CALTEX V. IAC Facts ON Jan. 12, 1978, APA inc.

entered into an agreement with Caltex, which states that the petitioner will supply respondents aviation fuel requirements for 2 years (Jan. 1978 to Dec. 1979). Petitioner complied with its obligations. However, APA was unable to pay Caltex a total amount of 4,072,682.00php as of June 30, 1980. To settle this amount, APA executed a Deed of Assignment in July 1980, where it assigned its right to Caltex its receivables or Special Fund Import Payments from the National Treasury, as payment for the outstanding amount. A treasury warrant was issued in Feb. 1981 by the National Treasury in the name of Caltex, for the amount of 5,475,294.oophp. four days after, because the amount paid to Caltex exceeded the outstanding amount, APA requested Caltex to refund the excess amount. However, Caltex declined to return the excess, because the amount (510,550.63 php) covered interest payment and service charges at the rate of 18% pa on the unpaid balance for the period of June 1980 July 1981. Thereafter, APA filed complaint with RTC of Manila to collect the excess amount paid to Caltex. The RTC dismissed the complaint in Nov. 1983. APA appealed to the IAC, which reversed the trial courts decision and ordered Caltex to return the amount prayed for by APA. The IAC also denied petitioners 3 MRs. Instant petition filed with the SC. Issue W/N a Deed of Assignment entered into by the parties constituted Dacion en Pago, as ruled by the IAC, such that the obligation is totally extinguished, hence after the assignment, no interest and service charges could anymore be imposed on APA, so that petitioner was not legally authorized to deduct the amount of 510,550.63 php as interest and service charges on the unpaid accounts of private respondent. Held No. The subsequent acts of the parties clearly show that they did not intend the Deed of Assignment to have the effect of totally extinguishing the obligations of the APA without payment of the applicable interest charges on the overdue amount. IAC decision is reversed and set aside; RTC decision reinstated. Ratio A dation in payment does not necessarily mean total extinguishment of the obligation. The obligation is totally extinguished only when the parties, by agreement, express or implied, or by mere silence, consider the thing as equivalent to the obligation. The Deed of Assignment expressly states that the Refund of Special Fund Payments given to Caltex, is payment for the outstanding obligation PLUS ANY APPLICABLE INTEREST CHARGES ON OVERDUE ACCOUNT AND OTHER AVTURBO FUEL LIFTING AND DELIVERIES THAT ASSIGNOR MAY FROM TIME TO TIME RECEIVE FROM THE ASSIGNEE, AND ASSIGNEE DOE HEREBY ACCEPT SUCH ASSIGNMENT IN ITS FAVOR. Hence, the Deed of Assignment speaks of 3 obligations: 1) the outstanding obligation; 2) the applicable interest charges on overdue accounts; and 3) the other avturbo fuel lifting and deliveries that assignor (APA) may from time to time receive from

assignee (Caltex). If the parties intended for the assignment to cover only the outstanding obligation, they should have so stated, without the other 2 obligations expressly provided therein. In the construction of the instrument where there are several provisions or particulars, such construction as will give effect to all will be adopted. The IAC also failed to take into consideration the subsequent acts of the parties, which show that they did not intend to extinguish the obligation with the Deed of Assignment: 1) after the execution of the Deed, petitioner continued to charge APA with interest on its overdue account up to Jan. 31, 1980. These charges were done every month with no protest from APA; 2) In its letter of Feb. 1981, APA sent to Caltex a letter requesting them to consider to limit the interest charges to Dec. 31, 1980; and, to reduce the 18% interest rate. Finally, the payment of the interest charges on the overdue account is separate from the principal obligation of the overdue amount. The law provides that if the debt produces interest, payment of the principal shall not be deemed to have been made until the interests have been covered. Art. 1248 Unless there is an express stipulation to that effect, the creditor cannot be compelled partially to receive the prestations in which the obligation consists. Neither may the debtor be required to make partial payments. However, when the debt is in part liquidated and in part unliquidated, the creditor may demand and the debtor may effect the payment of the former without waiting for the liquidation of the latter.

