To substantiate its allegation of extraordinary inflation, petitioner presented as witness Mr. Narciso Uy, Assistant Director of the Supervising and Examining Sector of the Central Bank, who attested that the inflation rate increased abruptly during the period 1982 to 1985, caused mainly by the devaluation of the peso. [5]Petitioner also submitted into evidence a certification of the official inflation rates from 1966 to 1986 prepared by the National Economic Development Authority (NEDA) based on consumer price index, which reflected that at the time the parties entered into the subject contract, the inflation rate was only 2.06%; then, it soared to 34.51% in 1974, and in 1984, reached a high of 50.34%.[6] In a decision rendered on July 15, 1991, the RTC dismissed the complaint for lack of merit. This judgment was affirmed by the Court of Appeals. Both courts found that petitioner was

Rental. --- The LESSEE agrees to pay the following rental for said premises: P2.50/sq.m. per month from the 1st to 10th years and P3.00/sq.m. per month from the 11th to 20th years, payable monthly in advance within the 1st 15 days of each month; provided that the rentals for the 1st 5 years less a discount of eleven (11) percent per annum computed on a monthly diminishing balance, shall be paid to LESSOR upon compliance of the three (3) conditions provided in clause (2) above. LESSEE also agrees to pay lessor, the sum of Six Thousand Pesos (P6,000.00) as demolition expenses, upon effectivity of this lease. The rental herein provided for is in any event the maximum rental which LESSOR may collect during the term of this lease or any renewal or extension thereof. LESSEE further agrees for thirty (30) days after written notice of such

unable to prove the existence of extraordinary inflation from 1968 to 1983 (or from the year of the execution of the contract up to the year of the filing of the complaint before the RTC) as to justify an adjustment or increase in the rentals based upon the provisions of Article 1250 of the Civil Code. The Court of Appeals declared that although, admittedly, there was an economic inflation during the period in question, it was not such as to call for the application of Article 1250 which is made to apply only to violent and sudden changes in the price level or uncommon or unusual decrease of the value of the currency. (It) does not contemplate of a normal or ordinary decline in the purchasing power of the peso.[7] The Court of Appeals also found similarly with the trial court that the terms of rental in the contract of lease dated July 16, 1968 are clear and unequivocal as to the specific amount of the rental rates and the fact that the rentals therein provided shall be the maximum rental which petitioner as lessor may collect. Absent any showing that such contractual provisions are contrary to law, morals, good customs, public order or public policy, the Court of Appeals held that there was no basis for not acknowledging their binding effect upon the parties. It also upheld the application by the trial court of the ruling in Filipino Pipe and Foundry Corporation vs. National Waterworks and Sewerage Authority, 161 SCRA 32, where the Court held that although there has been a decline in the purchasing power of the Philippine peso during the period 1961 to 1971, such downward fall of the currency could not be considered extraordinary and was simply a universal trend that has not spared the Philippines. Thus, the dispositive portion of the decision of the Court of Appeals reads: WHEREFORE, in view of the foregoing, the appeal is hereby DISMISSED and the decision appealed from is hereby AFFIRMED. SO ORDERED.[8] Petitioners motion for reconsideration of the above decision was denied by the Court of Appeals in a resolution dated March 10, 1999. Aggrieved, petitioner filed this petition for review on certiorari where she assails as erroneous the decision of the Court of Appeals, specifically, (1) in ruling that Article 1250 of the Civil Code is inapplicable to the instant case, (2) in not recognizing the applicability of the principle

of rebus sic stantibus, and (3) in applying the ruling in Filipino Pipe and Foundry Corporation vs. NAWASA. Petitioner contends that the monthly rental of P3.00 per square meter is patently inequitable. Based on the inflation rates supplied by NEDA, there was an unusual increase in inflation that could not have been foreseen by the parties; otherwise, they would not have entered into a relatively long-term contract of lease. She argued that the rentals in this case should not be regarded by their quantitative or nominal value, but as debts of value, that is, the rental rates should be adjusted to reflect the value of the peso at the time the lease was contracted.[9] Petitioner also insists that the factual milieu of the present case is distinct from that in Filipino Pipe and Foundry Corporation vs. NAWASA. She pointed out that the inflation experienced by the country during the period 1961 to 1971 (the pertinent time period in the Filipino Pipe case) had a lowest of 1.35% in 1969 and a highest of 15.03% in 1971, whereas in the instant case, involving the period 1968 to 1983, there had been highly abnormal inflation rates like 34.51% in 1974 (triggered by the OPEC oil price increases in 1973) and 50.34% in 1984 (caused by the assassination of Benigno Aquino, Jr. in 1983). Petitioner argues that the placing of the country under martial rule in 1972, the OPEC oil price increases in 1973, and the Aquino assassination which triggered the EDSA revolution, were fortuitous events that drastically affected the Philippine economy and were beyond the reasonable contemplation of the parties. To further bolster her arguments, petitioner invokes by analogy the principle of rebus sic stantibus in public international law, under which a vital change of circumstances justifies a states unilateral withdrawal from a treaty. In the herein case, petitioner posits that in pegging the monthly rental rates of P2.50 and P3.00 per square meter, respectively, the parties were guided by the economic conditions prevalent in 1968, when the Philippines faced robust economic prospects. Petitioner contends that between her and respondent, a corporation engaged in high stakes business and employing economic and business experts, it is the latter who had the unmistakable advantage to analyze the feasibility of entering into a 20-year lease contract at such meager rates. The only issue crucial to the present appeal is whether there existed an extraordinary inflation

during the period 1968 to 1983 that would call for the application of Article 1250 of the Civil Code and justify an adjustment or increase of the rentals between the parties. Article 1250 of the Civil Code states: 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. Article 1250 was inserted in the Civil Code of 1950 to abate the uncertainty and confusion that affected contracts entered into or payments made during World War II, and to help provide a just solution to future cases.[10] The Court has, in more than one occasion, been asked to interpret the provisions of Article 1250, and to expound on the scope and limits of extraordinary inflation. We have held extraordinary inflation to exist 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 of said currency, and such increase or decrease could not have been reasonably foreseen or was manifestly beyond the contemplation of the parties at the time of the establishment of the obligation.[11] An example of extraordinary inflation, as cited by the Court in Filipino Pipe and Foundry Corporation vs. NAWASA, supra, is that which happened to the deutschmark in 1920. Thus: More recently, in the 1920s, 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 unload 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.) The supervening of extraordinary inflation is never assumed.[12] The party alleging it must lay down the factual basis for the application of Article 1250. Thus, in the Filipino Pipe case, the Court acknowledged that the voluminous records and statistics submitted by plaintiff-appellant proved that there has been a decline in the purchasing power of the Philippine peso, but this downward fall cannot be considered extraordinary but was simply a universal trend that has not spared our country.[13] Similarly, in Huibonhoa vs. Court of Appeals,[14] the Court dismissed plaintiff-appellants unsubstantiated allegation that the Aquino assassination in 1983 caused building and construction costs to double during the period July 1983 to February 1984. In Serra vs. Court of Appeals,[15] the Court again did not consider the decline in the pesos purchasing power from 1983 to 1985 to be so great as to result in an extraordinary inflation. Like the Serra and Huibonhoa cases, the instant case also raises as basis for the application of Article 1250 the Philippine economic crisis in the early 1980s --- when, based on petitioners evidence, the inflation rate rose to 50.34% in 1984. We hold that there is no legal or factual basis to support petitioners allegation of the existence of extraordinary inflation during this period, or, for that matter, the entire time frame of 1968 to 1983, to merit the adjustment of the rentals in the lease contract dated July 16, 1968. Although by petitioners evidence there was a decided decline in the purchasing power of the Philippine peso throughout this period, we are hard put to treat this as an extraordinary inflation within the meaning and intent of Article 1250. Rather, we adopt with approval the following observations of the Court of Appeals on petitioners evidence, especially the NEDA certification of inflation rates based on consumer price index: xxx (a) from the period 1966 to 1986, the official inflation rate never exceeded 100% in any single year; (b) the highest official inflation rate recorded was in 1984 which reached only 50.34%; (c) over a twenty one (21) year period, the Philippines experienced a single-digit inflation in ten (10) years (i.e., 1966, 1967, 1968, 1969, 1975, 1976, 1977, 1978, 1983 and 1986); (d) in other years (i.e., 1970, 1971, 1972, 1973, 1974, 1979, 1980, 1981, 1982, 1984 and 1989) when the Philippines experienced double-digit inflation rates, the average of those rates was

