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SECONDDIVISION

MANUELGOCINCOand
G.R.No.151903
ARACELIS.GOCINCO,

Present:
Petitioners,

*CORONA,J.,
** CARPIOMORALES,

ActingChairperson,
*** NACHURA,
versus

BRION,and

ABAD,JJ.

COURTOFAPPEALS,
Promulgated:
ESTERSERVACIOand

MAASINTRADERS

LENDINGCORPORATION,
October9,2009
Respondents.
xx

DECISION

BRION,J.:

[1]
Before the Court is a petition for review on certiorari filed by petitioners,
spousesManuelandAraceliGoCinco(collectively,thespousesGoCinco),assailingthe
[2]
decision dated June 22, 2001 of the Court of Appeals (CA) in CAG.R. CV No.
[3]
47578, as well as the resolution dated January 25, 2002 denying the spouses Go
Cincosmotionforreconsideration.

THEFACTUALANTECEDENTS

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InDecember1987,petitionerManuelCinco(Manuel)obtainedacommercialloan
in the amount of P700,000.00 from respondent Maasin Traders Lending Corporation
[4]
(MTLC).The loan was evidenced by a promissory note dated December 11, 1987,
andsecuredbyarealestatemortgageexecutedonDecember15,1987overthespouses
GoCincoslandand4storeybuildinglocatedinMaasin,SouthernLeyte.

Underthetermsofthepromissorynote,theP700,000.00loanwassubjecttoa
monthly interest rate of 3% or 36% per annum and was payable within a term of 180
days or 6 months, renewable for another 180 days. As of July 16, 1989, Manuels
outstanding obligation with MTLC amounted to P1,071,256.66, which amount
[5]
includedtheprincipal,interest,andpenalties.

TobeabletopaytheloaninfavorofMTLC,thespousesGoCincoappliedfora
loanwiththePhilippineNationalBank,MaasinBranch(PNBorthebank) and offered
as collateral the same properties they previously mortgaged to MTLC. The PNB
[6]
approved the loan application for P1.3 Million through a letter dated July 8, 1989
thereleaseoftheamount,however,wasconditionedonthecancellationofthemortgage
infavorofMTLC.

OnJuly16,1989,ManuelwenttothehouseofrespondentEsterServacio(Ester),
MTLCsPresident,toinformherthattherewasmoneywiththePNBforthepaymentof
hisloanwithMTLC.EsterthenproceededtothePNBtoverifytheinformation,but
she claimed that the banks officers informed her that Manuel had no pending loan
applicationwiththem.WhenshetoldManuelofthebanksresponse,Manuelassured
her there was money with the PNB and promised to execute a document that would
allowhertocollecttheproceedsofthePNBloan.

[7]
On July 20, 1989, Manuel executed a Special Power of Attorney (SPA)
authorizingEstertocollecttheproceedsofhisPNBloan.Esteragainwenttothebank
toinquireabouttheproceedsoftheloan.This time, the banks officers confirmed the
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existence of the P1.3 Million loan, but they required Ester to first sign a deed of
release/cancellation of mortgage before they could release the proceeds of the loan to
her.OutragedthatthespousesGoCincousedthesamepropertiesmortgagedtoMTLC
ascollateralforthePNBloan,EsterrefusedtosignthedeedanddidnotcollecttheP1.3
Millionloanproceeds.

As the MTLC loan was already due, Ester instituted foreclosure proceedings
againstthespousesGoCincoonJuly24,1989.

Topreventtheforeclosureoftheirproperties,thespousesGoCincofiledanaction
[8]
for specific performance, damages, and preliminary injunction before the Regional
TrialCourt(RTC),Branch25,Maasin,SouthernLeyte.ThespousesGoCincoalleged
that foreclosure of the mortgage was no longer proper as there had already been
settlementofManuelsobligationinfavorofMTLC.Theyclaimedthattheassignment
oftheproceedsofthePNBloanamountedtothepaymentoftheMTLCloan. Esters
refusaltosignthedeedofrelease/cancellationofmortgageandtocollecttheproceedsof
thePNBloanwere,tothespousesGoCinco,completelyunjustifiedandentitledthemto
thepaymentofdamages.

Ester countered these allegations by claiming that she had not been previously
informedofthespousesGoCincosplantoobtainaloanfromthePNBandtousethe
loanproceedstosettleManuelsloanwithMTLC.Sheclaimedthatshehadnoexplicit
agreement with Manuel authorizing her to apply the proceeds of the PNB loan to
ManuelsloanwithMTLCtheSPAmerelyauthorizedhertocollecttheproceedsofthe
loan.ShethusaverredthatitwasunfairforthespousesGoCincotorequiretherelease
ofthemortgagetoMTLCwhennoactualpaymentoftheloanhadbeenmade.

