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Bank of the Philippine Islands vs.
Court of Appeals, 232
SCRA 302 , G.R. No. 0!"2 #a$ 0, %%!
G.R. No. 104612 May 10, 1994
BANK OF THE PHILIPPINE ISLANDS (s!!"sso#$%&$ %&'"#"s' o(
)OMMER)IAL AND TR*ST )O.+, petitioner,
HON. )O*RT OF APPEALS, EASTERN PL,-OOD )ORP. a&.
BENIGNO D. LIM, respondents.
DA/IDE, 0R., J.:
The petitioner urges us to review and set aside the amended
of 6 March 1992 of respondent Court of Appeals in CA
!.". C# $o. 2%&'9 which modi(ed the Decision of 1% $ovem)er
199* of +ranch 19 of the "egional Trial Court ,"TC- of Manila in
Civil Case $o. .&/296&, entitled Bank of the Philippine Islands
(successorininterest of Commercial Bank and !rust Compan"#
versus $astern Pl"%ood Corporation and Beni&no '. Lim. The Court
of Appeals had a0rmed the dismissal of the complaint )ut had
granted the defendants1 counterclaim for 2''1,261.// which
represents the outstanding )alance of their account with the
plainti3.
As culled from the records and the pleadings of the parties, the
following facts were dul4 esta)lished5
2rivate respondents 6astern 2l4wood Corporation ,6astern- and
+enigno D. 7im ,7im-, an o0cer and stoc8holder of 6astern, held at
least one 9oint )an8 account ,:and;or: account- with the
Commercial +an8 and Trust Co. ,C+TC-, the predecessorininterest
of petitioner +an8 of the 2hilippine <slands ,+2<-. =ometime in
March 19&%, a 9oint chec8ing account ,:and: account- with 7im in
the amount of 212*,***.** was opened )4 Mariano #elasco with
funds withdrawn from the account of 6astern and;or 7im. #arious
amounts were later deposited or withdrawn from the 9oint account
of #elasco and 7im. The mone4 therein was placed in the mone4
mar8et.
#elasco died on & April 19&&. At the time of his death, the
outstanding )alance of the account stood at 2662,%22..&. >n %
Ma4 19&&, )4 virtue of an <ndemnit4 ?nderta8ing e@ecuted )4 7im
for himself and as 2resident and !eneral Manager of 6astern,
onehalf of this amount was provisionall4 released and transferred
to one of the )an8 accounts of 6astern with C+TC.
Thereafter, on 1. August 19&., 6astern o)tained a loan of
2&',***.** from C+TC as :Additional Aor8ing Capital,: evidenced
)4 the :Disclosure =tatement on 7oan;Credit Transaction:
,Disclosure =tatement- signed )4 C+TC through its )ranch
manager, Ceferino BimeneC, and 6astern, through 7im, as its
2resident and !eneral Manager.
The loan was pa4a)le on demand
with interest at 1/D per annum.
Eor this loan, 6astern issued on the same da4 a negotia)le
promissor4 note for 2&',***.** pa4a)le on demand to the order of
C+TC with interest at 1/D per annum.
The note was signed )4
7im )oth in his own capacit4 and as 2resident and !eneral
Manager of 6astern. $o reference to an4 securit4 for the loan
appears on the note. <n the Disclosure =tatement, the )o@ with the
printed word :?$=6C?"6D: was mar8ed with :F: G meaning
unsecured, while the line with the words :this loan is wholl4;partl4
secured )4: is followed )4 the t4pewritten words :Hold>ut on a
151 on C;A $o. 2'1***1/2,: which refers to the 9oint account of
#elasco and 7im with a )alance of 2''1,261.//.
<n addition, 6astern and 7im, and C+TC signed another document
entitled :Holdout Agreement,: also dated 1. August 19&.,
wherein it was stated that :as securit4 for the 7oan I7im and
6asternJ have o3ered IC+TCJ and the latter accepts a holdout on
said ICurrent Account $o. 2'1**11/2 in the 9oint names of 7im
and #elascoJ to the full e@tent of their alleged interests therein as
these ma4 appear as a result of (nal and de(nitive 9udicial action
or a settlement )etween and among the contesting parties
thereto.:
2aragraph *2 of the Agreement provides as follows5
6astpl4 I6asternJ and Mr. 7im here)4 confer upon Comtrust IC+TCJ,
when and if their alleged interests in the Account +alance shall
have )een esta)lished with (nalit4, ample and su0cient power as
shall )e necessar4 to retain said Account +alance and ena)le
Comtrust to appl4 the Account +alance for the purpose of
liKuidating the 7oan in respect of principal and;or accrued interest.
And paragraph *% thereof reads5
The acceptance of this holdout shall not impair the right of
Comtrust to declare the loan pa4a)le on demand at an4 time, nor
shall the e@istence hereof and the nonresolution of the dispute
)etween the contending parties in respect of entitlement to the
Account +alance, preclude Comtrust from instituting an action for
recover4 against 6astpl4 and;or Mr. 7im in the event the 7oan is
declared due and pa4a)le and 6astpl4 and;or Mr. 7im shall default
in pa4ment of all o)ligations and lia)ilities thereunder.
<n the meantime, a case for the settlement of #elasco1s estate was
(led with +ranch 1%2 of the "TC of 2asig, entitled :In re Intestate
$state of (ariano )elasco,: and doc8eted as =p. 2roc. $o. .9%9. <n
the said case, the whole )alance of 2''1,261.// in the aforesaid
9oint account of #elasco and 7im was )eing claimed as part of
#elasco1s estate. >n 9 =eptem)er 19.6, the intestate court granted
the urgent motion of the heirs of #elasco to withdraw the deposit
under the 9oint account of 7im and #elasco and authoriCed the
heirs to divide among themselves the amount withdrawn.
=ometime in 19.*, C+TC was merged with +2<.
>n 2 Decem)er
19.&, +2< (led with the "TC of Manila a complaint against 7im and
6astern demanding pa4ment of the promissor4 note for
2&',***.**. The complaint was doc8eted as Civil Case $o. .&
/296& and was raLed to +ranch 19 of the said court, then
presided over )4 Budge Aenceslao M. 2olo. Defendants 7im and
6astern, in turn, (led a counterclaim against +2< for the return of
the )alance in the disputed account su)9ect of the Holdout
Agreement and the interests thereon after deducting the amount
due on the promissor4 note.
1% $ovem)er 199* dismissing the complaint )ecause +2< failed to
ma8e out its case. Eurthermore, it ruled that :the promissor4 note
in Kuestion is su)9ect to the 1holdout1 agreement,:
)ased on this agreement, :it was the dut4 of plainti3 +an8 I+2<J to
de)it the account of the defendants under the promissor4 note to
set o3 the loan even though the same has no (@ed maturit4.:
to the defendants1 counterclaim, the trial court, recogniCing the
fact that the entire amount in Kuestion had )een withdrawn )4
#elasco1s heirs pursuant to the order of the intestate court in =p.
2roc. $o. .9%9, denied it )ecause the :said claim cannot )e
awarded without distur)ing the resolution: of the intestate court.
+oth parties appealed from the said decision to the Court of
Appeals. Their appeal was doc8eted as CA!.". C# $o. 2%&'9.
>n 2' Banuar4 1991, the Court of Appeals rendered a decision
a0rming the decision of the trial court. <t, however, failed to rule
on the defendants1 ,private respondents1- partial appeal from the
trial court1s denial of their counterclaim. ?pon their motion for
reconsideration, the Court of Appeals promulgated on 6 March
1992 an Amended Decision
wherein it ruled that the settlement
of #elasco1s estate had nothing to do with the claim of the
defendants for the return of the )alance of their account with
C+TC;+2< as the4 were not priv4 to that case, and that the
defendants, as depositors of C+TC;+2<, are the latter1s creditorsM
hence, C+TC;+2< should have protected the defendants1 interest in
=p. 2roc. $o. .9%9 when the said account was claimed )4 #elasco1s
estate. <t then ordered +2< :to pa4 defendants the amount of
2''1,261.// representing the outstanding )alance in the )an8
account of defendants.:
>n 22 April 1992, +2< (led the instant petition alleging therein that
the Holdout Agreement in Kuestion was su)9ect to a suspensive
condition stated therein, viz., that the :2''1,261.// shall )ecome a
securit4 for respondent 7im1s promissor4 note onl4 if respondents1
7im and 6astern 2l4wood Corporation1s interests to that amount
are esta)lished as a result of a (nal and de(nitive 9udicial action or
a settlement )etween and among the contesting parties thereto.:
Hence, +2< asserts, the Court of Appeals erred in a0rming the
trial court1s decision dismissing the complaint on the ground that it
was the dut4 of C+TC to de)it the account of the defendants to set
o3 the amount of 2&',***.** covered )4 the promissor4 note.
2rivate respondents 6astern and 7im dispute the :suspensive
condition: argument of the petitioner. The4 interpret the (ndings of
)oth the trial and appellate courts that the mone4 deposited in the
9oint account of #elasco and 7im came from 6astern and 7im1s own
account as a (nding that the mone4 deposited in the 9oint account
of 7im and #elasco :rightfull4 )elongIedJ to 6astern 2l4wood
Corporation and;or +enigno 7im.: And )ecause the latter are the
rightful owners of the mone4 in Kuestion, the suspensive condition
does not (nd an4 application in this case and the )an8 had the
dut4 to set o3 this deposit with the loan. The4 add that the ruling
of the lower court that the4 own the disputed amount is the (nal
and de(nitive 9udicial action reKuired )4 the Holdout AgreementM
hence, the petitioner can onl4 hold the amount of 2&',***.**
representing the securit4 reKuired for the note and must return the
The petitioner (led a "epl4 to the aforesaid Comment. The private
respondents (led a "e9oinder thereto.
Ae gave due course to the petition and reKuired the parties to
su)mit simultaneousl4 their memoranda.
The 8e4 issues in this case are whether +2< can demand pa4ment
of the loan of 2&',***.** despite the e@istence of the Holdout
Agreement and whether +2< is still lia)le to the private respondents
on the account su)9ect of the Holdout Agreement after its
withdrawal )4 the heirs of #elasco.
The collection suit of +2< is )ased on the promissor4 note for
2&',***.**. >n its face, the note is an unconditional promise to
pa4 the said amount, and as stated )4 the respondent Court of
Appeals, :ItJhere is no Kuestion that the promissor4 note is a
negotia)le instrument.:
<t further correctl4 ruled that +2< was not
a holder in due course )ecause the note was not indorsed to +2< )4
the pa4ee, C+TC. >nl4 a negotiation )4 indorsement could have
operated as a valid transfer to ma8e +2< a holder in due course. <t
acKuired the note from C+TC )4 the contract of merger or sale
)etween the two )an8s. +2<, therefore, too8 the note su)9ect to the
Holdout Agreement.
Ae disagree, however, with the Court of Appeals in its
interpretation of the Holdout Agreement. <t is clear from paragraph
*2 thereof that C+TC, or +2< as its successorininterest, had ever4
right to demand that 6astern and 7im settle their lia)ilit4 under the
promissor4 note. <t cannot )e compelled to retain and appl4 the
deposit in 7im and #elasco1s 9oint account to the pa4ment of the
note. Ahat the agreement conferred on C+TC was a po%er, not a
dut4. !enerall4, a )an8 is under no dut4 or o)ligation to ma8e the
To appl4 the deposit to the pa4ment of a loan is a
privilege, a right of seto3 which the )an8 has the option to
e@ercise.
