FIRST DIVISION introduced into the land amounting to P35,000,000.
00, to
G.R. No. 123855 November 20, 2000
NEREO J. PACULDO, petitioner,
vs.
BONIFACIO C. REGALADO, respondent.
DECISION
PARDO, J.:
The case before the Court is an appeal via certiorari seeking
to set aside the decision of the Court of Appeals1 which
affirmed that of the Regional Trial Court, Quezon City, and
the Metropolitan Trial Court, Quezon City ordering the
ejectment of petitioner from the property subject of the
controversy.
The facts are as follows:
On December 27, 1990, petitioner Nereo J. Paculdo
(hereafter Nereo) and respondent Bonifacio C. Regalado
(hereafter Bonifacio) entered into a contract of lease over a
16,478 square meter parcel of land with a wet market
building, located along Don Mariano Marcos Avenue,
Fairview Park, Quezon City. The contract was for twenty five
(25) years, commencing on January 1, 1991 and ending on
December 31, 2015. For the first five (5) years of the
contract beginning December 27, 1990, Nereo would pay a
monthly rental of P450,000.00, payable within the first five
(5) days of each month at Bonifacio’s office, with a 2%
penalty for every month of late payment.
Aside from the above lease, petitioner leased eleven (11)
other property from respondent, ten (10) of which were
located within the Fairview compound, while the eleventh
was located along Quirino Highway, Quezon City. Petitioner
also purchased from respondent eight (8) units of heavy
equipment and vehicles in the aggregate amount of
P1,020,000.00.
On account of petitioner’s failure to pay P361,895.552 in
rental for the month of May, 1992, and the monthly rental
of P450,000.00 for the months of June and July 1992, on July
6, 1992, respondent sent a demand letter to petitioner
demanding payment of the back rentals, and if no payment
was made within fifteen (15) days from receipt of the letter,
it would cause the cancellation of the lease contract.3
Another demand letter followed this on July 17, 1992,
reiterating the demand for payment and for petitioner to
vacate the subject premises.4
Without the knowledge of petitioner, on August 3, 1992,
respondent mortgaged the land subject of the lease
contract, including the improvements which petitioner
Monte de Piedad Savings Bank, as security for a loan in the
amount of P20,000,000.00.5
On August 12, 1992, and on subsequent dates thereafter,
respondent refused to accept petitioner’s daily rental
payments.6
On August 20, 1992, petitioner filed with the Regional Trial
Court, Quezon City an action for injunction and damages
seeking to enjoin respondent from disturbing his possession
of the property subject of the lease contract.7 On the same
day, respondent filed with the Metropolitan Trial Court,
Quezon City a complaint for ejectment against petitioner.
Attached to the complaint were the two (2) demand letters
dated July 6 and July 17, 1992.8
On August 25, 1992, five (5) days after the filing of the
ejectment complaint, respondent moved to withdraw the
complaint on the ground that certain details had been
omitted in the complaint and must be re-computed.
On April 22, 1993, respondent re-filed the ejectment
complaint with the Metropolitan Trial Court, Quezon City.
Computed from August 1992 until March 31, 1993, the
monthly reasonable compensation that petitioner was
liable for was in the total sum of P3,924,000.00.9
On January 31, 1994, the Metropolitan Trial Court, Quezon
City rendered a decision in favor of respondent, the
dispositive portion of which reads:
"WHEREFORE, judgment is hereby rendered in favor of the
plaintiff and against the defendant, as follows:
"1. Ordering the defendant and all persons
claiming right under him to vacate the leased
premises located at Don Mariano Marcos
Avenue, Fairview Park, Quezon City, Metro-
Manila covered by Transfer Certificate of Title
RT-6883 of the Registry of Deeds of Quezon City;
"2. Ordering the defendant to pay the sum of
P527,119.27 representing the unpaid monthly
rentals as of June 30, 1992 plus 2% interest
thereon;
"3. Ordering the defendant to pay the sum of
P450,000.00 a month plus 2% interest thereon
starting July 1992 and every month thereafter
until the defendant and all persons claiming right
under him shall have actually vacated the
premises and surrender possession thereof to
the plaintiff;
 "4. Ordering the defendant to pay the sum of
P5,000,000.00 as and for attorney’s fees; and
"5. Ordering the defendant to pay the costs of
suit.
"SO ORDERED."10
In time, petitioner appealed to the Regional Trial Court,
Quezon City, Branch 220.11
On February 19, 1994, respondent, with the support of fifty
(50) armed security guards forcibly entered the property
and took possession of the wet market building.12
On July 6, 1994, the Regional Trial Court, Quezon City,
Branch 220 rendered a decision affirming in toto the
decision of the Metropolitan Trial Court, to wit:
"WHEREFORE, the appealed decision dated January 31,
1994, for being in accordance with the evidence presented
and the law on the matter, is hereby affirmed in toto.
"Let a writ of execution issue against defendant and his
surety, to answer for the decision of the lower court."13
On the same day, the Regional Trial Court issued a writ of
execution14 whereupon, petitioner vacated the subject
premises voluntarily. By July 12, 1994, petitioner had
completely turned over possession of subject property to
respondent.
Meanwhile, on July 21, 1994, petitioner filed a petition for
review with the Court of Appeals.15 He alleged that he had
paid the amount of P11,478,121.85 for security deposit and
rentals on the wet market building, but respondent,
without his consent, applied portions of the payment to his
other obligations. The vouchers and receipts indicated that
the payments made were for rentals. Thus, at the time of
payment petitioner had declared as to which obligation the
payment must be applied.
On February 10, 1995, the Court of Appeals promulgated its
decision finding that petitioner impliedly consented to
respondent’s application of payment to his other
obligations and, thus, dismissed the petition for lack of
merit.16
On March 3, 1995, petitioner filed a motion for
reconsideration;17 however, on February 9, 1996 the Court
of Appeals denied the motion.18
Hence, this appeal.19
At issue is whether petitioner was truly in arrears in the
payment of rentals on the subject property at the time of
the filing of the complaint for ejectment.
As found by the Metropolitan Trial Court and Regional Trial
Court, petitioner made a total payment of P10,949,447.18,
to respondent as of July 2, 1992.
If the payment made by respondent applied to petitioner’s
other obligations is set aside, and the amount petitioner
paid be applied purely to the rentals on the Fairview wet
market building, there would be an excess payment of
P1,049,447.18 as of July 2, 1992. The computation in such
case would be as follows:
Amount paid as of July 2,
P10,949,447.18
1992
Less:
Monthly rent from
January 1991-July 1992
P450,000.00 x 19 months P 8,550,000.00
Less:
Security deposit P 1,350,000.00
==============
Excess amount paid P 1,049,447.18
In the letter dated November 19, 1991, respondent
proposed that petitioner’s security deposit for the Quirino
lot, in the amount of P643,276.48, be applied as partial
payment for his account under the subject lot as well as to
real estate taxes on the Quirino lot.20 Petitioner interposed
no objection, as evidenced by his signature signifying his
conformity thereto.
In an earlier letter, dated July 15, 1991,21 respondent
informed petitioner that the payment was to be applied not
only to petitioner’s accounts under both the subject land
and the Quirino lot but also to heavy equipment bought by
the latter from respondent. Petitioner claimed that the
amount applied as payment for the heavy equipment was
critical because it was equivalent to more than two (2)
months rental of the subject property, which was the basis
for the ejectment case in the Metropolitan Trial Court.
The controversy stemmed from the fact that unlike the
November 19, 1991 letter, which bore a conformity portion
with petitioner’s signature, the July 15, 1991 letter did not
contain the signature of petitioner.
In nevertheless concluding that petitioner gave his consent
thereto, the Court of Appeals upheld both the lower court’s
and trial court’s findings that petitioner received the second
letter and its attachment and he raised no objection
thereto.
In other words, would petitioner’s failure to object to the
letter of July 15, 1991 and its proposed application of
payments amount to consent to such application?
Petitioner submits that his silence is not consent but is in
fact a rejection.
The right to specify which among his various obligations to
the same creditor is to be satisfied first rests with the
debtor,22 as provided by law, to wit:
"Article 1252. He who has various debts of the same kind in
favor of one and the same creditor, may declare at the time
of making the payment, to which of them the same must be
applied. Unless the parties so stipulate, or when the
application of payment is made by the party for whose
benefit the term has been constituted, application shall not
be made as to debts which are not yet due.
If the debtor accepts from the creditor a receipt in which an
application of the payment is made, the former cannot
complain of the same, unless there is a cause for
invalidating the contract."23
At the time petitioner made the payments, he made it clear
to respondent that they were to be applied to his rental
obligations on the Fairview wet market property. Though he
entered into various contracts and obligations with
respondent, including a lease contract over eleven (11)
property in Quezon City and sale of eight (8) heavy
equipment, all the payments made, about P11, 000,000.00,
were to be applied to rental and security deposit on the
Fairview wet market property.
Respondent Regalado argues that assuming that petitioner
expressed at the time of payment which among his
obligations were to be satisfied first, petitioner is estopped
by his assent to the application made by the respondent.
This assent is inferred from the silence of petitioner on the
July 15, 1991 letter24 containing a statement of the
application of payments, which was different from the
application made by petitioner. A big chunk of the amount
paid by petitioner went into the satisfaction of an obligation
which was not yet due and demandable--the payment of
the eight (8) heavy equipment amounting to about
P1,020,000.00.
The statement of account prepared by respondent was not
the receipt contemplated under the law. The receipt is the
evidence of payment executed at the time of payment, and
not the statement of account executed several days
thereafter.
There was no clear assent by petitioner to the change in the
manner of application of payment.1âwphi1 The petitioner’s
silence as regards the application of payment by
respondent cannot mean that he consented thereto. There
was no meeting of the minds. Though an offer may be
made, the acceptance of such offer must be unconditional
and unbounded in order that concurrence can give rise to a
perfected contract.25 Hence, petitioner could not be in
estoppel.
Assuming arguendo that, as alleged by respondent,
petitioner did not, at the time the payments were made,
choose the obligation to be satisfied first, respondent may
exercise the right to apply the payments to the other
obligations of petitioner. But this is subject to the condition
that the petitioner must give his consent. Petitioner’s
silence is not tantamount to consent. The consent must be
clear and definite.
Under the law, if the debtor did not declare at the time he
made the payment to which of his debts with the creditor
the payment is to be applied, the law provided the
guideline--no payment is to be made to a debt that is not
yet due26 and the payment has to be applied first to the debt
most onerous to the debtor.27
In the instant case, the purchase price of the eight (8) heavy
equipment was not yet due at the time the payment was
made, for there was no date set for such payment. Neither
was there a demand by the creditor to make the obligation
to pay the purchase price due and demandable.28 Hence,
the application made by respondent is contrary to the
provisions of the law.
The lease over the Fairview wet market property is the most
onerous among all the obligations of petitioner to
respondent. It was established that the wet market is a
going-concern and that petitioner has invested about
P35,000,000.00, in the form of improvements, on the
property. Hence, petitioner would stand to lose more if the
lease would be rescinded, than if the contract of sale of
heavy equipment would not proceed.
The decision of the Court of Appeals was based on a
misapprehension of the facts and the law on the application
of payment. Hence, the ejectment case subject of the
instant petition must be dismissed, without prejudice to the
determination and settlement of the money claims of the
parties inter se.
WHEREFORE, the Court GRANTS the petition. The Court
REVERSES and SETS ASIDE the decision of the Court of
Appeals in CA-G. R. SP No. 34634.
ACCORDINGLY, the Court REVERSES the decision of the
Regional Trial Court, Quezon City, Branch 220 in Civil Case
No. 94-20813, and dismisses the complaint filed with the
Metropolitan Trial Court, Quezon City, Branch 36 in Civil
Case No. MTC XXXVI-7089.