only 20.88%; (e) while there was a decline in the purchasing power of the Philippine currency from the period 1966 to 1986, such cannot be considered as extraordinary; rather, it is a normal erosion of the value of the Philippine peso which is a characteristic of most currencies. [16] Erosion is indeed an accurate description of the trend of decline in the value of the peso in the past three to four decades. Unfortunate as this trend may be, it is certainly distinct from the phenomenon contemplated by Article 1250. Moreover, this Court has held that the effects of extraordinary inflation are not to be applied without an official declaration thereof by competent authorities.[17] Lastly, the provisions on rentals in the lease contract dated July 16, 1968 between petitioner and respondent are clear and categorical, and we have no reason to suppose that such lease contract does not reflect or express their true intention and agreement. The contract is the law between the parties and if there is indeed reason to adjust the rent, the parties could have by themselves negotiated the amendment of the contract.[18] WHEREFORE, the petition seeking the reversal of the decision of the Court of Appeals in CA-G.R. CV No. 54115 is DENIED Serra vs. Court of Appeals, and RCBC 229 SCRA 60 January 1994 FACTS: Petitioner Federico Serra, who is the owner of a 374 square meter parcel of land located at Masbate, Masbate, and private respondent Rizal Commercial Banking Corporation (RCBC) entered into a "Contract of Lease with Option to Buy" in May 25, 1975 which provided that Serra will lease the subject land to RCBC for a period of 25 years from June 1, 1975 to June 1, 2000, that the RCBC has the option to purchase the same at P210.00 per square meter within a period of 10 years from May 25, 1975, the date of the signing of the Contract, and that Serra will have to register said land under the Torrens System to the Register of Deeds of Province of Masbate within the same 10-year option period. Pursuant to said contract, RCBC constructed improvements on the subject land to house its branch office, while the petitioner had the property, within 3 years from 1975, duly

registered with OCT No. 0-232 under the Torrens System. Later, petitioner alleged that as soon as he had the property registered, he kept on pursuing the branch manager for the sale of the lot as per their agreement, but it was not until September 4, 1984, that RCBC decided to exercise the option. RCBC informed petitioner, through a letter, of its intention to buy the property at the agreed price of not greater than P210.00 per square meter or a total of P78,430.00, but petitioner replied that he is no longer selling the property. RCBC then filed an action for specific performance and damages against Serra in March 1985 alleging that during the negotiations it made clear to petitioner that it intends to stay permanently on property once its branch office is opened unless the exigencies of the business requires otherwise. Although finding that the contract was valid, the lower court ruled that the option to buy is unenforceable because it lacked a consideration distinct from the price and RCBC did not exercise its option within the reasonable time. Upon motion for reconsideration, however, the lower court reversed itself on the 2nd issue, declared the contract as valid, and ordered Serra to deliver the proper deed of sale to RCBC. The Court of Appeals likewise affirmed said decision. ISSUE: Was there a valid contract of lease with option to buy between the parties? Was there a consideration distinct from the price to support the option given to RCBC? COURT RULING: The Supreme Court affirmed the appellate courts decision. A contract of adhesion is one wherein a party, usually a corporation, prepares the stipulations in the contract, while the other party merely affixes his signature or his "adhesion" thereto. These types of contracts are as binding as ordinary contracts because in reality, the party who adheres to the contract is free to reject it entirely. In the case at bar, the Supreme Court did not find the situation to be inequitable because petitioner is a highly educated man, who, at the time of the trial was already a CPA-Lawyer, and when he entered into the contract, was already a CPA, holding a respectable position with the Metropolitan Manila Commission. It is evident that a man of his stature should have been more

cautious in transactions he enters into, particularly where it concerns valuable properties. Also, in the present case, the consideration is even more onerous on the part of the lessee since it entails transferring of the building and/or improvements on the property to petitioner, should respondent bank fail to exercise its option within the period stipulated.
CF Sharp vs Northwest Airlines, 381SCRA314Facts: On May 9, 1974, CF Sharp was authorized to sell tickets of Northwest Airlines-Japan by entering an International Passenger Sales Agency Agreement, however, CFSharp failed to remit the proceeds of the ticket sales. This prompted Northwest Airlinesto file a collection suit against the CF Sharp before the Toko Distirct Court. Judgmentwas rendered in its favor, ordering CF Sharp to pay Northwest Airlines includingdamages for the delay. Unable to execute the decision in Japan, the respondent filed acase to enforce said judgment with the RTC. Thereafter, the RTC issued a writ of execution for foreign courts decision. The petitioner filed for certiorari, assertingit has already made partial payments. The CA lowered the amount to be paid andincluded in its decision that the amount may be paid in local currency at rate prevailingat time of payment. partly affirmed by the Supreme Court. CF Sharp was then ordered to pay Northwest sothat the RTC issued a writ of execution of decision ruling that Sharp is to pay Northwestthe sum of 83,158,195 yen at the exchange rate prevailing on the date of the foreign judgment plus 6% per annum until fully paid, 6% damages and 6% interest. An appeal,the Court of Appeals reduced the interest and it ruled that the basis of the conversion of Petitioners liability in its peso equivalent should be the prevailing rate at the time of payment and not the rate on the date of the foreign judgment.Issue: Whether or not the basis for the payment of the amount due is the value of thecurrency at the time of the establishment of the obligation.Ruling: NO, the rule that the value of currency at the time of the establishment of theobligation shall be the basis of payment finds application only when there is an official pronouncement or declaration of the existence of an extraordinary inflation or deflation.Hence, petitioners contention that Article 1250 of the Civil Code which provides that incase of an extra ordinary inflation or deflation of the currency stipulated shouldsupervene, the value of the currency at the time of establishment of the obligation shall bethe basis of payment, unless there is an agreement to the contrary shall apply in this caseis untenable.Under RA 529, stipulations on the satisfaction of obligations in foreign currencyare void. Payments of monetary obligations, subject to certain exceptions, shall bedischarged in the currency which is the legal tender of the Philippines. But since the lawdoesn't provide for the rate of exchange for the payment of foreign currencyobligations incurred after its enactment, jurisprudence held that the exchange rateshould be the prevailing rate at time of payment. This law has been amended, in payments for obligations to be made in currency other than Philippine currency but then again, it failed to state what the exchange rate that should be used. This being the case the jurisprudence regarding the use of the exchange rate at time of payment shall be used