Also, paragraph *% of the Holdout Agreement itself states that
notwithstanding the agreement, C+TC was not in an4 wa4
precluded from demanding pa4ment from 6astern and from
instituting an action to recover pa4ment of the loan. Ahat it
provides is an alternative, not an e@clusive, method of enforcing its
claim on the note. Ahen it demanded pa4ment of the de)t directl4
from 6astern and 7im, +2< had opted not to e@ercise its right to
appl4 part of the deposit su)9ect of the Holdout Agreement to the
pa4ment of the promissor4 note for 2&',***.**. <ts suit for the
enforcement of the note was then in order and it was error for the
trial court to dismiss it on the theor4 that it was set o3 )4 an
eKuivalent portion in C;A $o. 2'1***1/2 which +2< should have
de)ited. The Court of Appeals also erred in a0rming such
The :suspensive condition: theor4 of the petitioner is, therefore,
untena)le.
The Court of Appeals correctl4 decided on the counterclaim. The
counterclaim of 6astern and 7im for the return of the 2''1,261.//
was eKuivalent to a demand that the4 )e allowed to withdraw
their deposit with the )an8. Article 19.* of the Civil Code e@pressl4
provides that :IfJi@ed, savings, and current deposits of mone4 in
)an8s and similar institutions shall )e governed )4 the provisions
concerning simple loan.: <n *errano vs. Central Bank of the
we held that )an8 deposits are in the nature of
irregular depositsM the4 are reall4 loans )ecause the4 earn interest.
The relationship then )etween a depositor and a )an8 is one of
creditor and de)tor. The deposit under the Kuestioned account was
an ordinar4 )an8 depositM hence, it was pa4a)le on demand of the
The account was proved and esta)lished to )elong to 6astern even
if it was deposited in the names of 7im and #elasco. As the real
creditor of the )an8, 6astern has the right to withdraw it or to
demand pa4ment thereof. +2< cannot )e relieved of its dut4 to pa4
6astern simpl4 )ecause it alread4 allowed the heirs of #elasco to
withdraw the whole )alance of the account. The petitioner should
not have allowed such withdrawal )ecause it had admitted in the
Holdout Agreement the Kuestioned ownership of the mone4
deposited in the account. As earl4 as 12 Ma4 19&9, C+TC was
noti(ed )4 the Corporate =ecretar4 of 6astern that the deposit in
the 9oint account of #elasco and 7im was )eing claimed )4 them
and that onehalf was )eing claimed )4 the heirs of #elasco.
Moreover, the order of the court in =p. 2roc. $o. .9%9 merel4
authoriCed the heirs of #elasco to withdraw the account. +2< was
not speci(call4 ordered to release the account to the said heirsM
hence, it was under no 9udicial compulsion to do so. The
authoriCation given to the heirs of #elasco cannot )e construed as
a (nal determination or ad9udication that the account )elonged to
#elasco. Ae have ruled that when the ownership of a particular
propert4 is disputed, the determination )4 a pro)ate court of
whether that propert4 is included in the estate of a deceased is
merel4 provisional in character and cannot )e the su)9ect of
e@ecution.
+ecause the ownership of the deposit remained undetermined, +2<,
as the de)tor with respect thereto, had no right to pa4 to persons
other than those in whose favor the o)ligation was constituted or
whose right or authorit4 to receive pa4ment is indisputa)le. The
pa4ment of the mone4 deposited with +2< that will e@tinguish its
o)ligation to the creditordepositor is pa4ment to the person of the
creditor or to one authoriCed )4 him or )4 the law to receive it.
2a4ment made )4 the de)tor to the wrong part4 does not
e@tinguish the o)ligation as to the creditor who is without fault or
negligence, even if the de)tor acted in utmost good faith and )4
mista8e as to the person of the creditor, or through error induced
)4 fraud of a third person.
The pa4ment then )4 +2< to the heirs
of #elasco, even if done in good faith, did not e@tinguish its
o)ligation to the true depositor, 6astern.
<n the light of the a)ove (ndings, the dismissal of the petitioner1s
complaint is reversed and set aside. The award on the
counterclaim is sustained su)9ect to a modi(cation of the interest.
AH6"6E>"6, the instant petition is partl4 !"A$T6D. The
challenged amended decision in CA!.". C# $o. 2%&'% is here)4
M>D<E<6D. As modi(ed5
,1- 2rivate respondents are ordered to pa4 the petitioner the
promissor4 note for 2&',***.** with interest at5
,a- 1/D per annum on the principal, computed from
1. August 19&. until pa4mentM
,)- 12D per annum on the interest which had accrued up to the
date of the (ling of the complaint, computed from that date until
pa4ment pursuant to Article 2212 of the Civil Code.
,2- The award of 2''1,26/.// in favor of the private respondents
shall )ear interest at the rate of 12D per annum computed from
the (ling of the counterclaim.
$o pronouncement as to costs.
=> >"D6"6D.
FRANCISCO CULABA an !"#"$RIA CULABA, oin% &'(in)(( 'n)r
*+) na,) an (*-l) .C'la&a S*or),/ petitioners, vs. COUR$
OF A00"ALS an SAN #IGU"L COR0ORA$ION,
! " C I S I O N
CALL"1O, SR., J.:
This is a petition for review under Rule 45 of the Revised Rules of
Civil Procedure of the Decision!" of the Court of #ppeals in C#$%&R& CV No&
!'()* affir+in, in toto the Decision-" of the Re,ional Trial Court of .a/ati0
1ranch !)(0 in Civil Case No& !2)) for collection of su+ of +one30 and the
Resolution)" den3in, the +otion for reconsideration of the said decision&
$+) Uni(p'*) Fa2*(
The spouses 4rancisco and De+etria Cula5a were the owners and
proprietors of the Cula5a Store and were en,a,ed in the sale and
distri5ution of San .i,uel Corporation6s 7S.C8 5eer products& S.C sold
5eer products on credit to the Cula5a spouses in the a+ount of P-(0*52&220
as evidenced 53 Te+porar3 Credit Invoice No& 4-'4)&4" Thereafter0 the
Cula5a spouses +ade a partial pa3+ent of P)0942&220 leavin, an unpaid
5alance of P-40'!2&22& #s the3 failed to pa3 despite repeated de+ands0
S.C filed an action for collection of a su+ of +one3 a,ainst the+ 5efore the
RTC of .a/ati0 1ranch !)(&
The defendant$spouses denied an3 lia5ilit30 clai+in, that the3 had
alread3 paid the plaintiff in full on four separate occasions& To su5stantiate
this clai+0 the defendants presented four 748 Te+porar3 Char,e Sales 7TCS8
:i;uidation Receipts0 as follows<
April 19, 1983 Receipt No. 27331 for P8,000[5]
April 22, 1983 Receipt No. 27318 for P9,000[6]
April 27, 1983 Receipt No. 27339 for P4,500[7]
April 30, 1983 Receipt No. 27346 for P3,410[8]
Defendant 4rancisco Cula5a testified that he +ade the fore,oin,
pa3+ents to an S.C supervisor who ca+e in an S.C van& =e was then
showed a list of custo+ers6 accounta5ilities which included his account& The
defendant0 in ,ood faith0 then paid to the said supervisor0 and he was0 in
turn0 issued ,enuine S.C li;uidation receipts&
4or its part0 S.C su5+itted a pu5lisher6s affidavit'" to prove that the
entire 5oo/let of TCS: Receipts 5earin, Nos& -9)2!$-9)52 were reported
lost 53 it0 and that it caused the pu5lication of the notice of loss in the >ul3 '0
!'() issue of the Dail3 E?press0 as follows<
OUR CUSTOMERS ARE HEREBY INFORMED THAT TEMPORARY
CHARGE SALES LIQUIDATION RECEIPTS WITH SERIAL NOS. 27301-27350
ANY TRANSACTION, THEREFORE, ENTERED INTO WITH THE USE OF
THE ABOVE RECEIPTS WILL NOT BE HONORED.
Makati Beer Region[10]
$+) $rial Co'r*3( R'lin%
#fter trial on the +erits0 the trial court rendered @ud,+ent in favor of
S.C0 and held the Cula5a spouses lia5le on the 5alance of its o5li,ation0
1. Ordering defendants to pay the amount of P24,910.00 plus legal interest of
6% per annum from April 12, 1983 until the whole amount is fully paid;
2. Ordering defendants to pay 20% of the amount due to plaintiff as and for
attorneys fees plus costs.
#ccordin, to the trial court0 it was unusual that defendant 4rancisco
Cula5a for,ot the na+e of the collector to who+ he +ade the pa3+ents and
that he did not re;uire the said collector to print his na+e on the receipts&
The court also noted that althou,h the3 were part of a sin,le 5oo/let0 the
TCS :i;uidation Receipts su5+itted 53 the defendants did not appear to
have 5een issued in their natural se;uence& 4urther+ore0 the3 were part of
the lost 5oo/let receipts0 which the pu5lic was dul3 warned of throu,h the
Notice of :oss the plaintiff caused to 5e pu5lished in a dail3 newspaper& This
confir+ed the plaintiff6s clai+ that the receipts presented 53 the defendants
were spurious ones&
$+) Ca() on App)al
On appeal0 the appellants interposed the followin, assi,n+ent of
THE TRIAL COURT ERRED IN FINDING THAT THE RECEIPTS PRESENTED
BY DEFENDANTS EVIDENCING HIS PAYMENTS TO PLAINTIFF SAN
MIGUEL CORPORATION, ARE SPURIOUS.
THE TRIAL COURT ERRED IN CONCLUDING THAT PLAINTIFF-APPELLEE
HAS SUFFICIENTLY PROVED ITS CAUSE OF ACTION AGAINST THE
THE TRIAL COURT ERRED IN ORDERING DEFENDANTS TO PAY 20% OF
THE AMOUNT DUE TO PLAINTIFF AS ATTORNEYS FEES.[12]
The appellants asserted that while the trial court6s o5servations were
true0 it was the usual 5usiness practice in previous transactions 5etween
the+ and S.C& The S.C previousl3 honored receipts not 5earin, the
sales+an6s na+e& #ccordin, to appellant 4rancisco Cula5a0 he even lost
so+e of the receipts0 5ut did not encounter an3 pro5le+s&
#ccordin, to appellant 4rancisco0 he could not 5e faulted for pa3in,
the S.C collector who ca+e in a van and was in unifor+0 and that an3
re,ular custo+er would0 without an3 apprehension0 transact with such an
S.C e+plo3ee& 4urther+ore0 the respective receipts issued to hi+ at the
ti+e he paid on the four occasions +entioned had not 3et then 5een
declared lost& Thus0 the su5se;uent pu5lication in a dail3 newspaper
declarin, the 5oo/lets lost did not affect the validit3 and le,alit3 of the
pa3+ents +ade& #ccordin,l30 53 its actuations0 the S.C was estopped fro+
;uestionin, the le,alit3 of the pa3+ents and had no cause of action a,ainst
the appellants&
#nent the issue of attorne36s fees0 the order of the trial court for
pa3+ent thereof is without 5asis& #ccordin, to the appellant0 the provision
for attorne36s fees is a contin,ent fee0 alread3 provided for in the S.C6s
contract with the law fir+& To further order the+ to pa3 -2A of the a+ount
due as attorne36s fees is dou5le pa3+ent0 tanta+ount to undue enrich+ent
and therefore i+proper&!)"