[9]
InadecisiondatedAugust16,1994, theRTCruledinfavorofthespousesGo
Cinco. The trial court found that the evidence sufficiently established the existence of
thePNBloanwhoseproceedswereavailabletosatisfyManuelsobligationwithMTLC,
and that Ester unjustifiably refused to collect the amount. Creditors, it ruled, cannot
unreasonablypreventpaymentorperformanceofobligationtothedamageandprejudice
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[10]
ofdebtorswhomaystandliableforpaymentofhigherinterestrates.
After finding
MTLCandEsterliableforabuseofrights,theRTCorderedtheawardofthefollowing
amountstothespousesGoCinco:

(a)P1,044,475.15plus535.63perdayhereafter,representinglossofsavingsoninterest,
bywayofactualorcompensatorydamages,ifdefendantcorporationinsistsonthe
original3%monthlyinterestrate
(b)P100,000.00asunrealizedprofit
(c)P1,000,000.00asmoraldamages
(d)P20,000.00asexemplarydamages
(e)P22,000.00aslitigationexpensesand
[11]
(f)10%ofthetotalamountasattorneysfeespluscosts.

ThroughanappealwiththeCA,MTLCandEstersuccessfullysecuredareversal
oftheRTCsdecision.Unlikethetrialcourt,theappellatecourtfounditsignificantthat
there was no explicit agreement between Ester and the spouses Go Cinco for the
cancellation of the MTLC mortgage in favor of PNB to facilitate the release and
collectionbyEsteroftheproceedsofthePNBloan.The CA read the SPA as merely
authorizing Ester to withdraw the proceeds of the loan. As Manuels loan obligation
withMTLCremainedunpaid,theCAruledthatnovalidobjectioncouldbemadetothe
institution of the foreclosure proceedings. Accordingly, it dismissed the spouses Go
Cincocomplaint.Fromthisdismissal,thespousesGoCincofiledthepresentappealby
certiorari.

THEPETITION

ThespousesGoCincoimputeerroronthepartoftheCAforitsfailuretoconsider
their acts as equivalent to payment that extinguished the MTLC loan their act of
applyingforaloanwiththePNBwasindicativeoftheirgoodfaithandhonestintention
tosettletheloanwithMTLC.Theycontendthatthecreditorshavethecorrelativeduty
toacceptthepayment.

ThespousesGoCincochargeMTLCandEsterwithbadfaithandillmotivefor
unjustlyrefusingtocollecttheproceedsoftheloanandtoexecutethedeedofreleaseof
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mortgage. They assert that Esters justifications for refusing the payment were flimsy
excusessoshecouldproceedwiththeforeclosureofthemortgagedpropertiesthatwere
worthmorethantheamountduetoMTLC.Thus,theyconcludethattheactsofMTLC
and of Ester amount to abuse of rights that warrants the award of damages in their
(spousesGoCincos)favor.

In refuting the claims of the spouses Go Cinco, MTLC and Ester raise the same
argumentstheyraisedbeforetheRTCandtheCA.Theyclaimthattheywerenotaware
oftheloanandthemortgagetoPNB,andthattherewasnoagreementthattheproceeds
ofthePNBloanweretobeusedtosettleManuelsobligationwithMTLC.Since the
MTLC loan remained unpaid, they insist that the institution of the foreclosure
proceedings was proper. Additionally, MTLC and Ester contend that the present
petitionraisedquestionsoffactthatcannotbeaddressedinaRule45petition.

THECOURTSRULING

TheCourtfindsthepetitionmeritorious.

PreliminaryConsiderations

Ourreviewoftherecordsshowsthattherearenofactualquestionsinvolvedin
thiscasetheultimatefactsnecessaryfortheresolutionofthecasealreadyappearinthe
records.TheRTCandtheCAdecisionsdifferednotsomuchonthefindingsoffact,
but on the conclusions derived from these factual findings. The correctness of the
conclusionsderivedfromfactualfindingsraiseslegalquestionswhentheconclusionsare
solinkedto,orareinextricablyintertwinedwith,theappreciationoftheapplicablelaw
[12]
thatthecaserequires,asinthepresentcase.
Thepetitionraisestheissueofwhether
theloanduetheMTLChadbeenextinguishedthisisaquestionoflawthatthisCourt
canfullyaddressandsettleinanappealbycertiorari.