FEBTC v Diaz Realty a valid tender of payment, it is necessary that there be a fusion of intent, ability and capability to make good such offer, which mustbe absolute and must cover the amount due. Though a check is not legal tender, and a creditor may validly refuse to accept it if tendered aspayment, one who in fact accepted a fully funded check after the debtors manifestation that it had been given to settle an obligation isestopped from later on denouncing the efficacy of such tender of payment. -sc food for thought Facts: Diaz Realty borrows 720K from PABC at 20%. Diaz Realty assigns the rent it collects from ABC to PABC as payment for its monthlyamortizations. Sometime in 1985, PABC goes under and is placed under receivership by the CB. Sometime in December of 1986, FEBTC buysthe credit of PABC against Diaz. Diaz however only learns about it on March 23 1988. Diaz wastes no time in asking about his balance, which had by 3/23/1988 grown to 1.44M. Diaz tenders the full payment in the form of a fully funded check. FEBTC does no accept the check butinstead asks Diaz to deposit it as a money market instrument in its Davao Branch (Formerly PABC) pending the approval of the Liquidator. OnApril 14 1989, the placement expired and with still no reply from FEBTC re the rate adjustment request, diaz goes to court. Thr RTC ordersDiaz to pay the principal plus the loan but at the reduced interest rate of 12% to be computed from April 18,1985 to Nov 14,1988 and then toeither be reimbursed the excess over 1.45m or to pay the difference if the result be lower than 1.45m. FEBTC is ordered to pay 300k as damages. Also, the cancellation of the mortgage is ordered. On appeal to the CA, the CA upholds that Diaz did in fact make a valid tender ofpayment, but makes the mistake of imposing a different rate of interest than that which

was stipulated working on the mistaken premise that such would be warranted because Diaz was not informed about the sale of his credit to FEBTC. Held: The SC agrees with the lower court that their was in fact a valid tender of payment as Diaz had tendered a fully funded check which had been accepted by FEBTC but subsequently converted into a deposit. Diaz subsequent withdrawal of the amount does not extinguish the fact that he did in fact pay and that in fact the payment had been accepted (albeit converted into a deposit). Anent the interest rate, respondent is entitled to the 20% rate stipulated in the contract which was assigned to it by PABC, but only uptil the time when valid tender of payment was made. The legal rate of interest (12%) shall apply from that point onwards. Until the full and final settlement of the obligation. As for the mortgage, the mortgage should subsist until the full and final settlement of the oblig. Diaz must pay the 1m principal plus interest of 20% p/a from 4/18/85-11/14/88 and 12% afterwards. Anent the other issues, the CA is affirmed.

STATE INVESTMENT HOUSE, INC., petitioner, vs. COURT OF APPEALS, LOMUYON TIMBER INDUSTRIES, INC., AMANDA MALONJAO and RUFINO MALONJAO, Respondents Lomuyon agreed to sell to State Investment Hous Inc. (SIHI) its receivables at a discount . It wasagreed that should a receivable remain unpaid, SIHI may impose a penalty fee of 3% per month. Tosecure the payment of the receivables, the Malonjaos also executed in favor of SIHI a real estatemortgage over their 2 real properties.Lomuyon sold to SIHI for a total consideration of P2,558,073.75. various receivables consisting of checks.When SIHI presented the checks for payment to the drawee banks, the same were dishonored for reasonof insufficient funds except for TCBTC 618821.Defendants failed to pay the value of the checks. Thus, SIHI decided to undertake foreclosure of the realestate mortgage, wherein SIHI was the highest bidder at the public auction for P4,233,874.00.However, SIHI filed another complaint alleging that after deducting the price of the mortgaged properties from defendants outstanding obligation, there remains a deficiency of P2,601,147.62 as of February 14,1983, which as of May 31, 1983 amounted to P2,876,929.27 inclusive of interest and charges.The defendant s contended that SIHIs computation of their outstanding obligation is erroneous, and thatthe interest and charges made by plaintiff is usurious and unconscionable. ISSUE: The fact that the respondent Aquino spouses were not in default did not mean that they, as a matter of law, were relieved from the payment not only of penalty or compensatory interest at the

rate of twenty-four percent (24%)per annum but also of regular or monetary interest of seventeen percent (17%) per annum.

