[ G. R. No.

 39815, April 28, 1934 ] These two instruments are very clear in their terms, were duly signed by
both parties in the presence of two witnesses and acknowledged before a
EULALIO BELISARIO, PLAINTIFF AND APPELLANT, VS. PAZ NATIVIDAD notary public and recorded. We see no reason whatever for varying the
VIUDA DE ZULUETA, DEFENDANT AND APPELLEE. terms thereof.

DECISION
BUTTE, J.:
This is an appeal from a judgment of the Court of First Instance of Nueva
Ecija in an action for the recovery of two tracts of land situated in the
barrio of San Francisco, municipality of Lupao, in said province, and
described in certificates of transfer Nos. 3357 and 3358 issued by the
register of deeds of the Province of Pangasinan (in which the lands were
formerly situated) in favor of the defendant.
It appears from Exhibit A that the plaintiff sold the said lands absolutely
and without reservation to the defendant for the consideration of
P37,000, which was duly paid, and the agreement on the part of the
grantee to assume an indebtedness secured by a lien for P4,500, which
was likewise duly paid. The deed recites that the sale is absolute and in
perpetuity and the grantor warrants to defend the title. The deed bears
the date of April 29, 1927.
On the 28th of May, 1931, the plaintiff appeared at the house of the
defendant and offered to exercise his option of repurchase under said
Exhibit B by tendering to the defendant a check in the sum of P37,000,
drawn by Rosendo Santiago against his account in the Peoples Bank and
Trust Company. The books of the bank disclosed that at the time said
check was tendered to the defendant the drawer thereof had on deposit
in the said bank subject to check the sum of P5.85. Even if the check had
been good, the defendant was not legally bound to accept it because
such a check does not satisfy the requirements of a legal tender.
Finding no merit in this appeal, the judgment of the court below is
affirmed with costs against the appellant.
Abad Santos, Imperial, Goddard, and Diaz, JJ., concur.

On the same date the defendant executed and delivered in favor of the
plaintiff Exhibit B which, after reciting that the defendant is the absolute
owner of the lands referred to, granted the plaintiff an option to
repurchase the lands on or before the end of May, 1931, for the sum of
P37,000.

1
FIRST DIVISION
[ G.R. Nos. L-25836-37, January 31, 1981 ]
THE PHILIPPINE BANK OF COMMERCE, PLAINTIFF-APPELLEE, VS. JOSE M.
ARUEGO, DEFENDANT-APPELLANT.
DECISION
FERNANDEZ, J.:
The defendant, Jose M. Aruego, appealed to the Court of Appeals from
the order of the Court of First Instance of Manila, Branch XIII, in Civil Case
No. 42066 denying his motion to set aside the order declaring him in
default,[1] and from the order of said court in the same case denying his
motion to set aside the judgment rendered after he was declared in
default.[2] These two appeals of the defendant were docketed as CA-G.R.
NO. 27734-R and CA-G.R. NO. 27940-R, respectively.
Upon motion of the defendant on July 25, 1960, [3] he was allowed by the
Court of Appeals to file one consolidated record on appeal of CA-G.R. NO.
27734-R and CA-G.R. 27940-R.[4]
In a resolution promulgated on March 1, 1966, the Court of Appeals, First
Division, certified the consolidated appeal to the Supreme Court on the
ground that only questions of law are involved. [5]
On December 1, 1959, the Philippine Bank of Commerce instituted
against Jose M. Aruego Civil Case No. 42066 for the recovery of the total
2
sum of about P35,000.00 with daily interest thereon from November 17,
1959 until fully paid and commission equivalent to 3/8% for every thirty
(30) days or fraction thereof plus attorney's fees equivalent to 10% of the
total amount due and costs.[6]  The complaint filed by the Philippine Bank
of Commerce contains twenty-two (22) causes of action referring to
twenty-two (22) transactions entered into by the said Bank and Aruego
on different dates covering the period from August 28, 1950 to March 14,
1951.[7] 
The sum sought to be recovered represents the cost of the printing of
"World Current Events," a periodical published by the defendant. To
facilitate the payment of the printing the defendant obtained a credit
accommodation from the plaintiff. Thus, for every printing of the "World
Current Events," the printer, Encal Press and Photo-Engraving, collected
the cost of printing by drawing a draft against the plaintiff, said draft
being sent later to the defendant for acceptance.
As an added security for the payment of the amounts advanced to Encal
Press and Photo-Engraving, the plaintiff bank also required defendant
Aruego to execute a trust receipt in favor of said bank wherein said
defendant undertook to hold in trust for plaintiff the periodicals and to
sell the same with the promise to turn over to the plaintiff the proceeds
of the sale of said publication to answer for the payment of all
obligations arising from the draft.[8]
Aruego received a copy of the complaint together with the summons on
December 2, 1959.[9]  On December 14, 1959 the defendant filed an
urgent motion for extension of time to plead, and set the hearing on
December 16, 1959.[10]  At the hearing, the court denied defendant's
motion for extension. Whereupon, the defendant filed a motion to
dismiss the complaint on December 17, 1959 on the ground that the
complaint states no cause of action because:
 
a) When the various bills of exchange were presented to the defendant as
drawee for acceptance, the amounts thereof had already been paid by
the plaintiff to the drawer (Encal Press and Photo Engraving), without
knowledge or consent of the defendant drawee.
 
b) In the case of a bill of exchange, like those involved in the case at bar,
the defendant drawee is an accommodating party only for the drawer
(Encal Press and Photo-Engraving) and will be liable in the event that the
accommodating party (drawer) fails to pay its obligation to the plaintiff.
[11]
 
The complaint was dismissed in an order dated December 22, 1959, copy
of which was received by the defendant on December 24, 1959. [12]
On January 13, 1960, the plaintiff filed a motion for reconsideration. [13]  defendant also alleged that he has a good and substantial defense.
On March 7, 1960, acting upon the motion for reconsideration filed by
the plaintiff, the trial court set aside its order dismissing the complaint
and set the case for hearing on March 15, 1960 at 8:00 in the morning.
[14]
 A copy of the order setting aside the order of dismissal was received by
the defendant on March 11, 1960 at 5:00 o'clock in the afternoon
according to the affidavit of the deputy sheriff of Manila, Mamerto de la
Cruz. On the following day, March 12, 1960, the defendant filed a motion
to postpone the trial of the case on the ground that there having been no
answer as yet, the issues had not yet been joined. [15]  On the same date,
3
the defendant filed his answer to the complaint interposing the following
defenses: That he signed the document upon which the plaintiff sues in
his capacity as President of the Philippine Education Foundation; that his
liability is only secondary; and that he believed that he was signing only as
an accommodation party.[16]
On March 15, 1960, the plaintiff filed an ex parte motion to declare the
defendant in default on the ground that the defendant should have filed
his answer on March 11, 1960. He contends that by filing his answer on
March 12, 1960, defendant was one day late. [17] On March 19, 1960 the
trial court declared the defendant in default. [18]  The defendant learned of
the order declaring him in default on March 21, 1960. On March 22, 1960
the defendant filed a motion to set aside the order of default alleging that
although the order of the court dated March 7, 1960 was received on
March 11, 1960 at 5:00 in the afternoon, it could not have been
reasonably expected of the defendant to file his answer on the last day of
the reglementary period, March 11, 1960, within office hours, especially
because the order of the court dated March 7, 1960 was brought to the
attention of counsel only in the early hours of March 12, 1960. The
Attached to the motion are the affidavits of deputy sheriff Mamerto de la
Cruz that he served the order of the court dated March 7, 1960 on March
11, 1960, at 5:00 o’clock in the afternoon and the affidavit of the
defendant Aruego that he has a good and substantial defense. [19] The trial
court denied the defendant's motion on March 25, 1960. [20]  On May 6,
1960, the trial court rendered judgment sentencing the defendant to pay
to the plaintiff the sum of P35,444.35 representing the total amount of
his obligation to the said plaintiff under the twenty-two (22) causes of
action alleged in the complaint as of November 15, 1957 and the sum of of Appeals: (1) Appeal from the order of the lower court denying his
P10,000.00 as attorney's fees.[21] motion to set aside the order of default docketed as CA-G.R. NO. 27734-
R; (2) Appeal form the order denying his motion to set aside the judgment
On May 9, 1960 the defendant filed a notice of appeal from the order by default docketed as CA-G.R. NO. 27940-R.
dated March 25, 1961 denying his motion to set aside the order declaring
him in default, an appeal bond in the amount of P60.00, and his record on In his brief, the defendant-appellant assigned the following errors:
appeal. The plaintiff filed his opposition to the approval of defendant's
record on appeal on May 13, 1960. The following day, May 14, 1960, the  
lower court dismissed defendant's appeal from the order dated March "I
25, 1960 denying his motion to set aside the order of default. [22] On May
19, 1960, the defendant filed a motion for reconsideration of the trial  
court's order dismissing his appeal.[23] The plaintiff, on May 20, 1960,
THE LOWER COURT ERRED IN HOLDING THAT THE DEFENDANT WAS IN
opposed the defendant's motion for reconsideration of the order
DEFAULT.
dismissing appeal.[24]  On May 21, 1960, the trial court reconsidered its
previous order dismissing the appeal and approved the defendant's  
record on appeal.[25]  On May 30, 1960, the defendant received a copy of
a notice from the Clerk of Court dated May 26, 1960, informing the "II
defendant that the record on appeal filed by the defendant was
 
