PAZ P. ARRIETA and VITALIADO
ARRIETA,plaintiffs-appellees,vs.NATIONAL RICE AND CORN
CORPORATION,defendant-appellant,MANILA UNDERWRITERS INSURANCE CO.,
INC.,defendant-appellee.Teehankee and Carreon for
plaintiffs-appellees.The Government Corporate Counsel for
defendant-appellant.Isidro A. Vera for
defendant-appellee.REGALA,J.:This is an appeal of the
defendant-appellant NARIC from the decision of the trial court
dated February 20, 1958, awarding to the plaintiffs-appellees the
amount of $286,000.00 as damages for breach of contract and
dismissing the counterclaim and third party complaint of the
defendant-appellant NARIC.In accordance with Section 13 of Republic
Act No. 3452, "the National Rice and Corn Administration (NARIC) is
hereby abolished and all its assets, liabilities, functions, powers
which are not inconsistent with the provisions of this Act, and all
personnel are transferred "to the Rice and Corn Administration
(RCA).All references, therefore, to the NARIC in this decision must
accordingly be adjusted and read as RCA pursuant to the
aforementioned law.On May 19, 1952, plaintiff-appellee participated
in the public bidding called by the NARIC for the supply of 20,000
metric tons of Burmese rice. As her bid of $203.00 per metric ton
was the lowest, she was awarded the contract for the same.
Accordingly, on July 1, 1952, plaintiff-appellee Paz P. Arrieta and
the appellant corporation entered into a Contract of Sale of Rice,
under the terms of which the former obligated herself to deliver to
the latter 20,000 metric tons of Burmess Rice at $203.00 per metric
ton, CIF Manila. In turn, the defendant corporation committed
itself to pay for the imported rice "by means of an irrevocable,
confirmed and assignable letter of credit in U.S. currency in favor
of the plaintiff-appellee and/or supplier in Burma, immediately."
Despite the commitment to pay immediately "by means of an
irrevocable, confirmed and assignable Letter of Credit," however,
it was only on July 30, 1952, or a full month from the execution of
the contract, that the defendant corporation, thru its general
manager, took the first to open a letter of credit by forwarding to
the Philippine National Bank its Application for Commercial Letter
Credit. The application was accompanied by a transmittal letter,
the relevant paragraphs of which read:In view of the fact that we
do not have sufficient deposit with your institution with which to
cover the amount required to be deposited as a condition for the
opening of letters of credit, we will appreciate it if this
application could be considered special case.We understand that our
supplier, Mrs. Paz P. Arrieta, has a deadline to meet which is
August 4, 1952, and in order to comply therewith, it is imperative
that the L/C be opened prior to that date. We would therefore
request your full cooperation on this matter.On the same day, July
30, 1952, Mrs. Paz P. Arrieta thru counsel, advised the appellant
corporation of the extreme necessity for the immediate opening of
the letter credit since she had by then made a tender to her
supplier in Rangoon, Burma, "equivalent to 5% of the F.O.B. price
of 20,000 tons at $180.70 and in compliance with the regulations in
Rangoon this 5% will be confiscated if the required letter of
credit is not received by them before August 4, 1952."On August 4,
1952, the Philippine National Bank informed the appellant
corporation that its application, "for a letter of credit for
$3,614,000.00 in favor of Thiri Setkya has been approved by the
Board of Directors with the condition that marginal cash deposit be
paid and that drafts are to be paid upon presentment." (Exh. J-pl.;
Exh. 10-def., p. 19, Folder of Exhibits). Furthermore, the Bank
represented that it "will hold your application in abeyance pending
compliance with the above stated requirement."As it turned out,
however, the appellant corporation not in any financial position to
meet the condition. As matter of fact, in a letter dated August 2,
1952, the NARIC bluntly confessed to the appellee its dilemma: "In
this connection, please be advised that our application for opening
of the letter of credit has been presented to the bank since July
30th but the latter requires that we first deposit 50% of the value
of the letter amounting to aproximately $3,614,000.00which we are
not in a position to meet." (Emphasis supplied. Exh. 9-Def.; Exh.