RESOLUTION REYES, J.B.L., J.: Both appellant Velasco and appellee Manila Electric have filed their respective motions to reconsider the decision of this Court dated 6 August 1971. For the sake of clarity, the two motions will be here dealt with separately. A APPELLANT'S MOTION FOR RECONSIDERATION The thrust of this motion is that the decision has incorrectly assessed appellant's damages and unreasonably reduced their amount. It is first argued that the decision erred in not taking into account, in computing appellant's loss of income, the appellant's undeclared income of P8,338.20, assessed by the Bureau of Internal Revenue for the year 1954, in addition to his declared income for that year (P10,975), it being argued that appellant never claim any other source of income besides his professional earnings. Several circumstances of record disprove this claim. (1) That the amount of P8,338.20 was kept apart from ordinary earnings of appellant for the year 1954 (P10,975), and not declared with it, is in itself circumstantial evidence that it was not of comparable character. (2) If it was part of his ordinary professional income, appellant was guilty of fraud in not declaring it and he should not be allowed to derive advantage from his own wrongdoing. (3) The decision pointed out that by including the undeclared amount in appellant's disclosed professional earning for 1954, to a grand total of P19,313.20, the income for said year becomes abnormally high (in fact, more that double), as compared to appellant's earnings for the preceding years, 1951-1953, that averaged not more that P7,000 per annum. Such abnormality justifies the Court's refusal to consider the undisclosed P8,338.20 as part of appellant's regular income for the purpose of computing the reduction in his earnings as a result of the complained acts of appellee. (4) Finally, the true source of the undeclared amount lay in appellant's own knowledge, but he chose not to disclose it; neither did he call upon the assessing revenue officer to reveal its character. Appellant Velasco urges that the damages awarded him are inadequate considering the present high cost of living, and calls attention to Article 1250 of the present Civil Code, and to the doctrines laid down in People vs. Pantoja G.R. No. L-18793, 11 October 1968, 25 SCRA 468. We do not deem the rules invoked to be applicable. Article 1250 of the Civil Code is to the effect that: ART. 1250. 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. It can be seen from the employment of the words "extraordinary inflation or deflation of the currency stipulated" that the legal rule envisages contractual obligations where a specific currency is selected by the parties as the medium of payment; hence it is inapplicable to obligations arising from tort and not from contract, as in the case at bar, besides there being

PEDRO J. VELASCO, plaintiff-appellant, vs. MANILA ELECTRIC CO., ET AL., defendants-appellees.

no showing that the factual assumption of the article has come into existence. As to the Pantoja ruling, the regard paid to the decreasing purchase of the peso was considered a factor in estimating the indemnity due for loss of life, which in itself is not susceptible of accurate estimation. It should not be forgotten that the damages awarded to herein appellant were by no means full compensatory damages, since the decision makes clear that appellant, by his failure to minimize his damages by means easily within his reach, was declared entitled only to a reduced award for the nuisance sued upon (Steel vs. Rail & River Coal Co., 43 Ohio App. 228,182 N.E. 552); and the amount granted him had already taken into account the changed economic circumstances. Nor is the fact that appellant lost a chance to sell his house for P95,000 to Jose Valencia constitute a ground for an award of damages in that amount. As remarked in the main decision, there is no adequate proof of loss, since there is no evidence of the depreciation in the market value of the house in question caused by the acts of defendant Meralco The house, after all, has remained with appellant and he admits in his motion for reconsideration (page 48) that properties have increased in value by 200% since then. For the foregoing reasons, the motion for reconsideration is denied. B APPELLEE'S MOTION TO RECONSIDER Appellee Manila Electric Company argues that in case the noise emitted by its substation can not be brought down to the 50 decibel level imposed by our decision in chief, the remedy of the appellant would be to compel appellee Company to acquire and pay for the value of the house, under the so-called doctrine of "inverse condemnation and cites in support our doctrines in Bengzon vs. Province of Pangasinan, 62 Phil. 816, and Republic vs. Philippine Long Distance Telephone Co., L-18841, 27 January 1969, 26 SCRA 620-634. But as pointed out by appellant in his opposition, this issue was not raised, nor was the inverse condemnation doctrine invoked in the trial court, so that it would be improper to consider it on appeal, and worse still, on a motion for reconsideration of the decision on the merits. Furthermore, there is no showing that it is impossible to reduce the substation noise to the level decreed by this Court in the main decision. On the contrary, appellee's own evidence is that the noise can be reduced by erecting a wall barrier on the line separating the substation lot and the property of appellant. The version that appellee did not erect the wall because of the objections of appellant's wife was denied by her, and there is no preponderance of evidence in favor of appellee on this point. Moreover, since it was appellant Dr. Velasco who complained, his wife's objection would not suffice to constitute a waiver of his claim. As to the petition to increase the sound level prescribed by his Court from 50 to 55 decibels on the ground that present "ambient sound already ranges from 44 to 55 decibels in the mornings", the same can not be granted. As shown by the evidence at the trial, the intensity of the noise emitted by appellee's transformers are most objectionable at night, when people are endeavoring to rest and sleep in compensation for the fatigue and

tensions accumulated during daytime. WHEREFORE, appellee's motion to reconsider is likewise denied. FILOMENO N. LANTION, CLARITA C. LANTION, and JUANA C. FUENTES, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, GREGORIO ARANETA UNIVERSITY FOUNDATION and OBED JOSE MENESES, respondents. Marcelo C. Amiana and Filomeno N. Lantion for petitioners. MELENCIO-HERRERA, J.: The instant controversy traces its roots to the retrenchment and reorganization program (RRR) adopted in 1983 by respondent Gregorio Araneta University Foundation (the University, for short). In particular, this Petition for Certiorari seeks a reversal of the Decision of public respondent National Labor Relations Commission (NLRC), dated 20 January 1988, which modified the judgment of the Labor Arbiter in the Illegal Dismissal Case entitled "Filomeno N. Lantion et als. vs. Gregorio Araneta University Foundation et als." in NLRC Case No. NCR-3-98185. The three (3) Complainants in this case charged the University with Illegal Dismissal, Non-payment of separation pay, retirement pay, and gratuity pay, Unfair Labor Practice with Damages, and Attorney's Fees. The first Complainant, Filomeno Lantion, was the Acting Vice President and Executive Officer of the University at the time of his dismissal. He started as a clerk and has had thirty-two (32) years and seven (7) months of service. His last monthly salary was P4,247.00. The second Complainant, Clarita C. Lantion is his wife. The last position she held was that of Dean of the Institute of Business and Agricultural Administration and concurrently Head and Professor of the Department of Business and Finance. She is a holder of a Ph. D in Commerce and has had twenty-six (26) years of service in the University. Her last monthly salary was P2,550.00. The third Complainant is Juana C. Fuentes, sister-in-law of petitioner Filomeno Lantion. She joined the University in 1967, her last position being that of Secretary of the Chief Legal Officer. She is a BSBA holder and has served the University for sixteen (16) years. Her last monthly salary was P998.00. On 15 March 1983, Mr. Cesar A. Mijares, then President of the University, addressed a letter to the Minister of Labor and Employment informing him of the financial predicament of the University, thus: This University can no longer afford to continue operation under the present salary rates of its personnel. The reduction of personnel is not an adequate solution to this problem, because to do so would not enable the University to accommodate its present enrollment. ... Reducing the salaries of personnel even to an amount which is not below the statutory minimum is not legally allowable.