forwarded to the Clerk of the Court of Appeals. [26]
THE LOWER COURT ERRED IN ENTERTAINING THE MOTION TO DECLARE
On June 1, 1960 Aruego filed a Motion to set aside the judgment
DEFENDANT IN DEFAULT ALTHOUGH AT THE TIME THERE WAS ALREADY
rendered after he was declared in default reiterating the same ground
ON FILE AN ANSWER BY HIM WITHOUT FIRST DISPOSING OF SAID
previously advanced by him in his motion for relief from the order of
ANSWER IN AN APPROPRIATE ACTION.
default.[27] Upon opposition of the plaintiff filed on June 3, 1960, [28] the
trial court denied the defendant's motion to set aside the judgment by  
default in an order of June 11, 1960. [29]  On June 20, 1960, the defendant
filed his notice of appeal from the order of the court denying his motion "III
to set aside the judgment by default, his appeal bond, and his record on
 
appeal. The defendant's record on appeal was approved by the trial court
on June 25, 1960.[30]  Thus, the defendant had two appeals with the Court

4
THE LOWER COURT ERRED IN DENYING DEFENDANT'S PETITION FOR
RELIEF OF ORDER OF DEFAULT AND FROM JUDGMENT BY DEFAULT
AGAINST DEFENDANT."[31]  has a meritorious defense.
It has been held that to entitle a party to relief from a judgment taken
against him through his mistake, inadvertence, surprise or excusable
neglect, he must show to the court that he has a meritorious defense.
[32]
 In other words, in order to set aside the order of default, the
defendant must not only show that his failure to answer was due to
fraud, accident, mistake or excusable negligence but also that he has a
meritorious defense.
The record discloses that Aruego received a copy of the complaint
together with the summons on December 2, 1960; that on December 17,
1960, the last day for filing his answer, Aruego filed a motion to dismiss;
that on December 22, 1960 the lower court dismissed the complaint; that
on January 23, 1960, the plaintiff filed a motion for reconsideration and
on March 7, 1960, acting upon the motion for reconsideration, the trial
court issued an order setting aside the order of dismissal; that a copy of
the order was received by the defendant on March 11, 1960 at 5:00
o'clock in the afternoon as shown in the affidavit of the deputy sheriff;
and that on the following day, March 12, 1960, the defendant filed his
answer to the complaint.
The failure then of the defendant to file his answer on the last day for
pleading is excusable. The order setting aside the dismissal of the
complaint was received at 5:00 o'clock in the afternoon. It was therefore
impossible for him to have filed his answer on that same day because the
courts then held office only p to 5:00 o'clock in the afternoon. Moreover,
the defendant immediately filed his answer on the following day.
5
However, while the defendant successfully proved that his failure to
answer was due to excusable negligence, he has failed to show that he
The defendant does not have a good and substantial defense. Defendant
Aruego's defenses consist of the following:
 
a) The defendant signed the bills of exchange referred to in the plaintiff's
complaint in a representative capacity, as the then President of the
Philippine Education Foundation Company, publisher of "World Current
Events and Decision Law Journal," printed by Encal Press and Photo-
Engraving, drawer of the said bills of exchange in favor of the plaintiff
bank;
 