PaymentasModeof
ExtinguishingObligations
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[13]
Obligationsareextinguished,amongothers,bypaymentorperformance,
the
modemostrelevanttothefactualsituationinthepresentcase.UnderArticle1232ofthe
CivilCode,paymentmeansnotonlythedeliveryofmoneybutalsotheperformance,in
anyothermanner,ofanobligation.Article 1233 of the Civil Code states that a debt
shall not be understood to have been paid unless the thing or service in which the
obligationconsistshasbeencompletelydeliveredorrendered,asthecasemaybe. In
contractsofloan,thedebtorisexpectedtodeliverthesumofmoneyduethecreditor.
These provisions must be read in relation with the other rules on payment under the
[14]
CivilCode,
whichrulesimpliedlyrequireacceptancebythecreditorofthepayment
inordertoextinguishanobligation.

In the present case, Manuel sought to pay Ester by authorizing her, through an
SPA,tocollecttheproceedsofthePNBloananactthatwouldhaveledtopaymentif
Esterhadcollectedtheloanproceedsasauthorized.Admittedly,thedeliveryoftheSPA
was not, strictly speaking, a delivery of the sum of money due to MTLC, and Ester
couldnotbecompelledtoacceptitaspaymentbasedonArticle1233.Nonetheless,the
SPAstoodasanauthoritytocollecttheproceedsofthealreadyapprovedPNBloanthat,
[15]
uponreceiptbyEster,wouldhaveconstitutedaspaymentoftheMTLCloan.
Had
Ester presented the SPA to the bank and signed the deed of release/cancellation of
mortgage, the delivery of the sum of money would have been effected and the
[16]
obligationextinguished.
Astherecordsshow,Esterrefusedtocollectandallowthe
cancellationofthemortgage.

Under these facts, Manuel posits two things:first, that Esters refusal was based
on completely unjustifiable grounds and second, that the refusal was equivalent to
paymentthatledtotheextinguishmentoftheobligation.

a.UnjustRefusaltoAcceptPayment

AfterconsideringEstersarguments,weagreewithManuelthatEstersrefusalof
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thepaymentwaswithoutbasis.

Ester refused to accept the payment because the bank required her to first sign a
deedofrelease/cancellationofthemortgagebeforetheproceedsofthePNBloancould
bereleased.Asapriormortgagee,sheclaimedthatthespousesGoCincoshouldhave
obtainedherconsentbeforeofferingthepropertiesalreadymortgagedtoherassecurity
forthePNBloan.Moreover,EsterallegedthattheSPAmerelyauthorizedhertocollect
theproceedsoftheloantherewasnoexplicitagreementthattheMTLCloanwouldbe
paidoutoftheproceedsofthePNBloan.

Thereisnothinglegallyobjectionableinamortgagorsactoftakingasecondor
subsequent mortgage on a property already mortgaged a subsequent mortgage is
recognized as valid by law and by commercial practice, subject to the prior rights of
previous mortgages. Section 4, Rule 68 of the 1997 Rules of Civil Procedure on the
dispositionoftheproceedsofsaleafterforeclosureactuallyrequiresthepaymentofthe
[17]
proceedsto,amongothers,thejuniorencumbrancersintheorderoftheirpriority.

UnderArticle2130oftheCivilCode,astipulationforbiddingtheownerfromalienating
the immovable mortgaged is considered void. If the mortgagorowner is allowed to
convey the entirety of his interests in the mortgaged property, reason dictates that the
lesser right to encumber his property with other liens must also be recognized. Ester,
therefore,couldnotvalidlyrequirethespousesGoCincotofirstobtainherconsentto
the PNB loan and mortgage. Besides, with the payment of the MTLC loan using the
proceeds of the PNB loan, the mortgage in favor of the MTLC would have naturally
beencancelled.