HELD: In the instant case, respondent spouses Aquino, while they are properly regarded as having made a written tender of payment to petitioner State, failed to consign in court the amount due at the time of the maturity of Account No. IF-820904-AA. It follows that their obligation to pay principal-cum-regular or monetary interest under the terms and conditions of Account No. IF-82-0904-AA was not extinguished by such tender of payment alone.

For the respondent spouses to continue in possession of the principal of the loan amounting to P110,000.00 and to continue to use the same after maturity of the loan without payment of regular or monetary interest, would constitute unjust enrichment on the part of the respondent spouses at the expense of petitioner State even though the spouses had not been guilty of mora. It is precisely this unjust enrichment which Article 1256 of the Civil Code prevents by requiring, in addition to tender of payment, the consignation of the amount due in court which amount would thereafter be deposited by the Clerk of Court in a bank and earn interest to which the creditor would be entitled.

WHEREFORE, the Petition for Review is hereby GRANTED

VALARAO V CA

LUISA F. MCLAUGHLIN V. C.A. & RAMON FLORES G.R. No. L-57552 October 10, 1986

Facts: -Petitioner Luisa F. McLaughlin and private respondent Ramon Flores entered into a contract of conditional sale of real property. The deed of conditional sale fixed the total purchase price of P140k payable as follows: a) P26k upon the execution of the deed; and b) the balance of P113k to be paid not later than May 1977. -Parties also agreed that the balance shall bear interest at the rate of 1% per month to commence from December 1976, until the full purchase rice was paid. - In 1979, petitioner filed a complaint for the rescission of the deed of conditional sale due to the failure of private respondent to pay the balance due on May 31, 1977.

-Later, the parties submitted a Compromise Agreement on the basis of which the court rendered a decision. In said compromise agreement, private respondent acknowledged his indebtedness to petitioner under the deed of conditional sale in the amount of P119k, and the parties agreed that said amount would be payable as follows: a) P50k upon signing of the agreement; and b) the balance of P69k in two equal installments on June 1980 and December 1980. As agreed upon, private respondent paid P50k upon the signing of the agreement and in addition he also paid an escalation cost" of P25k. -Under paragraph 3 of the Compromise Agreement, private respondent agreed to pay P1k monthly rental beginning December 1979 until the obligation is duly paid, for the use of the property subject matter of the deed of conditional sale. Paragraphs 6 and 7 of the Compromise Agreement further state, that the parties agree that in the event the defendant (private respondent) fails to comply with his obligations herein provided, the plaintiff (petitioner) will be entitled to the issuance of a writ of execution rescinding the Deed of Conditional Sale of Real Property. In such eventuality, defendant (private respondent) hereby waives his right to appeal to (from) the Order of Rescission and the Writ of Execution which the Court shall render in accordance with the stipulations herein provided for. That in the event of execution all payments made by defendant (private respondent) will be forfeited in favor of the plaintiff (petitioner) as liquidated damages. -In October 1980, petitioner wrote to private respondent demanding that the latter pay the balance of P69k. This demand included not only the installment due on June 1980 but also the installment due on December 1980. Private respondent then sent a letter to petitioner signifying his willingness and intention to pay the full balance of P69k, and at the same time demanding to see the certificate of title of the property and the tax payment receipts. -Private respondent holds that on the first working day of said month, he tendered payment to petitioner but this was refused acceptance by petitioner. Petitioner filed a Motion for Writ of Execution alleging that private respondent failed to pay the installment due on June 1980 and thatsince June 1980 he had failed to pay the monthly rental of P1k. -RTC granted the motion for writ of execution. It denied the motion for reconsideration in an order dated November 21, 1980 and issued the writ of execution on November 25, 1980. In an order dated November 27, 1980, the trial court granted petitioner's ex-parte motion for clarification of the order of execution rescinding the deed of conditional sale of real property. -CA nullified and set aside disputed orders of RTC Issue: WON, the tender of payment made by Flores which was not accepted by McLaughlin made him not liable for further payment of his obligation and the rentals in arrear Ruling: No. According to Article 1256 of the Civil Code of the Philippines, if the creditor to whom tender of payment has been made refuses without just