1-Pe., p. 18, Folder of Exhibits)Consequently, the credit
instrument applied for was opened only on September 8, 1952 "in
favor of Thiri Setkya, Rangoon, Burma, and/or assignee for
$3,614,000.00," (which is more than two months from the execution
of the contract) the party named by the appellee as beneficiary of
the letter of credit.1wph1.tAs a result of the delay, the
allocation of appellee's supplier in Rangoon was cancelled and the
5% deposit, amounting to 524,000 kyats or approximately P200,000.00
was forfeited. In this connection, it must be made of record that
although the Burmese authorities had set August 4, 1952, as the
deadline for the remittance of the required letter of credit, the
cancellation of the allocation and the confiscation of the 5%
deposit were not effected until August 20, 1952, or, a full half
month after the expiration of the deadline. And yet, even with the
15-day grace, appellant corporation was unable to make good its
commitment to open the disputed letter of credit.The appellee
endeavored, but failed, to restore the cancelled Burmese rice
allocation. When the futility of reinstating the same became
apparent, she offered to substitute Thailand rice instead to the
defendant NARIC, communicating at the same time that the offer was
"a solution which should be beneficial to the NARIC and to us at
the same time." (Exh. X-Pe., Exh. 25Def., p. 38, Folder of
Exhibits). This offer for substitution, however, was rejected by
the appellant in a resolution dated November 15, 1952.On the
foregoing, the appellee sent a letter to the appellant, demanding
compensation for the damages caused her in the sum of $286,000.00,
U.S. currency, representing unrealized profit. The demand having
been rejected she instituted this case now on appeal.At the
instance of the NARIC, a counterclaim was filed and the Manila
Underwriters Insurance Company was brought to the suit as a third
party defendant to hold it liable on the performance bond it
executed in favor of the plaintiff-appellee.We find for the
appellee.It is clear upon the records that the sole and principal
reason for the cancellation of the allocation contracted by the
appellee herein in Rangoon, Burma, was the failure of the letter of
credit to be opened with the contemplated period. This failure
must, therefore, be taken as the immediate cause for the consequent
damage which resulted. As it is then, the disposition of this case
depends on a determination of who was responsible for such failure.
Stated differently, the issue is whether appellant's failure to
open immediately the letter of credit in dispute amounted to a
breach of the contract of July 1, 1952 for which it may be held
liable in damages.Appellant corporation disclaims responsibility
for the delay in the opening of the letter of credit. On the
contrary, it insists that the fault lies with the appellee.
Appellant contends that the disputed negotiable instrument was not
promptly secured because the appellee , failed to seasonably
furnish data necessary and required for opening the same, namely,
"(1) the amount of the letter of credit, (2) the person, company or
corporation in whose favor it is to be opened, and (3) the place
and bank where it may be negotiated." Appellant would have this
Court believe, therefore, that had these informations been
forthwith furnished it, there would have been no delay in securing
the instrument.Appellant's explanation has neither force nor merit.
In the first place, the explanation reaches into an area of the
proceedings into which We are not at liberty to encroach. The
explanation refers to a question of fact. Nothing in the record
suggests any arbitrary or abusive conduct on the part of the trial
judge in the formulation of the ruling. His conclusion on the
matter is sufficiently borne out by the evidence presented. We are
denied, therefore, the prerogative to disturb that finding,
consonant to the time-honored tradition of this Tribunal to hold
trial judges better situated to make conclusions on questions of
fact. For the record, We quote hereunder the lower court's ruling
on the point:The defense that the delay, if any in opening the
letter of credit was due to the failure of plaintiff to name the
supplier, the amount and the bank is not tenable. Plaintiff stated
in Court that these facts were known to defendant even before the
contract was executed because these facts were necessarily revealed
to the defendant before she could qualify as a bidder. She stated
too that she had given the necessary data immediately after the
execution of Exh. "A" (the contract of July 1, 1952) to Mr. GABRIEL
BELMONTE, General Manager of the NARIC, both orally and in writing
and that she also pressed for the opening of the letter of credit
on these occasions. These statements have not been controverted and
defendant NARIC, notwithstanding its previous intention to do so,
failed to present Mr. Belmonte to testify or refute this.