No costs.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Ynares-

Santiago, JJ., concur.
 SECOND DIVISION
[G.R. No. 72110. November 16, 1990.]
ROMAN CATHOLIC BISHOP OF MALOLOS, INC., Petitioner,
v. INTERMEDIATE APPELLATE COURT, and ROBES-
FRANCISCO REALTY AND DEVELOPMENT CORPORATION,
Respondents.
Rodrigo Law Office for Petitioner.
Antonio P. Barredo and Napoleon M. Malinas for Private
Respondent.
SYLLABUS
1. CIVIL LAW; CONTRACTS; TENDER OF PAYMENT; CANNOT
BE PRESUMED BY MERE INFERENCE FROM SURROUNDING
CIRCUMSTANCES. — We agree with the petitioner that a
finding that the private respondent had sufficient available
funds on or before the grace period for the payment of its
obligation does not constitute proof of tender of payment
by the latter for its obligation within the said period.
Tender of payment involves a positive and unconditional
act by the obligor of offering legal tender currency as
payment to the obligee for the former’s obligation and
demanding that the latter accept the same. Thus, tender
of payment cannot be presumed by a mere inference from
surrounding circumstances. At most, sufficiency of
available funds is only affirmative of the capacity or ability
of the obligor to fulfill his part of the bargain. But whether
or not the obligor avails himself of such funds to settle his
outstanding account remains to be proven by independent
and credible evidence. Tender of payment presupposes
not only that the obligor is able, ready, and willing, but
more so, in the act of performing his obligation. Ab posse
ad actu non vale illatio. "A proof that an act could have
been done is no proof that it was actually done." The
respondent court was therefore in error to have concluded
from the sheer proof of sufficient available funds on the
part of the private respondent to meet more than the total
obligation within the grace period, the alleged truth of
tender of payment. The same is a classic case of non-
sequitur.
2. ID.; ID.; ID.; NOT VALIDLY CONSTITUTED BY PAYMENT
OF A CERTIFIED PERSONAL CHECK. — With regard to the
third issue, granting arguendo that we would rule
affirmatively on the two preceding issues, the case of the
private respondent still can not succeed in view of the fact
that the latter used a certified personal check which is not
legal tender nor the currency stipulated, and therefore,
can not constitute valid tender of payment. The first
paragraph of Art. 1249 of the Civil Code provides that "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 Court en banc in the recent case of
Philippine Airlines v. Court of Appeals, (Promulgated on
January 30, 1990) G.R. No. L-49188, stated thus: 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 (citing Sec. 189, Act 2031 on
Negs. Insts.; Art. 1249, Civil Code; Bryan London Co. v.
American Bank, 7 Phil. 255; Tan Sunco v. Santos, 9 Phil. 44;
21 R.C.L. 60, 61). A check, whether a manager’s check or
ordinary check, is not legal tender, and an offer of a check
in payment of a debt is not a valid tender of payment and
may be refused receipt by the obligee or creditor. Hence,
where the tender of payment by the private respondent
was not valid for failure to comply with the requisite
payment in legal tender or currency stipulated within the
grace period and as such, was validly refused receipt by
the petitioner, the subsequent consignation did not
operate to discharge the former from its obligation to the
latter.
3. ID.; ID.; OBLIGATIONS ARISING THEREFROM HAVE THE
FORCE OF LAW BETWEEN THE CONTRACTING PARTIES. —
Art. 1159 of the Civil Code of the Philippines provides that
"obligations arising from contracts have the force of law
between the contracting parties and should be complied
with in good faith." And unless the stipulations in said
contract are contrary to law, morals, good customs, public
order, or public policy, the same are binding as between
the parties. (Article 1409, Civil Code, par. 1). What the
private respondent should have done if it was indeed
desirous of complying with its obligations would have been
to pay the petitioner within the grace period and obtain a
receipt of such payment duly issued by the latter.
Thereafter, or, allowing a reasonable time, the private
respondent could have demanded from the petitioner the
execution of the necessary documents. In case the
petitioner refused, the private respondent could have had
always resorted to judicial action for the legitimate
enforcement of its right. For the failure of the private
respondent to undertake this more judicious course of
action, it alone shall suffer the consequences.
4. REMEDIAL LAW; APPEAL; FACTUAL FINDINGS OF TRIAL
COURT AS A RULE, SHOULD BE ACCORDED FULL
CONSIDERATION AND RESPECT. — 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 we have earlier mentioned and which
as a rule, 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.
(Natividad del Rosario Vda. de Alberto v. Court of Appeals,
G.R. 29759, May 18, 1989; Matabuena v. Court of Appeals,
G.R. 76542, May 5, 1989).
5. ID.; SUPREME COURT; INSTANCES WHEN THE COURT
HAS TO REVIEW THE EVIDENCE. — While the Court is not a
trier of facts, yet, when the findings of fact of the Court of
Appeals are at variance with those of the trial court,
(Robleza v. Court of Appeals, G.R. 80364, June 28, 1989) or
when the inference of the Court of Appeals from its
findings of fact is manifestly mistaken, (Reynolds Philippine
Corporation v. Court of Appeals, G.R. 38187, January 17,
1987) the Court has to review the evidence in order to
arrive at the correct findings based on the record.
DECISION
SARMIENTO, J.:
This is a petition for review on certiorari which seeks the
reversal and setting aside of the decision 1 of the Court of
Appeals, 2 the dispositive portion of which
reads:chanrobles law library : red
WHEREFORE, the decision appealed from is hereby
reversed and set aside and another one entered for the
plaintiff ordering the defendant-appellee Roman Catholic
Bishop of Malolos, Inc. to accept the balance of P124,000.00
being paid by plaintiff-appellant and thereafter to execute
in favor of Robes-Francisco Realty Corporation a
registerable Deed of Absolute Sale over 20,655 square
meters portion of that parcel of land situated in San Jose del
Monte, Bulacan described in OCT No. 575 (now Transfer
Certificates of Title Nos. T-169493, 169494,169495 and
169496) of the Register of Deeds of Bulacan. In case of
refusal of the defendant to execute the Deed of Final Sale,
the clerk of court is directed to execute the said document.
Without pronouncement as to damages and attorney’s
fees. Costs against the defendant-appellee. 3
The case at bar arose from a complaint filed by the private
respondent, then plaintiff, against the petitioner, then
defendant, in the Court of First Instance (now Regional Trial
Court) of Bulacan, at Sta. Maria, Bulacan, 4 for specific
performance with damages, based on a contract 5 executed
on July 7, 1971.
The property subject matter of the contract consists of a
20,655 sq.m.-portion, out of the 30,655 sq.m. total area, of
a parcel of land covered by Original Certificate of Title No.
575 of the Province of Bulacan, issued and registered in the
name of the petitioner which it sold to the private
respondent for and in consideration of
P123,930.00.chanrobles virtual lawlibrary
The crux of the instant controversy lies in the compliance or
non-compliance by the private respondent with the
provision for payment to the petitioner of the principal
balance of P100,000.00 and the accrued interest of
P24,000.00 within the grace period.
A chronological narration of the antecedent facts is as
follows:chanrob1es virtual 1aw library
On July 7, 1971, the subject contract over the land in
question was executed between the petitioner as vendor
and the private respondent through its then president, Mr.
Carlos F. Robes, as vendee, stipulating for a downpayment
of P23,930.00 and the balance of P100,000.00 plus 12%
interest per annum to be paid within four (4) years from
execution of the contract, that is, on or before July 7, 1975.
The contract likewise provides for cancellation, forfeiture of
previous payments, and reconveyance of the land in
question in case the private respondent would fail to
complete payment within the said period.
On March 12, 1973, the 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.
On July 17, 1975, admittedly after the expiration of the
stipulated period for payment, the same Atty. Francisco
wrote the petitioner a formal request 7 that her company
be allowed to pay the principal amount of P100,000.00 in
three (3) equal installments of six (6) months each with the
first installment and the accrued interest of P24,000.00 to
be paid immediately upon approval of the said request.
On July 29, 1975, the petitioner, through its counsel, Atty.
Carmelo Fernandez, formally denied the said request of the
private respondent, but granted the latter a grace period of
five (5) days from the receipt of the denial 8 to pay the total
balance of P124,000.00, otherwise, the provisions of the
contract regarding cancellation, forfeiture, and
reconveyance would be implemented.
On August 4, 1975, the private respondent, through its
president, Atty. Francisco, wrote 9 the counsel of the
petitioner requesting an extension of 30 days from said date
to fully settle its account. The counsel for the petitioner,
Atty. Fernandez, received the said letter on the same day.
Upon consultation with the petitioner in Malolos, Bulacan,
Atty. Fernandez, as instructed, wrote the private
respondent a letter 10 dated August 7, 1975 informing the
latter of the denial of the request for an extension of the
grace period.
Consequently, Atty. Francisco, the private respondent’s
president, wrote a letter 11 dated August 22, 1975, directly
addressed to the petitioner, protesting the alleged refusal
of the latter to accept tender of payment purportedly made
by the former on August 5, 1975, the last day of the grace
period. In the same letter of August 22, 1975, received on
the following day by the petitioner, the private respondent
demanded the execution of a deed of absolute sale over the
land in question and after which it would pay its account in
full, otherwise, judicial action would be resorted
to.chanrobles.com.ph : virtual law library a decision in favor of the petitioner, the dispositive portion
of which reads:chanrobles virtual lawlibrary
On August 27, 1975, the petitioner’s counsel, Atty.
Fernandez, wrote a reply 12 to the private respondent WHEREFORE, finding plaintiff to have failed to make out its
stating the refusal of his client to execute the deed of case, the court hereby declares the subject contract
absolute sale due to its (private respondent’s) failure to pay cancelled and plaintiff’s downpayment of P23,930.00
its full obligation. Moreover, the petitioner denied that the forfeited in favor of defendant, and hereby dismisses the
private respondent had made any tender of payment complaint; and on the counterclaim, the Court orders
whatsoever within the grace period. In view of this alleged plaintiff to pay defendant.
breach of contract, the petitioner cancelled the contract
and considered all previous payments forfeited and the (1) Attorney’s fees of P10,000.00;
land as ipso facto reconveyed.
(2) Litigation expenses of P2,000.00; and
From a perusal of the foregoing facts, we find that both the
contending parties have conflicting versions on the main (3) Judicial costs.
question of tender of payment.
SO ORDERED. 14
The trial court, in its ratiocination, preferred not to give
credence to the evidence presented by the private Not satisfied with the said decision, the private respondent
Respondent. According to the trial court:chanrob1es virtual appealed to the respondent Intermediate Appellate Court
1aw library (now Court of Appeals) assigning as reversible errors,
among others, the findings of the trial court that the
. . . What made Atty. Francisco suddenly decide to pay available funds of the private respondent were insufficient
plaintiff’s obligation on August 5, 1975, go to defendant’s and that the latter did not effect a valid tender of payment
office at Malolos, and there tender her payment, when her and consignation.
request of August 4, 1975 had not yet been acted upon until
August 7, 1975? If Atty. Francisco had decided to pay the The respondent court, in reversing the decision of the trial
obligation and had available funds for the purpose on court, essentially relies on the following
August 5, 1975, then there would have been no need for findings:chanrob1es virtual 1aw library
her to write defendant on August 4, 1975 to request an
extension of time. Indeed, Atty. Francisco’s claim that she . . . We are convinced from the testimony of Atty. Adalia
made a tender of payment on August 5, 1975 — such Francisco and her witnesses that in behalf of the plaintiff-
alleged act, considered in relation to the circumstances appellant they have a total available sum of P364,840.00 at
both antecedent and subsequent thereto, being not in her and at the plaintiff’s disposal on or before August 4,
accord with the normal pattern of human conduct — is not 1975 to answer for the obligation of the plaintiff-appellant.
worthy of credence. 13 It was not correct for the trial court to conclude that the
plaintiff-appellant had only about P64,840.00 in savings
The trial court likewise noted the inconsistency in the deposit on or before August 5, 1975, a sum not enough to
testimony of Atty. Francisco, president of the private pay the outstanding account of P124,000.00. The plaintiff-
respondent, who earlier testified that a certain Mila appellant, through Atty. Francisco proved and the trial court
Policarpio accompanied her on August 5, 1975 to the office even acknowledged that Atty. Adalia Francisco had about
of the petitioner. Another person, however, named Aurora P300,000.00 in money market placement. The error of the
Oracion, was presented to testify as the secretary- trial court has in concluding that the money market
companion of Atty. Francisco on that same occasion. placement of P300,000.00 was out of reach of Atty.
Francisco. But as testified to by Mr. Catalino Estrella, a
Furthermore, the trial court considered as fatal the failure representative of the Insular Bank of Asia and America, Atty.
of Atty. Francisco to present in court the certified personal Francisco could withdraw anytime her money market
check allegedly tendered as payment or, at least, its xerox placement and place it at her disposal, thus proving her
copy, or even bank records thereof. Finally, the trial court financial capability of meeting more than the whole of
found that the private respondent had insufficient funds P124,000.00 then due per contract. This situation, We
available to fulfill the entire obligation considering that the believe, proves the truth that Atty. Francisco apprehensive
latter, through its president, Atty. Francisco, only had a that her request for a 30-day grace period would be denied,
savings account deposit of P64,840.00, and although the she tendered payment on August 4, 1975 which offer
latter had a money-market placement of P300,000.00, the defendant through its representative and counsel refused
same was to mature only after the expiration of the 5-day to receive. . .15 (Emphasis supplied)
grace period.
In other words, the respondent court, finding that the
Based on the above considerations, the trial court rendered private respondent had sufficient available funds, ipso facto
concluded that the latter had tendered payment. Is such
conclusion warranted by the facts proven? The petitioner
submits that it is not.cralawnad
Hence, this petition. 16
The petitioner presents the following issues for
resolution:chanrob1es virtual 1aw library
x x x non-sequitur.chanrobles
A. Is a finding that private respondent had sufficient
available funds on or before the grace period for the
payment of its obligation proof that it (private respondent)
did tender of (sic) payment for its said obligation within said
period?
x x x
B. Is it the legal obligation of the petitioner (as vendor) to
execute a deed of absolute sale in favor of the private
respondent (as vendee) before the latter has actually paid
the complete consideration of the sale — where the
contract between and executed by the parties stipulates —
"That upon complete payment of the agreed consideration
by the herein VENDEE, the VENDOR shall cause the
execution of a Deed of Absolute Sale in favor of the
VENDEE."cralaw virtua1aw library
x x x.
C. Is an offer of a check a valid tender of payment of an
obligation under a contract which stipulates that the
consideration of the sale is in Philippine Currency? 17
We find the petition impressed with merit.
With respect to the first issue, we agree with the petitioner
that a finding that the private respondent had sufficient
available funds on or before the grace period for the
payment of its obligation does not constitute proof of
tender of payment by the latter for its obligation within the
said period. Tender of payment involves a positive and
unconditional act by the obligor of offering legal tender
currency as payment to the obligee for the former’s
obligation and demanding that the latter accept the same.
Thus, tender of payment cannot be presumed by a mere
inference from surrounding circumstances. At most,
sufficiency of available funds is only affirmative of the
capacity or ability of the obligor to fulfill his part of the
bargain. But whether or not the obligor avails himself of
such funds to settle his outstanding account remains to be
proven by independent and credible evidence. Tender of
payment presupposes not only that the obligor is able,
ready, and willing, but more so, in the act of performing his
obligation. Ab posse ad actu non vale illatio. "A proof that
an act could have been done is no proof that it was actually
done."cralaw virtua1aw library
The respondent court was therefore in error to have
concluded from the sheer proof of sufficient available funds
on the part of the private respondent to meet more than
the total obligation within the grace period, the alleged
truth of tender of payment. The same is a classic case of
virtual lawlibrary
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 we have earlier
mentioned and which as a rule, 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. 18
While the Court is not a trier of facts, yet, when the findings
of fact of the Court of Appeals are at variance with those of
the trial court, 19 or when the inference of the Court of
Appeals from its findings of fact is manifestly mistaken, 20
the Court has to review the evidence in order to arrive at
the correct findings based on the record.
Apropos the second issue raised, although admittedly the
documents for the deed of absolute sale had not been
prepared, the subject contract clearly provides that the full
payment by the private respondent is an a priori condition
for the execution of the said documents by the petitioner.
That upon complete payment of the agreed consideration
by the herein VENDEE, the VENDOR shall cause the
execution of a Deed of Absolute Sale in favor of the VENDEE.
21
The private respondent is therefore in estoppel to claim
otherwise as the latter did in the testimony in cross-
examination of its president, Atty. Francisco, which
reads:chanrob1es virtual 1aw library
Q Now, you mentioned, Atty. Francisco, that you wanted
the defendant to execute the final deed of sale before you
would given (sic) the personal certified check in payment of
your balance, is that correct?
A Yes, sir. 22
x x x
Art. 1159 of the Civil Code of the Philippines provides that
"obligations arising from contracts have the force of law
between the contracting parties and should be complied
with in good faith." And unless the stipulations in said
contract are contrary to law, morals, good customs, public
order, or public policy, the same are binding as between the
parties.23 GRANTED and the DECISION of the respondent court
promulgated on April 25, 1985 is hereby SET ASIDE and
What the private respondent should have done if it was ANNULLED and the DECISION of the trial court dated May
indeed desirous of complying with its obligations would 25, 1981 is hereby REINSTATED. Costs against the private
have been to pay the petitioner within the grace period and Respondent.
obtain a receipt of such payment duly issued by the latter.
Thereafter, or, allowing a reasonable time, the private SO ORDERED.
respondent could have demanded from the petitioner the
execution of the necessary documents. In case the Melencio-Herrera, Paras and Regalado, JJ., concur.
petitioner refused, the private respondent could have had
always resorted to judicial action for the legitimate Padilla, J., took no part.
enforcement of its right. For the failure of the private
respondent to undertake this more judicious course of
action, it alone shall suffer the
consequences.chanrobles.com:cralaw:red