Therefore, the only effective solution is for the University to have all its personnel resign and pay them their separation pays, or retirement pays, whichever is higher, so that it could effect a top-to-bottom reorganization and restructure its salary rates and other benefits not mandated by law ... After we have paid our employees their separation/retirement pays, we will immediately rehire them in accordance with new and restructured salary rates ... and without the benefits not mandated by law ..., subject to the University's actual needs under its reorganized set-up. xxx xxx xxx On 29 March 1983, then Minister Ople replied: We understand that under the proposed retrenchment and reorganization plan, the following measures are envisaged: 1. a top-to-bottom University-wide reorganization, functional and structural in scope, as well as restructuring of salary rates and other personnel benefits not mandated by existing labor standard laws; 2. separation or retirement of ALL personnel with corresponding grants of termination pay or retirement benefits, whichever is higher; 3. re-hiring of ALL personnel so separated or retired under terms and conditions of employment to be established for the reorganized University Foundation, with the possible exception of those whose present positions will be affected by the proposed reorganizational changes. xxx xxx xxx On the basis of the foregoing considerations, we find no serious objections that may be interposed to the proposed reorganization and retrenchment program of the University Foundation. Implementation of this program shall of course be instituted without prejudice to whatever benefits that might have accrued to the employees concerned at the effective date of reorganization. (Italics supplied). On 14 October 1983, the Executive Committee of the Board of Trustees of the University issued a Memorandum-Circular providing, among others: The following guidelines are hereby issued: 1. All ad hoc, ad interim and temporary appointments will be considered terminated as of the date indicated in their respective appointments, or as of October 31, 1983, whichever is earlier; 2. GAUF faculty members and associates are invited to submit courtesy letters of

resignation to the Executive Vice President on or before October 31,1983. Those who submit may be re-appointed while those who would fail to submit may be retrenched; xxx xxx xxx We come now to the respective situations of petitioners. On 10 November 1983, petitioner Filomeno Lantion received a letter, dated 9 November 1983, terminating him as the Acting Vice-President and concurrently Executive Officer of the University effective 11 November 1983. Petitioner Clarita Lantion, wife of Filomeno, was terminated as Dean of the Institute of Business and Agricultural Administration and Concurrent Head of the Department of Business, Finance, and Management effective 1 June 1984. While petitioner Fuentes, Filomeno's sister-in-law, was terminated as Secretary to the Legal Office on 21 November 1983. On 25 March 1985, petitioners filed their Complaint against the University and its President, respondent Obed Jose Meneses, before the NLRC. Petitioners maintain that their positions were not affected by the reorganization program; that they were not re-hired despite their seniority in service, superior qualifications, and efficiency; that petitioner, Clarita Lantion was replaced by a faculty member who does not even possess the necessary academic qualification required by the University and the Ministry of Education; that petitioner, Juana Fuentes, was replaced by an undergraduate and very much her junior in terms of service; that their dismissal was motivated by vindictiveness since petitioner, Filomeno, had previously testified in the administrative charge against respondent Meneses; that petitioners were illegally dismissed without the one-month notice and are entitled to their monetary claims and reinstatement without loss of seniority rights and with full backwages. Traversing the foregoing averments, the University contends that on 18 November 1983, petitioner Filomeno Lantion expressed in clear and unequivocal terms his conformity to be retired and separated from the service such that he has no cause for illegal dismissal, much less for reinstatement; that on 3 November 1983, petitioner Clarita Lantion was extended an ad interim appointment as Acting Officer-in-Charge of the Institute of Business and Agricultural Administration up to 31 March 1984; that her appointment was extended to 31 May 1984 after which she was not reappointed so that since her appointment was for a fixed period the same had expired; she then ceased to be employed in the University and, in fact, she requested the payment of her termination benefits which has been partially met by the University; that petitioner Juana C. Fuentes tendered a courtesy resignation in a letter, dated 29 October 1983, which was accepted; that her position had been abolished; and that she had already been paid partially her retirement benefits. Referring to all three complainants, the University submits that they were not illegally dismissed nor was their removal motivated by vindictiveness; that the claim of vendetta is a childish and immature display of ill-feeling and animosity to respondent Meneses because of their futile attempt to hold or to administer the University; that the retrenchment program was already being implemented

when respondent Meneses was appointed; and that the letter of some employees terminating their services was even signed by petitioner Filomeno Lantion. Resolving the issues raised, in a Decision, dated 17 June 1986, the Labor Arbiter opined that failure of respondents to pay retirement and other benefits due complainants does not make their retrenchment illegal (p. 7, Decision) since retrenchment was effected to avert bigger losses in the future. By reason thereof, the entitlement of complainants was limited to the payment of "retirement benefits under the Blue Book," namely, "to petitioner Filomeno Lantion the amount of P165,526.59; to Clarita C. Lantion P72,769.89; and to Juana C. Fuentes, P17,577.17; plus 10% interest from the date of their separation, with 10% attorney's fees. Partial payments received are deductible. All other claims are hereby dismissed." Both parties appealed to the NLRC. On 20 January 1988, the NLRC affirmed the Labor Arbiter's finding that retrenchment was not illegal since it was resorted to in order to avert the financial collapse of the University. But it modified the amounts awarded by deleting the 10% interest as well as the 10% attorney's fees and adjusting the award of COLA to Fuentes to P5,269.30. The following explanation was given in the matter of interest and attorney's fees: Regarding the correctness of the 10% interest of the monetary awards and 10% attorney's fees raised by the respondents in their appeal which is certainly an added financial burden because the complainants were not illegally dismissed nor was it proven that their discharge was motivated by ill-feelings or vindictiveness, we find no sufficient or factual basis for the award. The 10% interest, is to our mind, in the for of damages and this must not only be prayed for but must also be properly averred and proven. With respect to the award of attorney's fees, we have considered the fact that respondents never resisted complainants' claim of retirement benefits which they are entitled to and which they have partially received even before filing of the complaint and therefore, we do not see any legal basis to award attorney's fees against respondents. In this Petition for Certiorari, petitioners assign the following errors to the NLRC: 1. The interest of l0% awarded by the Honorable Arbiter a quo is even a far cry of the amount of actual damages pleaded and duly established which were sustained by herein petitioners as a result of the nonpayment of their retirement/gratuity pay and other employee benefits by private respondent. 2. The attorney's fees awarded by the Honorable Labor Arbiter a quo was also duly pleaded and established and herein petitioners are entitled to the same because of the obstinate refusal of private respondents to settle in full the money

claims of the former despite verbal and written demands therefor, necessitating the filing of the instant case and hiring of the services of counsel. 3. Herein petitioners who had served respondent university from 16 to 32 years had been terminated from service discriminatorily, arbitrarily and illegally and had not been rehired by private respondents contrary to their own guidelines and those set forth by MOLE in the implementation of GAUF RRR program, and in not ordering the reinstatement with backwages of herein petitioners. The NLRC, Second Division, abusively ignored and/or totally disregarded applicable and clear-cut decision and/or rulings of the Supreme Court (in cases which transpired contemporaneously in the same respondent university which are foursquare on the matter, and which decision had been timely brought to the attention of said NLRC Division causing flagrant and notorious discrimination against herein petitioners. (pp. 10-11, Rollo). Significantly, in his Comment/Memorandum, the Solicitor General supports the position adopted by petitioners, on this principal ground that the NLRC departed from the Decision of this Court in Gregorio Araneta University Foundation vs. NLRC et als., (G.R. Nos. 79525-26, October 29, 1987, 155 SCRA 301) [herein after, the First GAUF Case], in that "since petitioners' positions were not abolished, their dismissal should have been held illegal in the absence of basis to consider them retired or separated from the service under the retrenchment program of the University nor are their dismissals in accordance with the regular rules and procedures on dismissal of employees" (p. 18, Comment). On the other hand, private respondents and the NLRC, on its own behalf, contend that there was no grave abuse of discretion amounting to lack of jurisdiction in holding that there was no basis in law and in fact for the award of 10% interest in the absence of malice or bad faith that preceded the termination of service of petitioners; nor was there reversible error in deleting the award of attorney's fees there being nothing in the record that petitioners even spent any amount for attorney's fees; that there was neither a departure from the rule in the First GAUF Case, supra, inasmuch as the complainants in those cases did not tender their resignation while petitioner Filomeno Lantion did; petitioner Clarita's re-appointment was for a fixed period and the same had expired; while petitioner Clarita Fuentes had resigned. What is more, except for petitioner Clarita Fuentes, their positions had been abolished. Additionally, the University claims that petitioners have received partial payment of their retirement benefits whereas complainants in the First GAUF Case had not. We gave due course to the Petition and required the submittal of Memoranda, with which directive the parties have complied.