The appellee0 for its part0 contended that the pri+ar3 issue in the
case at 5ar revolved around the 5asic and funda+ental principles of a,enc3&
!4" It was incu+5ent upon the defendants$appellants to e?ercise ordinar3
prudence and reasona5le dili,ence to verif3 and identif3 the e?tent of the
alle,ed a,ent6s authorit3& It was their 5urden to esta5lish the true identit3 of
the assu+ed a,ent0 and this could not 5e esta5lished 53 +ere
representation0 ru+or or ,eneral reputation& #s the3 utterl3 failed in this
re,ard0 the appellants +ust suffer the conse;uences&
The Court of #ppeals affir+ed the decision of the trial court0 thus<
In the face of the somewhat tenuous evidence presented by the appellants, we cannot
fault the lower court for giving more weight to appellees testimonial and
documentary evidence, all of which establish with some degree of preponderance
the existence of the account sued upon.
ALL CONSIDERED, we cannot find any justification to reject the factual findings
of the lower court to which we must accord respect, for which reason, the judgment
appealed from is hereby AFFIRMED in all respects.
=ence0 the instant petition&
The petitioners pose the followin, issues for the Court6s resolution<
I. WHETHER OR NOT THE RESPONDENT HAD PROVEN BY
PREPONDERANT EVIDENCE THAT IT HAD PROPERLY AND TIMELY
NOTIFIED PETITIONER OF LOST BOOKLET OF RECEIPTS
II. WHETHER OR NOT RESPONDENT HAD PROVEN BY PREPONDERANT
EVIDENCE THAT PETITIONER WAS REMISS IN THE PAYMENT OF HIS
ACCOUNTS TO ITS AGENT.[16]
#ccordin, to the petitioners0 receivin, receipts fro+ the private
respondent6s a,ents instead of its sales+en was a usual occurrence0 as
the3 had 5een operatin, the store since !'9'& Thus0 on four occasions in
#pril !'()0 when an a,ent of the respondent ca+e to the store wearin, an
S.C unifor+ and drivin, an S.C van0 petitioner 4rancisco Cula5a0 without
;uestion0 paid his accounts& =e received the receipts without fear0 as the3
were si+ilar to what he used to receive 5efore& 4urther+ore0 the petitioners
assert that0 co++on e?perience will attest that unless the attention of the
custo+ers is called for0 the3 would not ta/e note of the serial nu+5er of the
receipts&
The petitioners contend that the private respondent advertised its
warnin, to the pu5lic onl3 after the da+a,e was done0 or on >ul3 '0 !'')& Its
5elated notice showed its ,larin, lac/ of interest or concern for its
custo+ers6 welfare0 and0 in su+0 its ne,li,ence&
#nent the second issue0 petitioner 4rancisco Cula5a avers that the
a,ent to who+ the accounts were paid had all the ph3sical and +aterial
attri5utes or indications of a representative of the private respondent0 leavin,
no dou5t that he was dul3 authoriBed 53 the latter& Petitioner 4rancisco
Cula5a6s testi+on3 that Che does not necessaril3 chec/ the contents of the
receipts issued to hi+ e?cept for the a+ount indicated if the" sa+e
accuratel3 reflects his actual pa3+entD is a co++on attitude of custo+ers&
=e could0 thus0 not 5e faulted for pa3in, the private respondent6s a,ent on
four occasions& Petitioner 4rancisco Cula5a asserts that he +ade the
pa3+ent in ,ood faith0 to an a,ent who issued S.C receipts which
appeared to 5e ,enuine& Thus0 accordin, to the petitioners0 the3 had dul3
paid their o5li,ation in accordance with #rticles !-42 and !-4- of the New
Civil Code&
The private respondent0 for its part0 avers that the 5urden of provin,
pa3+ent is with the de5tor0 in consonance with the e?press provision of
#rticle !-)) of the New Civil Code& The petitioners +isera5l3 failed to prove
the self$servin, alle,ation that the3 alread3 paid their lia5ilit3 to the private
respondent& 4urther+ore0 under nor+al circu+stances0 an o5li,or would not
@ust pa3 a su5stantial a+ount to so+eone who+ he saw for the first ti+e0
without even as/in, for the latter6s na+e&
$+) R'lin% o4 *+) Co'r*
The petition is dis+issed&
The petitioners ;uestion the findin,s of the Court of #ppeals as to
whether the pa3+ent of the petitioners6 o5li,ation to the private respondent
was properl3 +ade0 thus0 e?tin,uishin, the sa+e& This is clearl3 a factual
issue0 and 5e3ond the purview of the Court to delve into& This is in
consonance with the well$settled rule that findin,s of fact of the trial court0
especiall3 when affir+ed 53 the Court of #ppeals0 are accorded the hi,hest
de,ree of respect0 and ,enerall3 will not 5e distur5ed on appeal& Such
findin,s are 5indin, and conclusive on the Court&!9" 4urther+ore0 it is not
the Court6s function under Rule 45 of the Rules of Court0 as a+ended0 to
review0 e?a+ine and evaluate or wei,h the pro5ative value of the evidence
presented&!("
To reiterate0 the issue 5ein, raised 53 the petitioners does not involve
a ;uestion of law0 5ut a question of fact0 not co,niBa5le 53 this Court in a
petition for review under Rule 45& The @urisdiction of the Court in such a case
is li+ited to reviewin, onl3 errors of law0 unless the factual findin,s 5ein,
assailed are not supported 53 evidence on record or the i+pu,ned @ud,+ent
is 5ased on a +isapprehension of facts&!'"
# careful stud3 of the records of the case reveal that the appellate
court affir+ed the trial court6s factual findin,s as follows<
4irst& Receipts Nos& -9))!0 -9)!(0 -9))' and -9)4* were included
in the private respondent6s lost 5oo/let0 which loss was dul3 advertised in a
newspaper of ,eneral circulationE thus0 the private respondent could not
have officiall3 issued the+ to the petitioners to cover the alle,ed pa3+ents
on the dates appearin, thereon&
Second& There was so+ethin, a+iss in the wa3 the receipts were
issued to the petitioners0 as one receipt 5earin, a hi,her serial nu+5er was
issued ahead of another receipt 5earin, a lower serial nu+5er0 supposedl3
coverin, a later pa3+ent& The petitioners failed to e?plain the apparent +i?$
up in these receipts0 and no atte+pt was +ade in this re,ard&
Third& The fact that the sales+an6s na+e was invaria5l3 left 5lan/ in
the four receipts and that the petitioners could not even re+e+5er the na+e
of the supposed i+postor who received the said pa3+ents stron,l3 ar,ue
a,ainst the veracit3 of the petitioners6 clai+&
Fe find no co,ent reason to reverse the said findin,s&
The dis+issal of the petition is inevita5le even upon close perusal of
the +erits of the case&
Pa3+ent is a +ode of e?tin,uishin, an o5li,ation&-2" #rticle !-42 of
the Civil Code provides that pa3+ent shall 5e +ade to the person in whose
favor the o5li,ation has 5een constituted0 or his successor$in$interest0 or an3
person authoriBed to receive it&-!" In this case0 the pa3+ents were
purportedl3 +ade to a CsupervisorD of the private respondent0 who was clad
in an S.C unifor+ and drove an S.C van& =e appeared to 5e authoriBed to
accept pa3+ents as he showed a list of custo+ers6 accounta5ilities and
even issued S.C li;uidation receipts which loo/ed ,enuine& Gnfortunatel3
for petitioner 4rancisco Cula5a0 he did not ascertain the identit3 and
authorit3 of the said supervisor0 nor did he as/ to 5e shown an3 identification
to prove that the latter was0 indeed0 an S.C supervisor& The petitioners
relied solel3 on the +an6s representation that he was collectin, pa3+ents for
S.C& Thus0 the pa3+ents the petitioners clai+ed the3 +ade were not the
pa3+ents that dischar,ed their o5li,ation to the private respondent&
The 5asis of a,enc3 is representation&--" # person dealin, with an
a,ent is put upon in;uir3 and +ust discover upon his peril the authorit3 of
the a,ent&-)" In the instant case0 the petitioners6 loss could have 5een
avoided if the3 had si+pl3 e?ercised due dili,ence in ascertainin, the
identit3 of the person to who+ the3 alle,edl3 +ade the pa3+ents& The fact
that the3 were partin, with valua5le consideration should have +ade the+
+ore circu+spect in handlin, their 5usiness transactions& Persons dealin,
with an assu+ed a,ent are 5ound at their peril to ascertain not onl3 the fact
of a,enc3 5ut also the nature and e?tent of authorit30 and in case either is
controverted0 the 5urden of proof is upon the+ to esta5lish it&-4" The
petitioners in this case failed to dischar,e this 5urden0 considerin, that the
private respondent vehe+entl3 denied that the pa3+ents were accepted 53
it and were +ade to its authoriBed representative&
Ne,li,ence is the o+ission to do so+ethin, which a reasona5le +an0
,uided 53 those considerations which ordinaril3 re,ulate the conduct of
hu+an affairs0 would do0 or the doin, of so+ethin,0 which a prudent and
reasona5le +an would not do&-5" In the case at 5ar0 the +ost prudent thin,
the petitioners should have done was to ascertain the identit3 and authorit3
of the person who collected their pa3+ents& 4ailin, this0 the petitioners
cannot clai+ that the3 acted in ,ood faith when the3 +ade such pa3+ents&
Their clai+ therefor is ne,ated 53 their ne,li,ence0 and the3 are 5ound 53 its
conse;uences& 1ein, ne,li,ent in this re,ard0 the petitioners cannot see/
relief on the 5asis of a supposed a,enc3&-*"
56"R"FOR"0 the instant petition is here53 DENIED& The assailed
Decision dated #pril !*0 !''*0 and the Resolution dated >ul3 !'0 !''* of the
Court of #ppeals are #44IR.ED& Costs a,ainst the petitioners&
SO OR!"R"!.