b) The defendant signed these bills of exchange not as principal obligor,
but as accommodation or additional party obligor, to add to the security
of said plaintiff bank. The reason for this statement is that unlike real
bills of exchange, where payment of the face value is advanced to the
drawer only upon acceptance of the same by the drawee, in the case in
question, payment for the supposed bills of exchange were made
before acceptance; so that in effect, although these documents are
labelled bills of exchange, legally they are not bills of exchange but
mere instruments evidencing indebtedness of the drawee who received
the face value thereof, with the defendant as only additional security of
the same.[33] 
The first defense of the defendant is that he signed the supposed bills of
exchange as an agent of the Philippine Education Foundation Company
where he is president. Section 20 of the Negotiable Instruments Law
provides that "Where the instrument contains or a person adds to his
signature words indicating that he signs for or on behalf of a principal or
in a representative capacity, he is not liable on the instrument if he was
duly authorized; but the mere addition of words describing him as an
agent or as filling a representative character, without disclosing his
principal, does not exempt him from personal liability."
An inspection of the drafts accepted by the defendant shows that
nowhere has he disclosed that he was signing as a representative of the
Philippine Education Foundation Company. [34]  He merely signed as
follows: "JOSE ARUEGO (Acceptor) (SGD) JOSE ARUEGO." For failure to
disclose his principal, Aruego is personally liable for the drafts he
accepted.
The defendant also contends that he signed the drafts only as an
accommodation party and as such, should be made liable only after a
showing that the drawer is incapable of paying. This contention is also
without merit.
An accommodation party is one who has signed the instrument as maker,
drawer, acceptor, indorser, without receiving value therefor and for the
purpose of lending his name to some other person. Such person is liable
on the instrument to a holder for value, notwithstanding such holder, at
the time of the taking of the instrument knew him to be only an
accommodation party.[35] In lending his name to the accommodated
party, the accommodation party is in effect a surety for the latter. He
lends his name to enable the accommodated party to obtain credit or to
6
raise money. He receives no part of the consideration for the instrument
but assumes liability to the other parties thereto because he wants to
accommodate another. In the instant case, the defendant signed as a
drawee/acceptor. Under the Negotiable Instruments Law, a drawee is
primarily liable. Thus, if the defendant who is a lawyer, really intended
to be secondarily liable only, he should not have signed as an
acceptor/drawee. In doing so, he became primarily and personally liable
for the drafts.
The defendant also contends that the drafts signed by him were not really
bills of exchange but mere pieces of evidence of indebtedness because
payments were made before acceptance. This is also without merit.
Under the Negotiable Instruments Law, a bill of exchange is an
unconditional order in writing addressed by one person to another,
signed by the person giving it, requiring the person to whom it is
addressed to pay on demand or at a fixed or determinable future time a
sum certain in money to order or to bearer. [36]  As long as a commercial
paper conforms with the definition of a bill of exchange, that paper is
considered a bill of exchange. The nature of acceptance is important only
in the determination of the kind of liabilities of the parties involved, but
not in the determination of whether a commercial paper is a bill of
exchange or not.
It is evident then that the defendant's appeal can not prosper. To grant
the defendant's prayer will result in a new trial which will serve no
purpose and will just waste the time of the courts as well as of the parties
because the defense is nil or ineffective.[37]
WHEREFORE, the order appealed from in Civil Case No. 42066 of the
Court of First Instance of Manila denying the petition for relief from the
judgment rendered in said case is hereby affirmed, without
pronouncement as to costs.
SO ORDERED.
[ G.R. No. 31025, August 15, 1929 ]
FRANCISCO GUTIERREZ ET AL., PLAINTIFFS AND APPELLEES, VS. JUAN
CARPIO, DEFENDANT AND APPELLANT.
DECISION
ROMUALDEZ, J.:
The litigants herein compromised a civil case on July 13, 1928, agreeing
that if within one month from the date thereof the plaintiffs failed to
repurchase certain land, its ownership would vest in the defendant.
The question now raised is whether or not the plaintiffs duly tendered the
amount of the reimbursement agreed upon in the proper form of money
to the defendant.
The court below held in the affirmative, but the defendant, appealing
from such judgment, maintains that on August 13, when the plaintiffs
tendered it, the stipulated period had already elapsed; that the tender of
reimbursement made by check is insufficient; and that the holding of the
trial court that the land in question is valued at P27,000 is groundless.
7
When did the stipulated month terminate? This is the first point in
controversy, the determination of which depends upon the kind of month
agreed upon by the parties, and on the day from which it should be
counted.
As to the kind of month, it is to be noted that, according to the ruling in
the case of Guzman vs. Lichauco (42 Phil., 291), article 7 of the Civil Code
has been modified by section 13 of the Administrative Code, according to
which "month" now means the civil or calendar month and not the
regular thirty-day month.
And the civil or calendar month is defined as follows:
"The civil or solar month is that which agrees with the Gregorian
calendar; and these months are known by the names of January,
February, March, etc. They are composed of unequal portions of time * *
*." (Bouvier's Law Dictionary.)
"A calendar month is a month as designated in the calendar, without
regard to the number of days it may contain. In commercial transactions
it means a month ending on the day in the succeeding month
corresponding to the day in the preceding month from which the
computation began, and if the last month have not so many days, then on
the last day of that month. Daley vs. Anderson, 48 Pac, 839, 840; 7 Wyo.,
1; 75 Am. St. Rep., 870 (citing Migotti vs. Colvill, 4 C. P. Div., 233)." (1
Words and Phrases, 943.)
Hence, this court held in the case of Villegas vs. Capistrano (9 Phil., 416),
that the period of three months counted from February 13 did not expire
on the 12th of the following May.
As to when said month began, said section 13 of the Administrative Code
provides as follows:
"In computing any fixed period of time, with reference to the
performance of an act required by law or contract to be done at a certain
time or within a certain limit of time, the day of date, or day from which
the time is reckoned, is to be excluded and the date of performance
included, unless otherwise provided." (Italics ours.)
Similar provisions may be found in article 1130 of the Civil Code, and in
section 4 of the Code of Civil Procedure.
There is nothing in the agreement under discussion providing otherwise,
and according to the phrase therein contained, "one month from this
date," said date, which was July 13, 1928, is exactly the date which must
be excluded being the "day from which the time is reckoned," according
to the words of the aforementioned section 13 of the Administrative
Code, which we have italicized above.
Wherefore, that civil month of thirty-one days began on July 14 and
terminated with the end of the thirteenth day of the following August.
And as it has been proved without discussion that the plaintiffs offered to
repurchase the land from the defendant on August 13th, it follows that
such offer was made within the period stipulated.
But the defendant alleges that the offer to repurchase made by check
was legally insufficient. We agree that the payment by check does
not per se have the effect of such payment. (Section 189, Act No. 2031,
on Negotiable Instruments; article 1170, Civil Code; Bryan, Landon Co. vs.
American Bank, 7 Phil., 255; and Tan Sunco vs. Santos, 9 Phil., 44; 21 R. C.
L., 60, 61.) But it appears from Felipe Gutierrez's testimony that the
8
defendant told him on August 12th that he would accept the repurchase
by check.
Felipe Gutierrez is not very explicit about it, but we deem this to be the
drift of his testimony. The defendant must have so understood it, seeing
that he thought it necessary to rebut said detail in his testimony which,
notwithstanding the defendant's denial, we hold to be established by a
preponderance of evidence, considering all the circumstances of the case.
The defendant having thus consented to the repurchase by check and
having signified that by reason of such repurchase the plaintiffs could
return to their home, said defendant was in estoppel, and could not, on
the following day, refuse to accept such payment by check, because he
induced the plaintiffs to act upon the belief that he had consented to
said manner of payment.
From this it follows that by virtue of the defendant's having consented to
that payment by check, which was neither alleged nor proved to be in any
way defective, that offer to repurchase was legally effective and sufficient
to compel the defendant to accept it.
We conclude that the offer to repurchase was made within the stipulated
period and in the form of money accepted by the defendant, from whose
refusal to allow the repurchase in such terms originates the plaintiffs'
right of action herein.
The last assignment of error touching the value of the land, cannot be a
cause for the reversal of the judgment appealed from for under the
circumstances of the case, it has no bearing on the decision of the case
nor affects the result thereof.
The judgment appealed from is modified, and it is hereby ordered that SECOND DIVISION
the plaintiffs may, within ten days from the date on which this judgment
becomes final, repurchase the land, the subject matter of these [ G.R. No. L-41764, December 19, 1980 ]
proceedings, through the delivery to the defendant at the latter's NEW PACIFIC TIMBER & SUPPLY COMPANY, INC., PETITIONER, VS. HON.
residence in the municipality of Santa Rita, Pampanga, of the sum of ALBERTO V. SENERIS, RICARDO A. TONG AND EX-OFFICIO SHERIFF
fourteen thousand six hundred forty three pesos and forty-three HAKIM S. ABDULWAHID, RESPONDENTS.
centavos (P14,643.43), Philippine currency (in coin or paper money). The
judgment appealed from is affirmed in all other respects, with costs DECISION
against the appellant. So ordered.

Avanceña, C. J., Johnson, Street, Villamor, Johns, and Villa-Real, CONCEPCION, JR., J.:
JJ., concur.

A petition for certiorari with preliminary injunction to annul and/or

modify the order of the Court of First Instance of Zamboanga City (Branch
II) dated August 28, 1975 denying petitioner's Ex-Parte Motion for
Issuance Of Certificate Of Satisfaction Of Judgment.

Herein petitioner is the defendant in a complaint for collection of a sum

of money filed by the private respondent. [1] On July 19, 1974, a
compromise judgment was rendered by the respondent Judge in
accordance with an amicable settlement entered into by the parties the
terms and conditions of which, are as follows:

"(1)That defendant will pay to the plaintiff the amount of Fifty Four
Thousand Five Hundred Pesos (P54,500.00) at 6% interest per annum
to be reckoned from August 25, 1972;

"(2)That defendant will pay to the plaintiff the amount of Six Thousand
Pesos (P6,000.00) as attorney's fees for which P5,000.00 had been