With regard to the third issue, granting arguendo that we

would rule affirmatively on the two preceding issues, the
case of the private respondent still can not succeed in view
of the fact that the latter used a certified personal check
which is not legal tender nor the currency stipulated, and
therefore, can not constitute valid tender of payment. The
first paragraph of Art. 1249 of the Civil Code provides that
"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 Court en banc in the recent case of Philippine Airlines

v. Court of Appeals, 24 G.R. No. L-49188, stated
thus:chanrob1es virtual 1aw library

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 (citing Sec. 189, Act 2031
on Negs. Insts.; Art. 1249, Civil Code; Bryan London Co. v.
American Bank, 7 Phil. 255; Tan Sunco v. Santos, 9 Phil. 44;
21 R.C.L. 60, 61). A check, whether a manager’s check or
ordinary check, is not legal tender, and an offer of a check
in payment of a debt is not a valid tender of payment and
may be refused receipt by the obligee or creditor.

Hence, where the tender of payment by the private

respondent was not valid for failure to comply with the
requisite payment in legal tender or currency stipulated
within the grace period and as such, was validly refused
receipt by the petitioner, the subsequent consignation did
not operate to discharge the former from its obligation to
the latter.

In view of the foregoing, the petitioner in the legitimate

exercise of its rights pursuant to the subject contract, did
validly order therefore the cancellation of the said contract,
the forfeiture of the previous payment, and the
reconveyance ipso facto of the land in question.chanrobles
lawlibrary : rednad