There is a striking parallelism between the facts and issues in this case and those in the First GAUF Case. Both cases arose from the implementation of the retrenchment and reorganization program of the University. In the First GAUF Case, Complainants were permanent employees and had worked in the University from eighteen (18) to twenty-five (25) years. Petitioners in this case are also permanent employees and have rendered service within a span of from sixteen (16) to thirty-two (32) years. In both cases, Complainants were retrenched and not reappointed. The difference between the two cases lies in that in the First GAUF Case, Complainants therein did not submit their courtesy resignations, whereas in this case petitioners Clarita Lantion and Fuentes did. Petitioners Filomeno and Clarita Lantion were reappointed but were subsequently terminated because petitioner Filemeno allegedly resigned and Clarita's term had expired. Noting these similarities and variances, the NLRC held in the First GAUF Case, that the dismissal was illegal as their positions were not affected by the reorganization. But in this case the dismissal was pronounced legal and only the payment of retirement pay under the "Blue Book" was ordered. The basic question for determination is whether or not the NLRC gravely abused its discretion in holding in this case that petitioners were not illegally dismissed. Following the First GAUF Case as a precedent, the answer must be in the affirmative. Under the guidelines to the retrenchment program given by the University and the Ministry of Labor, the following considerations emerge clear: (1) there was to be a separation or retirement of ALL personnel with corresponding grant of termination pay or retirement benefits, whichever is higher; (2) top-to-bottom University-wide reorganization subject, however, to the condition of rehiring of ALL personnel so separated or retired; (3) but with the exception of those whose present positions will be affected by the proposed reorganizational changes. That retrenchment was proper, therefore, there can be no question. The conditions laid down, however, were not religiously followed. Petitioners were not rehired although they fall outside the exception provided. Their positions were not affected by the re-organizational changes envisioned in the retrenchment program. The position of Vice-President continued to exist (Exh. K). And as far as Filomeno and Clarita Lantion are concerned, their temporary appointment to other positions could not have affected their permanent status pursuant to the ruling in the First GAUF Case. Clarita's position was neither abolished. She was replaced by another faculty member. It may be that petitioners Filomeno and Clarita Lantion had expressed their conformity to their termination, while Fuentes had tendered her courtesy resignation. As is obvious, however, those steps were but in administrative compliance with the Memorandum Circular of 14 October 1983 of the University, ante. As a matter of fact, courtesy resignations could have been dispensed with as all personnel were deemed resigned. Besides, such compliance had placed them in a better position than the Complainants in the First GAUF Case considering the proviso in the Memo-Circular of the University that "those who submit courtesy resignations may be re-appointed while those who would fail to submit may be retrenched."

Reinstatement of petitioners with backwages for three (3) years is thus called for as held in the First GAUF Case. In fact, in its Comment dated 10 December 1988, the NLRC now admits that petitioner Fuentes is entitled to reinstatement with three (3) years backwages as it is not clear from the records that her position as Secretary to the Legal Office was abolished under the retrenchment program of the University. Petitioners call attention, however, to the amendatory provision in Republic Act No. 6715 (March, 1989) to substantiate their contention that full backwages should be awarded. That provision reads: Sec. 34. Article 279 of the Labor Code is hereby amended to read as follows: Art. 279. Security of Tenure- ... An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. (Italics ours) Nothing in said law, however, provides for its retroactive application aside from the fact that the University is in dire financial straits and can hardly assume additional monetary obligations. As to the award by the Labor Arbiter of 10% interest on the retirement pay, respondent NLRC did not err in deleting it for lack of legal basis. There is no showing that private respondents were motivated by ill-feeling or bad faith. Respondents had effected partial payments of petitioners' retirement benefits even before the filing of this case except that payment could not be made in full due to financial constraints. An additional monetary burden may only exacerbate the University's inability to meet its monetary obligations due to its precarious financial state. In respect of the argument that the inflation that has supervened justifies the imposition of interest, this Court has held that the effects of extraordinary inflation are not to be applied without an agreement between the parties and without an official declaration thereof by competent authorities (Velasco vs. Manila Electric Co., G. R. No. L18390, December 20, 1971, 42 SCRA 556; Commissioner of Public Highways vs. Burgos, L-36706, March 31, 1980, 96 SCRA 831). And in regards attorney's fees, respondent NLRC properly disallowed the award as the same is granted only in case of unlawful withholding of wages (Gregorio Araneta University Foundation vs. NLRC, et al., G.R. No. L-75583, November 8, 1988,167 SCRA 79; Article III (a), P.D. 442 as amended). In this case, it cannot be said that wages had been unlawfully withheld by the University. In fact, it had made partial payments of retirement benefits. WHEREFORE, the Decision of respondent National Labor Relations Commission is REVERSED in so far as it holds that the dismissal of petitioners was not illegal and hereby ORDERS respondent Gregorio Araneta University Foundation to REINSTATE petitioners to their former

positions with three (3) years backwages under the new terms and conditions of employment in the University as reorganized. In all other respects, the Decision of the National Labor Relations Commission is AFFIRMED

ROMAN CATHOLIC BISHOP OF MALOLOS INC vs IAC

Tender of payment involves a positive and unconditional act by the obligor of offering legal tender currency as payment to the obligee for the formers obligation and demanding that the latter accept the same. tender of payment cannot be presumed by a mere inference from surrounding circumstances

FACTS:
July 7, 1971: A contract over the land was executed between the Roman Catholic Bishop of Malolos (bishop) as vendor and the through its then president, Mr. Carlos F. Robes, as vendee, stipulating for a downpayment of P23,930 and the balance of P100,000 plus 12% interest per annum to be paid within 4 years from execution of the contract. The contract likewise provides for cancellation, forfeiture of previous payments, and reconveyance of the land in case of failure to pay within the period

sheer proof of sufficient available funds to meet more than the total obligation within the grace period - NOT sufficient On the contrary, the respondent court finds itself remiss in overlooking or taking lightly the more important findings of fact made by the trial court which are entitled to great weight on appeal and should be accorded full consideration and respect and should not be disturbed unless for strong and cogent reasons

March 12, 1973: private respondent, through its new president, Atty. Adalia Francisco, addressed a letter 6 to Father Vasquez, parish priest of San Jose Del Monte, Bulacan, requesting to be furnished with a copy of the subject contract and the supporting documents July 17, 1975: after the expiration of the stipulated period for payment, Atty. Francisco wrote the formal request that her company be allowed to pay the principal amount of P100,000 in 3 equal installments of 6 months each with the 1st installment and the accrued interest of P24,000 to be paid immediately upon approval July 29, 1975: Bishop through its counsel, Atty. Carmelo Fernandez, formally denied the request but granted a grace period of 5 days from the receipt of the denial to pay the total balance of P124,000 August 4, 1975: private respondent, through its president, Atty. Francisco, wrote the counsel of the petitioner requesting an extension of 30 days from to fully settle its account. - denied RTC: favored Bishop declaring the down payment as forfeited

certified personal check which is not legal tender nor the currency stipulated, and therefore, can not constitute valid tender of payment Since a negotiable instrument is only a substitute for money and not money, the delivery of such an instrument does not, by itself, operate as payment