Puno, (Chairman), Quisumbing, Austria-Martinez, and Tinga, JJ.,
Repu5lic of the PhilippinesSU0R"#" COUR$.anila
T=IRD DIVISION
G.R. No. 72708 No9),&)r 18, 1::2
CAL$"; <06ILI00IN"S=, INC., petitioner0 vs&$6" IN$"R#"!IA$"
A00"LLA$" COUR$ an ASIA 0ACIFIC AIR5A>S, INC., respondents&
BI!IN, J.:
This is a petition for certiorari see/in, the annul+ent of the decision dated
#u,ust -90!'(5 of the then Inter+ediate #ppellate Court in C#$%&R& No&
2-*(40 which reversed the @ud,+ent of the trial court and ordered petitioner
to return the a+ount of P5!20 552&*) to private respondent plus interest at
the le,al rate of !4A per annum&
The facts of the case are as follows<
On >anuar3 !-0 !'9(0 private respondent #sia Pacific #irwa3s Inc&0 entered
into an a,ree+ent with petitioner Calte? 7Philippines8 Inc&0 where53
petitioner a,reed to suppl3 private respondentHs aviation fuel re;uire+ents
for two 7-8 3ears0 coverin, the period fro+ >anuar3 !0 !'9( until Dece+5er
)!0 !'9'& Pursuant thereto0 petitioner supplied private respondentHs fuel
suppl3 re;uire+ents& #s of >une )20 !'(20 private respondents had an
outstandin, o5li,ation to petitioner in the total a+ount of P4029-0*(-&!)0
representin, the unpaid price of the fuel supplied& To settle this outstandin,
o5li,ation0 private respondent e?ecuted a Deed of #ssi,n+ent dated >ul3
)!0 !'(20 wherein it assi,ned to petitioner its receiva5les or refunds of
Special 4und I+port Pa3+ents fro+ National Treasur3 of the Philippines to
5e applied as pa3+ent of the a+ount of P4029-0*(-&!) which private
respondent owed to petitioner& On 4e5ruar3 !-0 !'(!0 pursuant to the Deed
of #ssi,n+ent0 Treasur3 Farrant No& 12492(*!) in the a+ount of
P504950-'4&22 representin, the refund to respondent of Special 4und I+port
Pa3+ent on its fuel purchases was issued 53 the National Treasur3 in favor
of the petitioner& 4our da3s later0 on 4e5ruar3 !*0 !'(!0 private respondent0
havin, learned that the a+ount re+itted to petitioner e?ceeded the a+ount
covered 53 the Deed of #ssi,n+ent0 wrote a letter to petitioner0 re;uestin, a
refund in the a+ount of P'220222&22 plus in favor of private respondent& The
latter0 5elievin, that it was entitled to a lar,er a+ount 53 wa3 of refund0 wrote
a petitioner anew0 de+andin, the refund of the re+ainin, a+ount& In
response thereto0 petitioner infor+ed private respondent that the a+ount not
returned 7P5!20552&*)8 represented interest and service char,es at the rate
of !(A per annum on the unpaid and overdue account of respondent fro+
>une !0 !'(2 to >ul3 )!0 !'(!&
Thus0 on Septe+5er !)0 !'(-0 private respondent filed a co+plaint a,ainst
petitioner in the Re,ional Trial Court of .anila0 to collect the su+ of
P5!20552&*)&22&
Petitioner 7defendant in the trial court8 filed its answer0 reiteratin, that the
a+ount not returned represented interest and service char,es on the unpaid
and overdue account at the rate of !(A per annum& It was further alle,ed
that the collection of said interest and service char,es is sanctioned 53 law0
and is in accordance with the ter+s and conditions of the sale of petroleu+
products to respondent0 which was +ade with the confor+it3 of said private
respondent who had accepted the validit3 of said interest and service
char,es&
On Nove+5er 90 !'()0 the trial court rendered its decision dis+issin, the
co+plaint0 as well as the counterclai+ filed 53 defendant therein&
Private respondent 7plaintiff8 appealed to the Inter+ediate #ppellate Court
7I#C8& On #u,ust -90 !'(50 a decision was rendered 53 the said appellate
court reversin, the decision of the trial court0 and orderin, petitioner to return
the a+ount of P5!20552&*) to private respondent&
Counsel for petitioner received a cop3 of the appellate courtHs decision on
Septe+5er *0 !'(5& On Septe+5er -20 !'(5 or !4 da3s after receipt of the
aforesaid decision0 an Gr,ent .otion for e?tension of five da3s within which
to file a +otion for reconsideration was filed 53 petitioner& On Septe+5er -*0
!'(50 the .otion for Reconsideration was filed& The followin, da30 petitioner
filed a +otion to set the +otion for reconsideration for hearin,&
In a Resolution dated Octo5er -40 !'(50 the appellate court denied the
aforesaid three +otions& The first +otion pra3in, for an e?tension of five
da3s within which to file a +otion for reconsideration was denied 53 the
appellate court citing the new rulin, of the Supre+e Court in =a5alu3as
Enterprises Inc& vs& >apBon 7!)( SCR# 4* !'(5"8 as authorit3& The
appellate court0 followin, said rulin,0 held that the !5$da3 period for filin, a
+otion for reconsideration cannot 5e e?tended& Thus0 the +otion for
reconsideration filed on Septe+5er -*0 !'(5 was stric/en fro+ the record0
havin, 5een filed 5e3ond the non$e?tensi5le !5$da3 re,le+entar3 period&
The third +otion was li/ewise denied for 5ein, +oot and acade+ic&
On Nove+5er 40 !'(50 the prevailin, part3 7respondent herein8 filed Gr,ent
.otion for Entr3 of >ud,+ent& Two da3s latter0 or on Nove+5er *0 !'(50 the
petitioner filed a .otion for Reconsideration of the Resolution dated Octo5er
-40 !'(5&
The appellate court in a Resolution dated Nove+5er !-0 !'(5 ,ranted the
+otion for entr3 of @ud,+ent filed 53 private respondent& It directed the entr3
of @ud,+ent and ordered the re+and of the records of the case to the court
of ori,in for e?ecution&
On Nove+5er !40 !'(50 petitioner0 without waitin, for the resolution of the
appellate court in the ur,ent +otion for reconsideration it filed on Nove+5er
*0 !'(50 filed the instant petition to annul and set aside the resolution of the
appellate court dated Octo5er -40 !'(5 which denied the .otion for
Reconsideration of its decision dated #u,ust -90 !'(5&
In a +otion dated Nove+5er -!0 !'(50 petitioner pra3ed of the issuance of
te+porar3 restrainin, order to en@oin the appellate court fro+ re+andin, the
records of the case for e?ecution of the @ud,+ent& The petitioner also filed a
Supple+ent to Petition for Certiorari0 dated Nove+5er -!0 !'(5&
In a Resolution dated Nove+5er -90 !'(50 this Court0 actin, on the petition0
re;uired private respondent to file its Co++entE ,ranted the pra3er of the
petitioner in his ur,ent +otion0 and a te+porar3 restrainin, order was issued
en@oinin, the appellate court fro+ re+andin, the records of the case for
e?ecution of @ud,+ent&
Private respondent filed its CO..ENT dated Dece+5er !40 !'(5&
In a Resolution dated >anuar3 -90 !'(*0 the Court resolved to ,ive due
course to the petition0 and re;uired the parties to su5+it their +e+oranda& In
co+pliance with the said Resolution0 the parties filed their respective
+e+oranda&
On #u,ust !50 !'(*0 petitioner filed a .otion to Re+and Records to the
Court of #ppeals in view of the resolution of this Court dated .a3 )20 !'(* in
the =a5alu3as case which considered and set aside its decision dated
#u,ust 50 !'(5 53 ,ivin, it prospective application 5e,innin, one +onth
after the pro+ul,ation of the said resolution& This +otion was opposed 53
private respondent& On Septe+5er --0 !'(*0 petitioner filed its Repl3 to
Opposition to which private respondent filed its re@oinder& In a Resolution
dated Dece+5er )0 !'(*0 the +otion to re+and records was denied&
PetitionerHs 1rief raised si? 7*8 assi,n+ent of errors0 to wit<
T=E I#C ERRED IN #PP:IIN% T=E NEF PO:ICI O4 NOT %R#NTIN%
#NI EJTENSION O4 TI.E TO 4I:E .OTION 4OR RECONSIDER#TION&
T=E I#C ERRED IN RG:IN% T=#T T=E O1:I%#TION O4 RESPONDENT
F#S :I.ITED TO P4029-0*(-&!) NOTFIT=ST#NDIN% T=#T 4#CT T=#T
T=E DEED O4 #SSI%N.ENT 7T=E CONTR#CT SGED GPON8 ITSE:4
EJPRESS:I #ND REPE#TED:I SPE#KS O4 RESPONDENTHS
O1:I%#TION #S LT=E #.OGNT O4 P4029-0*(-&!) #S >GNE )20 !'(2
P:GS #PP:IC#1:E INTEREST C=#R%ES ON OVERDGE #CCOGNT #ND
OT=ER #VTGR1O 4GE: :I4TIN% #ND DE:IVERIES T=#T #SSI%NOR
.#I 4RO. TI.E TO TI.E RECEIVE 4RO. #SSI%NEE&L
T=E I#C ERRED IN RG:IN% T=#T T=E DEED O4 #SSI%N.ENT
S#TIS4IES T=E REMGISITES O4 D#TION IN P#I.ENT 7F=IC= =#S
T=E E44ECT O4 I..EDI#TE EJTIN%GIS=.ENT O4 T=E O1:I%#TION8
DESPITE T=E 4#CT T=#T S#ID DEED O4 #SSI%N.ENT 7!8 COVERS
4GTGRE O1:I%#TION 4OR L#PP:IC#1:E INTEREST C=#R%ES ON
OVER DGE #CCOGNT #ND OT=ER #VTGR1O 4GE: :I4TIN% T=E
DE:IVERIES T=#T #SSI%NOR .#I 4RO. TI.E TO TI.E RECEIVE
4RO. #SSI%NEESL #ND 7-8 INC:GDES #N EJPRESS RESERV#TION 1I
#SSI%NEE TO DE.#ND 4G:: P#I.ENT O4 T=E O1:I%#TIONS O4 T=E
#SSI%NOR LIN C#SE O4 GNRE#SON#1:E DE:#I OR NON$RECEIPT
O4 #SSI%NEE O4 T=E #4ORE.ENTIONED 4GNDS #NDNOR RE4GND
O4 SPECI#: 4GND I.PORT P#I.ENT 4RO. T=E %OVERN.ENT DGE
TO #NI C#GSE OR RE#SON F=#TSOEVER&
T=E I#C ERRED IN 4#I:IN% TO T#KE INTO #CCOGNT T=E
CONTE.POR#NEOGS #ND SG1SEMGENT #CTS O4 T=E P#RTIES
F=IC= #:SO C:E#R:I S=OF T=#T T=EI DID NOT INTEND T=E DEED
O4 #SSI%N.ENT TO =#VE E44ECT O4 D#TION IN P#I.ENT&
I4 T=E DEED O4 #SSI%N.ENT =#D T=E E44ECT O4 # D#TION IN
P#I.ENT0 T=EN T=E I#C ERRED IN NOT RG:IN% T=#T PETITIONER
=#S # RI%=T TO RET#IN T=E ENTIRE CREDIT #SSI%NED TO IT IN :IEG
O4 P#I.ENT O4 RESPONDENTHS O1:I%#TION INSTE#D O4 1EIN%
REMGIRED TO RETGRN PORTION O4 T=E CREDIT F=IC= IS C:#I.ED
TO 1E IN EJCESS O4 RESPONDENTHS O1:I%#TION&
#SSG.IN% T=#T PETITIONER IS :I#1:E TO .#KE # RETGRN O4 #
PORTION O4 T=E CREDIT #SSI%NED0 T=E I#C ERRED IN #F#RDIN%
LINTEREST #T T=E :E%#: R#TE O4 !4A P! A""#M 4RO. T=E
4I:IN% O4 T=E :E%#: O4 T=E CO.P:#INT&L
Fe find +erit in the instant petition&
The two vital issues presented to the Court for resolution are0 as follows<
!& Fhether or not the Gr,ent .otion for E?tension of Ti+e to 4ile a .otion
for Reconsideration filed 53 petitioner on Septe+5er -20 !'(50 as well as the
.otion for Reconsideration filed on Septe+5er -*0 !'(5 7within the period of
e?tension pra3ed for80 +a3 5e validl3 ,rantedE and
-& Fhether or not the Deed of #ssi,n+ent entered into 53 the parties herein
on >ul3 )!0 !'(2 constituted $acion en pago, as ruled 53 the appellate court0
such that the o5li,ation is totall3 e?tin,uished0 hence after said date0 no
interest and service char,es could an3+ore 5e i+posed on private
respondent0 so that petitioner was not le,all3 authoriBed to deduct the
a+ount of P5!20552&*) as interest and service char,es on the unpaid and
overdue accounts of private respondent&