WHEREFORE, the petition for review on certiorari is

 FIRST DIVISION
G.R. No. 118599 June 26, 1998
ANICETO 1 M. QUINO, Petitioner, vs. COURT OF APPEALS,
PURIFICACION L. CANSON, EDITHA G. LEONARDO,
CARMELITA L. MORI, JOSEFINA L. BAIS, AIDA L. COLLYER,
ANTONIO G. LEONARDO, RUDOLFO G. LEONARDO,
ROBERTO G. LEONARDO and TERESA L. REGNER, in
substitution for ANTONIO LEONARDO SR., JOSEFA GALAN
and JOSE BITOON, Respondents.
BELLOSILLO, J.:
On 29 October 1974 Bernarda and Rosario Galan sold their
agricultural land with an area of 2.3926 hectares situated in
Basak, Compostela, Cebu, to spouses Antonio Leonardo Sr.
and Josefa Galan for P2,000.00. More than a decade later,
or on 30 October 1986, petitioner Aniceto Quiño filed a
complaint for redemption of the property against the
vendees claiming that he had been instituted as tenant
thereon by the Galans since 1951; consequently, he had the
right to be notified in writing of the owners' intention to sell
the property to enable him to exercise his right of
preemption under Sec. 11 of RA No. 3844 2 but that
notwithstanding the Galans had not informed him of the
sale. He claimed that he learned of the transaction only on
1 September 1986 when he found out that the Leornardos
were already the new owners. He therefore prayed that he
be allowed to redeem the property and consigned the
purchase price with the trial court on the same day he filed
his complaint.
Meanwhile, on 4 November 1986 the Leonardos sold the
property to private respondent Jose Bitoon for P30,000.00.
On 12 November 1986 petitioner filed another complaint
against the same spouses for injunction with a prayer for a
restraining order to enjoin his ejectment from the property.
During the pendency of the case, Antonio Leonardo Sr. died.
His childred, private respondents Purificacion L. Canson,
Editha G. Leonardo, Carmelita, L. Mori, Josefina L. Bais, Aida
L. Collyer, Antonio G. Leonardo, Rudolfo G. Leonardo,
Roberto G. Leonardo and Teresa L. Ragner, were
substituted in his stead as co-defendants.
Something thereafter, petitioner received a letter from the
counsel of respondent Bitoon dated 24 November 1986
notifying him of the transfer of ownership of the land to his
client. As no supporting document was attached to the
letter to bolster counsel's claim, petitioner went to the
Notarial Division of the Capitol Building and obtained on 2
March 1987 a copy of the pertinent deed of sale between
spouses Leonardo and respondent Bitoon.
On 27 July 1987 petitioner filed an amended complaint
impleading Jose Bitoon as additional defendant. However,
on 8 October 1990 the trial court dismissed the original as
well as the amended complaint after finding that majority
of the esential requisites of tenancy relationship between
the parties did not exist. 3
The Court of Appeals however arrived at an entirely
different evaluation of the evidence. 4 On 5 August 1994 it
held that all the essential requisites for tenancy relationship
were present, and being a tenant petitioner was entitled to
the rights of preemption and redemption under Secs. 11
and 12, respectively, of RA No. 3844. Nevertheless it noted
a stumbling block to petitioner's complete victory thus -
Be that as it may, since the land in question had already
pass(ed) on to defendant-appellee Jose Bitoon, and
plaintiff-appellant's quest against defendant-appellees
spouses Antonio Leonardo and Josefa Galan may be
considered moot and academic under RA 3844, Section 10,
defendant-appelle Jose Bitoon having been subrogated to
the rights and obligations of his predecessors-in-interest,
his obligation under the law to the tenant-plaintiff
continues and subsists, that if he decides to sell the land,
then plaintiff-appellant can still exercise his rights under
the law (Velasquez v. Nery, 211 SCRA 28, emphasis
supplied). 5
The appellate court decreed thus -
1. declaring petitioner as tenant of Bernarda and Rosario
Galan and thereafter of their successor-in-interest,
Antonio Leonardo Sr. substituted by his (nine) children and
in turn of the present owner, respondent Bitoon.;
2. ordering respondent Bitoon to reinstate petitioner as
agricultural tenant and to maintain him in the peaceful
possession and enjoyment of the land tenanted by him;
3. ordering the Clerk of Court of the trial court to return to
petitioner the amount of two thousand pesos (P2,000.00)
which he consigned with the trial court as redemption
price for the land in question, covered by O.R. No.
9802404 J dated 30 October 1986; and,
4. no pronouncement as to costs. 6
On 23 November 1994 respondent Court of Appeals denied
reconsideration. 7
The issue then is whether respondent Court of Appeals was
correct in holding that petitioner could not redeem the
property from respondent Bitoon unless the latter decided
to sell it on the strength of the ruling in Velasquez v. Nery. 8
Petitioner asserts that Velasquez is inapplicable because of
the difference in factual circumstances. In that case, the
sale made by the landowners to a third party was by virtue
of a court order and not as envisioned under Sec. 11 of RA
No. 3844. In other words, the right of the tenants therein to
preemptively purchase wa not violated. Hence the right of
redemption was unavailing to them.
For a better understanding of the controversy, it is essential
to discuss first the statutory right of redemption and
pertinent jurisprudence on the matter.
Sec. 12 of RA No. 3844 as amended by RA No. 6389 provides
-
Sec. 12. Lessee's right Redemption. - In case the
landholding is sold to a third person without the
knowledge of the agricultural lessee, the latter shall have
the right to redeem the same at a reasonable price
consideration . . . . The right of redemption under this
Section may be exercised within one hundred eighty days
from notice in writing which shall be served by the vendee
on all lessees affected and the Deaprtment of Agrarian
Reform upon the registration of the sale . . . . The
redemption price shall be the reasonable price of the land
at the time of the sale . . . .
Simply stated, in the event that the landholding is sold to a
third person without the knowledge of the agricultural
lessee, the latter is granted by law the right to redeem it
within one hundred eighty (180) days from notice in writing
and at a reasonable price and consideration. Petitioner was
not notified of the first and second instances of sale of the
property apparently because all the respondents disputed
petitioner's assertion that he has been a tenant thereon
since 1951. These instances of sale without notification
gave rise to his right to redeem the property as lessee
although no longer from the Leonardos but from its present
owner, respondent Bitoon.
A letter dated 24 November 1986 from the counsel of
respondent Bitoon was received by petitioner informing
him that the ownership of subject property has been
transferred to respondent Bitoon. However the counsel did
not bother to furnish petitioner with the supporting
documents which is why petitioner did not readily believe
what was written in the letter. Petitioner had to proceed to
the Notarial Division of the Capitol Building on 2 March
1987 to secure a copy of the deed of sale between spouses
Leonardo and respondent Bitoon.
The purpose of the written notice required by law its to
remove all uncertainties as to the sale, its terms and its
validity, and to quiet any doubts that the alienation is not
definitive. The law does not prescribe any particular form of
notice, nor any distinctive method for notifying the
redemptioner. So long as the redemptioner is informed in
writing of the sale and the particulars thereof, the period
for redemption will start running. 9 The letter received by
petitioner, being bare, was not such written notice. It failed
to make certain the terms, particulars and validity of the
sale. Rather, only a copy of the deed of sale, in an authentic
form, will satisfy the requirement of the law and serve the
purpose thereof. Thus, it is proper to reckon the period of
redemption from receipt of the authentic document on 2
March 1987. The amended complaint filed on 27 July 1987
is well within the redemption period of one hundred eighty
(180) days.
The preceding discussion leads us to the requirement
concerning reasonable price and consideration. An offer to
redeem to be properly effected can either be through a
formal tender with consignation or by filing a complaint in
court coupled with consignation of the redemption price
within the prescribed period. 10 It must be stressed however
that in making a repurchase it is not sufficient that a person
offering to redeem merely manifest his desire to purchase;
this statement of intention must be accompanied by an
actual and simultaneous tender of payment which
constitutes the legal use or exercise of the right to
repurchase. And the tender of payment must be for the full
amount of the repurchase price, otherwise the offer to
redeem will be held ineffectual. 11 As to what constitutes
reasonable price and consideration, the valuation placed by
the Leonardo spouses and respondent Bitoon themselves
as price of the land must be taken to be such reasonable
price and consideration. 12
Petitioner consigned the amount of P2,000.00 paid by the
Leonardos to the Galans. However when he amended his
complaint by impleading respondent Bitoon, he did not
increase the amount consigned as would have made it
equivalent to P30,000.00, representing payment by the
second vendee. In this regard, petitioner submits that he is
not required to consign the latter amount since that would
put an additional burden on a tenant seeking redemption.
After all, he would be paying whatever amount be finally
determined by the trial court as reasonable price and
consideration.
It is not difficult to discern why the full amount of the
redemption price should be consigned in court. Only by
such means can the buyer become certain that the offer to
redeem is one made seriously and in good faith. A buyer
cannot be expected to entertain an offer of redemption
without the attendant evidence that the redemptioner can,
and is willing to accomplish the repurchase immediately. A
different rule would leave the buyer open to harassment by
speculators or crackpots, as well as to unnecessary
prolongation of the redemption period, contrary to the
policy of the law in fixing a definite term to avoid prolonged
and anti-economic uncertainty as to ownership of the thing
sold. Consignation of the entire price would remove all purchase to sell but he cannot be compelled to buy.
controversies as to the redemptioner's ability to pay at the Supposing the lessee failed to redeem the property and the
proper time. 13 Against such rationale, petitioner's purchaser decided to sell or alienate it without notifying the
submission is rendered insignificant. The amount so former, the property may be redeemed from the
consigned by him falls short short of the requirement of the subsequent transferee because another essence of the
law and leaves the Court with no choice but to rule against right of redemption is that it attaches to a particular
him. landholding by operation of law. 14 The plain import of the
obiter dictum in the Velasquez case is that the Velasquez
With the foregoing ratiocination, it becomes unnecessary to spouses may redeem the property from the PNB as new
dwell on the issue of whether petitioner may redeem the owner, or should PNB decide to sell the property they may
property from respondent Bitoon. Nevertheless, we shall redeem the same from its transferee. Thus, contrary to the
pursue the discussion thereon if only to rectify some points. assertion of petitioner, Velasquez is applicable but not as so
In Velasquez, the Velasquez spouses, in a nutshell, were applied by respondent court; instead, it should have based
agricultural lessees of the property owned by the Nery its main ruling lack of interest to redeem the property at the
spouses and the Lorenzos. Later, the owners filed an action acquisition price paid by respondent Bitoon.
for partition before the trial court. In a compromise
agreement, they agreed to sell the property to Delta Motor Hence we reiterate that, for of petitioner to consign the
Corporation. Having received information about the entire redemption price, there was no valid exercise by him
impending sale, the Velasquez spouses filed an action for of his legal right to redeem.
redemption before the then Court of Agrarian Relations.
Subsequently, the sale materialized. Unfortunately, the WHEREFORE, the petition is DENIED. The decision of
redemption case was dismissed due to lack of interest to respondent Court of Appeals (1) declaring petitioner as
redeem the property at its acquisition price. The appeal tenant of Bernarda and Rosario Galan and thereafter of
before respondent court and the petition before this Court their successor-in-interest, Antonio Leonardo Sr. and Josefa
met the same fate. However, we also noted that the Galan, and in turn, of the present owner respondent Bitoon;
Philippine National Bank (PNB), which was not a party to the (2) ordering respondent Jose Bitoon to reinstate petitioner
case had in the meantime extrajudicially foreclosed the as agricultural tenant and to maintain him in the peaceful
property. By way of obiter dictum we stated - possession and enjoyment of the land tenanted by him; (3)
ordering the Clerk of Court of the trial court to return to
Because of the extra-judicial foreclosure of the mortgage petitioner the amount of of P2,000.00 which he consigned
over the subject by the Philippine National Bank, the as redemption price for the land in question covered by O.R.
present case has become moot and academic with regard No. 9802404 J dated 30 October 1986, with no
to petitioners claim against Delta Motor Corporation. It is pronouncement as to costs, is AFFIRMED.
now the PNB or its subsequent transferees from whom the
petitioners must redeem, if and when PNB decides to sell SO ORDERED.
or alienate the subject property in the future . . . .
Davide, Jr., Vitug, Panganiban and Quisumbing, JJ., concur.
Respondent appellate court must have taken out of context
our statement therein when the former ruled that "if
respondent Bitoon decides to sell the land then petitioner
can still exercise his rights under the law." The phrase in the
Velasquez case that "if and when PNB decides to sell or
alienate the subject property in the future" logically refers
to "its subsequent transferees" only, and not as a condition
precedent to the exercise of the right of redemption as
what respondent court perceived it to be. To further stress
the matter, the ruling of respondent court overlooks the
essence of redemption provided in the amended Sec. 12 of
RA No. 3844 which, as previously mentioned, grants to the
lessee such right in case the property is sold to a third
person without his knowledge. Since that situation
obtained in Velasquez, the Velasquez spouses had the right
to redeem the property from the PNB as new owner. The
circumstances that the property was sold to a third person
without the knowledge of the lessee provides the source
from which the right of redemption springs. Analyzing this
right, it may be stated that such right works only one way -
in favor of the redemptioner. For he can compel the
 Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-32116 April 2l, 1981
RURAL BANK OF CALOOCAN, INC. and JOSE O. DESIDERIO,
JR., petitioners,
vs.
THE COURT OF APPEALS and MAXIMA CASTRO,
respondents.
DE CASTRO, * J.:
This is a petition for review by way of certiorari of the
decision 1 of the Court of Appeals in CA-G.R. No. 39760-R
entitled "Maxima Castro, plaintiff-appellee, versus
Severino Valencia, et al., defendants; Rural Bank of
Caloocan, Inc., Jose Desiderio, Jr. and Arsenio Reyes,
defendants-appellants," which affirmed in toto the
decision of the Court of First Instance of Manila in favor of
plaintiff- appellee, the herein private respondent Maxima
Castro.
On December 7, 1959, respondent Maxima Castro,
accompanied by Severino Valencia, went to the Rural Bank
of Caloocan to apply for an industrial loan. It was Severino
Valencia who arranged everything about the loan with the
bank and who supplied to the latter the personal data
required for Castro's loan application. On December 11,
1959, after the bank approved the loan for the amount of
P3,000.00, Castro, accompanied by the Valencia spouses,
signed a promissory note corresponding to her loan in
favor of the bank.
On the same day, December 11, 1959, the Valencia
spouses obtained from the bank an equal amount of loan
for P3,000.00. They signed a promissory note (Exhibit "2")
corresponding to their loan in favor of the bank and had
Castro affixed thereon her signature as co-maker.
The two loans were secured by a real-estate mortgage
(Exhibit "6") on Castro's house and lot of 150 square
meters, covered by Transfer Certificate of Title No. 7419 of
the Office of the Register of Deeds of Manila.
On February 13, 1961, the sheriff of Manila, thru Acting
Chief Deputy Sheriff Basilio Magsambol, sent a notice of
sheriff's sale addressed to Castro, announcing that her
property covered by T.C.T. No. 7419 would be sold at
public auction on March 10, 1961 to satisfy the obligation
covering the two promissory notes plus interest and
attorney's fees.
Upon request by Castro and the Valencias and with
conformity of the bank, the auction sale that was
scheduled for March 10, 1961 was postponed for April 10,
1961. But when April 10, 1961 was subsequently declared
a special holiday, the sheriff of Manila sold the property
covered by T.C.T. No. 7419 at a public auction sale that
was held on April 11, 1961, which was the next succeeding
business day following the special holiday.
Castro alleged that it was only when she received the
letter from the Acting Deputy Sheriff on February 13, 1961,
when she learned for the first time that the mortgage
contract (Exhibit "6") which was an encumbrance on her
property was for P6.000.00 and not for P3,000.00 and that
she was made to sign as co-maker of the promissory note
(Exhibit "2") without her being informed of this.
On April 4, 1961, Castro filed a suit denominated "Re: Sum
of Money," against petitioners Bank and Desiderio, the
Spouses Valencia, Basilio Magsambol and Arsenio Reyes as
defendants in Civil Case No. 46698 before the Court of
First Instance of Manila upon the charge, amongst others,
that thru mistake on her part or fraud on the part of
Valencias she was induced to sign as co-maker of a
promissory note (Exhibit "2") and to constitute a mortgage
on her house and lot to secure the questioned note. At the
time of filing her complaint, respondent Castro deposited
the amount of P3,383.00 with the court a quo in full
payment of her personal loan plus interest.
In her amended complaint, Castro prayed, amongst other,
for the annulment as far as she is concerned of the
promissory note (Exhibit "2") and mortgage (Exhibit "6")
insofar as it exceeds P3,000.00; for the discharge of her
personal obligation with the bank by reason of a deposit of
P3,383.00 with the court a quo upon the filing of her
complaint; for the annulment of the foreclosure sale of her
property covered by T.C.T. No. 7419 in favor of Arsenio
Reyes; and for the award in her favor of attorney's fees,
damages and cost.
In their answers, petitioners interposed counterclaims and
prayed for the dismissal of said complaint, with damages,
attorney's fees and costs. 2
The pertinent facts arrived from the stipulation of facts
entered into by the parties as stated by respondent Court
of Appeals are as follows:
Spawning the present litigation are the
facts contained in the following
stipulation of facts submitted by the
parties themselves:
1. That the capacity and addresses of evidence they may desire on the
all the parties in this case are admitted circumstances regarding the execution
. of the above-mentioned documents.

2. That the plaintiff was the registered
owner of a residential house and lot
located at Nos. 1268-1270 Carola
Street, Sampaloc, Manila, containing
an area of one hundred fifty (150)
square meters, more or less, covered
by T.C.T. No. 7419 of the Office of the
Register of Deeds of Manila;
3. That the signatures of the plaintiff
appearing on the following documents
are genuine:
a) Application for Industrial Loan with
the Rural Bank of Caloocan, dated
December 7, 1959 in the amount of
P3,000.00 attached as Annex A of this
partial stipulation of facts;
b) Promissory Note dated December
11, 1959 signed by the plaintiff in favor
of the Rural Bank of Caloocan for the
amount of P3,000.00 as per Annex B of
this partial stipulation of facts;
c) Application for Industrial Loan with
the Rural Bank of Caloocan, dated
December 11, 1959, signed only by the
defendants, Severino Valencia and
Catalina Valencia, attached as Annex C,
of this partial stipulation of facts;
4. That the sheriff of Manila, thru
Acting Chief Deputy Sheriff, Basilio
Magsambol, sent a notice of sheriff's
sale, address to the plaintiff, dated
February 13, 1961, announcing that
plaintiff's property covered by TCT No.
7419 of the Register of Deeds of the
City of Manila, would be sold at public
auction on March 10, 1961 to satisfy
the total obligation of P5,728.50, plus
interest, attorney's fees, etc., as
evidenced by the Notice of Sheriff's
Sale and Notice of Extrajudicial Auction
Sale of the Mortgaged property,
attached herewith as Annexes F and F-
1, respectively, of this stipulation of
facts;
5. That upon the request of the
plaintiff and defendants-spouses
Severino Valencia and Catalina
Valencia, and with the conformity of
the Rural Bank of Caloocan, the Sheriff
of Manila postponed the auction sale
scheduled for March 10, 1961 for thirty
(30) days and the sheriff re-set the
auction sale for April 10, 1961;
6. That April 10, 1961 was declared a
special public holiday; (Note: No. 7 is
omitted upon agreement of the
parties.)

d) Promissory note in favor of the Rural

8. That on April 11, 1961, the Sheriff of
Bank of Caloocan, dated December 11,
Manila, sold at public auction plaintiff's
1959 for the amount of P3000.00,
property covered by T.C.T. No. 7419
signed by the spouses Severino
and defendant, Arsenio Reyes, was the
Valencia and Catalina Valencia as
highest bidder and the corresponding
borrowers, and plaintiff Maxima
certificate of sale was issued to him as
Castro, as a co-maker, attached as
per Annex G of this partial stipulation
Annex D of this partial stipulation of
of facts;
facts;