...Secondly, from the correspondence and communications which form
part of the record of this case, it is clear that what singularly
delayed the opening of the stipulated letter of credit and which,
in turn, caused the cancellation of the allocation in Burma, was
the inability of the appellant corporation to meet the condition
importation by the Bank for granting the same. We do not think the
appellant corporation can refute the fact that had it been able to
put up the 50% marginal cash deposit demanded by the bank, then the
letter of credit would have been approved, opened and released as
early as August 4, 1952. The letter of the Philippine National Bank
to the NARIC was plain and explicit that as of the said date,
appellant's "application for a letter of credit ...has been
approvedby the Board of Directors with the condition that 50%
marginal cash deposit be paid and that drafts are to be paid upon
presentment." (Emphasis supplied)The liability of the appellant,
however, stems not alone from this failure or inability to satisfy
the requirements of the bank. Its culpability arises from its
willful and deliberate assumption of contractual obligations even
as it was well aware of its financial incapacity to undertake the
prestation. We base this judgment upon the letter which accompanied
the application filed by the appellant with the bank, a part of
which letter was quoted earlier in this decision. In the said
accompanying correspondence, appellant admitted and owned that it
did "not have sufficient deposit with your institution (the PNB)
with which to cover the amount required to be deposited as a
condition for the opening of letters of credit. ... .A number of
logical inferences may be drawn from the aforementioned admission.
First, that the appellant knew the bank requirements for opening
letters of credit; second, that appellant also knew it could not
meet those requirement. When, therefore, despite this awareness
that was financially incompetent to open a letter of credit
immediately, appellant agreed in paragraph 8 of the contract to pay
immediately "by means of an irrevocable, confirm and assignable
letter of credit," it must be similarly held to have bound itself
to answer for all and every consequences that would result from the
representation. aptly observed by the trial court:... Having called
for bids for the importation of rice involving millions,
$4,260,000.00 to be exact, it should have a certained its ability
and capacity to comply with the inevitably requirements in cash to
pay for such importation. Having announced the bid, it must be
deemed to have impliedly assured suppliers of its capacity and
facility to finance the importation within the required period,
especially since it had imposed the supplier the 90-day period
within which the shipment of the rice must be brought into the
Philippines. Having entered in the contract, it should have taken
steps immediately to arrange for the letter of credit for the large
amount involved and inquired into the possibility of its
issuance.In relation to the aforequoted observation of the trial
court, We would like to make reference also to Article 11 of the
Civil Code which provides:Those who in the performance of their
obligation are guilty of fraud, negligence, or delay, and those who
in any manner contravene the tenor thereof, are liable in
damages.Under this provision, not only debtors guilty of fraud,
negligence or default in the performance of obligations a decreed
liable; in general, every debtor who fails in performance of his
obligations is bound to indemnify for the losses and damages caused
thereby (De la Cruz Seminary of Manila, 18 Phil. 330; Municipality
of Moncada v. Cajuigan, 21 Phil. 184; De la Cavada v. Diaz, 37
Phil. 982; Maluenda & Co. v. Enriquez, 46 Phil. 916; Pasumil v.
Chong, 49 Phil. 1003; Pando v. Gimenez, 54 Phil. 459; Acme Films v.
Theaters Supply, 63 Phil. 657). The phrase "any manner contravene
the tenor" of the obligation includes any illicit act which impairs
the strict and faithful fulfillment of the obligation or every kind
or defective performance. (IV Tolentino, Civil Code of the
Philippines, citing authorities, p. 103.)The NARIC would also have
this Court hold that the subsequent offer to substitute Thailand
rice for the originally contracted Burmese rice amounted to a
waiver by the appellee of whatever rights she might have derived
from the breach of the contract. We disagree. Waivers are not
presumed, but must be clearly and convincingly shown, either by
express stipulation or acts admitting no other reasonable
explanation. (Ramirez v. Court of Appeals, 52 O.G. 779.) In the
case at bar, no such intent to waive has been established.We have
carefully examined and studied the oral and documentary evidence
presented in this case and upon which the lower court based its
award. Under the contract, the NARIC bound itself to buy 20,000
metric tons of Burmese rice at "$203.00 U.S. Dollars per metric
ton, all net shipped weight, and all in U.S. currency, C.I.F.