#nent the first issue0 we rule in the affir+ative&
Fe held in the case of =a5alu3as Enterprises0 Inc&0 et& al& vs& >apson et& al&
7!)( SCR# 4* !'(5"0 pro+ul,ated #u,ust 50 !'(580 that the L!5$da3 period
for appealin, or for filin, a +otion for reconsideration cannot 5e e?tendedL&
Su5se;uentl30 the Court0 actin, on respondentHs +otion for reconsideration
in the sa+e entitled case 7!4- SCR# -2( !'(*"80 restated and clarified the
rule on this point for the ,uidance of the 1ench and 1ar 53 ,ivin, the rule
prospective application in its resolution dated .a3 )20 !'(*E
#fter considerin, the a5le ar,u+ents of counsels for petitioners and
respondents0 the Court resolved that the interest of @ustice would 5e 5etter
served if the rulin, in the ori,inal decision were applied prospectivel3 fro+
the ti+e herein stated& The reason is that it would 5e unfair to deprive parties
of the ri,ht to appeal si+pl3 5ecause the3 availed the+selves of a procedure
which was not e?pressl3 prohi5ited or allowed 53 the law or the Rules& On
the otherhand0 a +otion for new trial or reconsideration is not a pre$re;uisite
to an appeal0 a petition for review or a petition for review on certiorari, and
since the purpose of the a+end+ents a5ove referred to is to e?pedite the
final disposition of cases0 a strict 5ut prospective application of the said
rulin, is in order& =ence0 for the ,uidance of the 1ench and 1ar0 the Court
restates and clarifies the rules on this point0 as follows&
!&8 1e,innin, one +onth after the pro+ul,ation of this Resolution0 the rule
shall 5e strictl3 enforced that no +otion for e?tension of ti+e to file a +otion
for new trial or reconsideration +a3 5e filed with the .etropolitan or
.unicipal Trial Courts0 the Re,ional Trial Courts0 and the Inter+ediate
#ppellate Court& Such a +otion +a3 5e filed onl3 in cases pendin, with the
Supre+e Court as the court of last resort0 which +a3 in its sound discretion
either ,rant or den3 the e?tension re;uested&
In Sin,h vs& I#C0 7!4( SCR# -99 !'(9"80 this Court appl3in, the aforesaid
rulin, in the =a5alu3as case0 held&
In other words0 there is one +onth ,race period fro+ the pro+ul,ation on
.a3 )20 !'(*0 of the CourtHs Resolution in the clarificator3 =a5alu3as case0
or up to >une )20 !'(*0 within which the rule 5arrin, e?tensions of ti+e to file
+otions for reconsideration is0 as 3et0 not strictl3 enforcea5le 71a3aca vs&
I#C0 %&R& No& 9(4-40 Septe+5er !50 !'(*8&
Since petitioners herein filed their .otion for E?tension on #u,ust *0 !'(50 it
was still within the ,race period0 which e?pired on >une )20 !'(*0 and +a3
still 5e allowed&
Si+ilarl30 when petitioner herein filed its .otion for E?tension of ti+e to file
+otion for reconsideration on Septe+5er -20 !'(50 the said +otion was filed
within the one$+onth ,race period0 which e?pired on >une )20 !'(*0 and
+a3 still 5e allowed& Conse;uentl30 the .otion for Reconsideration filed 53
petitioner on Septe+5er -*0 !'(50 was also filed on ti+e&
Fith respect to the second issue0 Fe rule that the Deed of #ssi,n+ent
e?ecuted 53 the parties on >ul3 )!0 !'(2 is not a dation in pa3+ent and did
not totall3 e?tin,uish respondentHs o5li,ation as stated therein&
The then Inter+ediate #ppellate Court ruled that the three 7)8 re;uisites
$acion en pago * are all present in the instant case0 and concluded that the
Deed of #ssi,n+ent of >ul3 )!0 !'(2 7#nne? LCL of Partial Stipulation of
4acts8 constitutes a dacion in pa3+ent provided for in #rticle !-45 ?? of the
Civil Code which has the effect of e?tin,uishin, the o5li,ation0 thus
supportin, the clai+ of private respondent for the return of the a+ount
retained 53 petitioner&
This Court0 spea/in, of the concept of dation in pa3+ent0 in the case of
:opeB vs& Court of #ppeals 7!!4 SCR# *9!0 *(5 !'(-"80 a+on, others0
stated<
The dation in pa3+ent e?tin,uishes the o5li,ation to the e?tent of the value
of the thin, delivered0 either as a,reed upon 53 the parties or as +a3 5e
proved0 unless the parties 53 a,ree+ent0 e?press or i+plied0 or 53 their
silence0 consider the thin, as e;uivalent to the o5li,ation0 in which case the
o5li,ation is totall3 e?tin,uished& 7( .anresa )-4E ) Valverde !94 fn&8
4ro+ the a5ove0 it is clear that a dation in pa3+ent does not necessaril3
+ean total e?tin,uish+ent of the o5li,ation& The o5li,ation is totall3
e?tin,uished onl3 when the parties0 53 a,ree+ent0 e?press or i+plied0 or 53
their silence0 consider the thin, as e;uivalent to the o5li,ation&
In the instant case0 the then Inter+ediate #ppellate Court failed to ta/e into
account the followin, e?press recitals of the Deed of #ssi,n+ent O
That Fhereas0 A%%&'"(! has an outstan$ing ob)igation *ith A%%&'" in
the amount of P+,,-.,/0.&12 as of June 2,, 130,, p)us an4 app)icab)e
interest on o5er$ue account& 7p& -0 Deed of #ssi,n+ent8
Now therefore in consideration of the fore,oin, pre+ises0 #SSI%NOR 53
virtue of these presents0 does here53 irrevoca5l3 assi,n and transfer unto
#SSI%NEE an3 and all funds andNor Refund of Special 4und Pa3+ents0
includin, all its ri,hts and 5enefits accruin, out of the sa+e0 that #SSI%NOR
+i,ht 5e entitled to0 53 virtue of and pursuant to the decision in 1OE Case
No& (2$!-)0 in pa4ment of A%%&'"(!6s outstan$ing ob)igation p)us an4
app)icab)e interest charges on o5er$ue account an$ other a5turbo fue) )ifting
an$ $e)i5eries that A%%&'"(! ma4 from time to time recei5e from the
A%%&'", an$ A%%&'" $oes hereb4 accepts such assignment in its
fa5or& 7p& -0 Deed of #ssi,n+ent8 7E+phasis supplied8
=ence0 it could easil3 5e seen that the Deed of #ssi,n+ent spea/s of three
7)8 o5li,ations O 7!8 the outstandin, o5li,ation of P4029-0*(-&!) as of >une
)20 !'(2E 7-8 the applica5le interest char,es on overdue accountsE and 7)8
the other avtur5o fuel liftin, and deliveries that assi,nor 7private respondent8
+a3 fro+ ti+e to ti+e receive fro+ assi,nee 7Petitioner8& #s aptl3 ar,ued 53
petitioner0 if it were the intention of the parties to li+it or fi? respondentHs
o5li,ation to P4029-&*(-&!)E the3 should have so stated and there would
have 5een no need for the+ to ;ualif3 the state+ent of said a+ount with the
clause Las of >une )20 !'(2 plus an3 applica5le interest char,es on overdue
accountL and the clause Land other avtur5o fuel liftin, and deliveries that
#SSI%NOR +a3 fro+ ti+e to ti+e receive fro+ the #SSI%NEEL& The ter+s
of the Deed of #ssi,n+ent 5ein, clear0 the literal +eanin, of its stipulations
should control 7#rt& !)920 Civil Code8& In the construction of an instru+ent
where there are several provisions or particulars0 such a construction is0 if
possi5le0 to 5e adopted as will ,ive effect to all 7Rule !)20 Sec& '0 Rules of
Court8&
:i/ewise0 the then Inter+ediate #ppellate Court failed to ta/e into
consideration the su5se;uent acts of the parties which clearl3 show that the3
did not intend the Deed of #ssi,n+ent to totall3 e?tin,uish the o5li,ation O
7!8 #fter the e?ecution of the Deed of #ssi,n+ent on >ul3 )!0 !'(20
petitioner continued to char,e respondent with interest on its overdue
account up to >anuar3 )!0 !'(! 7#nne?es L=L0 LIL0 L>L and LKL of the Partial
Stipulation of 4acts8& This was pursuant to the Deed of #ssi,n+ent which
provides for respondentHs o5li,ation for Lapplica5le interest char,es on
overdue account&L The char,es for interest were +ade ever3 +onth and not
once did respondent ;uestion or ta/e e?ception to the interestE and 7-8 In its
letter of 4e5ruar3 !*0 !'(! 7#nne? L>L0 Partial Stipulation of 4acts80
respondent addressed the followin, re;uest to petitionerE
.oreover0 we would also li/e to re;uest for a consideration in the followin,
!& Interest char,es 5e li+ited up to Dece+5er )!0 !'(2 onl3E and
-& Reduction of -A of !(A interest rate p&a&
Fe are hopin, for 3our usual /ind consideration on this +atter&
In order to @ud,e the intention of the contractin, parties0 their
conte+poraneous and su5se;uent acts shall 5e principall3 considered 7#rt&
!-5)0 Civil Code8& The fore,oin, su5se;uent acts of the parties clearl3 show
that the3 did not intend the Deed of #ssi,n+ent to have the effect of totall3
e?tin,uishin, the o5li,ations of private respondent without pa3+ent of the
applica5le interest char,es on the overdue account&
4inall30 the pa3+ent of applica5le interest char,es on overdue account0
separate fro+ the principal o5li,ation of P4029-&*(-&!) was e?pressl3
stipulated in the Deed of #ssi,n+ent& The law provides that Lif the de5t
produces interest0 pa3+ent of the principal shall not 5e dee+ed to have
5een +ade until the interests have 5een covered&L 7#rt& !-5)0 Civil Code8&
F=ERE4ORE0 the decision of the then Inter+ediate #ppellate Court dated
#u,ust -90 !'(5 is here53 SET #SIDE0 and the Nove+5er 90 !'() decision
of the trial court is REINST#TED&
SO ORDERED&
Read the full text of PAPA vs. A. U. VALENCIA and CO. INC., G.R. No. 105188,
FACTS: Petitioner Papa was the administrator of the Testate Estate of deceased
Angela M. Butte. A parcel of land owned by the latter was sold to respondent
Pearroyo through respondent Valencia herein. However, no title to the property has
been delivered to them by petitioner despite the fact that respondents paid in check
the amount of P40,000.00 as full payment of the purchase price of the lot in question
in addition to the earnest money that they paid to petitioner in the amount of
P5,000.00. Evidence was shown that receipts were issued by herein petitioner. A
complaint for specific performance was filed against petitioner for his failure to
comply with what is incumbent upon him that is the delivery to respondents of the
title to the subject property and the peaceful possession and enjoyment of the said
property, free from any liens and encumbrances. This complaint was granted by the
regional trial court. On appeal, petitioner alleged, among others, that the sale was
never consummated on the ground that the check paid by respondents was not
encashed invoking the provision of the Civil Code, which provides, in part, that
payment by checks shall produce the effect of payment only when they have been
cashed or when through the fault of the creditor they have been impaired.