Far East Bank vs Diaz Realty,IncGr no. 138588 August 23, 2001 Nature of the Obligation:Tender of Payment Facts;In August 1973, Diaz Realty got a loan form Pacific Banking Corp in theamount of 720,000 the interest at 12% per annum, later increased to 14% , 16%,18% and 29%. The loan was secured by a real estate mortgage over two(2) parcelsof land owned by the Diaz Realty, both located in Davao City.In 1981, Allied Banking Corp rented an office space in the buildingconstructed on the said properties owned by the mortgage contract, whereby theparties agreed that the monthly rentals shall be paid directly to Pacific Bank for thelessors accoubt either to partly or fully pay off the aforesaid mortgage indebtednessOn July 1985, the Central Bank closed Pacific Banking Corporation, placed itunder the receivership and appointed Renan Santos as its liquidator. December1986, FEBTC purchased the credit of Diaz Realty in favor of PaBC but it was only onMarch 23,1988 that Diaz wa informed.On March 1988 Diaz went to the office of PaBC and was informed that itwas acquired by FEBTC and was informed that his loan is P 1, 447,142 million. Diaztendered the amount of P 1,450,000 through Interbank Check in order to preventthe imposition of additional interest. That FEBTC did not accept it as payment andwas asked to deposit the amount with the defendant's Davao City Branch officeallegedly pending the approval of Central Bank liquidator Renan Santos.

ISSUE: W/N there is tender of payment by issuance of a certified check HELD: NO. RTC reinstated.

ISSUE:Whether or not their was a valid tender of payment made by Diaz Realty toFEBTC? HELD: The Court finds that their was a valid tender of payment made by Diaz Realtyto FEBTC.In general, a check does not constitute legal tender and that the creditormay validly refuse it. It must be emphasized, however, that this dictum does notprevent a creditor from accepting a checking as payment. In other words, thecrditor has the option and discretion of refusing or acpting it.In the present case, FEBTC did not refuse Diaz's check. On the contrary itaccepted the check which, it insisted, was a deposit. The check proved to be fullyfunded and was in fact honored by the drawee bank. FEBTC was in possession of the money for several months. Tender of payment is the definitive act of offering the creditor what is due tohim or her, together with the demand that the creditor accept the same. Moreimportantly, there must be a fusion of intent, ability and capability to make goodsuch offer, which must be absolute and must cover the amount due.Diaz intended to settle its obligation with FEBTC is evident from the recordsof the case. Upon knowing of the loan balance was 1,447,142.03 it presented toFEBTC a check in the amount of P 1,450,000 with the specific notification that it wasfor full payment. Tender of Payment extinguishes the obligation only after proper consignation.For a consignation to be necessary, the creditor must have refused, without justcause, to accept the debtor's payment. However, petitioner accepted Diaz check. The tender was made by Diaz for the purpose of settling its obligation. It wasincumbent upon FEBTC to refuse, or accept it as payment. The latter, did not havethe right or the option to accept and treat it as a deposit. By accepting the tenderedcheck and conevrting it into money, FEBTC is presumed to have accepted it aspayment. To hold otherwise would be inequitable and unfair to DIAZ

Tan Te Gutierrez Tong, Defendants.

[3]

and

Co

The uncontroverted facts of the case as found by the Court of Appeals are as follows: The subject of this controversy is an apartment building located at 619 Asuncion Street, Binondo, Manila and owned by Jespajo Realty Corporation. On February 1, 1985, said corporation, represented by its President, Jesus L. Uy, entered into separate contracts of lease with Tan Te Gutierrez and Co Tong.xxx Pursuant to the contract, Tan Te occupied room No. 217 of the subject building at a monthly rent of P847.00 while Co Teng occupied the Penthouse at a monthly rent of P910.00xxx The terms of the contract among others are the following: PERIOD OF LEASE- The lease period shall be effective as of February 1, 1985 and shall continue for an indefinite period provided the lessee is up-to-date in the payment of his monthly rentals. The LESSEE may, at his option, terminate this contract any time by giving sixty (60) days prior written notice of termination to the LESSOR. However, violation of any of the terms and conditions of this contract shall be a sufficient ground for termination thereof by the LESSOR. xxx xxx xxx RENT INCREASE - For the duration of this contract, the LESSEE agrees to an automatic 20% yearly increase in the monthly rentals. Since the effectivity of the lease agreement on February 1985, the lessees religiously paid their respective monthly rentals together with the 20% yearly increased (sic) in the monthly rentals as stipulated in the contract. On January 2, 1990, the lessor corporation sent a written notice to the lessees informing them of the formers intention to increase the monthly rentals on the occupied premises to P3,500.00 monthly effective February 1, 1990. The lessees through its counsel in a letter dated March 10, 1990 xxx manifested their opposition alleging that the same is in contravention of the terms of the contract of lease as agreed upon. Due to the opposition and the failure of the lessees to pay the increased monthly rentals in the amount of P3,500.00, the lessor through its counsel in a letter dated April 10,1990

JESPAJO REALTY CORPORATION, petitioner, vs. HON. COURT OF APPEALS, TAN TE GUTIERREZ and CO TONG, respondents. DECISION
AUSTRIA-MARTINEZ, J.:

Before us is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to review and set aside the decision of the Court of Appeals promulgated on January 26, 1994 in CA-G.R. SP No. 27312 which reversed the decision of the Regional Trial Court in Civil Case No. 9157757 and reinstated the Metropolitan Trial Court rulings in Civil Case No. 134022-CV, entitled, Jespajo Realty Corp., Plaintiff, vs.
[1] [2]

xxx demanded that the lessees vacate the premises and pay the amount of P7,000.00 corresponding to the months of February and March, 1990. The lessees exerted effort to pay the rentals due for the months of February and March 1990 at the monthly rate stipulated in the contract but was refused by the lessor so that on May 2, 1990, they instituted before the Metropolitan Trial Court of Manila, Branch 16 a case for consignation xxx In the said complaint, plaintiffs alleged that the amount of P2,107.60 and P2,264.40 are the monthly rental obligations of Tan Te and Co Tong respectively. They sought to consign with the court their monthly rental obligations at the rate above mentioned for the months of February up to April 1990. Additionally, they prayed that the court issue an order directing the defendant to honor the terms and conditions of the lease. It is to be noted that on February 6, 1991, the trial judge in the consignation case issued an order allowing the plaintiffs therein to deposit with the City Treasurer of Manila the amount of P33,480.28 for Co Tong and the amount of P32,710.32 for Tan Te Gutierrez representing their respective rentals for thirteen (13) months from February, 1990 to January, 1991. This order however is without prejudice to the final outcome of the case. Plaintiffs duly complied with the order as evidenced by an official receipts (sic) xxx in the name of Tan Te Gutierrez and Co Tong, respectively, issued by the City Treasurer on February 11, 1991. On November 15, 1990, or more than six (6) months from the filing of the case for consignation, the lessor instituted an ejectment suit against the lessees before the Metropolitan Trial Court of Manila Branch 20 xxx. The court in its decision dated May 10, 1991 rendered a decision dismissing the ejectment suit for lack of merit. xxx
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much higher than the correct rental in accordance with their stipulated 20% automatic increase annually. This was done by the plaintiff apparently in order to create an artificial cause of action, as when the LESSEES would refuse, as in fact they refused, to pay the monthly rentals at the increase rate. This pretext of the plaintiff cannot be countenanced by law. Anent the final issue as to whether or not the defendants are already in arrears in the payment of rentals on the premises, it is noteworthy that the instant case for Unlawful Detainer was filed by the plaintiff-LESSOR herein only on November 15, 1990, while the LESSEES consignation case against the LESSOR-plaintiff herein based on the latters refusal to accept the rentals have been pending with Branch XVI of this Court since May 2, 1990. And, in accordance with the consignation case, the LESSEES, upon proper motion approved by the Court, deposited the amounts of P33,480.28 covered by O.R. No. B-578503 (for CO TONG) and P32,710.32 covered by O.R. B-578502 (for TAN TE GUTIERREZ) both receipts dated February 11, 1991. IN VIEW OF THE FOREGOING, and after careful scrutiny of the entire record including all documentary evidence adduced by both parties, this Court is of the opinion and so holds that the plaintiff (Jespajo Realty Corporation) has failed to establish its claims by preponderance of evidence. WHEREFORE, this case is hereby dismissed for utter lack of merit. The counterclaim is likewise dismissed for lack of evidence to support the same. No pronouncement as to costs. SO ORDERED.[5] Jespajo Realty Corporation then appealed to the Regional Trial Court which ruled in its favor, thus: The Court is fully convinced that the sum demanded by appellant as increase in appellees monthly rentals to the premises which they are renting from appellant is very reasonable considering that the leased premises are located in the commercial and business section of Manila in Binondo. It is also undisputed that appellant has a 24-hour security unit over the property as well as