WefinditimprobableforEstertoclaimthattherewasnoagreementtoapplythe
proceeds of the PNB loan to the MTLC loan. Beginning July 16, 1989, Manuel had
alreadyexpressedintenttopayhisloanwithMTLCandthusrequestedforanupdated
statement of account. Given Manuels express intent of fully settling the MTLC loan
and of paying through the PNB loan he would secure (and in fact secured), we also
cannotgivecredittotheclaimthattheSPAonlyallowedEstertocollecttheproceedsof
the PNB loan, without giving her the accompanying authority, although verbal, to
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applytheseproceedstotheMTLCloan.EvenEstersactionsbelieherclaimasshein
fact even went to the PNB to collect the proceeds. In sum, the surrounding
circumstancesofthecasesimplydonotsupportEstersposition.

b.UnjustRefusalCannotbeEquatedtoPayment

While Esters refusal was unjustified and unreasonable, we cannot agree with
Manuels position that this refusal had the effect of payment that extinguished his
obligation to MTLC. Article 1256 is clear and unequivocal on this point when it
providesthat

ARTICLE1256.Ifthecreditortowhomtenderofpaymenthasbeenmaderefuses
without just cause to accept it, the debtor shall be released from responsibility by the
consignationofthethingorsumdue.[Emphasissupplied.]

Inshort,arefusalwithoutjustcauseisnotequivalenttopaymenttohavetheeffectof
payment and the consequent extinguishment of the obligation to pay, the law requires
thecompanionactsoftenderofpaymentandconsignation.

Tender of payment, as defined in Far East Bank and Trust Company v. Diaz
[18]
Realty, Inc.,
is the definitive act of offering the creditor what is due him or her,
togetherwiththedemandthatthecreditoracceptthesame.Whenacreditorrefusesthe
debtors tender of payment, the law allows the consignation of the thing or the sum
due.Tenderandconsignationhavetheeffectofpayment,asbyconsignation,thething
due is deposited and placed at the disposal of the judicial authorities for the creditor to
[19]
collect.

AsadtwistinthiscaseforManuelwasthathecouldnotavailofconsignationto
extinguishhisobligationtoMTLC,asPNBwouldnotreleasetheproceedsoftheloan
unlessanduntilEsterhadsignedthedeedofrelease/cancellationofmortgage,whichshe
unjustly refused to do. Hence, to compel Ester to accept the loan proceeds and to
preventtheirmortgagedpropertiesfrombeingforeclosed,thespousesGoCincofoundit
necessarytoinstitutethepresentcaseforspecificperformanceanddamages.
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c.EffectsofUnjustRefusal

Under these circumstances, we hold that while no completed tender of payment


andconsignationtookplacesufficienttoconstitutepayment,thespousesGoCincoduly
established that they have legitimately secured a means of paying off their loan with
MTLCtheywereonlypreventedfromdoingsobytheunjustrefusalofEstertoaccept
theproceedsofthePNBloanthroughherrefusaltoexecutethereleaseofthemortgage
on the properties mortgaged to MTLC. In other words, MTLC and Ester in fact
prevented the spouses Go Cinco from the exercise of their right to secure payment of
theirloan.NoreasonexistsunderthislegalsituationwhywecannotcompelMTLCand
Ester:(1)toreleasethemortgagetoMTLCasaconditiontothereleaseoftheproceeds
ofthePNBloan,uponPNBsacknowledgmentthattheproceedsoftheloanareready
and shall forthwith be released and (2) to accept the proceeds, sufficient to cover the
totalamountoftheloantoMTLC,aspaymentforManuelsloanwithMTLC.

Wealsofindthatunderthecircumstances,thespousesGoCincohaveundertaken,
attheveryleast,theequivalentofatenderofpaymentthatcannotbuthavelegaleffect.
Since payment was available and was unjustifiably refused, justice and equity demand
that the spouses Go Cinco be freed from the obligation to pay interest on the
[20]
outstandingamountfromthetimetheunjustrefusaltookplace
theywouldnot
have been liable for any interest from the time tender of payment was made if the
payment had only been accepted. Under Article 19 of the Civil Code, they should
likewise be entitled to damages, as the unjust refusal was effectively an abusive act
contrarytothedutytoactwithhonestyandgoodfaithintheexerciseofrightsandthe
fulfillmentofduty.

Forthesereasons,wedeletetheamountsawardedbytheRTCtothespousesGo
Cinco (P1,044,475.15, plus P563.63 per month) representing loss of savings on
interestsforlackoflegalbasis.Theseamountswerecomputedbasedonthedifference
intheinterestrateschargedbytheMTLC(36%perannum)andthePNB(17%to18%
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perannum),fromthedateoftenderofpaymentuptothetimeofthepromulgationof
theRTCdecision.The trial court failed to consider the effects of a tender of payment
and erroneously declared that MTLC can charge interest at the rate of only 18% per
annumthesameratethatPNBcharged,notthe36%interestratethatMTLCcharged
theRTCawardedthedifferenceintheinterestratesasactualdamages.