9. That on April 16, 1962, the

e) Real estate mortgage dated
defendant Arsenio Reyes, executed an
December 11, 1959 executed by
Affidavit of Consolidation of
plaintiff Maxima Castro, in favor of the
Ownership, a copy of which is hereto
Rural Bank of Caloocan, to secure the
attached as Annex H of this partial
obligation of P6,000.00 attached
stipulation of facts;
herein as Annex E of this partial
stipulation of facts;
10. That on May 9, 1962, the Rural
Bank of Caloocan Incorporated
All the parties herein expressly
executed the final deed of sale in favor
reserved their right to present any
of the defendant, Arsenio Reyes, in the
 amount of P7,000.00, a copy of which
is attached as Annex I of this partial
stipulation of facts;
11. That the Register of Deeds of the
City of Manila issued the Transfer
Certificate of Title No. 67297 in favor
of the defendant, Arsenio Reyes, in lieu
of Transfer Certificate of Title No. 7419
which was in the name of plaintiff,
Maxima Castro, which was cancelled;
12. That after defendant, Arsenio
Reyes, had consolidated his title to the
property as per T.C.T. No. 67299,
plaintiff filed a notice of lis pendens
with the Register of Deeds of Manila
and the same was annotated in the
back of T.C.T. No. 67299 as per Annex J
of this partial stipulation of facts; and
13. That the parties hereby reserved
their rights to present additional
evidence on matters not covered by
this partial stipulation of facts.
WHEREFORE, it is respectfully prayed
that the foregoing partial stipulation of
facts be approved and admitted by this
Honorable Court.
As for the evidence presented during the trial, We quote
from the decision of the Court of Appeals the statement
thereof, as follows:
In addition to the foregoing stipulation
of facts, plaintiff claims she is a 70-year
old widow who cannot read and write
the English language; that she can
speak the Pampango dialect only; that
she has only finished second grade
(t.s.n., p. 4, December 11, 1964); that
in December 1959, she needed money
in the amount of P3,000.00 to invest in
the business of the defendant spouses
Valencia, who accompanied her to the
defendant bank for the purpose of
securing a loan of P3,000.00; that
while at the defendant bank, an
employee handed to her several forms
already prepared which she was asked
to sign on the places indicated, with no
one explaining to her the nature and
contents of the documents; that she
did not even receive a copy thereof;
that she was given a check in the
amount of P2,882.85 which she
delivered to defendant spouses; that
sometime in February 1961, she
received a letter from the Acting
Deputy Sheriff of Manila, regarding the
extrajudicial foreclosure sale of her
property; that it was then when she
learned for the first time that the
mortgage indebtedness secured by the
mortgage on her property was
P6,000.00 and not P3,000.00; that
upon investigation of her lawyer, it was
found that the papers she was made to
sign were:
(a) Application for a loan of P3,000.00
dated December 7, 1959 (Exh. B-1 and
Exh. 1);
(b) Promissory note dated December
11, 1959 for the said loan of P3,000.00
(Exh- B-2);
(c) Promissory note dated December
11, 1959 for P3,000.00 with the
defendants Valencia spouses as
borrowers and appellee as co-maker
(Exh. B-4 or Exh. 2).
The auction sale set for March 10,
1961 was postponed co April 10, 1961
upon the request of defendant spouses
Valencia who needed more time within
which to pay their loan of P3,000.00
with the defendant bank; plaintiff
claims that when she filed the
complaint she deposited with the Clerk
of Court the sum of P3,383.00 in full
payment of her loan of P3,000.00 with
the defendant bank, plus interest at
the rate of 12% per annum up to April
3, 1961 (Exh. D).
As additional evidence for the
defendant bank, its manager declared
that sometime in December, 1959,
plaintiff was brought to the Office of
the Bank by an employee- (t.s.n., p 4,
January 27, 1966). She wept, there to
inquire if she could get a loan from the
bank. The claims he asked the amount
and the purpose of the loan and the
security to he given and plaintiff said
she would need P3.000.00 to be
invested in a drugstore in which she
was a partner (t.s.n., p. 811. She
offered as security for the loan her lot
and house at Carola St., Sampaloc,
 Manila, which was promptly
investigated by the defendant bank's
inspector. Then a few days later,
plaintiff came back to the bank with
the wife of defendant Valencia A date
was allegedly set for plaintiff and the
defendant spouses for the processing
of their application, but on the day
fixed, plaintiff came without the
defendant spouses. She signed the
application and the other papers
pertinent to the loan after she was
interviewed by the manager of the
defendant. After the application of
plaintiff was made, defendant spouses
had their application for a loan also
prepared and signed (see Exh. 13). In
his interview of plaintiff and defendant
spouses, the manager of the bank was
able to gather that plaintiff was in joint
venture with the defendant spouses
wherein she agreed to invest
P3,000.00 as additional capital in the
laboratory owned by said spouses
(t.s.n., pp. 16-17) 3
The Court of Appeals, upon evaluation of the evidence,
affirmed in toto the decision of the Court of First Instance
of Manila, the dispositive portion of which reads:
FOR ALL THE FOREGOING
CONSIDERATIONS, the Court renders
judgment and:
(1) Declares that the promissory note,
Exhibit '2', is invalid as against plaintiff
herein;
(2) Declares that the contract of
mortgage, Exhibit '6', is null and void,
in so far as the amount thereof
exceeds the sum of P3,000.00
representing the principal obligation of
plaintiff, plus the interest thereon at
12% per annum;
(3) Annuls the extrajudicial foreclosure
sale at public auction of the mortgaged
property held on April 11, 1961, as well
as all the process and actuations made
in pursuance of or in implementation
thereto;
(4) Holds that the total unpaid
obligation of plaintiff to defendant
Rural Bank of Caloocan, Inc., is only the
amount of P3,000.00, plus the interest
thereon at 12% per annum, as of April
3, 1961, and orders that plaintiff's
deposit of P3,383.00 in the Office of
the Clerk of Court be applied to the
payment thereof;
(5) Orders defendant Rural Bank of
Caloocan, Inc. to return to defendant
Arsenio Reyes the purchase price the
latter paid for the mortgaged property
at the public auction, as well as
reimburse him of all the expenses he
has incurred relative to the sale
thereof;
(6) Orders defendants spouses
Severino D. Valencia and Catalina
Valencia to pay defendant Rural Bank
of Caloocan, Inc. the amount of
P3,000.00 plus the corresponding 12%
interest thereon per annum from
December 11, 1960 until fully paid; and
Orders defendants Rural Bank of
Caloocan, Inc., Jose Desiderio, Jr. and
spouses Severino D. Valencia and
Catalina Valencia to pay plaintiff,
jointly and severally, the sum of
P600.00 by way of attorney's fees, as
well as costs.
In view of the conclusion that the court
has thus reached, the counterclaims of
defendant Rural Bank of Caloocan, Inc.,
Jose Desiderio, Jr. and Arsenio Reyes
are hereby dismissed, as a corollary
The Court further denies the motion of
defendant Arsenio Reyes for an Order
requiring Maxima Castro to deposit
rentals filed on November 16, 1963,
resolution of which was held in
abeyance pending final determination
of the case on the merits, also as a
consequence of the conclusion
aforesaid. 4
Petitioners Bank and Jose Desiderio moved for the
reconsideration 5 of respondent court's decision. The
motion having been denied, 6 they now come before this
Court in the instant petition, with the following
Assignment of Errors, to wit:
I
THE COURT OF APPEALS ERRED IN
UPHOLDING THE PARTIAL
ANNULMENT OF THE PROMISSORY
NOTE, EXHIBIT 2, AND THE
MORTGAGE, EXHIBIT 6, INSOFAR AS
THEY AFFECT RESPONDENT MAXIMA
CASTRO VIS-A-VIS PETITIONER BANK
DESPITE THE TOTAL ABSENCE OF
EITHER ALLEGATION IN THE
COMPLAINT OR COMPETENT PROOF IN
THE EVIDENCE OF ANY FRAUD OR
OTHER UNLAWFUL CONDUCT
COMMITTED OR PARTICIPATED IN BY
PETITIONERS IN PROCURING THE
EXECUTION OF SAID CONTRACTS
FROM RESPONDENT CASTRO.
II
THE COURT OF APPEALS ERRED IN
IMPUTING UPON AND CONSIDERING
PREJUDICIALLY AGAINST PETITIONERS,
AS BASIS FOR THE PARTIAL
ANNULMENT OF THE CONTRACTS
AFORESAID ITS FINDING OF FRAUD
PERPETRATED BY THE VALENCIA
SPOUSES UPON RESPONDENT CASTRO
IN UTTER VIOLATION OF THE RES
INTER ALIOS ACTA RULE.
III
THE COURT OF APPEAL ERRED IN NOT
HOLDING THAT, UNDER THE FACTS
FOUND BY IT, RESPONDENT CASTRO IS
UNDER ESTOPPEL TO IMPUGN THE
REGULARITY AND VALIDITY OF HER
QUESTIONED TRANSACTION WITH
PETITIONER BANK.
IV
THE COURT OF APPEALS ERRED IN NOT
FINDING THAT, BETWEEN PETITIONERS
AND RESPONDENT CASTRO, THE
LATTER SHOULD SUFFER THE
CONSEQUENCES OF THE FRAUD
PERPETRATED BY THE VALENCIA
SPOUSES, IN AS MUCH AS IT WAS
THRU RESPONDENT CASTRO'S
NEGLIGENCE OR ACQUIESCENSE IF
NOT ACTUAL CONNIVANCE THAT THE
PERPETRATION OF SAID FRAUD WAS
MADE POSSIBLE.
V they affect Castro and the bank and in declaring that the
THE COURT OF APPEALS ERRED IN
UPHOLDING THE VALIDITY OF THE
DEPOSIT BY RESPONDENT CASTRO OF
P3,383.00 WITH THE COURT BELOW AS
A TENDER AND CONSIGNATION OF
PAYMENT SUFFICIENT TO DISCHARGE
SAID RESPONDENT FROM HER
OBLIGATION WITH PETITIONER BANK.
VI
THE COURT OF APPEALS ERRED IN NOT
DECLARING AS VALID AND BINDING
UPON RESPONDENT CASTRO THE
HOLDING OF THE SALE ON
FORECLOSURE ON THE BUSINESS DAY
NEXT FOLLOWING THE ORIGINALLY
SCHEDULED DATE THEREFOR WHICH
WAS DECLARED A HOLIDAY WITHOUT
NECESSITY OF FURTHER NOTICE
THEREOF.
The issue raised in the first three (3) assignment of errors
is whether or not respondent court correctly affirmed the
lower court in declaring the promissory note (Exhibit 2)
invalid insofar as they affect respondent Castro vis-a-vis
petitioner bank, and the mortgage contract (Exhibit 6)
valid up to the amount of P3,000.00 only.
Respondent court declared that the consent of Castro to
the promissory note (Exhibit 2) where she signed as co-
maker with the Valencias as principal borrowers and her
acquiescence to the mortgage contract (Exhibit 6) where
she encumbered her property to secure the amount of
P6,000.00 was obtained by fraud perpetrated on her by
the Valencias who had abused her confidence, taking
advantage of her old age and ignorance of her financial
need. Respondent court added that "the mandate of fair
play decrees that she should be relieved of her obligation
under the contract" pursuant to Articles 24 7 and 1332 8 of
the Civil Code.
The decision in effect relieved Castro of any liability to the
promissory note (Exhibit 2) and the mortgage contract
(Exhibit 6) was deemed valid up to the amount of
P3,000.00 only which was equivalent to her personal loan
to the bank.
Petitioners argued that since the Valencias were solely
declared in the decision to be responsible for the fraud
against Castro, in the light of the res inter alios acta rule, a
finding of fraud perpetrated by the spouses against Castro
cannot be taken to operate prejudicially against the bank.
Petitioners concluded that respondent court erred in not
giving effect to the promissory note (Exhibit 2) insofar as
mortgage contract (Exhibit 6) was valid only to the extent
of Castro's personal loan of P3,000.00.
The records of the case reveal that respondent court's
findings of fraud against the Valencias is well supported by
evidence. Moreover, the findings of fact by respondent
court in the matter is deemed final. 9 The decision declared
the Valencias solely responsible for the defraudation of
Castro. Petitioners' contention that the decision was silent
regarding the participation of the bank in the fraud is,
therefore, correct.
We cannot agree with the contention of petitioners that
the bank was defrauded by the Valencias. For one, no
claim was made on this in the lower court. For another,
petitioners did not submit proof to support its contention.
At any rate, We observe that while the Valencias
defrauded Castro by making her sign the promissory note
(Exhibit 2) and the mortgage contract (Exhibit 6), they also
misrepresented to the bank Castro's personal
qualifications in order to secure its consent to the loan.
This must be the reason which prompted the bank to
contend that it was defrauded by the Valencias. But to
reiterate, We cannot agree with the contention for
reasons above-mentioned. However, if the contention
deserves any consideration at all, it is in indicating the
admission of petitioners that the bank committed mistake
in giving its consent to the contracts.
Thus, as a result of the fraud upon Castro and the
misrepresentation to the bank inflicted by the Valencias
both Castro and the bank committed mistake in giving
their consents to the contracts. In other words, substantial
mistake vitiated their consents given. For if Castro had
been aware of what she signed and the bank of the true
qualifications of the loan applicants, it is evident that they
would not have given their consents to the contracts.
Pursuant to Article 1342 of the Civil Code which provides:
Art. 1342. Misrepresentation by a third
person does not vitiate consent, unless
such misrepresentation has created
substantial mistake and the same is
mutual.
We cannot declare the promissory note (Exhibit 2) valid
between the bank and Castro and the mortgage contract
(Exhibit 6) binding on Castro beyond the amount of
P3,000.00, for while the contracts may not be invalidated
insofar as they affect the bank and Castro on the ground of
fraud because the bank was not a participant thereto, such
may however be invalidated on the ground of substantial
mistake mutually committed by them as a consequence of
the fraud and misrepresentation inflicted by the Valencias.
Thus, in the case of Hill vs. Veloso, 10 this Court declared
that a contract may be annulled on the ground of vitiated
consent if deceit by a third person, even without
connivance or complicity with one of the contracting
parties, resulted in mutual error on the part of the parties
to the contract.
Petitioners argued that the amended complaint fails to
contain even a general averment of fraud or mistake, and
its mention in the prayer is definitely not a substantial
compliance with the requirement of Section 5, Rule 8 of
the Rules of Court. The records of the case, however, will
show that the amended complaint contained a particular
averment of fraud against the Valencias in full compliance
with the provision of the Rules of Court. Although, the
amended complaint made no mention of mistake being
incurred in by the bank and Castro, such mention is not
essential in order that the promissory note (Exhibit 2) may
be declared of no binding effect between them and the
mortgage (Exhibit 6) valid up to the amount of P3,000.00
only. The reason is that the mistake they mutually suffered
was a mere consequence of the fraud perpetrated by the
Valencias against them. Thus, the fraud particularly
averred in the complaint, having been proven, is deemed
sufficient basis for the declaration of the promissory note
(Exhibit 2) invalid insofar as it affects Castro vis-a-vis the
bank, and the mortgage contract (Exhibit 6) valid only up
to the amount of P3,000.00.
The second issue raised in the fourth assignment of errors
is who between Castro and the bank should suffer the
consequences of the fraud perpetrated by the Valencias.
In attributing to Castro an consequences of the loss,
petitioners argue that it was her negligence or
acquiescence if not her actual connivance that made the
fraud possible.
Petitioners' argument utterly disregards the findings of
respondent Court of Appeals wherein petitioners'
negligence in the contracts has been aptly demonstrated,
to wit:
A witness for the defendant bank,
Rodolfo Desiderio claims he had
subjected the plaintiff-appellee to
several interviews. If this were true
why is it that her age was placed at 61
instead of 70; why was she described
in the application (Exh. B-1-9) as drug
manufacturer when in fact she was
not; why was it placed in the
application that she has income of
P20,000.00 when according to plaintiff-
appellee, she his not even given such
kind of information -the true fact being
that she was being paid P1.20 per picul
of the sugarcane production in her
 hacienda and 500 cavans on the palay
production. 11
From the foregoing, it is evident that the bank was as
much , guilty as Castro was, of negligence in giving its
consent to the contracts. It apparently relied on
representations made by the Valencia spouses when it
should have directly obtained the needed data from Castro
who was the acknowledged owner of the property offered
as collateral. Moreover, considering Castro's personal
circumstances – her lack of education, ignorance and old
age – she cannot be considered utterly neglectful for
having been defrauded. On the contrary, it is demanded of
petitioners to exercise the highest order of care and
prudence in its business dealings with the Valencias
considering that it is engaged in a banking business –a
business affected with public interest. It should have
ascertained Castro's awareness of what she was signing or
made her understand what obligations she was assuming,
considering that she was giving accommodation to,
without any consideration from the Valencia spouses.
Petitioners further argue that Castro's act of holding the
Valencias as her agent led the bank to believe that they
were authorized to speak and bind her. She cannot now be
permitted to deny the authority of the Valencias to act as
her agent for one who clothes another with apparent
authority as her agent is not permitted to deny such
authority.
The authority of the Valencias was only to follow-up
Castro's loan application with the bank. They were not
authorized to borrow for her. This is apparent from the
fact that Castro went to the Bank to sign the promissory
note for her loan of P3,000.00. If her act had been
understood by the Bank to be a grant of an authority to
the Valencia to borrow in her behalf, it should have
required a special power of attorney executed by Castro in
their favor. Since the bank did not, We can rightly assume
that it did not entertain the notion, that the Valencia
spouses were in any manner acting as an agent of Castro.
When the Valencias borrowed from the Bank a personal
loan of P3,000.00 evidenced by a promissory note (Exhibit
2) and mortgaged (Exhibit 6) Castro's property to secure
said loan, the Valencias acted for their own behalf.
Considering however that for the loan in which the
Valencias appeared as principal borrowers, it was the
property of Castro that was being mortgaged to secure
said loan, the Bank should have exercised due care and
prudence by making proper inquiry if Castro's consent to
the mortgage was without any taint or defect. The
possibility of her not knowing that she signed the
promissory note (Exhibit 2) as co-maker with the Valencias
and that her property was mortgaged to secure the two
loans instead of her own personal loan only, in view of her
personal circumstances – ignorance, lack of education and
old age – should have placed the Bank on prudent inquiry
to protect its interest and that of the public it serves. With
the recent occurrence of events that have supposedly
affected adversely our banking system, attributable to
laxity in the conduct of bank business by its officials, the
need of extreme caution and prudence by said officials and
employees in the discharge of their functions cannot be
over-emphasized.
Question is, likewise, raised as to the propriety of
respondent court's decision which declared that Castro's
consignation in court of the amount of P3,383.00 was
validly made. It is contended that the consignation was
made without prior offer or tender of payment to the
Bank, and it therefore, not valid. In holding that there is a
substantial compliance with the provision of Article 1256
of the Civil Code, respondent court considered the fact
that the Bank was holding Castro liable for the sum of
P6,000.00 plus 12% interest per annum, while the amount
consigned was only P3,000.00 plus 12% interest; that at
the time of consignation, the Bank had long foreclosed the
mortgage extrajudicially and the sale of the mortgage
property had already been scheduled for April 10, 1961 for
non-payment of the obligation, and that despite the fact
that the Bank already knew of the deposit made by Castro
because the receipt of the deposit was attached to the
record of the case, said Bank had not made any claim of
such deposit, and that therefore, Castro was right in
thinking that it was futile and useless for her to make
previous offer and tender of payment directly to the Bank
only in the aforesaid amount of P3,000.00 plus 12%
interest. Under the foregoing circumstances, the
consignation made by Castro was valid. if not under the
strict provision of the law, under the more liberal
considerations of equity.
The final issue raised is the validity or invalidity of the
extrajudicial foreclosure sale at public auction of the
mortgaged property that was held on April 11, 1961.
Petitioners contended that the public auction sale that was
held on April 11, 1961 which was the next business day
after the scheduled date of the sale on April 10, 1961, a
special public holiday, was permissible and valid pursuant
to the provisions of Section 31 of the Revised
Administrative Code which ordains:
Pretermission of holiday. – Where the
day, or the last day, for doing any act
required or permitted by law falls on a
holiday, the act may be done on the
next succeeding business day.
Respondent court ruled that the aforesaid sale is null and
void, it not having been carried out in accordance with
Section 9 of Act No. 3135, which provides:
 Section 9. – Notice shall be given by
posting notices of the sale for not less
than twenty days in at least three
public places of the municipality or city
where the property is situated, and if
such property is worth more than four
hundred pesos, such notice shall also
be published once a week for at least
three consecutive weeks in a
newspaper of general circulation in the
municipality or city.