9
 acknowledged received by the plaintiff under Consolidated Bank and
Trust Corporation Check No. 16-135022 amounting to P5,000.00
leaving a balance of One Thousand Pesos (P1,000.00);
"(3)That the entire amount of P54,500.00 plus interest, plus the balance
of P1,000.00 for attorney's fees will be paid by defendant to the
plaintiff within five months from today, July 19, 1974; and
"(4)Failure on the part of the defendant to comply with any of the above-
conditions, a writ of execution may be issued by this Court for the
satisfaction of the obligation."[2]
For failure of the petitioner to comply with his judgment obligation, the
respondent Judge, upon motion of the private respondent, issued an
order for the issuance of a writ of execution on December 21, 1974.
Accordingly, a writ of execution was issued for the amount of P63,130.00
pursuant to which, the Ex-Officio Sheriff levied upon the following
personal properties of the petitioner, to wit:
(1) Unit American Lathe 24"
(1) Unit American Lathe 18" Cracker Wheeler
(1) Unit Rockford Shaper 24"
and set the auction sale thereof on January 15, 1975.  However, prior to
January 15, 1975, petitioner deposited with the Clerk of Court, Court of
First Instance, Zamboanga City, in his capacity as Ex-Officio Sheriff of
Zamboanga City, the sum of P63,130.00 for the payment of the judgment
obligation, consisting of the following:
10
1. P50,000.00 in Cashier's Check No. S-314361 dated January 3,
1975 of the Equitable Banking Corporation; and
2. P13,130.00 in cash.[3]
In a letter dated January 14, 1975, to the Ex-Officio Sheriff,[4] private
respondent through counsel, refused to accept the check as well as the
cash deposit.  In the same letter, private respondent requested the
scheduled auction sale on January 15, 1975 to proceed if the petitioner
cannot produce the cash.  However, the scheduled auction sale at 10:00
a.m. on January 15, 1975 was postponed to 3:00 o'clock p.m. of the same
day due to further attempts to settle the case.  Again, the scheduled
auction sale that afternoon did not push through because of a last ditch
attempt to convince the private respondent to accept the check.  The
auction sale was then postponed on the following day, January 16, 1975
at 10:00 o'clock a.m.[5]At about 9:15 a.m., on January 16, 1975, a certain
Mr. Tañedo representing the petitioner appeared in the office of the Ex-
Officio Sheriff and the latter reminded Mr. Tañedo that the auction sale
would proceed at 10:00 o'clock.  At 10:00 a.m., Mr. Tañedo and Mr.
Librado, both representing the petitioner requested the Ex-Officio Sheriff
to give them fifteen minutes within which to contact their lawyer which
request was granted.  After Mr. Tañedo and Mr. Librado failed to return,
counsel for private respondent insisted that the sale must proceed and
the Ex-Officio Sheriff proceeded with the auction sale. [6] In the course of
the proceedings, Deputy Sheriff Castro sold the levied properties item by
item to the private respondent as the highest bidder in the amount of
P50,000.00.  As a result thereof, the Ex-Officio Sheriff declared a
deficiency of P13,130.00.[7] Thereafter, on January 16, 1975, the Ex-
Officio Sheriff issued a "Sheriff's Certificate of Sale" in favor of the private
respondent, Ricardo Tong, married to Pascuala Tong for the total amount
of P50,000.00 only.[8] Subsequently, on January 17, 1975, petitioner filed
an ex-parte motion for issuance of certificate of satisfaction of judgment.  Section 63 of the Central Bank Act:
This motion was denied by the respondent Judge in his order dated
August 28, 1975.  In view thereof, petitioner now questions said order by
way of the present petition alleging in the main that said respondent
Judge capriciously and whimsically abused his discretion in not granting
the motion for issuance of certificate of satisfaction of judgment for the
following reasons:  (1) that there was already a full satisfaction of the
judgment before the auction sale was conducted with the deposit made
to the Ex-Officio Sheriff in the amount of P63,000.00 consisting of
P50,000.00 in Cashier's Check and P13,130.00 in cash; and (2) that the
auction sale was invalid for lack of proper notice to the petitioner and its
counsel when the Ex-Officio Sheriff postponed the sale from June 15,
1975 to January 16, 1976 contrary to Section 24, Rule 39 of the Rules of
Court.  On November 10, 1975, the Court issued a temporary restraining
order enjoining the respondent Ex-Officio Sheriff from delivering the
personal properties subject of the petition to Ricardo A. Tong in view of
the issuance of the "Sheriff Certificate of Sale."
We find the petition to be impressed with merit.
The main issue to be resolved in this instance is as to whether or not the
private respondent can validly refuse acceptance of the payment of the
judgment obligation made by the petitioner consisting of P50,000.00 in
Cashier's Check and P13,130.00 in cash which it deposited with the Ex-
Officio Sheriff before the date of the scheduled auction sale.  In
upholding private respondent's claim that he has the right to refuse
payment by means of a check, the respondent Judge cited the following:
"Sec. 63. Legal Character. - Checks representing deposit money do not
have legal tender power and their acceptance in payment of debts, both
public and private, is at the option of the creditor, Provided, however,
that a check which has been cleared and credited to the account of the
creditor shall be equivalent to a delivery to the creditor in cash in an
amount equal to the amount credited to his account."
Article 1249 of the New Civil Code:
"Art. 1249. - The payment of debts in money shall be made in the
currency stipulated, and if it is not possible to deliver such currency, then
in the currency which is legal tender in the Philippines.
"The delivery of promissory notes payable to order, or bills of exchange
or other mercantile documents shall produce the effect of payment only
when they have been cashed, or when through the fault of the creditor
they have been impaired.
"In the meantime, the action derived from the original obligation shall be
held in abeyance."
Likewise, the respondent Judge sustained the contention of the private
respondent that he has the right to refuse payment of the amount of
P13,130.00 in cash because the said amount is less than the judgment
obligation, citing the following Article of the New Civil Code:
"Art. 1248. Unless there is an express stipulation to that effect, the
creditor cannot be compelled partially to receive the presentations in

11
which the obligation consists.  Neither may the debtor be required to
make partial payment.
"However, when the debt is in part liquidated and in part unliquidated,
the creditor may demand and the debtor may effect the payment of the
former without waiting for the liquidation of the latter."
It is to be emphasized in this connection that the check deposited by the
petitioner in the amount of P50,000.00 is not an ordinary check but a
Cashier's Check of the Equitable Banking Corporation, a bank of good
standing and reputation.  As testified to by the Ex-Officio Sheriff with
whom it has been deposited, it is a certified crossed check. [9] It is a well-
known and accepted practice in the business sector that a
Cashier's Check is deemed as cash.  Moreover, since the said
check had been certified by the drawee bank, by the
certification, the funds represented by the check are
transferred from the credit of the maker to that of the payee
or holder, and for all intents and purposes, the latter
becomes the depositor of the drawee bank, with rights and
duties of one in such situation.[10] Where a check is certified
by the bank on which it is drawn, the certification is
equivalent to acceptance. [11] Said certification "implies that
the check is drawn upon sufficient funds in the hands of the
drawee, that they have been set apart for its satisfaction,
and that they shall be so applied whenever the check is
presented for payment.  It is an understanding that the check is good
then, and shall continue good, and this agreement is as binding on the
12
bank as its notes in circulation, a certificate of deposit payable to the
order of the depositor, or any other obligation it can assume. 
The object of certifying a check, as regards both parties, is to enable the
holder to use it as money."[12] When the holder procures the check to be
certified, "the check operates as an assignment of a part of the funds to
the creditors".[13] Hence, the exception to the rule enunciated under
Section 63 of the Central Bank Act to the effect "that a check which has
been cleared and credited to the account of the creditor shall be
equivalent to a delivery to the creditor in cash in an amount equal to the
amount credited to his account" shall apply in this case.  Considering that
the whole amount deposited by the petitioner consisting of Cashier's
Check of P50,000.00 and P13,130.00 in cash covers the judgment
obligation of P63,000.00 as mentioned in the writ of execution, then, We
see no valid reason for the private respondent to have refused
acceptance of the payment of the obligation in his favor.  The auction
sale, therefore, was uncalled for.  Furthermore, it appears that on January
17, 1975, the Cashier's Check was even withdrawn by the petitioner and
replaced with cash in the corresponding amount of P50,000.00 on
January 27, 1975 pursuant to an agreement entered into by the parties at
the instance of the respondent Judge.  However, the private respondent
still refused to receive the same.  Obviously, the private respondent is
more interested in the levied properties than in the mere satisfaction of
the judgment obligation.  Thus, petitioner's motion for the issuance of a
certificate of satisfaction of judgment is clearly meritorious and the
respondent Judge gravely abused his discretion in not granting the same
under the circumstances.
In view of the conclusion reached in this instance, We find no more need The temporary restraining order issued is hereby made permanent.
to discuss the other ground relied upon in the petition.
Costs against the private respondent.
It is also contended by the private respondent that appeal and not a
special civil action for certiorari is the proper remedy in this case, and that SO ORDERED.
since the period to appeal from the decision of the respondent Judge has
already expired, then, the present petition has been filed out of time. 
The contention is untenable.  The decision of the respondent Judge in
Civil Case No.  250 (166) has long become final and executory and so, the
same is not being questioned herein.  The subject of the petition at bar
as having been issued in grave abuse of discretion is the order dated
August 28, 1975 of the respondent Judge which was merely issued in
execution of the said decision.  Thus, even granting that appeal is open
to the petitioner, the same is not an adequate and speedy remedy for
the respondent Judge had already issued a writ of execution.[14]

WHEREFORE, in view of all the foregoing, judgment is hereby rendered:

1. Declaring as null and void the order of the respondent Judge

dated August 28, 1975;

2. Declaring as null and void the auction sale conducted on January

16, 1975 and the certificate of sale issued pursuant thereto;

3. Ordering the private respondent to accept the sum of P63,130.00

under deposit as payment of the judgment obligation in his favor;

4. Ordering the respondent Judge and respondent Ex-Officio Sheriff

to release the levied properties to the herein petitioner.