As part of the actual and compensatory damages, the RTC also awarded
P100,000.00tothespousesGoCincorepresentingunrealizedprofits.Apparently,ifthe
proceeds of the PNB loan (P1,203,685.17) had been applied to the MTLC loan
(P1,071,256.55),therewouldhavebeenabalanceofP132,428.62 left, which amount
the spouses Go Cinco could have invested in their businesses that would have earned
themaprofitofatleastP100,000.00.

We find no factual basis for this award. The spouses Go Cinco were unable to
substantiate the amount they claimed as unrealized profits there was only their bare
claimthattheexcesscouldhavebeeninvestedintheirotherbusinesses.Withoutmore,
thisclaimofexpectedprofitsisatbestspeculativeandcannotbethebasisforaclaimfor
damages.InLucasv.SpousesRoyo,

[21]

wedeclaredthat:

In determining actual damages, the Court cannot rely on speculation, conjecture or


guesswork as to the amount. Actual and compensatory damages are those recoverable
becauseofpecuniarylossinbusiness,trade,property,profession,joboroccupationandthe
samemustbesufficientlyproved,otherwise,iftheproofisflimsyandunsubstantiated,
nodamageswillbegiven.[Emphasissupplied.]

Weagree,however,thattherewasbasisfortheawardofmoralandexemplary
damagesandattorneysfees.

Estersactofrefusingpaymentwasmotivatedbybadfaithasevidencedbythe
utterlackofsubstantialreasonstosupportit.Herunjustrefusal,inherbehalfandforthe
MTLCwhichsherepresents,amountedtoanabuseofrightstheyactedinanoppressive
[22]
manner and, thus, are liable for moral and exemplary damages.
We nevertheless
reducetheP1,000,000.00toP100,000.00astheoriginallyawardedamountformoral
damagesisplainlyexcessive.
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We affirm the grant of exemplary damages by way of example or correction for


thepublicgoodinlightofthesamereasonsthatjustifiedthegrantofmoraldamages.

AsthespousesGoCincowerecompelledtolitigatetoprotecttheirinterests,they
are entitled to payment of 10% of the total amount of awarded damages as attorneys
feesandexpensesoflitigation.

WHEREFORE, we GRANT the petitioners petition for review on certiorari,


andREVERSEthedecisionofJune22,2001oftheCourtofAppealsinCAG.R.CV
No. 47578, as well as the resolution of January 25, 2002 that followed. We
REINSTATEthedecisiondatedAugust16,1994oftheRegionalTrialCourt,Branch
25,Maasin,SouthernLeyte,withthefollowingMODIFICATIONS:

(1) Therespondentsareherebydirectedtoaccepttheproceedsofthe
spouses Go Cincos PNB loan, if still available, and to consent to the
release of the mortgage on the property given as security for the loan
upon PNBs acknowledgment that the proceeds of the loan, sufficient
to cover the total indebtedness to respondent Maasin Traders Lending
CorporationcomputedasofJune20,1989,shallforthwithbereleased
(2)Theawardforlossofsavingsandunrealizedprofitisdeleted
(3)TheawardformoraldamagesisreducedtoP100,000.00and
(4)Theawardsforexemplarydamages,attorneysfees,andexpensesof
litigationareretained.

The awards under (3) and (4) above shall be deducted from the amount of the
outstanding loan due the respondents as of June 20, 1989. Costs against the
respondents.

SOORDERED.

ARTUROD.BRION
AssociateJustice
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WECONCUR:

CONCHITACARPIOMORALES
AssociateJustice
ActingChairperson

RENATOC.CORONA
ANTONIOEDUARDOB.NACHURA
AssociateJustice
AssociateJustice

ROBERTOA.ABAD
AssociateJustice

ATTESTATION

IattestthattheconclusionsintheaboveDecisionhadbeenreachedin
consultationbeforethecasewasassignedtothewriteroftheopinionoftheCourts
Division.

CONCHITACARPIOMORALES
AssociateJustice
ActingChairperson

CERTIFICATION

PursuanttoSection13,ArticleVIIIoftheConstitution,andtheActingDivision
ChairpersonsAttestation,itisherebycertifiedthattheconclusionsintheaboveDecision
werereachedinconsultationbeforethecasewasassignedtothewriteroftheopinionof
theCourtsDivision.