Manila ..." On the other hand, documentary and other evidence
establish with equal certainty that the plaintiff-appellee was able
to secure the contracted commodity at the cost price of $180.70 per
metric ton from her supplier in Burma. Considering freights,
insurance and charges incident to its shipment here and the
forfeiture of the 5% deposit, the award granted by the lower court
is fair and equitable. For a clearer view of the equity of the
damages awarded, We reproduce below the testimony of the appellee,
adequately supported by the evidence and record:Q. Will you please
tell the court, how much is the damage you suffered?A. Because the
selling price of my rice is $203.00 per metric ton, and the cost
price of my rice is $180.00 We had to pay also $6.25 for shipping
and about $164 for insurance. So adding the cost of the rice, the
freight, the insurance, the total would be about $187.99 that would
be $15.01 gross profit per metric ton, multiply by 20,000 equals
$300,200, that is my supposed profit if I went through the
contract.The above testimony of the plaintiff was a general
approximation of the actual figures involved in the transaction. A
precise and more exact demonstration of the equity of the award
herein is provided by Exhibit HH of the plaintiff and Exhibit 34 of
the defendant, hereunder quoted so far as germane.It is equally of
record now that as shown in her request dated July 29, 1959, and
other communications subsequent thereto for the opening by your
corporation of the required letter of credit, Mrs. Arrieta was
supposed to pay her supplier in Burma at the rate of One Hundred
Eighty Dollars and Seventy Cents ($180.70) in U.S. Currency, per
ton plus Eight Dollars ($8.00) in the same currency per ton for
shipping and other handling expenses, so that she is already
assured of a net profit of Fourteen Dollars and Thirty Cents
($14.30), U.S., Currency, per ton or a total of Two Hundred and
Eighty Six Thousand Dollars ($286,000.00), U.S. Currency, in the
aforesaid transaction. ...Lastly, herein appellant filed a
counterclaim asserting that it has suffered, likewise by way of
unrealized profit damages in the total sum of $406,000.00 from the
failure of the projected contract to materialize. This counterclaim
was supported by a cost study made and submitted by the appellant
itself and wherein it was illustrated how indeed had the
importation pushed thru, NARIC would have realized in profit the
amount asserted in the counterclaim. And yet, the said amount of
P406,000.00 was realizable by appellant despite a number of
expenses which the appellee under the contract, did not have to
incur. Thus, under the cost study submitted by the appellant,
banking and unloading charges were to be shouldered by it,
including an Import License Fee of 2% and superintendence fee of
$0.25 per metric ton. If the NARIC stood to profit over P400 000.00
from the disputed transaction inspite of the extra expenditures
from which the herein appellee was exempt, we are convicted of the
fairness of the judgment presently under appeal.In the premises,
however, a minor modification must be effected in the dispositive
portion of the decision appeal from insofar as it expresses the
amount of damages in U.S. currency and not in Philippine Peso.
Republic Act 529 specifically requires the discharge of obligations
only "in any coin or currency which at the time of payment is legal
tender for public and private debts." In view of that law,
therefore, the award should be converted into and expressed in
Philippine Peso.This brings us to a consideration of what rate of
exchange should apply in the conversion here decreed. Should it be
at the time of the breach, at the time the obligation was incurred
or at the rate of exchange prevailing on the promulgation of this
decision.In the case ofEngel v. Velasco & Co., 47 Phil. 115, We
ruled that in an action for recovery of damages for breach of
contract, even if the obligation assumed by the defendant was to
pay the plaintiff a sum of money expressed in American currency,
the indemnity to be allowed should be expressed in Philippine
currency at the rate of exchange at the time of the judgment rather
than at the rate of exchange prevailing on the date of defendant's
breach. This ruling, however, can neither be applied nor extended
to the case at bar for the same was laid down when there was no law
against stipulating foreign currencies in Philippine contracts. But
now we have Republic Act No. 529 which expressly declares such
stipulations as contrary to public policy, void and of no effect.