13

SECOND DIVISION
[ G.R. No. 51767, June 29, 1982 ]
LETICIA CO, ASSISTED BY HER HUSBAND MUI YUK KONG, IN
SUBSTITUTION OF CITADEL INSURANCE & SURETY CO., INC., PLAINTIFF-
APPELLEE, VS. PHILIPPINE NATIONAL BANK, DEFENDANT-APPELLANT.
DECISION
BARREDO, J.:
Direct appeal to this Supreme Court pursuant to Republic Act 5440 from
the decision of the Court of First Instance of Rizal, Branch XXI in its Civil
Case No. 23101 entitled "Citadel Insurance & Surety Co., Inc. vs.
Philippine National Bank", the dispositive portion of which reads:
"WHEREFORE, this Court finds that plaintiff has validly exercised the right
of redemption herein-before discussed and orders the defendant to:
(a)  Accept the amount consigned and deposited pursuant to the Order of
this Court on March 11, 1976;
(b)  Execute and specifically comply to the effects of the exercise of the
right of redemption so that whatever title is due to the plaintiff after
redemption may properly accrue to plaintiff;
14
(c)  Deliver and surrender to plaintiff possession over the property in
question.
"Considering that this case has been submitted for decision based upon
four (4) limited questions of law and there being no evidence presented
and submitted to support any claim for damages, there is no
pronouncement and award of damages as well as costs.
"SO ORDERED." (Pp. 180-181, Record on Appeal.)
It goes without saying that under the Act aforementioned by virtue of
which this appeal is before Us, the issues We are called upon to resolve
are only questions of law.
Briefly stated, the undisputed material facts of this case, as may be culled
from the decision of the trial court and elsewhere in the record, are as
follows:
 On November 10, 1961, the Standard Parts Manufacturing Corporation,
hereinafter to be referred to simply as STANDARD, executed a real estate
mortgage in favor of herein defendant-appellant Philippine National
Bank, hereinafter to be referred to simply as PNB, over properties
covered by Transfer Certificates of Title Nos. T-5108 and T-5320, both
situated in Baguio City, as collateral for a loan consideration of
P500,000.00.  On February 20, 1963, the same debtor corporation
executed an amended real estate mortgage to include as collateral for
the increase of the above loan to P1,000,000.00 a property located at
Pasong Tamo Extension within the Municipality of Makati (then part of
Rizal Province and now of Metro Manila) covered by Transfer Certificate
of Title No. 54474.  Additionally, on February 20, 1963, the same
corporation executed in favor of PNB a chattel mortgage of its personal
properties listed on pages 96 to 108 of the Record on Appeal.  On pages
6-7 of appellant's brief it is stated that as of July 19, 1974, the "borrowed
loan" of STANDARD totalled P4,296,803.56, and that the said obligation
was secured, as aforementioned, by the mortgages on the Baguio and
Makati real estates of STANDARD and the chattel mortgage on its
personal properties above referred to.
When STANDARD failed to pay its obligation, PNB extrajudicially
foreclosed the mortgage on the Baguio properties as well as the chattel
mortgage on July 19, 1974, with PNB as the highest bidder for
P1,514,305.00.  Subsequently, on August 8, 1974, PNB also foreclosed the
mortgage on the Makati property and purchased the same, as highest
bidder, for P1,363,000.00.
We quote further from appellant's brief:
"When Standard Parts failed to pay its obligation, PNB foreclosed the
Baguio properties and chattels on July 19, 1974 with it as the highest
bidder for P1,514,305.00 and the Pasong Tamo property on August 8,
1974 also with it as the highest bidder for P1,363,000.00.  Hence, after
foreclosure of the above-mentioned mortgage, the deficiency claim of the
Bank against Standard Parts as of August 8, 1974 amounted to
P1,434,521.07.  Subsequently, a Certificate of Sale dated July 19, 1974
was issued by the Sheriff of Baguio City covering TCT Nos. T-5708 and T-
5320 (Annex 'C', P.S.F.).  A Certificate of Sale dated August 8, 1974
covering TCT No. 54474 was also issued by the Sheriff of Rizal (Annex 'D',
P.S.F.) and registered on March 14, 1976 in the Registry of Deeds.  Upon
failure of Standard Parts to redeem the foreclosed properties within the
reglementary period, the PNB consolidated titles to the Baguio properties
and TCT Nos. 26080 and 26081 (Annexes 'E' and 'E-1', respectively, P.S.F.)
15
were issued by the Register of Deeds of Baguio City on May 5, 1976 in the
name of the Bank.  On May 14, 1976, TCT No. 54474 was cancelled and
TCT No. S-28133 issued in the name of the PNB.
"Meantime, on March 5, 1976, Citadel wrote PNB a letter (Annex 'H',
P.S.F.) stating therein its desire to redeem the property covered by TCT
No. 54474, it being the alleged assignee of the right of redemption of
Standard Parts with respect only to said property.  Citadel, however,
offered to redeem the property for only P1,621,970.00.  In its reply to
said letter, PNB, in a letter dated March 5, 1976 (Annex 'I', P.S.F.),
justifiably refused to accept the tender of payment of Citadel considering
that the amount of P1,621,970.00 was very much lower than the Bank's
total claim of P3,366,546.42 as of March 5, 1976 per the Statement of
Account of Standard Parts (Annex 'G', P.S.F. )." (Pp. 7-9, Brief of PNB)
To Our mind then, the facts that are decisive herein the following:
1.  The mortgages here in question were constituted way back in 1961 to
1963.
2.  The foreclosure sale of the Baguio properties and the chattels took
place on July 19, 1974 and that of the Makati estate on August 8, 1974.
3.  Citadel Insurance & Surety Co., Inc. (CITADEL, for short) to whom
STANDARD had in the meanwhile (or on February 20, 1976) transferred
its rights in the mortgages here in issue, wrote PNB on March 5, 1976
stating that it was redeeming the Makati property, offering to pay
therefor as redemption price P1,621,970.00.  The letter of CITADEL in this
regard reads thus:
"CITADEL INSURANCE & SURETY CO., INC.
Suite 202 Sikatuna Bldg., Ayala Ave. P   258,970.00 - interest at the rate of 1% a month from the date of auc-
Makati, Rizal tion, August 8, 1974, up to the time of redemption;
Tel. No. 87-33-07 & 87-34-44
____________
March 5, 1976
P1,621,970.00 - TOTAL
PHILIPPINE NATIONAL BANK
as evidenced by RCBC Manager's Check No. MC 194188 dated March 4,
Escolta, Manila
1976, which is attached to this letter as Annex 'B'.
Re:  Legal Redemption of Extra-Judicial
In view of the foregoing, kindly acknowledge the receipt of the
Foreclosed Property of Standard
Parts Manufacturing Corporation redemption amount and cause the issuance of the corresponding
Certificate of Redemption in favor of our Company.
Under Act No. 3135, As Amended

Gentlemen: Thank you.

In connection with the above-mentioned property which is covered by Very truly yours,
TCT No. 54474 of the Register of Deeds For the Province of Rizal, we wish
(Sgd.) FRANCISCO S. CORPUS
to inform you that the CITADEL INSURANCE & SURETY CO., INC., is the
Assignee of the right of redemption, which will expire on March 11, 1976, President
by virtue of a 'Deed of Assignment and Waiver of Redemption Rights' Att.:  a/s" (Pages 131-133, Record on Appeal)
dated February 29, 1976, photostat copy of which is attached to this
letter as Annex 'A'. 4.  Immediately or on even date PNB rejected the above tender,
contending that the offered price was much lower than P3,366,546.42,
As assignee of the aforementioned Right of Redemption, our Company is [1]
 of said date March 5, 1976, which PNB maintained was the correct
now exercising the same by tendering to you the redemption price redemption price.  The following was the reply of PNB:
computed as follows:
"PHILIPPINE NATIONAL BANK
P1,363,000.00 - total bid of the PNB per its letter to the Sheriff dated LEGAL DEPARTMENT
August 8, 1974;

16
March 5, 1976 the decision of the trial court, the certificate of sale was registered on
Mr. Francisco S. Corpus March 11, 1976.  (Page 176, Record on Appeal.)
President
6.  On March 11, 1976, CITADEL filed the instant action in the court below
Citadel Insurance & Surety Co., Inc. with the following prayer:
202 Sikatuna Bldg., Ayala Ave.
"PRAYER
Makati, Rizal

Dear Mr. Corpus:
This refers to your letter of March 5, 1976 wherein you expressed your
desire to redeem the property covered by TCT No. 54474 of the Register
of Deeds of Rizal which we acquired from Standard Parts Manufacturing
Corp. in the amount of P1,621,970.00 in the form of RCBC Manager's
Check No. MC 194188 dated March 4, 1976.
"WHEREFORE, it is respectfully prayed that upon the filing of this
complaint this Honorable Court forthwith issue an order authorizing its
Branch Clerk to accept a Manager's Check in the amount of P1,621,970.00
and deposit the same with the Rizal Commercial Banking Corporation
under a Savings Account in order that the same shall not remain idle, and
in the name of defendant PNB, subject to the control and disposition of
this Honorable Court; and after hearing, judgment be rendered:

We feel that the Legal Department is in no position to decide the
acceptance of your offer because it appears that the amount offered is
less than our total claim.  We suggest, therefore, that you see either Vice
President Andres L. Africa or Asst. Vice Pres. Raul Leveriza on Monday,
March 8, 1976.
Very truly yours,
( Sgd.) ARTEMIO S. TIPON
Senior Supervising Atty."
(Pp. 133-134, Record on Appeal.)
5.  The Certificate of Sale dated August 8, 1974 covering TCT No. 54474
was issued by the Sheriff of Rizal and registered on March 14, 1976 in the
Registry of Deeds.  (Page 8, PNB's brief) Notably, however, according to
"(a)  Ordering defendant to accept the amount so deposited, and/or such
amount as may be found by this Honorable Court to be the lawful
redemption price for the particular property in question;
"(b)  Ordering defendant to turn over the title and possession of the
property in question to plaintiff, together with its fruits from March 11,
1976 up to the time possession is actually surrendered to the plaintiff,
plus the interests thereon counted from the date of filing of this
complaint;
"(c)  Ordering defendant to execute such documents and papers that may
be necessary for the transfer of the title and possession of the property in
question to plaintiff;

17
"(d)  Ordering defendant to pay plaintiff damages in the form of
attorney's fees and expenses of litigation, the amount of which is left to
the sound discretion of this Honorable Court;
"(e)  Ordering the defendant to pay the costs of suit.
"PLAINTIFF FURTHER PRAYS for such other relief as may be found just and
equitable in the premises." (Pp. 6-8, Record on Appeal.)
7.  There is no dispute that a manager's check of the Rizal Commercial
Banking Corporation No. MC 194188 dated March 4, 1976 and in the
amount of P1,621,970.00 (Pp. 14-15, Record on Appeal) accompanied the
complaint and was actually deposited under a savings account with the
same bank by order of the trial court of the same date "in the name of
the PNB subject to the control and disposition of the Court." (p. 20,
Record on Appeal.)
In the light of the foregoing facts, the parties stipulated in the partial
stipulation facts they submitted to the trial court that:
"B.   Limitation of Issues
"The parties agreed that the issues raised by the pleadings are one of law,
to wit:
"1.  Whether the redemption period has expired.
"2.  What is the correct redemption amount required under the law?
"3.  Whether there was a valid and effective tender of payment.
18
"4.  Whether the Deed of Assignment is binding and enforceable against
defendant PNB." (P. 151, Record on Appeal.)
Timeliness of the
redemption
To be sure, We find the opposing postures of the parties on the
timeliness of the redemption here in question a little blurred and
confusing.  So, rather than to try to extricate Ourselves out of such maze,
We feel it is sufficient to point out that according to the brief of appellant,
the foreclosure sale of the subject property was made on August 8, 1974
(pp. 7-8) and the corresponding certificate of sale was issued by sheriff on
the same day and "registered on March 14, 1976 in the Register of
Deeds." (p. 8, Record on Appeal.) "On May 14, 1976 TCT 54474 was
cancelled and TCT No. S-28133 issued in the name of PNB".  (id.)[2]
In such ambiguous premises, We have no alternative than to use March
11, 1975[3] as point of reference regarding the date of the registration of
the certificate of sale.  Appellant assumes that on this basis the period of
redemption was up to March 10, 1976.  Well, the truth of the matter is
that this detail is tied up inextricably to the main question of law that
pervades the whole of this controversy.
What is the law applicable
to this case as to the period
of redemption?
Let us not forget that the mortgage at issue was executed in 1963.  True it
is that as underscored by counsel for PNB, STANDARD, the predecessor-
in-interest of CITADEL, who signed the deed of mortgage agreed, and
CITADEL is bound by such agreement, "to abide and to be bound by the
provisions of the Charter of the PNB".  Specifically paragraph (g) of said
real estate mortgage provides:
"(g)  The mortgagor hereby waives the right granted him under Section
119 of Commonwealth Act No. 141, known as the Public Land Act, as
amended and agrees to abide to be bound by the provisions of Act No.
3135 or Act No. 2933, which amended Act No. 1612, or Republic Act No.
1300, as amended, known as the New Charter." (Page 15, PNB's Brief.)
Going by the literal terms of this quoted provision, STANDARD/CITADEL
stand bound by the same.  In other words, paragraph (g) of the mortgage
contract made the provisions of Act No. 3135 or Act 2933, which
amended Act No. 1612, or Republic Act 1300, as amended, known as the
new Charter part and parcel of the mortgage contract.  Now, what is the
legal import or consequence of such express incorporation of and
submission to Act 3135 and Republic Act 1300 by STANDARD/CITADEL?
Republic Act 1300 entitled "An Act Revising the Charter of the Philippine
National Bank" was approved and made effective on June 16, 1955.  It
was therefore the law when in 1963 the mortgage here in dispute was
executed.  It was the very law that the above-quoted paragraph (g) of the
mortgage contract made reference to.  In this connection, evidently
overlooked by counsel for PNB is that Republic Act 1300 does not
contemplate extrajudicial procedure.  Clearly indicative of this is Section
20 thereof which provides:
"Sec. 20.  Right of redemption of property foreclosed.  - The mortgagor
shall have the right, within the year after the sale of real estate as a result
19
of the foreclosure of a mortgage, to redeem the property by paying the
amount fixed by the court in the order of execution, with interest thereon
at the rate specified in the mortgage, and all the costs and other judicial
expenses incurred by the Bank by reason of the execution and sale and
for the custody of said property."
Indeed, conventional legal and banking business sense dictates that it
must have been because of such omission that paragraph (g) above had
to expressly incorporate Act 3135 which provides for extrajudicial
foreclosure.  We cannot, therefore, escape the conclusion that what
STANDARD agreed to in respect to the possible foreclosure of its
mortgage was to subject the same to the provisions of Act 3135 should
the PNB opt to utilize said law instead of Republic Act 1300.
On the other hand, Act 3135, as amended by Act 4018, is of 1924
vintage.  Its Section 6 very clearly governs the right of redemption in
extrajudicial foreclosures thus:
"Sec. 6.  In all cases in which an extrajudicial sale is made under the
special power hereinbefore referred to, the debtor, his successors in
interest or any judicial creditor or judgment creditor of said debtor, or
any person having a lien on the property subsequent to the mortgage or
deed of trust under which the property is sold, may redeem the same at
any time within the term of one year from and after the date of the sale;
and such redemption shall be governed by the provisions of sections four
hundred and sixty-four to four hundred and sixty-six, inclusive, of the
Code of Civil Procedure, in so far as these are not inconsistent with the
provisions of this Act."
Sections four hundred sixty-four to four hundred sixty-six, inclusive, of
the Code of Civil Procedure, since the promulgation of the Rules of Court
of 1940, became Sections 29, 30 and 34 of Rule 39.  The same sections
were reiterated in the Revised Rules of Court in July 1964.
From all the foregoing, We are of the considered opinion and so hold that
STANDARD's/CITADEL's period of redemption was up to March 10, 1976.
[4]
 That CITADEL filed its complaint to compel PNB to accept its
redemption only on March 11, 1976 is of no moment.  The unequivocal
tender of redemption was made in the letter of Francisco S. Corpus, its
President, of March 5, 1976 accompanied by a manager’s check of the
Rizal Commercial Banking Corporation, a well known, big and reputable
banking institution, for the amount it believed it should pay as
redemption price.  PNB rejected it on the sole and only ground that it
considered the amount insufficient.  The Court, therefore, holds that the
redemption was made on time, that is, within one year (or even twelve
months) from the date appearing as the date of the registration of the
certificate of sale.
How about the amount needed
for such redemption?
On this score, PNB insists on p. 9 et. seq. of its brief on the applicability to
this case of "Section 25 of Presidential Decree No. 694, otherwise known
as the new PNB Charter" which provides:
"Section 25.  Right of Redemption of Foreclosed Property – Right of
Possession During Redemption Period – Within one year from the
registration of the foreclosure sale of real estate, the mortgagor shall
have the right to redeem the property by paying all claims of the Bank
20
against him on the date of the sale including all the costs and other
expenses incurred by reason of the foreclosure sale and custody of the
property, as well as charges and accrued interests."
But P.D. 694 took effect only on May 8, 1975.  PNB's counsel himself has,
as already mentioned above, taken the position that it was the old PNB
Charter, Republic Act 1300, that was expressly made part of the contract. 
In other words, it was by virtue of such contractual stipulation and not ex
propio vigore that the provisions of the bank's then current charter
bound the mortgagor STANDARD.  But prescinding from possible legal
flaw in such pose, and that all provisions of the charter are enforceable
and must be read into all mortgages with the PNB as integral parts