ISSUE: Whether or not the sale was consummated.
RULING: The sale was consummated. Contrary to petitioner's contention, a
presumption exists that the check was encashed hence there is payment on the part
of respondents herein.
It is evident from the facts of the case that no proof was presented that petitioner did
not in fact encashed the check in question. On the contrary, evidence was shown that
petitioner received said check as well as the earnest money and issued receipts
therefor. Accordingly, the presumption is that the check was encashed since the
payment by check was not denied by herein petitioner. Granting that petitioner had
never encashed the check, his failure to do so for more than ten (10) years
undoubtedly resulted in the impairment of the check through his unreasonable and
unexplained delay. The Supreme Court held that, while it is true that the delivery of
a check produces the effect of payment only when it is cashed, the rule is otherwise
if the debtor is prejudiced by the creditor's unreasonable delay in presentment. The
acceptance of a check implies an undertaking of due diligence in presenting it for
payment, and if he from whom it is received sustains loss by want of such diligence,
it will be held to operate as actual payment of the debt or obligation for which it was
given. It has, likewise, been held that if no presentment is made at all, the drawer
cannot be held liable irrespective of loss or injury unless presentment is otherwise
excused. The payee of a check would be a creditor under this provision and if its
non-payment is caused by his negligence, payment will be deemed effected and the
obligation for which the check was given as conditional payment will be discharged.
R)p'&li2 o4 *+) 0+ilippin)(Con%r)(( o4 *+) 0+ilippin)(.etro .anila
$)n*+ Con%r)((
R)p'&li2 A2* No. 8188 1'n) 11, 1::6Repealin, R# 5-'
AN AC$ R"0"ALING R"0UBLIC AC$ NU#B"R"! FI@" 6UN!R"!
$5"N$>ANIN" AS A#"N!"!, "N$I$L"! "AN ACT TO ASSURE THE
UNIFORM VAUE OF !HII!!INE COIN AN" CURRENC#.B
7e it enacte$ b4 the %enate an$ 8ouse of !epresentati5es of the
Phi)ippines in Congress assemb)e$9<
S)2*ion 1. #ll +onetar3 o5li,ations shall 5e settled in the Philippine currenc3
which is le,al tender in the Philippines& =owever0 the parties +a3 a,ree that
the o5li,ation or transaction shall 5e settled in an3 other currenc3 at the ti+e
of pa3+ent&
S)2. 2. Repu5lic #ct Nu+5ered 4ive =undred Twent3$Nine 7R&#& No& 5-'80
as a+ended entitled :An Act to Assume the #niform ;a)ue of Phi)ippine Coin
an$ Currenc4,: is here53 repealed&
S)2. 8. This #ct shall ta/e effect fifteen 7!58 da3s after its pu5lication in the
Official %aBette or in two 7-8 national newspapers of ,eneral circulation& The
1an,/o Sentral n, Pilipinas and the Depart+ent of 4inance shall conduct an
intensive infor+ation ca+pai,n on the effect of this #ct&
Appro5e$< >une !!0 !''*
4IRST DIVISION
[G.R. No. 160215. No9),&)r 10, 2004]
6>!RO R"SOURC"S CON$RAC$ORS COR0ORA$ION, petitioner, vs.
NA$IONAL IRRIGA$ION A!#INIS$RA$ION, respondent.
>NAR"SASAN$IAGO, J.C
Challen,ed in this petition for review on certiorari under Rule 45 is the
Decision of the Court of #ppeals!" dated Octo5er -'0 -22- and its
Resolution dated Septe+5er -40 -22)-" in C#$%&R& SP No& 445-90)"
reversin, the @ud,+ent of the Construction Industr3 #r5itration Co++ission
7CI#C8 dated >une !20 !''94" in CI#C Case No& !4$'( in favor of petitioner
=3dro Resources Contractors Corporation&
The facts are undisputed and are +atters of record&
In a co+petitive 5iddin, conducted 53 the National Irri,ation
#d+inistration 7NI#8 so+eti+e in #u,ust !'9(0 =3dro Resources
Contractors Corporation 7=3dro8 was awarded Contract .PI$C$-5" involvin,
the +ain civil wor/ of the .a,at River .ulti$Purpose Pro@ect& The contract
price for the wor/ was pe,,ed at P!04('0!4*049)&9- with the peso
co+ponent thereof a+ountin, to P!024!0((409**&'' and the GSP
co+ponent valued at P*20*590''-&)9 at the e?chan,e rate of P9&)9)5 to the
dollar or P4490)*!092*&9)&
On Nove+5er *0 !'9(0 the parties si,ned #+end+ent No& !*" of the
contract where53 NI# a,reed to increase the forei,n currenc3 allocation for
e;uip+ent financin, fro+ GSP-(02220222&22 for the first and second 3ears
of the contract to GSP)(02220222&220 to 5e +ade availa5le in full durin, the
first 3ear of the contract to ena5le the contractor to purchase the needed
e;uip+ent and spare parts0 as approved 53 NI#0 for the construction of the
pro@ect& On #pril '0 !'(20 the parties entered into a .e+orandu+ of
#,ree+ent9" 7.O#8 where53 the3 a,reed that =3dro +a3 directl3 avail of
the forei,n currenc3 co+ponent of the contract for the sole purpose of
purchasin, necessar3 spare parts and e;uip+ent for the pro@ect& This was
+ade in order for the contractor to avoid further dela3s in the procure+ent of
the said spare parts and e;uip+ent&
# few +onths after the .O# was si,ned0 NI# and =3dro entered into
a Supple+ental .e+orandu+ of #,ree+ent 7Supple+ental .O#8 to include
a+on, the ite+s to 5e financed out of the forei,n currenc3 portion of the
Contract Cconstruction +aterials0 supplies and services as well as e;uip+ent
and +aterials for incorporation in the per+anent wor/s of the Pro@ect&D("
For/ on the pro@ect pro,ressed steadil3 until =3dro su5stantiall3
co+pleted the pro@ect in !'(- and the final acceptance was +ade 53 NI# on
4e5ruar3 !40 !'(4&'"
Durin, the period of the e?ecution of the contract0 the forei,n
e?chan,e value of the peso a,ainst the GS dollar declined and steadil3
deteriorated& Fhenever =3dro6s avail+ent of the forei,n currenc3
co+ponent e?ceeded the a+ount of the forei,n currenc3 pa3a5le to =3dro
for a particular period0 NI# char,ed interest in dollars 5ased on the prevailin,
e?chan,e rate instead of the fi?ed e?chan,e rate of P9&)9)5 to the dollar&
Iet when =3dro received pa3+ents fro+ NI# in Philippine Pesos0 NI# +ade
deductions fro+ =3dro6s forei,n currenc3 co+ponent at the fi?ed e?chan,e
rate of P9&)9)5 to GSP!&22 instead of the prevailin, e?chan,e rate&
Gpon co+pletion of the pro@ect0 a final reconciliation of the total
entitle+ent of =3dro to the forei,n currenc3 co+ponent of the contract was
+ade& The result of this final reconciliation showed that the total entitle+ent
of =3dro to the forei,n currenc3 co+ponent of the contract e?ceeded the
a+ount of GS dollars re;uired 53 =3dro to repa3 the advances +ade 53 NI#
for its account in the i+portation of new e;uip+ent0 spare parts and tools&
=3dro then re;uested a full and final pa3+ent due to the underpa3+ent of
the forei,n e?chan,e portion caused 53 price escalations and e?tra wor/
orders& In !'()0 NI# and =3dro prepared a @oint co+putation deno+inated
as the C.PI$C$- Dollar Rate Differential on 4orei,n Co+ponent of
Escalation&D!2" 1ased on said @oint co+putation0 =3dro was still entitled to a
forei,n e?chan,e differential of GSP!0)5)099!&9' e;uivalent to
P!20('(0)'!&!9&
=3dro then presented its clai+ for said forei,n e?chan,e differential
to NI# on #u,ust !-0 !'()!!" 5ut the latter refused to honor the sa+e&
=3dro +ade several!-" de+ands to recover its clai+ until the sa+e was
turned down with finalit3 53 then NI# #d+inistrator 4ederico N& #lda30 >r& on
>anuar3 *0 !'(9&!)"
On Dece+5er 90 !''40 =3dro filed a re;uest for ar5itration with the
Construction Industr3 #r5itration Co++ission 7CI#C8&!4" In the said
re;uest0 =3dro no+inated si? 7*8 ar5itrators& The case was doc/eted as
CI#C Case No& !($'4&
NI# filed its #nswer with Co+pulsor3 Counterclai+!5" raisin, laches0
estoppel and lac/ of @urisdiction 53 CI#C as its special defenses& NI# also
su5+itted its si? 7*8 no+inees to the panel of ar5itrators& #fter appoint+ent
of the ar5itrators0 5oth parties a,reed on the Ter+s of Reference!*" as well
as the issues su5+itted for ar5itration&
On .arch !)0 !''50 NI# filed a .otion to Dis+iss!9" ;uestionin,
CI#C6s @urisdiction to ta/e co,niBance of the case& The latter0 however0
deferred resolution of the +otion and set the case for hearin, for the
reception of evidence&!(" NI# +oved!'" for reconsideration 5ut the sa+e
was denied 53 CI#C in an Order dated #pril -50 !''5&-2"
Dissatisfied0 NI# filed a petition for certiorari and prohi5ition with the
Court of #ppeals where the sa+e was doc/eted as C#$%&R& SP No& )9!(20
-!" which dis+issed the petition in a Resolution dated >une -(0 !''*&--"
NI# challen,ed the resolution of the Court of #ppeals 5efore this
Court in a special civil action for certiorari0 doc/eted as %&R& No& !-'!*'&-)"
.eanwhile0 on >une !20 !''90 the CI#C pro+ul,ated a decision in
favor of =3dro&-4" NI# filed a Petition for Review on #ppeal 5efore the
Court of #ppeals0 which was doc/eted as C#$%&R& SP No& 445-9&-5"
Durin, the pendenc3 of C#$%&R& SP No& 445-9 5efore the Court of
#ppeals0 this Court dis+issed special civil action for certiorari doc/eted as
%&R& No& !-'!*' on the ,round that CI#C had @urisdiction over the dispute
and directed the Court of #ppeals to proceed with reasona5le dispatch in the
disposition of C#$%&R& SP No& 445-9& NI# did not +ove for reconsideration
of the said decision0 hence0 the sa+e 5eca+e final and e?ecutor3 on
Dece+5er !50 !'''&-*"
Thereafter0 the Court of #ppeals rendered the challen,ed decision in
C#$%&R& SP No& 445-90 reversin, the @ud,+ent of the CI#C on the ,rounds
that< 7!8 =3dro6s clai+ has prescri5edE 7-8 assu+in, that =3dro was entitled
to its clai+0 the rate of e?chan,e should 5e 5ased on a fi?ed rateE 7)8
=3dro6s clai+ is contrar3 to R&#& No& 5-'E-9" 748 NI#6s Certification of Non$
4oru+$Shoppin, was proper even if the sa+e was si,ned onl3 53 counsel
and not 53 NI#6s authoriBed representativeE and 758 NI# did not en,a,e in
foru+$shoppin,&
=3dro6s .otion for Reconsideration was denied in Resolution of
Septe+5er -40 -22)&
=ence0 this petition&
#ddressin, first the issue of prescription0 the Court of #ppeals0 in
rulin, that =3dro6s clai+ had prescri5ed0 reasoned thus<
Nevertheless, We find good reason to apply the principle of prescription against
HRCC. It is well to note that Section 25 of the General Conditions of the subject
contract provides (CIAC Decision, p. 15, Rollo, p. 57):
Any controversy or dispute arising out of or relating to this Contract which cannot
be resolved by mutual agreement shall be decided by the Administrator within thirty
(30) calendar days from receipt of a written notice from Contractor and who shall
furnish Contractor a written copy of this decision. Such decision shall be final and
conclusive unless within thirty (30) calendar days from the date of receipt thereof,
Contractor shall deliver to NIA a written notice addressed to the Administrator that
he desires that the dispute be submitted to arbitration. Pending decision from
arbitration, Contractor shall proceed diligently with the performance of the
Contract and in accordance with the decision of the Administrator. (Emphasis and
Both parties admit the existence of this provision in the Contract (Petition, p. 4;
Comment, p. 16; Rollo, pp. 12 and 131). Apropos, the following matters are clear:
(1) any controversy or dispute between the parties arising from the subject contract
shall be governed by the provisions of the contract; (2) upon the failure to arrive at a
mutual agreement, the contractor shall submit the dispute to the Administrator of
NIA for determination; and (3) the decision of the Administrator shall become final
and conclusive, unless within thirty (30) calendar days from the date of receipt
thereof, the Contractor shall deliver to NIA a written notice addressed to the
Administrator that he desires that the dispute be submitted for arbitration.