We agree with respondent court. The pretermission of a

holiday applies only "where the day, or the last day for
doing any act required or permitted by law falls on a
holiday," or when the last day of a given period for doing
an act falls on a holiday. It does not apply to a day fixed by
an office or officer of the government for an act to be
done, as distinguished from a period of time within which
an act should be done, which may be on any day within
that specified period. For example, if a party is required by
law to file his answer to a complaint within fifteen (15)
days from receipt of the summons and the last day falls on
a holiday, the last day is deemed moved to the next
succeeding business day. But, if the court fixes the trial of
a case on a certain day but the said date is subsequently
declared a public holiday, the trial thereof is not
automatically transferred to the next succeeding business
day. Since April 10, 1961 was not the day or the last day
set by law for the extrajudicial foreclosure sale, nor the
last day of a given period but a date fixed by the deputy
sheriff, the aforesaid sale cannot legally be made on the
next succeeding business day without the notices of the
sale on that day being posted as prescribed in Section 9,
Act No. 3135.

WHEREFORE, finding no reversible error in the judgment

under review, We affirm the same in toto. No
pronouncement as to cost.

SO ORDERED.

Teehankee (Acting, C.J.) Makasiar, Fernandez, Guerrero

and Melencio-Herrera, JJ., concur.
 FIRST DIVISION
[G.R. No. 44167 : December 19, 1990.]
192 SCRA 388
JULITA FRANCISCO and her husband, HERMENEGILDO
TANKENKO, and RESTITUTO FRANCISCO and his wife,
FELISA ABEJO, Petitioners, vs. CRISPIN V. BAUTISTA, Judge
of the Court of First Instance of Bulacan; FRANCISCA
FRANCISCO, MAXIMA FRANCISCO and FRANCISCO
FRANCISCO, Respondents.
DECISION
NARVASA, J.:
In Civil Case No. 501-V of the then Court of First Instance of
Bulacan (Branch III, Valenzuela) — which was an action for
partition and reconveyance instituted by Maxima,
Francisca, and Francisco, all surnamed Francisco, together
with their respective spouses, against Julita, Romeo,
Lorenza and Restituto, all also surnamed Francisco, and
their respective spouses — judgment was rendered on
August 11, 1971 by Judge Juan de Borja the dispositive
portion of which is as follows:
"WHEREFORE, judgment is hereby rendered declaring
Maxima Francisco entitled to 138 square meters and
Francisca Francisco to 126 square meters from the portion
sold to Restituto Francisco and Francisco Francisco to 360
square meters from the portion sold to Julita Francisco at a
price of P11.00 per square meter, the same to be paid
within thirty (30) days after this decision becomes final,
otherwise plaintiffs shall loss all their rights to said portion,
and after payment shall have been made defendants shall
execute the proper deeds of conveyance in favor of
plaintiffs . . ." (Emphasis supplied)
This judgment was affirmed by the Court of Appeals in a
decision promulgated on September 16, 1975. 1 No appeal
was attempted from the Appellate Court's decision which
consequently became final and executory on October 9,
1975, and was remanded to the Trial Court for execution.
On January 12, 1976, the plaintiffs filed a motion for
execution. The motion was denied by respondent Judge,
Hon. Crispin V. Bautista, by Order dated February 2, 1976. 2
His Honor ruled that since the judgment had given the
plaintiffs thirty (30) days from finality of decision within
which to pay to the defendants the price of the areas
respectively awarded to them at the rate of P11.00 per
square meter; and since considerably more than thirty (30)
days had elapsed since the decision of the Court of Appeals,
affirming that of the Trial Court, had become final, said
plaintiffs had, in accordance with the judgment, lost "all
their rights" to their portions.:-cralaw
The respondent Judge however later reconsidered and set
aside his Order of February 2, 1976, on motion of the
plaintiffs. This he did in an Order dated April 14, 1976 3 In
said Order, he declared that upon the facts, the failure of
the plaintiffs to effect payment within the appointed time
could not be ascribed to their fault. His Honor found that —
". . . plaintiffs' attempt to tender payment in accordance
with the decision of this Court which the Court of Appeals
affirmed on September 16, 1975 failed to materialize
because plaintiff Restituto Francisco and his wife were in
the United States and defendant Julita Francisco to whom
plaintiffs tendered payment refused the same which
resulted in their failure to comply with their obligation to
pay within the period of thirty (30) days provided for in the
decision, the Court considers plaintiffs' attempt to tender
payment sufficient to comply with their undertaking. Art.
1186 of the New Civil Code provides that the condition shall
be deemed fulfilled when the obligor voluntarily prevents
its fulfillment.'"
The respondent Judge accordingly RESOLVED —
". . . to set aside. . . (the) Order of February 2, 1976 and
plaintiffs are given a period of fifteen (15) days from receipt
of this Order within which to tender payment to the
defendants and/or deposit with the Office of the Clerk of
Court the amount corresponding to the value of the parcel
of land subject matter of this case after the same is
segregated from the portion belonging to the defendants."
The defendants moved, in their turn, for reconsideration of
the Order of April 14, 1976. The motion was seasonably
opposed by the plaintiffs, and thereafter denied by Judge
Bautista, by Order dated July 2, 1976. It is these Orders of
April 14, and July 2, 1976 that the petitioners would have
this Court annul in the special civil action of Certiorari at bar.
The petitioners theorize that in rendering the Order of April
14, 1976, respondent Judge had acted with grave abuse of
discretion because he had in effect substantially altered the
final and executory judgment of his predecessor, as
affirmed by the Court of Appeals.
It is well settled that a court has plenary power to alter,
modify or even set aside, its own decisions, and even order
a new trial, at any time before the decision becomes final,
or before an appeal from that decision has been perfected.
4 However, after the decision has become final and
executory, it can no longer be amended or corrected by the
court except for clerical errors or mistakes. 5 This principle
of immutability of judgments already final and executory
has invariably been adhered to by this Court regardless of
any occasional injustice, for the equity of a particular case
must yield to the "overmastering need" of certainty and
unalterability of judicial pronouncements. 6 Any
amendment or alteration which substantially affects a final
and executory judgment is null and void for lack of
jurisdiction, including the entire proceedings held for that
purpose. 7 It is these principles that petitioners invoke to
nullify the questioned orders of the respondent Judge in
this case. The facts here and the applicable principles, reconveyance of the portions of law adjudged to them), no
however, preclude such relief.:-cralaw subsequent consignation was necessary to entitle the
private respondents to such reconveyance. Hence, the
A distinction should be made between the jurisdiction of
respondent Judge committed no grave abuse of discretion
the court to amend, modify or alter its judgment and its
in setting aside his Order of February 2, 1976 and giving said
power to enforce it. The former ceases to attach when the
respondents a new period within which to tender payment
judgment becomes final, while the judgment has become
to the petitioner and/or deposit the required amount in
final for the purpose of its execution, 8 the propriety of its
court. It may even be said that in view of the efficacy of said
exercise rather than the jurisdiction to amend or modify
tender for the purpose of enforcing a reconveyance the
being the real issue here. Now, in the execution
grant of a fresh period within which to reiterate the same is
proceedings in question, the court a quo found as a fact that
superfluous and unnecessary.:-cralaw
plaintiffs were prevented from consummating the requisite
tender of payment due to the absence of two of the Moreover, as previously shown, the rights and obligations
defendants from the Philippines and the refusal of the third of the parties arose from a judgment, not from contract and
to accept such tender which, it is not seriously disputed, therefore the Civil Code requirements as to consignation
was attempted within the prescribed 30-day period from are not applicable. 13 Thus, in case of refusal of a tender of
finality of the judgment. There is no cogent reason to the amount due on a judgment, the court may direct the
disturb that factual conclusion, which therefore is binding money to be paid in court and when this is done, order
and conclusive upon this Court. 9 satisfaction of the judgment to be entered. 14 The tender
of payment of a judgment is not the same as tender of
This Court has held in several cases 10 that where a timely
payment of a contractual debt and consignation of the
and valid tender of payment is made pursuant to the
money due from a debtor to a creditor. 15 The requisites
exercise of a right (not an obligation) it is sufficient, without
of consignation under Art. 1256 et seq. do not apply to the
consignation, to preserve such right.
former.
In Vda. de Quirino v. Palarca, 11 it was ruled that
It appearing that private respondents have already
consignation referred to in Article 1256 of the Civil Code is
deposited with the Office of the Clerk of Court of the Court
inapplicable to a lease with option to buy because said
of First Instance (now RTC) of Valenzuela, Bulacan, the sum
provision refers to consignation as one of the means for the
of P6,864.00 in accordance with the order of the court a quo
payment or discharge of a "debt," whereas the lessee was
dated April 14, 1976, and this as early as May 13, 1976, or
not indebted to the lessor for the price of the leased
six days after their receipt, thru counsel, on May 7, 1976 of
premises. The lessee merely exercised a right of option and
said order, 16 approval of the consignation and discharge of
had no obligation to pay said price until execution of the
private respondents' obligation are warranted.
deed of sale in his favor, which the lessor refused to do.
WHEREFORE, the petition is DENIED and the court a quo is
And in the fairly recent case of Legaspi v. Court of
hereby ORDERED to approve the consignation made by
Appeals, 12 which involved the exercise of the right to
private respondents, and direct execution of the judgment
repurchase, the Court also held that —
in question so as to effectuate the reconveyance prescribed
". . . In instances where no debt 15 due and owing, therein according to its terms. Costs against petitioners.
consignation is not proper.
SO ORDERED.
"We have ruled early that:
Cruz, Gancayco, Griño-Aquino and Medialdea, JJ., concur.
'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
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 desire to comply with the
obligation."
The tender having been made, not so much to discharge an
obligation as to enforce or exercise a right (to a
 SECOND DIVISION
G.R. No. 150913 February 20, 2003
SPOUSES TEOFILO and SIMEONA RAYOS, and GEORGE
RAYOS, petitioners,
vs.
DONATO REYES, SATURNINO REYES, TOMASA R.
BUSTAMANTE and TORIBIA R. CAMELO, respondents.
DECISION
BELLOSILLO, J.:
AT STAKE IN THIS PETITION FOR REVIEW is the ownership of
three (3) parcels of unregistered land with an area of
approximately 130,947 square meters situated in Brgy.
Sapa, Burgos, Pangasinan, the identities of which are not
disputed.
The three (3) parcels were formerly owned by the spouses
Francisco and Asuncion Tazal who on 1 September 1957
sold them for ₱724.00 to respondents’ predecessor-in-
interest, one Mamerto Reyes, with right to repurchase
within two (2) years from date thereof by paying to the
vendee the purchase price and all expenses incident to their
reconveyance. After the sale the vendee a retro took
physical possession of the properties and paid the taxes
thereon.1
The otherwise inconsequential sale became controversial
when two (2) of the three (3) parcels were again sold on 24
December 1958 by Francisco Tazal for ₱420.00 in favor of
petitioners’ predecessor-in-interest Blas Rayos without first
availing of his right to repurchase the properties.
In the meantime, on 1 September 1959 the conventional
right of redemption in favor of spouses Francisco and
Asuncion Tazal expired without the right being exercised by
either the Tazal spouses or the vendee Blas Rayos.
After the expiration of the redemption period, Francisco
Tazal attempted to repurchase the properties from
Mamerto Reyes by asserting that the 1 September 1957
deed of sale with right of repurchase was actually an
equitable mortgage and offering the amount of ₱724.00 to
pay for the alleged debt.2 But Mamerto Reyes refused the
tender of payment and vigorously claimed that their
agreement was not an equitable mortgage.3
On 9 May 1960 Francisco Tazal filed a complaint with the
Court of First Instance of Pangasinan against Mamerto
Reyes, docketed as Civil Case No. A-245, for the declaration
of the 1 September 1957 transaction as a contract of
equitable mortgage. He also prayed for an order requiring
defendant Mamerto Reyes to accept the amount of
₱724.00 which he had deposited on 31 May 1960 with the
trial court as full payment for his debt, and canceling the
supposed mortgage on the three (3) parcels of land with the
execution of the corresponding documents of
reconveyance in his favor.4 Defendant denied plaintiff’s
allegations and maintained that their contract was a sale
with right of repurchase that had long expired.
On 22 June 1961 Francisco Tazal again sold the third parcel
of land previously purchased by Mamerto Reyes to
petitioner-spouses Teofilo and Simeona Rayos for ₱400.00.
On 1 July 1961 petitioner-spouses bought from Blas Rayos
for ₱400.00 the two (2) lots that Tazal had sold at the first
instance to Mamerto Reyes and thereafter to Blas Rayos.
Curiously, these contracts of sale in favor of petitioner-
spouses were perfected while Civil Case No. A-245 was
pending before the trial court.
On 26 September 1962 the parties in Civil Case No. A-245
submitted a stipulation of facts upon which the Court of
First Instance would decide the case. They admitted the
genuineness and due execution of the 1 September 1957
deed of sale with right of repurchase although they were in
disagreement as to its true character. They also
acknowledged the consignation of ₱724.00 in the Court of
First Instance on 31 May 1960 and the payment of taxes by
Mamerto Reyes on the three (3) parcels of land from 1958
to 1962.5
On 5 January 1963 the trial court in Civil Case No. A-245
rejected the contention of Francisco Tazal that the deed of
sale executed on 1 September 1957 was an equitable
mortgage but held that Tazal could nonetheless redeem the
three (3) parcels of land within thirty (30) days from finality
of judgment by paying to Mamerto Reyes the purchase
price of ₱724.00 and all expenses to execute the
reconveyance, i.e., the expenses of the contract and the
necessary and useful expenses made on the properties as
required by Art. 1616 of the Civil Code. The dispositive
portion of the trial court’s decision reads -
WHEREFORE, the Court, hereby renders judgment declaring
the contract x x x entered into by the plaintiffs and the
defendant and captioned ‘Deed of Sale with Right to
Repurchase’ as a true sale with right to repurchase x x x and
not an equitable mortgage x x x and declaring the plaintiffs
entitled to repurchase the property in question within thirty
(30) days from finality of this decision, without
pronouncement as to cost.6
Mamerto Reyes appealed the Decision to the Court of
Appeals,7 which in turn elevated the appeal to this Court 8
since only questions of law were involved.9 When Mamerto
Reyes died in 1986, petitioner-spouses Teofilo and Simeona
Rayos wrested physical possession of the disputed
properties from Reyes’s heirs.
On 16 May 1990 this Court considered the case closed and
terminated for failure of the parties therein to manifest
their interest to further prosecute the case. On 20 June
1990 the judgment in Civil Case No. A-245 became final and
executory.1a\^/phi1.net
Subsequent to the finality of judgment in Civil Case No. A-
245 petitioner-spouses did nothing to repurchase the three
(3) parcels of land within the thirty (30) - day grace period
from finality of judgment since, according to them, they
believed that the consignation of ₱724.00 in the civil case
had perfected the repurchase of the disputed properties.
On 6 July 1992 respondents as heirs of Mamerto Reyes
executed an affidavit adjudicating to themselves the
ownership of the parcels of land and declared the
properties in their names for assessment and collection of
real estate taxes. On 19 January 1993 respondents
registered the 1 September 1957 deed of sale with right of
repurchase with the register of deeds.
On 8 July 1993 respondents filed a complaint for damages
and recovery of ownership and possession of the three (3)
parcels of land in dispute against herein petitioner-spouses
Teofilo and Simeona Rayos and petitioner George Rayos as
administrator thereof before the Regional Trial Court of
Alaminos, Pangasinan.10 It was respondents’ theory that
neither petitioners nor their predecessors-in-interest
Francisco Tazal and Blas Rayos repurchased the properties
before buying them in 1958 and 1961 or when the
judgment in Civil Case No. A-245 became final and
executory in 1990, hence the sale of the three (3) parcels of
land to petitioner-spouses did not transfer ownership