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ANTONIOT.CARPIO*
ActingChiefJustice

* DesignatedadditionalMemberoftheSecondDivisionperSpecialOrderNo.718datedOctober2,2009.
** Designated Acting Chairperson of the Second Division per Special Order No. 690 dated September 4, 2009.
*** DesignatedadditionalMemberoftheSecondDivisionperSpecialOrderNo.730datedOctober5,2009.
[1]
UnderRule45ofthe1997RulesofCivilProcedure.Rollo,pp.532.
[2]
PennedbyAssociateJusticeRenatoDacudao(retired),withAssociateJusticeRomeoCallejo,Jr.,whoretiredasMemberof
thisCourt,andAssociateJusticeSergioPestao,concurringid.at7584.
[3]
Id.at99100.
[4]
Id.at46.
[5]
Id.at49.
[6]
ThenetproceedsofthePNBloanwereP1,203,685.17.
[7]
Rollo,p.47.
[8]
DocketedasCivilCaseNo.R2575.
[9]
PennedbyJudgeNumerianoAvila,Jr.Rollo,pp.6073.
[10]
Id.at67.
[11]
Id.at73.
[12]
SeePhilippineAmericanGeneralInsuranceCompanyv.PksShippingCompany,449Phil.223(2003).
[13]
CIVILCODE,Article1231(1).
[14]
ThepertinentprovisionsoftheCivilCodeonPaymentare:
Art.1235.Whentheobligeeacceptstheperformance,knowingitsincompletenessorirregularity,andwithoutexpressing
anyprotestorobjection,theobligationisdeemedfullycompliedwith.

Art.1236.Thecreditorisnotboundtoacceptpaymentorperformancebyathirdpersonwhohasnointerestinthe
fulfillmentoftheobligation,unlessthereisastipulationtothecontrary.

Whoeverpaysforanothermaydemandfromthedebtorwhathehaspaid,exceptthatifhepaidwithouttheknowledgeor
againstthewillofthedebtor,hecanrecoveronlyinsofarasthepaymenthasbeenbeneficialtothedebtor.

Art. 1238. Payment made by a third person who does not intend to be reimbursed by the debtor is deemed to be a
donation,whichrequiresthedebtor'sconsent.Butthepaymentisinanycasevalidastothecreditorwhohasacceptedit.

Art.1244.Thedebtorofathingcannotcompelthecreditortoreceiveadifferentone,althoughthelattermaybeofthe
samevalueas,ormorevaluablethanthatwhichisdue.

Inobligationstodoornottodo,anactorforbearancecannotbesubstitutedbyanotheractorforbearanceagainstthe
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obligee'swill.

Art.1248.Unlessthereisanexpressstipulationtothateffect,thecreditorcannotbecompelledpartiallytoreceivethe
prestationsinwhichtheobligationconsists.Neithermaythedebtorberequiredtomakepartialpayments.

However,whenthedebtisinpartliquidatedandinpartunliquidated,thecreditormaydemandandthedebtormayeffect
thepaymentoftheformerwithoutwaitingfortheliquidationofthelatter.

[15]
Weapplyhere,byparityofreasoning,theprincipleadoptedinpaymentusingmercantiledocuments.Paymentbymeans
of mercantile documents like checks and promissory notes in lieu of the sum of money due does not extinguish the
obligation until they have been accepted and cashed by the creditor. See Crystal v. Court of Appeals, 159 Phil. 557
(1975).
[16]
ThePNBsofficerstestifiedthathadtherequireddocument(deedofrelease/cancellationofmortgage)beensubmitted,
thebankcouldhavereleasedtheloanproceeds.Rollo,p.81.
[17]
SEC.4.Dispositionofproceedsofsale.Theamountrealizedfromtheforeclosuresaleofthemortgagedpropertyshall,
afterdeductingthecostsofthesale,bepaidtothepersonforeclosingthemortgage,andwhenthereshallbeanybalance
orresidue,afterpayingoffthemortgagedebtdue,thesameshallbepaidtojuniorencumbrancersintheorderoftheir
priority,tobeascertainedbythecourt,oriftherebenosuchencumbrancersortherebeabalanceorresidueafterpayment
tothem,thentothemortgagororhisdulyauthorizedagent,ortothepersonentitledtoit.
[18]
416Phil.147(2001).
[19]
CIVILCODE,Article1258.
[20]
SpousesBiesterbosv.CourtofAppealsandBartlome,458Phil.265(2003),citingAraneta,Inc.v.DePaternoand
Vidal,91Phil.786(1952).
[21]
398Phil.400(2000).
[22]
CIVILCODE,Articles2220and2232.
* DesignatedActingChiefJusticefromOctober6to11,2009perSpecialOrderNo.721datedOctober5,2009.

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