Prescinding from the foregoing matters, We find that the CIAC erred in granting
HRCCs claim considering that the latters right to make such demand had clearly
prescribed. To begin with, on January 7, 1986, Cesar L. Tech (NIAs Administrator
at the time) informed HRCC in writing that after a review of the additional points
raised by the latter, NIA confirms its original recommendation not to allow the said
claim (Annex F; Rollo, p. 81; CIAC Decision, p. 11; Rollo, p. 53). This should
have propelled private respondent to notify and signify to NIA of intention to submit
the dispute to arbitration pursuant to the provision of the contract. Yet, it did not.
Instead it persisted to send several letters to NIA reiterating the reason for its
rejected claim (CIAC Decision, p. 11; Rollo, p. 53).-("
Fe disa,ree for the followin, reasons<
<irst, the appellate court clearl3 overloo/ed the fact that NI#0 throu,h
then #d+inistrator 4edrico N& #lda30 >r&0 denied Cwith finalit3D =3dro6s clai+
onl3 on >anuar3 *0 !'(9 in a letter 5earin, the sa+e date-'" which reads<
This refers to your letter dated November 7, 1986 requesting reconsideration on
your claim for payment of the Dollar Rate Differential of Price Escalation in
Contract No. MPI-C-2.
We have reviewed the relevant facts and issues as presented and the additional
points raised in the abovementioned letter in the context of the Contract Documents
and we find no strong and valid reason to reverse the earlier decision of NIAs
previous management denying your claim. Therefore, we regret that we have to
reiterate the earlier official stand of NIA under its letter dated January 7, 1986, that
confirms the original recommendation which had earlier been presented in our 4
Indorsement dated February 5, 1985 to your office.
In view hereof, we regret to say with finality that the claim cannot be given
favorable consideration. (Emphasis and italics supplied)
=3dro received the a5ove$+entioned letter on >anuar3 -90 !'(9&)2"
Pursuant to Section -5 of the Contract6s %eneral Conditions 7%C$-580 =3dro
had thirt3 7)28 da3s fro+ receipt of said denial0 or until 4e5ruar3 -*0 !'(90
within which to notif3 NI# of its desire to su5+it the dispute to ar5itration&
On 4e5ruar3 !(0 !'(90 =3dro sent a letter)!" to NI#0 addressed to
then NI# #d+inistrator 4ederico N& #lda30 >r&0 +anifestin, its desire to su5+it
the dispute to ar5itration& The letter was received 53 NI# on 4e5ruar3 !'0
!'(90 which was *ithin the thirt3$da3 prescriptive period&
.oreover0 a circu+spect scrutin3 of the wordin, of %C$-5 with re,ard
to the thirt3$da3 prescriptive period shows that said proviso is intended to
appl3 to disputes which arose $uring the actua) construction of the pro@ect
and not for controversies which occured after the pro@ect is co+pleted& The
rationale for such a stipulation was aptl3 e?plained thus 53 the CI#C in its
Decision in CI#C Case No& !($'4<
In construction contracts, there is invariably a provision for interim settlement of
disputes. The right to settle disputes is given to the owner or his representative,
either an architect or engineer, designated as owners representative, only for the
purpose of avoiding delay in the completion of the project. In this particular
contract, that right was reserved to the NIA Administrator. The types of disputes
contemplated were those which may have otherwise affected the progress of the
work. It is very clear that this is the purpose of the limiting periods in this clause
that the dispute shall be resolved by the Administrator within 30 days from receipt
of a written notice from the Contractor and that the Contractor may submit to
arbitration this dispute if it does not agree with the decision of the Administrator,
and Pending decision from arbitration, Contractor shall proceed diligently with the
performance of the Contract and in accordance with the decision of the
In this case, the dispute had arisen after completion of the Project. The reason for the
30-day limitation no longer applies, and we find no legal basis for applying it.
Moreover, in Exhibit B, NIA Administrator Cesar L. Tech had, instead of
rendering an adverse decision, by signing the document with HRCCs Onofre B.
Banson, implicitly approved the payment of the foreign exchange differential, but
this payment could not be made because of the opinion of Auditor Saldua and later
of the Commission on Audit.)-"
%econ$, as earl3 as #pril !'()0 =3dro and NI#0 throu,h its
#d+inistrator Cesar :& Tech0 prepared the >oint Co+putation which shows
that =3dro is entitled to the forei,n currenc3 differential&))" #s correctl3
found 53 the CI#C0 this co+putation constitutes a written ac/nowled,+ent
of the de5t 53 the de5tor under #rticle !!55 of the Civil Code0 which states<
court, when there is a written extrajudicial demand by the creditors, and when there
is any written acknowledgment of the debt by the debtor. (Emphasis and italics
Instead of upholdin, the CI#C6s findin,s on this point0 the Court of
#ppeals ruled that Cesar :& Tech6s act of si,nin, the >oint Co+putation was
an u)tra 5ires act& This a,ain is patent error& It +ust 5e noted that the
#d+inistrator is the hi,hest officer of the NI#& 4urther+ore0 =3dro has 5een
dealin, with NI# throu,h its #d+inistrator in all of its transactions with
respect to the contract and su5se;uentl3 the forei,n currenc3 differential
clai+& The NI# #d+inistrator is e+powered 53 the Contract to ,rant or den3
forei,n currenc3 differential clai+s& It would 5e preposterous for the NI#
#d+inistrator to have the power of ,rantin, clai+s without the authorit3 to
verif3 the co+putation of such clai+s& 4inall30 the records of the case will
show that NI# itself ne5er disputed its #d+inistrator6s capacit3 to si,n the
>oint Co+putation 5ecause it /new that the #d+inistrator0 in fact0 had such
capacit3&
Even assu+in, for the sa/e of ar,u+ent that the #d+inistrator had
no authorit3 to 5ind NI#0 the latter is alread3 estopped after repeatedl3
representin, to =3dro that the #d+inistrator had such authorit3& #
corporation +a3 5e held in estoppel fro+ den3in, as a,ainst third persons
the authorit3 of its officers or a,ents who have 5een clothed 53 it with
ostensi5le or apparent authorit3&)4" Indeed Q
. . . The rule is of course settled that [a]lthough an officer or agent acts without, or
in excess of, his actual authority if he acts within the scope of an apparent authority
with which the corporation has clothed him by holding him out or permitting him to
appear as having such authority, the corporation is bound thereby in favor of a
person who deals with him in good faith in reliance on such apparent authority, as
where an officer is allowed to exercise a particular authority with respect to the
business, or a particular branch of it, continuously and publicly, for a considerable
time.. . .)5"
Thir$, NI# has clearl3 waived the prescriptive period when it
continued to entertain =3dro6s clai+ re,ardin, new +atters raised 53 the
latter in its letters to NI# and then issuin, rulin,s thereon& In this re,ard0
#rticle !!!- of the Civil Code provides that<
ART. 1112. Persons with capacity to alienate property may renounce prescription
already obtained, but not the right to prescribe in the future.
Prescription is deemed to have been tacitly renounced when the renunciation
results from acts which imply the abandonment of the right acquired. (Emphasis
and italics supplied)
Certainl30 when a part3 has renounced a ri,ht ac;uired 53
prescription throu,h its actions0 it can no lon,er clai+ prescription as a
defense&)*"
<ourth, even assu+in, that NI# did not waive the thirt3$da3
prescriptive period0 it clearl3 waived the effects of such period when it
activel3 participated in ar5itration proceedin,s throu,h the followin, acts<
a) On January 6, 1995, NIA voluntarily filed its written appearance, readily
submitted its Answer and asserted its own Counterclaims;
b) In the Compliance which accompanied the Answer, NIA also submitted its six
nominees to the Arbitral Tribunal to be constituted, among of which one was
eventually appointed to the tribunal;
c) NIA also actively participated in the deliberations for and the formulation of
the Terms of Reference during the preliminary conference set by CIAC; and
d) For the purpose of obviating the introduction of testimonial evidence on the
authenticity and due execution of its documentary evidence, NIA even had
examined, upon prior request to Hydro, all of the documents which the latter
intended to present as evidentiary exhibits for the said arbitration case.