thereof to them.
Petitioners argued on the other hand that the consignation
of ₱724.00 in Civil Case No. A-245 had the full effect of
redeeming the properties from respondents and their
predecessor-in-interest, and that respondents were guilty
of estoppel and laches since Mamerto Reyes as their
predecessor-in-interest did not oppose the sale to Blas
Rayos and to petitioner-spouses Teofilo and Simeona
Rayos. The parties then filed their respective memoranda
after which the case was submitted for decision.
On 15 November 1996 the trial court promulgated its
Decision in Civil Case No. A-2032 finding merit in
respondents’ claim for damages as well as ownership and
possession of the disputed parcels of land from
petitioners.11 The court declared void the separate deeds of
absolute sale thereof executed by Francisco Tazal in favor
of Blas Rayos and to spouses Teofilo and Simeona Rayos and
by Blas Rayos to the same spouses, and ordered herein
petitioners and Francisco Tazal to vacate and reconvey the
lands to respondents as heirs of Mamerto Reyes and to pay
actual damages for litigation expenses in the sum of
₱20,000.00, attorney’s fees of ₱10,000.00, and exemplary
damages of ₱50,000.00 plus costs. The court a quo
rationalized that petitioners did not present evidence to
prove that they and their predecessor-in-interest were able
to repurchase the property within the period of redemption
set forth by the Court of First Instance in Civil Case No. A-
245.12 Petitioners appealed the Decision to the Court of
Appeals.13
On 31 May 2001 the appellate court promulgated its
Decision affirming in toto the judgment appealed from.14
The Court of Appeals held that the deposit of ₱724.00 on 31
May 1960 in Civil Case No. A-245 was done belatedly, i.e.,
after the two (2) year - period from 1 September 1957, the
date of the sale as stated in the deed of sale between the
spouses Francisco and Asuncion Tazal and Mamerto Reyes,
and did not cover the entire redemption price, i.e., the
selling price of ₱724.00 plus the expenses of executing the
contract and the necessary and useful expenses made on
the properties. The appellate court further ruled that
estoppel and laches did not bar the cause of action of
respondents as plaintiffs in Civil Case No. A-2032 since
Mamerto Reyes as their predecessor-in-interest actively
resisted the claim of Francisco Tazal in Civil Case No. A-245
to treat the 1 September 1957 sale as an equitable
mortgage and to authorize the redemption of the parcels of
land in dispute beyond the two (2)-year period stipulated in
the sale with right to repurchase. Hence, the instant
petition for review.
Petitioners argue that the consignation of ₱724.00 in Civil
Case No. A-245 provides the best evidence of the
repurchase of the three (3) parcels of land; that the
consignation was admitted by Mamerto Reyes himself in
the stipulation of facts and approved implicitly by the Court
of First Instance when it held the 1 September 1957
transaction as a contract of sale with right of repurchase;
that respondents failed to prove the existence of other
expenses, i.e., the expenses of the contract and the
necessary and useful expenses made on the properties,
required by Art. 1616 of the Civil Code to be paid in addition
to the purchase price of ₱724.00 so that petitioners may
validly exercise the right to repurchase the real estate; that
Mamerto Reyes as respondents’ predecessor-in-interest
was guilty of estoppel and laches for not seeking the
annulment of the contracts of sale in favor of Blas Rayos and
petitioner-spouses Teofilo and Simeona Rayos; that
petitioner-spouses are buyers in good faith and for value of
the three (3) parcels of land; and finally, that there is no
legal basis for awarding damages since Civil Case No. A-2032
was decided solely on the basis of the parties’ memoranda
and not upon any evidence offered.
It appears that petitioners hinge their arguments upon the
validity of the consignation of ₱724.00 and accept the
proposition that if the consignation is declared void the
subsequent sales to Blas Rayos and petitioner-spouses
would be ineffective to transfer ownership of the disputed
parcels and concomitantly would vest respondents with the
ownership and possession thereof.
On the other hand, respondents maintain that the absence
of an express or at least discernible court approval of the
consignation of ₱724.00 in Civil Case No. A-245 prevented
the repurchase of the parcels of land in question; that the
deposit of only ₱724.00 did not cover all the expenses
required by Art. 1616 of the Civil Code for a valid repurchase
of the properties; that Mamerto Reyes as their predecessor-
in-interest was not guilty of estoppel and laches in not filing
a complaint to annul the contracts of sale in favor of Blas
Rayos and petitioner-spouses Teofilo and Simeona Rayos
since during that time Civil Case No. A-245 was pending
before the courts; that petitioner-spouses are not buyers in
good faith and for value since they knew that the parcels of
land had been previously sold to Mamerto Reyes and that,
in any event, the rule protecting buyers in good faith and
for value applies only to transactions involving registered
lands and not to unregistered lands as in the instant case;
and finally, that the award of damages is amply supported
by their pleadings in the trial court.
We deny the instant petition for review and affirm the
decision of the court a quo, except for the sole modification
to delete and set aside the award of damages. There is no
evidence to prove that petitioners paid at any time the
repurchase price for the three (3) parcels of land in dispute
except for the deposit of ₱724.00 in the Court of First
Instance which however fell short of all the acts necessary
for a valid consignation and discharge of their obligation to
respondents.
In order that consignation may be effective the debtor must
show that (a) there was a debt due; (b) the consignation of
the obligation had been made because the creditor to
whom a valid tender of payment was made refused to
accept it; (c) previous notice of the consignation had been
given to the person interested in the performance of the
obligation; (d) the amount due was placed at the disposal of
the court; and, (e) after the consignation had been made
the person interested was notified thereof.15
In the instant case, petitioners failed, first, to offer a valid
and unconditional tender of payment; second, to notify
respondents of the intention to deposit the amount with
the court; and third, to show the acceptance by the creditor
of the amount deposited as full settlement of the
obligation, or in the alternative, a declaration by the court
of the validity of the consignation. The failure of petitioners
to comply with any of these requirements rendered the
consignation ineffective.16
Consignation and tender of payment must not be
encumbered by conditions if they are to produce the
intended result of fulfilling the obligation.17 In the instant
case, the tender of payment of ₱724.00 was conditional and
void as it was predicated upon the argument of Francisco
Tazal that he was paying a debt which he could do at any
time allegedly because the 1 September 1957 transaction
was a contract of equitable mortgage and not a deed of sale
with right to repurchase. The ostensible purposes of
offering the amount in connection with a purported
outstanding debt were to evade the stipulated redemption
period in the deed of sale which had already expired when
the tender of payment was made and Civil Case No. A-245
was instituted, and as a corollary, to avail of the thirty (30)-
day grace period under Art. 1606 of the Civil Code within
which to exercise the right to repurchase.18 Mamerto Reyes
was therefore within his right to refuse the tender of
payment offered by petitioners because it was conditional
upon his waiver of the two (2)-year redemption period
stipulated in the deed of sale with right to repurchase.
Moreover, petitioners failed to prove in Civil Cases Nos. A-
245 and A-2032 that any form of notice regarding their
intention to deposit the amount of ₱724.00 with the Court
of First Instance had been served upon respondents. This
requirement is not fulfilled by the notice which could have
ensued from the filing of the complaint in Civil Case No. A-
245 or the stipulation made between Francisco Tazal and
Mamerto Reyes regarding the consignation of ₱724.00. The
latter constitutes the second notice required by law as it
already concerns the actual deposit or consignation of the
amount and is different from the first notice that makes
known the debtor’s intention to deposit the amount, a
requirement missing in the instant case.19 Without any
announcement of the intention to resort to consignation
first being made to the persons interested in the fulfillment
of the obligation, the consignation as a means of payment
is void.20
It is also futile to argue that the deposit of ₱724.00 with the
Court of First Instance could have perfected the redemption
of the three (3) parcels of land because it was not approved
by the trial court, much less accepted by Mamerto Reyes or
his heirs, herein respondents. The dispositive portion of the
Decision in Civil Case No. A-245, which reads "x x x x the
Court, hereby renders judgment declaring the contract x x x
entered into by the plaintiffs and the defendant and
captioned ‘Deed of Sale with Right to Repurchase’ as a true
sale with right to repurchase x x x and not an equitable
mortgage x x x and declaring the plaintiffs entitled to
repurchase the property in question within thirty (30) days
from finality of this decision x x x x" plainly rejected the
complaint for lack of merit and necessarily also the
consignation done pursuant thereto. This conclusion is
buttressed by the directive of the trial court in the body of
the Decision that Francisco Tazal "may still exercise the right
to repurchase the property in question by returning to the
[Mamerto Reyes] the purchase price of ₱724.00 plus all
expenses incident to the reconveyance within the period of
thirty (30)-days from the time this decision becomes final x
x x x"21 The obvious reference of this statement was the
stipulation made by the parties therein that "the defendant
[Mamerto Reyes] has been paying the taxes on said
properties from 1958 to 1969 x x x x"22 where the taxes paid
constituted necessary expenses that petitioners had to
reimburse to respondents’ predecessor-in-interest aside
from the ₱724.00 earlier deposited by Tazal.1awphi1.nét
To be sure, while it has been held that approval of the court
or the obligee’s acceptance of the deposit is not necessary
where the obligor has performed all acts necessary to a
valid consignation such that court approval thereof cannot
be doubted, Sia v. Court of Appeals23 clearly advises that this
ruling is applicable only where there is unmistakable
evidence on record that the prerequisites of a valid
consignation are present, especially the conformity of the
proffered payment to the terms of the obligation which is
to be paid.24 In the instant case, since there is no clear and
preponderant evidence that the consignation of ₱724.00
satisfied all the requirements for validity and enforceability,
and since Mamerto Reyes vehemently contested the
propriety of the consignation, petitioners cannot rely upon
sheer speculation and unfounded inference to construe the
Decision of the Court of First Instance as one impliedly
approving the consignation of ₱724.00 and perfecting the
redemption of the three (3) parcels of land.
It should be recalled that one of the requisites of
consignation is the filing of the complaint by the debtor
against the creditor. Hence it is the judgment on the
complaint where the court declares that the consignation
has been properly made that will release the debtor from
liability. Should the consignation be disapproved by the
court and the case dismissed, there is no payment and the
debtor is in mora and he shall be liable for the expenses and
bear the risk of loss of the thing.25
To sanction the argument of petitioners and in the process
excuse them from their responsibility of securing from the
trial court in Civil Case No. A-245 a categorical declaration
that the consignation of ₱724.00 had complied with all the
essential elements for its validity would only dilute the rule
requiring absolute compliance with the requisites of
consignation.26 It also disturbs a steady and stable status of
proprietary rights, i.e., "x x x el acreedor tan solo, y no el
juez, puede autorizar la variacion que para los derechos de
aquel suponga la que se intente en el objeto, cuantia o
forma de las obligaciones,"27 since parties are left guessing
on whether the repurchase of the properties had been
effected. In a broader sense, this uncertain state will only
depress the market value of the land and virtually paralyze
efforts of the landowner to meet his needs and obligations
and realize the full value of his land.
Moreover, we do not think that respondents’ causes of
action in Civil Case No. A-2032 are now barred by estoppel
and laches. The essence of estoppel and laches is the failure
or neglect for an unreasonable and unexplained length of
time to do that which by exercising due diligence could or
should have been done earlier; it is the negligence or
omission to assert a right within a reasonable time
warranting a presumption that the party entitled to assert
it either has abandoned or declined to assert it although
there is no absolute rule as to what constitutes staleness of
demand as each case is to be determined according to its
particular circumstances.28
In the instant case, it was prudent and discerning for
respondents and their predecessor-in-interest Mamerto
Reyes that they deferred any action against petitioners, i.e.,
Civil Case No. A-2032, to recover ownership and possession
of the three (3) pieces of real estate, until the finality of
judgment in Civil Case No. A-245. For patiently electing not
to inundate our courts of justice with cases the outcome of
which may well depend upon the then pending civil suit,
respondents cannot now be penalized by barring their
complaint in Civil Case No. A-2032 on the equitable grounds
of estoppel and laches.
We also find no reason to disturb our findings upon
petitioners’ assertion that they were purchasers of the
three (3) parcels of land in good faith and for value. As we
held in David v. Bandin, "the issue of good faith or bad faith
of the buyer is relevant only where the subject of the sale is
registered land and the purchaser is buying the same from
the registered owner whose title to the land is clean x x x in
such case the purchaser who relies on the clean title of the
registered owner is protected if he is a purchaser in good
faith for value."29 Since the properties in question are
unregistered lands, petitioners as subsequent buyers
thereof did so at their peril. Their claim of having bought the
land in good faith, i.e., without notice that some other
person has a right to or interest in the property, would not
protect them if it turns out, as it actually did in this case,
that their seller did not own the property at the time of the
sale.
At any rate, petitioners failed to discharge their burden of
proof that they were purchasers of the three (3) parcels of
land in good faith. For, as we ruled in Embrado v. Court of
Appeals,30 the burden of proving the status of a purchaser
in good faith and for value lies upon him who asserts that
status, which is not discharged by simply invoking the
ordinary presumption of good faith, i.e., that everyone is
presumed to act in good faith, since the good faith that is
here essential is integral with the very status which must be
established.
In the proceedings a quo, what is evident is the admitted
fact of payment made by Mamerto Reyes as respondents’
predecessor-in-interest of the taxes on the properties prior
to and at the time when the contracts of sale in favor of
petitioner-spouses were perfected, which undoubtedly
confirms the precedence of respondents’ possession of the
parcels of land in question. This situation should have
compelled petitioners to investigate the right of
respondents over the properties before buying them, and
in the absence of such inquiry, the rule is settled that a
buyer in the same circumstances herein involved cannot
claim to be a purchaser in good faith.
The absence of good faith on the part of petitioner-spouses
Teofilo and Simeona Rayos in purchasing the three (3)
parcels of unregistered land precludes the application of
the rule on double sales enunciated in Art. 1544 of the Civil
Code.31 In any event, even if we apply Art. 1544, the facts
would nonetheless show that respondents and their
predecessor-in-interest registered first the source of their
ownership and possession, i.e., the 1 September 1957 deed
of sale with right to repurchase, held the oldest title, and
possessed the real properties at the earliest time. Applying
the doctrine of "priority in time, priority in rights" or "prius
tempore, potior jure," respondents are entitled to the
ownership and possession of the parcels of land in dispute.
Bustamante and Toribia R. Camelo who are heirs of
Mamerto Reyes as absolute owners of the property in
question free from all liens and encumbrances; and,
ordering petitioner-spouses Teofilo and Simeona Rayos,
petitioner George Rayos and Francisco Tazal and/or their
agents or representatives to vacate and surrender the
parcels of land in favor of respondents Donato Reyes,
Saturnino Reyes, Tomasa R. Bustamante and Toribia R.
Camelo, are AFFIRMED with the SOLE MODIFICATION that
the award of actual damages for litigation expenses,
attorney’s fees and exemplary damages plus costs is
DELETED and SET ASIDE. No costs.
SO ORDERED.
Mendoza, Quisumbing, Austria-Martinez and Callejo, Sr.,
JJ., concur.