Portions of the MTC decision read: Furthermore, it appears that the plaintiff realizing that it had virtually surrendered certain aspects of its rights of ownership over the subject premises in stipulating that the lease shall continue for an indefinite period provided the LESSEE is up-todate in the payment of his monthly rentals, has raised the monthly rental to P3,500.00 which is

parking spaces and provisions for electricity, water and telephone services. In the light of the foregoing, the Court is constrained to reverse the appealed decision and hereby orders another judgment to be entered in favor of appellant. WHEREFORE, PREMISES CONSIDERED, judgment is rendered as follows: 1. Reversing the decision of the court a quo insofar as it dismissed appellants complaint; 2. Declaring the termination or revocation [of the] lease contracts Annexes A and A-1, Complaint executed between appellant and appellees; 3. Ordering appellees, their heirs and all other persons acting for and in their behalf to vacate and surrender immediately the lease premises to appellant; 4. Adjudging appellees to pay unto appellant their rental arrearages of P57,426.45 for appellee (Tan Te Gutierrez) and P56,153.75 for appellee (Co Tong) as of April 30, 1991 and thereafter each appellee is ordered to pay also appellant the sum of P3,500.00 every month starting May 1, 1991 until they shall have fully vacated and surrendered the leased premises; 5. Appellees are likewise adjudged to pay the sum of P10,000.00 as and for attorneys fees, and 6. The costs of suit. SO ORDERED.[6] However, said RTC decision was reversed by the Court of Appeals in the herein assailed decision, portions of which read: Be that as it may, We find that it was the private respondent who, in fact, violated the lease agreement by charging petitioners a monthly rental of P3,500.00, well in excess of the rental stipulated in the lease contract. We see in the refusal of private respondent to accept the rental being offered by petitioners, a scheme to place petitioners in default of their rental payments. However, said scheme was waylaid by petitioners consignation of the rentals due from them.

In view of the foregoing discussion, We find no more necessity in discussing the last two (2) errors raised in the petition. We likewise find that the respondent court committed an error of fact and law in reversing the decision of the Metropolitan Trial Court of Manila and in arriving at the decision under review. WHEREFORE, the decision under review is hereby REVERSED and SET ASIDE. The decision dated May 10, 1991 of the Metropolitan Trial Court of Manila, Branch XX which dismissed Civil Case No. 134022 CV for lack of merit is hereby REINSTATED. No pronouncement as to costs. SO ORDERED.[7] Petitioner comes before this Court with the following questions:
I

WHEN THE PARTIES TO A CONTRACT OF LEASE STIPULATED FOR AN INDEFINITE PERIOD AND SHALL CONTINUE FOR AS LONG AS THE LESSEE IS PAYING THE RENT, IS THE SAID CONTRACT INTERMINABLE EVEN BY THE LESSOR?
II

WHEN THERE IS A DISAGREEMENT ON THE RENTALS TO BE PAID, SHOULD IT BE RESOLVED IN A CONSIGNATION CASE OR IN AN EJECTMENT CASE?
[8]

Petitioner claims that the contracts of lease entered into between the petitioner and private respondents did not provide for a definite period, hence, Art. 1687 of the New Civil Code applies. Said Article reads: Art. 1687. If the period for the lease has not been fixed, it is understood to be from year to year, if the rent agreed upon is annual; from month to month, if it is monthly; from week to week, if the rent is weekly; and from day to day, if the rent is to be paid daily. However, even though a monthly rent is paid, and no period for the lease has been set, the courts may fix a longer term for the lease after the lessee has occupied the premises for over one year. If the rent is weekly, the courts may likewise determine a longer period after the lessee has been in possession for over six months. In case of daily rent, the courts may also

fix a longer period after the lessee has stayed in the place for over one month. Petitioner cited Yek Seng Co. vs. Court of Appeals, where this Court held that: [c]onformably, we hold that as the rental in the case at bar was paid monthly and the term was not expressly agreed upon, the lease was understood under Article 1687 of the Civil Code to be terminable from month to month.
[9] [10]

Petitioner insists that the subject contract of lease did not provide for a definite period hence it falls under the ambit of Art. 1687 of the NCC, making the agreement effective on a month-to-month basis since rental payments are made monthly. The Court of Appeals opined otherwise. It reasoned that the application of Art. 1687 in this case is misplaced because when there is a fixed period for the lease, whether the period be definite or indefinite or when the period of the lease is expressly left to the will of the lessee, Art. 1687 will not apply , citing Eleizagui vs. Manila Lawn Tennis Club, 2 Phil 309.
[13]

On the premise that the lease contract was effective on a monthly basis, petitioner claims that the contract of lease with respondent has been terminated, without being renewed, after respondents refused to comply with the increased monthly rate of P3,500.00 and that this refusal even after receiving a notice of termination and a final demand letter is a valid cause of action for unlawful detainer.
[11]

We agree with the ruling of the Court of Appeals. Art. 1687 finds no application in the case at bar. The lease contract between petitioner and respondents is with a period subject to a resolutory condition. The wording of the agreement is unequivocal: The lease period xxx shall continue for an indefinite period provided the lessee is up-to-date in the payment of his monthly rentals. The condition imposed in order that the contract shall remain effective is that the lessee is upto-date in his monthly payments. It is undisputed that the lessees Gutierrez and Co Tong religiously paid their rent at the increasing rate of 20% annually. The agreement between the lessor and the lessees are therefore still subsisting, with the original terms and conditions agreed upon, when the petitioner unilaterally increased the rental payment to more than 20% or P3,500.00 a month. Petitioner cites Puahay Lao vs. Suarez where it said that the Court in the earlier case of Singson v. Baldomar, rejected the theory that a lease could continue for an indefinite term so long as the lessee paid the rent, because then its continuance and fulfillment would depend solely on the free and uncontrolled choice of the tenant between continuing to pay rentals or not, thereby depriving the lessors of all say in the matter as it would be contrary to the
[14] [15]

As to the second issue, petitioner argues that the Court of Appeals erred in ruling that their allegation of respondents non-payment of rentals in the complaint for ejectment was false. Petitioner insists that when it filed the case of ejectment, private respondents had failed and refused to pay the demanded P3,500.00 monthly rentals. Thus, petitioner correctly alleged non-payment of this rental as another ground for ejectment aside from the basic allegation of termination of the lease contract. Petitioner also contends that the issue of whether or not the P3,500.00 monthly rental should be the correct rental to be paid by the private respondents cannot properly be determined in the consignation case earlier filed by private respondents since the issue can be resolved only in the ejectment case.
[12]