Fe now co+e to the issue of whether or not the provisions of R&#&
No& 5-'0 otherwise /nown as an Act To Assure #niform ;a)ue to Phi)ippine
Coin An$ Currenc40 is applica5le to =3dro6s clai+&
The Contract 5etween NI# and =3dro is an internationa))4 tendered
contract considerin, that it was funded 53 the International 1an/ for
Reconstruction and Develop+ent 7I1RD8& #s a contract funded 53 an
international or,aniBation0 particularl3 one reco,niBed 53 the Philippines0)9"
the contract is e=empt fro+ the provisions of R&#& No& 5-'& R&#& No& 4!22
a+ended the provisions of R&#& 5-' thus<
SECTION 1. Section one of Republic Act Numbered Five hundred and
twenty-nine, entitled An Act to Assure Uniform Value of Philippine Coin and
Currency, is hereby amended to read as follows:
Sec. 1. Every provision contained in, or made with respect to, any domestic
obligation to wit, any obligation contracted in the Philippines which provisions
purports to give the obligee the right to require payment in gold or in a particular
kind of coin or currency other than Philippine currency or in an amount of money of
the Philippines measured thereby, be as it is hereby declared against public policy,
and null, void, and of no effect, and no such provision shall be contained in, or made
with respect to, any obligation hereafter incurred. The above prohibition shall not
apply to (a) transactions where the funds involved are the proceeds of loans or
investments made directly or indirectly, through bona fide intermediaries or agents,
by foreign governments, their agencies and instrumentalities, and international
financial and banking institutions so long as the funds are identifiable, as having
emanated from the sources enumerated above; (b) transactions affecting high-
priority economic projects for agricultural, industrial and power development as
may be determined by the National Economic Council which are financed by or
through foreign funds; (c) forward exchange transaction entered into between banks
or between banks and individuals or juridical persons; (d) import-export and other
international banking, financial investment and industrial transactions. With the
exception of the cases enumerated in items (a), (b), (c) and (d) in the foregoing
provisions, in which bases the terms of the parties agreement shall apply, every
other domestic obligation heretofore or hereafter incurred, whether or not any such
provision as to payment is contained therein or made with respect thereto, shall be
discharged upon payment in any coin or currency which at the time of payment is
legal tender for public and private debts: Provided, That if the obligation was
incurred prior to the enactment of this Act and required payment in a particular kind
of coin or currency other than Philippine currency, it shall be discharged in
Philippine currency measured at the prevailing rates of exchange at the time the
obligation was incurred, except in case of a loan made in a foreign currency
stipulated to be payable in the same currency in which case the rate of exchange
prevailing at the time of the stipulated date of payment shall prevail. All coin and
currency, including Central Bank notes, heretofore and hereafter issued and declared
by the Government of the Philippines shall be legal tender for all debts, public and
SECTION 2. This Act shall take effect upon its approval. (Emphasis and italics
Even assu+in, e= gratia argumenti that R&#& No& 5-' is applica5le0 it
is still erroneous for the Court of #ppeals to den3 =3dro6s clai+ 5ecause
Section ! of R&#& No& 5-' states that onl3 the stipulation re;uirin, pa3+ent
in forei,n currenc3 is void0 5ut not the ob)igation to +a/e pa3+ent& This can
5e ,leaned fro+ the provision that Cever3 other do+estic o5li,ation
heretofore or hereafter incurredD shall 5e Cdischar,ed upon pa3+ent in an3
coin and currenc3 which at the ti+e is le,al tender for pu5lic and private
de5ts&D In !epub)ic !esources an$ >e5e)opment Corporation 5. Court of
Appea)s0)(" it was held<
. . . it is clear from Section 1 of R.A. No. 529 that what is declared null and void is
the provision contained in, or made with respect to, any domestic obligation to wit,
any obligation contracted in the Philippines which provision purports to give the
obligee the right to require payment in gold or in a particular kind of coin or
currency other than Philippine currency or in an amount of money of the Philippines
measured thereby and not the contract or agreement which contains such
proscribed provision. (Emphasis supplied)
.ore succinctl30 we held in San 1uenaventura v& Court of #ppeals)'"
It is to be noted under the foregoing provision that while an agreement to pay an
obligation in a currency other than Philippine currency is null and void as contrary
to public policy, what the law specifically prohibits is payment in currency other
than legal tender but does not defeat a creditors claim for payment. A contrary
rule would allow a person to profit or enrich himself inequitably at anothers
expense. (Emphasis supplied)
It is thus erroneous for the Court of #ppeals to disallow petitioner6s
clai+ for forei,n currenc3 differential 5ecause NI#6s o5li,ation should 5e
converted to Philippine Pesos which was le,al tender at the ti+e&42"
The ne?t issue to 5e resolved is whether or not =3dro6s clai+ should
5e co+puted at the fi?ed rate of e?chan,e&
Fhen the .O#4!" and the Supple+ental .O#4-" were in effect0
there were instances when the forei,n currenc3 availed of 53 =3dro
e?ceeded the forei,n currenc3 pa3a5le to it for that particular Pro,ress
Pa3+ent& In instances li/e these0 NI# actuall3 char,ed =3dro interest in
forei,n currenc3 co+puted at the pre5ai)ing e?chan,e rate and not at the
fi?ed rate& NI# now insists that the e?chan,e rate should 5e co+puted
accordin, to the fi=e$ rate and not the escalatin, rate it actuall3 char,ed
=3dro&
Suffice it to state that this flip$floppin, stance of NI# of adoptin, and
discardin, positions to suit its convenience cannot 5e countenanced& #
person who0 53 his deed or conduct has induced another to act in a
particular +anner0 is 5arred fro+ adoptin, an inconsistent position0 attitude
or course of conduct that there53 causes loss or in@ur3 to another&4)"
Indeed0 the application of the principle of estoppel is proper and ti+el3 in
headin, off NI#6s efforts at renouncin, its previous acts to the pre@udice of
=3dro which had dealt with it honestl3 and in ,ood faith&
. . . A principle of equity and natural justice, this is expressly adopted under Article
1431 of the Civil Code, and pronounced as one of the conclusive presumptions
under Rule 131, Section 3(a) of the Rules of Court, as follows:
Whenever a party has, by his own declaration, act or omission, intentionally and
deliberately led another to believe a particular thing to be true, and to act upon such
a belief he cannot, in any litigation arising out of such declaration, act or omission,
Petitioner, having performed affirmative acts upon which the respondents based
their subsequent actions, cannot thereafter refute his acts or renege on the effects of
the same, to the prejudice of the latter. To allow him to do so would be tantamount
to conferring upon him the liberty to limit his liability at his whim and caprice,
which is against the very principles of equity and natural justice44"
NI# is0 therefore0 estopped fro+ invo/in, the contractual stipulation
providin, for the fi?ed rate to @ustif3 a lower co+putation than that clai+ed 53
=3dro& It cannot 5e allowed to hide 5ehind the ver3 provision which it itself
continuousl3 violated&45" #n ad+ission or representation is rendered
conclusive upon the person +a/in, it and cannot 5e denied or disproved as
a,ainst the person rel3in, thereon&4*" # part3 +a3 not ,o 5ac/ on his own
acts and representations to the pre@udice of the other part3 who relied upon
the+&49"
NI# was ,uilt3 of foru+$shoppin,& 4oru+$shoppin, refers to the act of
availin, oneself of several @udicial re+edies in different courts0 either
si+ultaneousl3 or successivel30 su5stantiall3 founded on the sa+e
transaction and identical +aterial facts and circu+stances0 raisin, 5asicall3
the li/e issues either pendin, in0 or alread3 resolved 530 so+e other court&
It has 5een characteriBed as an act of +alpractice that is prohi5ited
and conde+ned as triflin, with the courts and a5usin, their processes& It
constitutes i+proper conduct which tends to de,rade the ad+inistration of
@ustice& It has also 5een descri5ed as deplora5le 5ecause it adds to the
con,estion of the heavil3 5urdened doc/ets of the courts&4'" The test in
deter+inin, the presence of this pernicious practice is whether in the two or
+ore cases pendin,0 there is identit3 of< 7a8 partiesE 758 ri,hts or causes of
actionE and 7c8 reliefs sou,ht&52"
#ppl3in, the fore,oin, 3ardstic/ to the instant case0 it is clear that
NI# violated the prohi5ition a,ainst foru+$shoppin,& 1esides filin, C#$%&R&
SP No& 445-9 wherein the Court of #ppeals6 decision is the su5@ect of appeal
in this proceedin,0 NI# previousl3 filed C#$%&R& SP No& )9!(2 and %&R& No&
!-'!*' which is a special civil action for certiorari& In all three cases0 the
parties are invaria5l3 =3dro and NI#& In all three petitions0 NI# raised
practicall3 the sa+e issues5!" and in all of the+0 NI#6s pra3er was the
sa+e< to nullif3 the proceedin,s co++enced at the CI#C&
It +ust 5e pointed out in this re,ard that the first two petitions na+el30
C#$%&R& SP No& )9!(2 and %&R& No& !-'!*' are 5oth origina) actions& Since
NI# failed to file a petition for review on certiorari under Rule 45 of the Rules
of Court challen,in, the decision of the appellate court in C#$%&R& SP No&
)9!(2 dis+issin, its petition0 it opted to file an ori,inal action for certiorari
under Rule *5 with this Court where the sa+e was doc/eted as %&R& No&
!-'!*'& 4or its failure to appeal the @ud,+ents in C#$%&R& SP No& )9!(2
and %&R& No& !-'!*'0 NI# is necessaril3 5ound 53 the effects of those
decisions& The filin, of C#$%&R& SP No& 445-90 which raises the issues
alread3 passed upon in 5oth cases is a clear case of foru+$shoppin, which
+erits outri,ht dis+issal&
The issue of whether or not the Certification of Non$4oru+ Shoppin,
is valid despite that it was si,ned 53 NI#6s counsel +ust 5e answered in the
ne,ative& #pplica5le is the rulin, in Mari5e)es %hip4ar$ Corp. 5. Court of
Appea)s, et a)&<5-"
It is settled that the requirement in the Rules that the certification of non-forum
shopping should be executed and signed by the plaintiff or the principal means that
counsel cannot sign said certification unless clothed with special authority to do so.
The reason for this is that the plaintiff or principal knows better than anyone else
whether a petition has previously been filed involving the same case or substantially
the same issues. Hence, a certification signed by counsel alone is defective and
constitutes a valid cause for dismissal of the petition. In the case of natural
persons, the Rule requires the parties themselves to sign the certificate of non-forum
shopping. However, in the case of the corporations, the physical act of signing may
be performed, on behalf of the corporate entity, only by specifically authorized
individuals for the simple reason that corporations, as artificial persons, cannot
personally do the task themselves. . . It cannot be gainsaid that obedience to the
requirements of procedural rule[s] is needed if we are to expect fair results
therefrom. Utter disregard of the rules cannot justly be rationalized by harking on
the policy of liberal construction. (Emphasis and italics supplied)
In this connection0 the law3er +ust 5e Cspecificall3 authoriBedD in
order to validl3 si,n the certification&5)"
In closin,0 we restate the rule that the courts will not interfere in
+atters which are addressed to the sound discretion of ,overn+ent
a,encies entrusted with the re,ulation of activities co+in, under the special
technical /nowled,e and trainin, of such a,encies&54"
#n action 53 an ad+inistrative a,enc3 +a3 5e set aside 53 the
@udicial depart+ent onl3 if there is an error of law0 a5use of power0 lac/ of
@urisdiction or ,rave a5use of discretion clearl3 conflictin, with the letter and
spirit of the law&55" In the case at 5ar0 there is no co,ent reason to depart
fro+ the ,eneral rule 5ecause the action of the CI#C confor+s rather than
conflicts with the ,overnin, statutes and controllin, case law on the +atter&
56"R"FOR"0 the petition is %R#NTED& The Decision of the Court
of #ppeals in C#$%&R& SP No& 445-9 dated Octo5er -'0 -22- and the
Resolution dated Septe+5er -40 -22) are REVERSED and SET #SIDE&
The Decision of the Construction Industr3 #r5itration Co++ission dated
>une !20 !''9 in CI#C Case No& !($'4 is REINST#TED&
>a5i$e, Jr., C.J., (Chairman), Quisumbing, Carpio, and Azcuna, JJ., concur.
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