Finally, on the issue of damages, we agree with petitioners

that respondents failed to prove their entitlement to actual
damages for litigation expenses of ₱20,000.00, attorney’s
fees of ₱10,000.00 and exemplary damages of ₱50,000.00
plus costs. No evidence to prove actual damages was
offered in Civil Case No. A-2032 since the parties therein
submitted the case for decision on the basis of their
respective memoranda, hence no actual damages can be
awarded.32 In the same manner, there is no clear and
convincing showing that petitioners acted in a wanton,
fraudulent, reckless, oppressive, or malevolent manner to
warrant the imposition of exemplary damages in
respondents’ favor.33 In any event, exemplary damages
cannot be adjudicated in the instant case since there is no
award of moral, temperate or compensatory damages.34

Similarly, we cannot award attorney’s fees since there is no

stipulation to grant the same nor were exemplary damages
awarded or were improperly imposed as in the instant
case.35 It is appropriate to stress that the mere filing of a
complaint does not ipso facto entitle a party to attorney’s
fees since this act is a means sanctioned by law to protect
rights and interests even if found subsequently to be
unmeritorious.

WHEREFORE, the instant Petition for Review is DENIED. The

assailed Decision of the Court of Appeals in CA-G.R. CV No.
55789 affirming in toto the Decision of the Regional Trial
Court, Branch 54, Alaminos, Pangasinan in Civil Case No. A-
2032, i.e., declaring void the Deeds of Absolute Sale
executed by Francisco Tazal in favor of Blas Rayos, and by
the latter in favor of Teofilo Rayos, and by Francisco Tazal in
favor of Teofilo Rayos dated 22 June 1961, all encompassing
the three (3) parcels of land sold under the Deeds of Sale
with the Right to Repurchase, insofar as they authorized the
transfer of ownership and possession thereof to petitioner-
spouses Teofilo and Simeona Rayos; proclaiming
respondents Donato Reyes, Saturnino Reyes, Tomasa R.