cause to accept it, the debtor shall be released from responsibility by the consignation of the thing or sum due, and that consignation alone shall produce the same effect in the five cases enumerated therein; Article 1257 provides that in order that the consignation of the thing (or sum) due may release the obligor, it must first be announced to the persons interested in the fulfillment of the obligation; and Article 1258 provides that consignation shall be made by depositing the thing (or sum) due at the disposal of the judicial authority and that the interested parties shall also be notified thereof. Tender of payment must be distinguished from consignation. Tender is the antecedent of consignation, that is, an act preparatory to the consignation, which is the principal, and from which are derived the immediate consequences which the debtor desires or seeks to obtain. Tender of payment may be extrajudicial, while consignation is necessarily judicial, and the priority of the first is the attempt to make a private settlement before proceeding to the solemnities of consignation In the case at bar, although as above stated private respondent had preserved his rights as a vendee in the contract of conditional sale of real property by a timely valid tender of payment of the balance of his obligation which was not accepted by petitioner, he remains liable for the payment of his obligation because of his failure to deposit the amount due with the court. Inasmuch as petitioner did not accept the aforesaid amount, it was incumbent on private respondent to deposit the same with the court in order to be released from responsibility. Since private respondent did not deposit said amount with the court, his obligation was not paid and he is liable in addition for the payment of the monthly rental of Pl,000.00 from January 1, 1981 until said obligation is duly paid, in accordance with paragraph 3 of the Compromise Agreement. Upon full payment of the amount of P76,059.71 and the rentals in arrears, private respondent shall be entitled to a deed of absolute sale in his favor of the real property in question. Legaspi vs Court of Appeals G. R. No. L-45510 / 142 SCRA 81 May 27, 1986 Facts: On February 8, 1971, the plaintiff now petitioner filed a complaint with the CFI of Cavite for reconveyance to enforce his right to repurchase two parcels of land, Lots Nos. 3962 and 3963 of the Imus Estate covered by TCT Nos. T-4388 and T-4389, respectively, which he sold to the defendant, now private respondent, pursuant to a sale with pacto de retro as evidenced by a Deed of Sale with the Right to Repurchase dated October 15, 1965 and marked as Exhibit A. Bernardo B. Legaspi is the registered owner of two parcels of land which he sold to his son-in-law, Leonardo B. Salcedo on October 15, 1965 for the sum of Php25,000 with the right to repurchase the same within 5 years from the execution of the deed of sale. Before the expiry date of the repurchase period Legaspi offered and tendered to Salcedo the amount of Php25,000 for the repurchase of the two

parcels of land; that the tender of payment was refused by Salcedo on the ground that the repurchase price should have been Php42,250 due to extraordinary inflation. Salcedo, furthermore; refused to convey the property to Legaspi. As a result of his refusal, Legaspi consigned with the CFI of Cavite the amount of Php25,000. Issue: Whether or not the prior offer and tender of payment of the amount of Php25,000 is valid as to warrant reconveyance of the parcels of land. Held: YES. Tender of payment is the manifestation made by the debtor to the creditor of his desire to comply with his obligation, with the offer of immediate performance. Generally, it is an act preparatory to consignation as an attempt to make a private settlement before proceeding to the solemnities of consignation. Consignation is the act of depositing the thing due with the court or judicial authorities whenever the creditor cannot accept or refuses to accept payment and it generally requires a prior tender of payment. In instances where no debt is due and owing, consignation is not proper. In the previous cases of Villegas v. Capistrano, 9 Phil. 416; Rosales v. Reyes, et al., 25 Phil. 495; Paez, et al. v. Magno, 46 O.G. p. 5425, the Supreme Court held that: Consignation is not required to preserve the right of repurchase as a mere tender of payment is enough if made on time as a basis for an action to compel the vendee a retro to resell the property. Since the case at bar involves the exercise of the right to repurchase, a showing that petitioner made a valid tender of payment is sufficient. It is enough that a sincere or genuine tender of payment and not a mock or deceptive one was made. The fact that he deposited the amount of the repurchase money with the Clerk of Court was simply an additional security for the petitioner. It was not an essential act that had to be performed after tender of payment was refused by the private respondent although it may serve to indicate the veracity of the desire to comply with the obligation. Legaspi offered and tendered the amount to Salcedo within the five year period that he is allowed to repurchase the property. The court held that the argument of Salcedo in refusing the payment of Legaspi within the period allowed for him to repurchase the property is untenable. The case involves the exercise of the right to repurchase and a showing that petitioner made a valid tender of payment is sufficient. It is enough that a sincere or genuine tender of payment and not a mock and deceptive one was made. The fact that he deposited the amount to the clerk of court is merely a security for the petitioner is was not an essential act that had to be performed after the tender of payment was refused although it may serve to indicate the veracity of the desire to comply with the obligation. WHEREFORE, the decision of the former Court of Appeals is hereby REVERSED and SET ASIDE. The decision of the Court of First Instance of Cavite, 7th Judicial District, Branch III is REINSTATED but MODIFIED by the deletion of the award of P20,000.00 for moral, punitive, exemplary and corrective damages. In all other respects, the trial courts decision is AFFIRMED.