Crucial in the resolution of this case is the construction of the lease agreement, particularly the portion on the period of lease, which reads: PERIOD OF LEASE- The lease period shall be effective as of February 1, 1985 and shall continue for an indefinite period provided the lessee is up-to-date in the payment of his monthly rentals. xxx

spirit of Article 1256 of the Old Civil Code, now Article 1308 of the New Civil Code of the Philippines which provides that validity or compliance of contracts can not be left to the will of one of the parties.
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upheld the validity of a contract provision in favor of the lessee: xxx Article 1308 of the Civil Code expresses what is known in law as the principle of mutuality of contracts. xxx This binding effect of a contract on both parties is based on the principle that the obligations arising from contracts have the force of law between the contracting parties, and there must be mutuality between them based essentially on their equality under which it is repugnant to have one party bound by the contract while leaving the other free therefrom. The ultimate purpose is to render void a contract containing a condition which makes its fulfillment dependent solely upon the uncontrolled will of one of the contracting parties. An express agreement which gives the lessee the sole option to renew the lease is frequent and subject to statutory restrictions, valid and binding on the parties. This option, which is provided in the same lease agreement, is fundamentally part of the consideration in the contract and is no different from any other provision of the lease carrying an undertaking on the part of the lessor to act conditioned on the performance by the lessee. xxx The fact that such option is binding only on the lessor and can be exercised only by the lessee does not render it void for lack of mutuality. After all, the lessor is free to give or not to give the option to the lessee. And while the lessee has a right to elect whether to continue with the lease or not, once he exercises his option to continue and the lessor accepts, both parties are thereafter bound by the new lease agreement. Their rights and obligations become mutually fixed, and the lessee is entitled to retain possession of the property for the duration of the new lease, and the lessor may hold him liable for the rent therefor. The lessee cannot thereafter escape liability even if he should subsequently decide to abandon the premises. Mutuality obtains in such a contract and equality exists between the lessor and the lessee since they remain with the same faculties in respect to fulfillment.[22] (Emphasis supplied) As correctly ruled by the MTC in its decision, the grant of benefit of the period in

A review of the Puahay and Singson cases shows that the factual backgrounds therein are not the same as in the case at bar. In those cases, the lessees were actually in arrears with their rental payments. The Court, in the Puahay case, ruled that the lessor had the right to terminate the lease under par. 3, Art. 1673 of the Civil Code, declaring that the lessor may judicially eject the lessee for violation of any of the conditions agreed upon in the contract. In the case of Singson, the lease contract was expressly on a month-tomonth basis.
[17]

The contention of the petitioner that a provision in a contract that the lease period shall subsist for an indefinite period provided the lessee is up-to-date in the payment of his monthly rentals is contrary to Art. 1308 of the Civil Code is not plausible. As expounded by the Court in the case of Philippine Banking Corporation vs. Lui She:
[18]

We have had occasion to delineate the scope and application of article 1308 in the early case of Taylor v. Uy Tieng Piao.[19] We said in that case: Article 1256 [now art. 1308] of the Civil Code in our opinion creates no impediment to the insertion in a contract for personal service of a resolutory condition permitting the cancellation of the contract by one of the parties. Such a stipulation, as can be readily seen, does not make either the validity or the fulfillment of the contract dependent upon the will of the party to whom is conceded the privilege of cancellation; for where the contracting parties have agreed that such option shall exist, the exercise of the option is as much in the fulfillment of the contract as any other act which may have been the subject of agreement. xxx.[20] Also held in the recent case of Allied Banking Corp. vs. CA[21] where this Court

favor of the lessee was given in exchange for no less than an automatic 20% yearly increase in monthly rentals. This additional condition was not present in the Puahay and Singson cases. Moreover, the express provision in the lease agreement of the parties that violation of any of the terms and conditions of the contract shall be sufficient ground for termination thereof by the lessor, removes the contract from the application of Article 1308. Lastly, after having the lessees believe that their lease contract is one with an indefinite period subject only to prompt payment of the monthly rentals by the lessees, we agree with private respondents that the lessor is estopped from claiming otherwise.[23] In the case of Opulencia vs. Court of Appeals,[24] this Court held that petitioner is estopped from backing out of her representations in the contract with respondent, that is, she may not renege on her own acts and representations, to the prejudice of the respondents who relied on them. We have held in a long line of cases that neither the law nor the courts will extricate a party from an unwise or undesirable contract he or she entered into with all the required formalities and will full awareness of its consequences.[25] Anent the second issue, we likewise hold that the contention of petitioner is without merit. The Court of Appeals found that the petitioners allegation of respondents nonpayment is false. This is a finding of fact which we respect and uphold, absent any showing of arbitrariness or grave abuse on the part of the court. Furthermore, the statement of petitioner that the correct amount of rents cannot be considered in a consignation case but only in the ejectment case is misleading because nowhere in the decision of the appellate court did it state otherwise. This second issue is clearly just a futile attempt to overthrow the appellate courts ruling.

Nevertheless, suffice it to be stated that under Article 1258 of the Civil Code which provides: Art. 1258. Consignation shall be made by depositing the things due at the disposal of judicial authority, before whom to tender of payment shall be proved, in a proper case, and the announcement of the consignation in other cases. The consignation having been made, the interested parties shall also be notified thereof. the rationale for consignation is to avoid the performance of an obligation becoming more onerous to the debtor by reason of causes not imputable to him.[26] Whether or not petitioner has a cause of action to eject private respondents from the leased premises due to refusal of the lessees to pay the increased monthly rentals had been duly determined in the ejectment case by the Municipal Trial Court which was correctly upheld by the Court of Appeals. WHEREFORE, finding no error in the assailed decision, we DENY the petition for lack of merit and AFFIRM the decision of the Court of Appeals.
AGRIFINA AQUINTEY, petitioner, vs. SPOUSES FELICIDAD AND RICO TIBONG
FACTS: On May 6, 1999, petitioner Aquintey filed before RTC Baguio,a complaint for sum of money and damages against respondents.Agrifina alleged that Felicidad secured loans from her on severaloccasions at monthly interest rates of 6% to 7%. Despite demands,spouses Tibong failed to pay their outstanding loans of P773,000,00exclusive of interests. However, spouses Tiong alleged that theyhad executed deeds of assignment in favor of Agrifina amountingto P546,459 and that their debtors had executed promissory notesin favor of Agrifina. Spouses insisted that by virtue of thesedocuments, Agrifina became the new collector of their debts.Agrifina was able to collect the total amount of P301,000 fromFelicdads debtors. She tried to collect the balance of Felicidad andwhen the latter reneged on her promise, Agrifina filed a complaintin the office of the barangay for the collection of P773,000.00. Therewas no settlement. RTC favored Agrifina. Court of Appeals affirmedthe decision with modification ordering defendant to pay thebalance of total indebtedness in the amount of P51,341,00 plus 6%per month. ISSUE: Whether or not the deeds of assignment in favor of petitionerhas the effect of payment of the original obligation thatwould partially extinguish the same RULING:

Substitution of the person of the debtor ay be affected bydelegacion. Meaning, the debtor offers, the creditor accepts a thirdperson who consent of the substitution and assumes the obligation.It is necessary that the old debtor be released fro the obligation andthe third person or new debtor takes his place in the relation .Without such release, there is no novation. Court of Appealscorrectly found that the respondents obligation to pay the balanceof their account with petitioner was extinguished pro tanto by thedeeds of credit. CA decision is affirmed with the modification thatthe principal amount of the respondents is P33,841