thereof, in this instant case, the Court finds its hands inert and shackled in
the face of the constitutional proscription against the impairment of
contracts.  (Sec. 11, Art. IV, New Constitution) Stated otherwise, since the
contract of mortgage herein was entered into under a specific law,
Republic Act 1300, even the principle that no law is unamendable nor
unrepealable cannot hold, when the subsequent legislative enactment,
P.D. 694, would alter and modify to the prejudice of any of the parties the
terms of the contract under the aegis of the prior law.  Indisputably, the
application of P.D. 694 to the mortgage herein involved would violate the
Constitution.  Hence, it simply cannot apply.
Stated otherwise, by virtue of the provision of the mortgage contract
precisely cited by PNB, namely, its paragraph (g), quoted earlier, PNB had
the contractually acquired option to resort either to its Charter, Republic
Act 1300 or to Act 3135.  When it foreclosed the mortgage at issue, it
chose Act 3135.  That was an option it freely exercised without the least
intervention of appellee.  And it was exercised before P.D. 694 came into
being.  In fact, the foreclosure sales took place in 1974 yet.  And so, to
make the redemption subject to a subsequent law would be obviously
prejudicial to the party exercising the right to redeem.  Without
considering the date the loan was secured and the date of the mortgage
contract, and taking into account only the dates of the foreclosures and
auction sales, it is quite obvious that any change in the law governing
redemption that would make it more difficult than under the law at the
time of the sale cannot be given retroactive effect.  Under the terms of
the mortgage contract, the terms and conditions under which
redemption may be exercised are deemed part and parcel thereof
whether the same be merely conventional or imposed by law.  To alter
those terms in a manner prejudicial to the mortgagor or the person
redeeming the property as his successor-in-interest after the foreclosures
and sales would definitely come within the constitutional proscription
against impairment of the obligations of contracts.
 Having thus come to the ineludible conclusion that Act 3135 and
Sections 29 to 32 of Rule 39 of the Rules of Court rather than P.D. 694 are
the laws applicable to the right of redemption invoked by appellee in this
case,[5] it would appear that all that remains for Us to do is to apply the
said legal precepts.  Pursuant to Section 30 of Rule 39, "the judgment
debtor - - - (or his successor-in-interest per Section 29, here Leticia Co,)
may redeem the property from the purchaser, (here PNB) at any time
within twelve months after the sale, on paying the purchaser the amount
of his purchase, with one per centum per month interest thereon in
addition, up to the time of redemption, together with the amount of any
assessments or taxes which the purchaser may have paid thereon after
the purchase, and interest on such last-named amount at the same rate; -
- -"  money in court or elsewhere ( Enage vs. Vda. de Escano, 38 Phil. 687) and
21
In this connection, lest it be argued that CITADEL did not include in its
tender the amount of assessments or taxes PNB might have paid before
the redemption, His Honor, We note that the trial judge, has pointed out
that in spite of the requirement in the certificate of sale issued by the
sheriff that the purchaser or highest bidder submits within 30 days
immediately preceding the expiration of the period of redemption, an
appropriate statement of the amount of such assessments or taxes, PNB
failed to comply with such requirement, hence it would be unfair to fault
CITADEL for the non-inclusion thereof in its tender.  PNB argues,
however, that it did furnish CITADEL on March 5, 1976 the required data. 
We note, however, that the statement of P3,366,546.42 specified by PNB
in its reply of March 5, 1976 is not clear enough to show the details on
taxes and assessments under discussion.  In any event, considering that
as earlier pointed out by Us, there could be a possibility that March 5,
1976 should be considered as the last day of redemption, the explanation
of PNB is, at least in equity, unavailing.  There was no more time for
CITADEL to have a breakdown of the P3,366,546.42 to find out what
items were included therein.  Anyway, this discussion is practically
academic because in the manner We are resolving this case, this point
would be of no moment.
Before passing to another aspect of this case, it may not be amiss to
mention here that in Moran's Comments on the Rules of Court (p. 326-
327, 1979 ed.), it is stated that where the judgment debtor, which neces-
sarily includes his successor-in-interest (Section 29, a, Rule 39) validly
tenders the necessary payment for the redemption and the tender is
refused, it is not necessary that it be followed by the deposit of the
no interest after such tender is demandable on the redemption money.  Corporation ( RFC for short, now the Development Bank of the
( Martinez vs. Campbell, 10 Phil. 626; Fabros vs. Agustin, 18 Phil. 336).
The jurisprudence cited
by PNB are not applicable
Even as We have so far focused Our discussion and resolution of the
issues herein on the pertinent statutory provisions, We have not really
closed Our eyes to the jurisprudence cited by PNB in its brief, four of
which are worthy of mention, namely:  Medina vs. PNB, 56 Phil. 655;
Nepomuceno vs. RFC, G.R. No. L-14877, Nov. 23, 1960; Perez vs. PNB, 17
SCRA 833 and DBP vs. Mirang, 66 SCRA 141.
The case of Perez, supra, did not involve a redemption in the sense that it
is in issue in this case.  In fact, the point involved in the instant case is not
even touched in the syllabus thereof in SCRA.  This is because what was
fundamentally the problem therein was whether or not it was obligatory
on the part of the bank-mortgagee to foreclose judicially the mortgage
inasmuch as the mortgagor died.  As the Court said, "the main issue in
this appeal is the application of Section 7, Rule 87 of the Rules of 1940
(now Section 7 of Rule 68), a reproduction of Section 708 of the Code of
Civil Procedure".  Hence, anything said therein at issue may be deemed as
obiter.  If anything in that opinion is relevant hereto, it is that portion
thereof that justly and equitably holds that from whatever amount
should be payable to the mortgagee Bank, should be deducted "the value
of any rents and profits derived by the (said) bank from the property in
question".  (at p. 840)
In the Nepomuceno case, supra, what confronted the Court was a
question relative to a mortgage with the Rehabilitation Finance
22
Philippines).  The Court found no difficulty in not applying Section 6 of Act
3135 because it found that there is in Section 31 of the Charter of the RFC
a provision basically similar to Section 25 of Presidential Decree 694, now
being invoked here by PNB.  Naturally, the Court upheld the RFC's
contention that the whole amount of the mortgagor's indebtedness
should be paid.  But in the instant case, as already discussed earlier, P.D.
694 came too late.
DBP vs. Mirang, supra, follows in principle the Nepomuceno ruling that
the special provisions in the charter of DBP govern in matters of
redemption of property acquired by it in a foreclosure sale.  So, We need
not elucidate any further on its inapplicability hereto.
It is the earlier case of Medina vs. PNB, supra, that nearly approximates
the position PNB is pressing on Us now, because in a portion of the
opinion thereof, Chief Justice Avanceña, as correctly underlined by PNB in
its brief, stated:
"As we have indicated above, there is no question with regard to the
plaintiffs' right, as successors of the Manila Commercial Company, to
repurchase the parcels covered by the transfer certificates of title Nos.
137 and 139.  The question is whether, as the bank contends and the trial
court has held, the redemption should be made by paying to the bank the
entire amount owed to it by the Manila Commercial Company.  The
appellants contend that this redemption may be made by only
reimbursing the bank what it has paid for the sale made to it.  In this
respect we are also of the opinion that the judgment appealed from is
correct." (Page 655)
But this statement needs clarification.  Towards the concluding portion of
the opinion, he explained that:
"It will be remembered that the mortgage contract between the bank and
the Manila Commercial Company was executed on October 30, 1920,
before the approval of Act No. 3135 in March, 1924.  If, before Act No.
3135 took effect, the Manila Commercial Company had violated the
contract, beyond all doubt the bank would have been able to sell the
mortgaged property, without the necessity of a judicial action, and the
sale thus made would carry the right of repurchase on the part of the
debtor through the payment of the entire amount of the debt.
"When the bank's right to foreclose the mortgage of the Manila
Commercial Company accrued, Act No. 3135 was already in force.  Of
course, this law, being general, did not affect the charter of the bank,
which was a special law.  Thus, when the bank, in order to sell the
mortgaged property extrajudicially, resorted to Act No. 3135, it did so
merely to find a proceeding for the sale; but that action cannot be taken
to mean a waiver of its right to demand the payment of the whole debt
before the property can be redeemed.  The record contains nothing to
show that the bank made this waiver of said right." (Pp. 656-657)
There is here an implication that in undertaking the foreclosure therein
involved, the PNB relied on Act 3135.  This is not quite accurate, for in the
opening paragraph of the same opinion, it is stated that:
"On October 30, 1920 the Manila Commercial Co. and La Yebana Co.
mortgaged four parcels of land with Torrens titles, described in the
complaint, to the Philippine National Bank, the first and fourth parcels
being in the name of the La Yebana Co. and the second and third in the
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name of the Manila Commercial Co.  The mortgage was given to secure
the payment of P680,000 or for whatever amount the Manila Commercial
Co. might be indebted to the Philippine National Bank.  One of the clauses
of the mortgage provides that in case of a violation by the Manila
Commercial Co. of any of the conditions of the contract, the Philippine
National Bank may take possession of the mortgaged property and sell or
dispose of it by public or private sale, without first having to file a
complaint or to give any notice, and at such sale, if public, it may acquire
for itself all or any of the parcels of land." (Page 651) ( Underlinings
supplied)
Thus, it is to Our mind closer to the truth that it was by virtue of such
contractual clause, rather than Act 3135, even if the request to the sheriff
did mention said Act that PNB foreclosed.  In any event, the Court did
take into account that the mortgage at issue in that case was executed
before the approval of Act 3135 and observed that without such Act, the
right of the bank to full payment would have been indisputable.  This is
the same principle of non-impairment of the contracts by subsequent
legislative action We have made reference to above in precluding the
applicability hereto of P.D. 694.
On the minor issues
We are not impressed that PNB is really serious in its pose that the tender
by manager's check by CITADEL was inefficacious.  For one thing, that
obligation was waived when in its letter of rejection, the bank did not
invoke it.  (Gregorio Araneta, Inc. vs. De Paterno and Vidal, 91 Phil. 786)
More importantly, this Court has already sanctioned redemption by
check.  ( Javellana vs. Mirasol, 40 Phil. 761)
Neither do We find any substantial weight in PNB's pose that the transfer
or conveyance of STANDARD's right of redemption to CITADEL and the
latter to Leticia Co is not binding on it.  In Lichauco vs. Olegario, et al., 43
Phil. 540, this Court held that "whether or not x x x an execution debtor
was legally authorized to sell his right of redemption, is a question already
decided by this Court in the affirmative in numerous decisions on the
precepts of Sections 463 and 464 and other sections related thereto, of
the Code of Civil Procedure." (The mentioned provisions are carried over
in Rule 39 of the Revised Rules of Court.) That the transfers or
conveyances in question were not registered is of miniscule significance,
there being no showing that PNB was damaged or could be damaged by
such omission.  When CITADEL made its tender on May 5, 1976, PNB did
not question the personality of CITADEL at all.  It is now too late and
purely technical to raise such an innocuous failure to comply with Article
1625 of the Civil Code.
The foregoing discussion inexorably points to the conclusion that the
price of redemption of P1,621,970.00 tendered by CITADEL on March 5,
1976 was the correct amount.  Since PNB refused to allow the
redemption thus legally tendered, applying the law strictly, it would stand
to lose P1,744,576.42 of what it claims was the total indebtedness or
outstanding obligation of CITADEL as of March 11, 1976.
To avoid this loss, PNB invokes, as already stated above, P.D. No. 694, but
We have also pointed out earlier that to apply said decree would result in
the impairment of the contractual obligation of CITADEL, which cannot be
allowed under the Constitution.
However, We are persuaded that all such considerations would render
the result of this case short of what appears to be substantial justice in
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the light of the situation on hand.  It strikes Us as rather unconscionable
that by a literal application of the law and perhaps due to a mistake in the
amount of the bid made by PNB,[6] the bank would not get full satisfaction
of its credit.  Indeed, there would be unjust enrichment on the part of the
debtor-mortgagor in such an eventuality.  Our sense of justice cannot
permit such inequitous advantage.
With this point in mind, We deem it fairer and so hold that considering
the unique factual milieu of this case, Articles 22 and 2142 of the Civil
Code should be the guideposts of Our decision here.  Said articles
provide:
"ART. 22.  Every person who through an act of performance by another,
or any other means, acquires or comes into possession of something at
the expense of the latter without just or legal ground, shall return the
same to him."
xxx                            xxx                               xxx
"ART. 2142.  Certain lawful, voluntary and unilateral acts give rise to the
juridical relation of quasi-contract to the end that no one shall be unjustly
enriched or benefited at the expense of another."
Although the report of the Code Commission states that:
"Another rule is expressed in article 22 which compels the return of a
thing acquired 'without just or legal ground.' This provision embodies the
doctrine that no person should unjustly enrich himself at the expense of
another, which has been one of the mainstays of every legal system for
centuries.  It is most needful that this ancient principle be clearly and
specifically consecrated in the proposed Civil Code to the end that in
cases not foreseen by the lawmaker, no one may unjustly benefit himself
to the prejudice of another.  The German Civil Code has a similar
provision (art. 812)."
it may be said that whatever of the principle of unjust enrichment may
not be covered by Article 22, Article 2142 makes its enhancement in this
jurisdiction most comprehensive.
Consequently, it is but just and proper that PNB should be paid the full
amount of P3,366,546.42 without any interest as of March 11, 1976,
when it refused a redemption legally and validly tendered.  On the other
hand, the amount of P1,621,970.00 tendered by CITADEL on March 5,
1976 and which was deposited in a savings account, drawing interest
apparently less than 12% p.a., in the name of PNB by order of the trial
court should be computed to have earned legal interest or 12% p.a.,
compounded annually, since March 11, 1976, provided however that
should such amount including the compounded interest at 12% p.a. so
earned be less than P3,366,546.42, petitioner herein should pay PNB such
difference, and provided, on the other hand, that with this arrangement,
PNB does not have to account to CITADEL/LETICIA CO for any of the
rentals it had earned from the time it took possession of the property.  In
the final analysis, instead of PNB losing P1,744,576.42, under strict
technical legal reasoning, as explained above, applying hereto the
principle of unjust enrichment, which We deem in the peculiar
circumstances at this instant case to be the fairest way of resolving this
controversy, it would still be paid by petitioner a certain amount, not to
mention what must be quite substantial and considerable, the rentals the
said bank it has earned, which it does not have to account for.
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In closing, We may add that in Escaño, supra, this Court laid down as a
policy that "redemptions are looked upon with favor, and when an injury
is to follow, a liberal construction will be given to our redemption laws to
the end that the property of the debtor may pay as many of the debtor's
liabilities", PNB having foreclosed on the Baguio properties and the
chattels of STANDARD for what appears could have been a fairer price, it
is but in consonance with the Escaño policy that the redemption herein
involved be allowed on the basis of the injunction against unjust
enrichment.[7]We may add here the observation, taught by common
business experience, that when a bank grants a loan, secured by any
collateral, what is of uppermost consideration to such lender is the
borrower's capacity to pay according to the terms stipulated, and not
really the acquisition of the collateral, if only to maintain the bank's
liquidity position as conveniently as possible.  Acquired assets generally
add to liquidity problems of banks.  The foreclosure of the security is a
measure of last resort, hence when by the exercise of the right of
redemption, the bank can recover the money it has loaned, nothing could
be more proper than to allow the borrower to retain his property.  Of
course, peculiar instances are naturally excepted.  That is why this
decision cannot be invoked as a precedent for other parties not exactly
similarly situated as the appellee in this case.  Should there be any
thought that Our resolution of this case is not strictly according to legal
principles, let everyone be reminded that this Court has inherent equity
jurisdiction it can always exercise in settings attended by unusual
circumstances to prevent manifest injustice that could result from bare
technical adherence to the letter of the law and unprecise jurisprudence
under it.
WHEREFORE, the judgment of the trial court against the Philippine
National Bank herein on appeal is hereby modified and another one is
hereby rendered in favor of the said defendant-appellant bank in
accordance with the formula hereinabove stated, and, accordingly, upon
payment by LETICIA CO of the amount due it pursuant to the above
computation, PNB is hereby ordered to transfer the title to the property
in question to LETICIA CO.  This payment must be made within ten (10)
days from the finality of this judgment.

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