OLIMPIA FERNANDEZ Vda. De ZULUETA (Substituted by JOSEFINA, LIBERTY and GREGORIO all surnamed ZULUETA) vs. ISAURO B. OCTAVIANO and AURELIO B. OCTAVIANO G.R. No. L-55350 March 28, 1983 PAYMENT BY CESSION (Article 1255) FACTS In November 1952, Olimpia, the registered owner of 5.5 hectares of rice land, sold the lot to Private Respondent Aurelio, for P8, 600.00. The subject property was then mortgaged to Maximo Gumayan of Leganes, Iloilo in representation of the Olimpias debt to the same. It was stipulated by both the Olimpia and Aurelio that upon the execution of the instrument, Olimpia, her heirs, assigns, executors and administrators, have no more rights, interests or participations over the parcel of land aforementioned. Respondent Aurelio then took possession of the land after the sale. Sometime in May, 1953, Respondent tried to get the certificate of title of the land from Olimpia, for the purpose of registering the deed of absolute sale, but was told that the same was in the possession of Gumayan, who, in turn, informed him that the title had been deposited with the Philippine National Bank. Gumayan continually refused to release the certificate of title until Aurelio would first pay him the pagare receipts representing the debt of Olimpia from the former which amounts were not included in the mortgage obligation of Olimpia, assumed by Aurelio. Relying on the express consent of Olimpia to sell the land and believing that she had renounced the option granted her to repurchase the same, Aurelio negotiated with his own brother, respondent Isauro, for the sale of the property sometime in 1954. Isauro agreed to buy the property, and paid Aurelio P10, 500.00.Olimpia, through her lawyer, desired to "repurchase" the land and wrote Isauro a letter asking him if he was willing to resell the land as she had the money already to buy it back. Respondents refused the offer. Olimpia contends that since 1958, she was looking for Aurelio to tell him of her desire to "repurchase" the property but that Aurelio could nowhere be found. Hence, this suit for recovery of ownership and possession of the land against the Octaviano brothers. ISSUE Whether or not Olimpia may recover ownership and possession of the subject property. HELD NO. The nature of the transaction between Olimpia and Aurelio, from the context of the deed of sale is not a sale with right to repurchase. In this case, there was no reservation made by the vendor, Olimpia. The "option to repurchase" was contained in a subsequent document and was made by the vendee, Aurelio. Thus, it was more of an option to buy or a mere promise on the part of the vendee, Aurelio, to resell the property to the vendor, Olimpia. From the provisions of the deed of sale, there is nothing therein from which it could be inferred that the property was being utilized as security for a debt. The document was labeled as deed of absolute and definite sale with the vendee Aurelio assuming the payment of the mortgage obligations owing by Olimpia to Maximino Gumayan, and specifically stipulating that upon payment of that indebtedness, the transaction became a deed of definite sale. Inasmuch as the contract was neither a sale with right of repurchase, nor an equitable mortgage, neither can itbe successfully alleged that it partook of a "pactum commissorium" and was, therefore, void. "Pactum commissorium "is a stipulation for automatic vesting of title over the security in the creditor in case of the debtor's default. It bears reiterating, however, that Olimpia was not a debtor, but a vendor. She was so described in the document; Olimpia owed nothing to Aurelio, and offered nothing to him as security for payment for any indebtedness.