And, as We already pronounced in the case ofEastboard Navigation,
Ltd. v. Juan Ysmael & Co., Inc., G.R. No. L-9090, September 10,
1957, if there is any agreement to pay an obligation in a currency
other than Philippine legal tender, the same is null and void as
contrary to public policy (Republic Act 529), and the most that
could be demanded is to pay said obligation in Philippine currency
"to be measured in the prevailing rate of exchange at the time the
obligation was incurred (Sec. 1,idem)."UPON ALL THE FOREGOING, the
decision appealed from is hereby affirmed, with the sole
modification that the award should be converted into the Philippine
peso at the rate of exchange prevailing at the time the obligation
was incurred or on July 1, 1952 when the contract was executed. The
appellee insurance company, in the light of this judgment, is
relieved of any liability under this suit. No pronouncement as to
costs.G.R. No. L-27782 July 31, 1970OCTAVIO A.
KALALO,plaintiff-appellee,vs.ALFREDO J.
LUZ,defendant-appellant.Amelia K. del Rosario for
plaintiff-appellee.Pelaez, Jalandoni & Jamir for
defendant-appellant.ZALDIVAR,J.:Appeal from the decision, dated,
February 10, 1967, of the Court of First Instance of Rizal (Branch
V, Quezon City) in its Civil Case No. Q-6561.On November 17, 1959,
plaintiff-appellee Octavio A. Kalalo hereinafter referred to
asappellee), a licensed civil engineer doing business under the
firm name of O. A. Kalalo and Associates, entered into an agreement
(Exhibit A )1with defendant-appellant Alfredo J . Luz (hereinafter
referred to asappellant), a licensed architect, doing business
under firm name of A. J. Luz and Associates, whereby the former was
to render engineering design services to the latter for fees, as
stipulated in the agreement. The services included design
computation and sketches, contract drawing and technical
specifications of all engineering phases of the project designed by
O. A. Kalalo and Associates bill of quantities and cost estimate,
and consultation and advice during construction relative to the
work. The fees agreed upon were percentages of the architect's fee,
to wit: structural engineering, 12-%; electrical engineering, 2-%.
The agreement was subsequently supplemented by a "clarification to
letter-proposal" which provided, among other things, that "the
schedule of engineering fees in this agreement does not cover the
following: ... D. Foundation soil exploration, testing and
evaluation; E. Projects that are principally engineering works such
as industrial plants, ..." and "O. A. Kalalo and Associates reserve
the right to increase fees on projects ,which cost less than
P100,000 ...."2Pursuant to said agreement, appellee rendered
engineering services to appellant in the following projects:(a)
Fil-American Life Insurance Building at Legaspi City;(b)
Fil-American Life Insurance Building at Iloilo City;(c) General
Milling Corporation Flour Mill at Opon Cebu;(d) Menzi Building at
Ayala Blvd., Makati, Rizal;(e) International Rice Research
Institute, Research center Los Baos, Laguna;(f) Aurelia's Building
at Mabini, Ermita, Manila;(g) Far East Bank's Office at
Fil-American Life Insurance Building at Isaac Peral Ermita,
Manila;(h) Arthur Young's residence at Forbes Park, Makati,
Rizal;(i) L & S Building at Dewey Blvd., Manila; and(j) Stanvac
Refinery Service Building at Limay, Bataan.On December 1 1, '1961,
appellee sent to appellant a statement of account (Exhibit "1"),3to
which was attached an itemized statement of defendant-appellant's
account (Exh. "1-A"), according to which the total engineering fee
asked by appellee for services rendered amounted to P116,565.00
from which sum was to be deducted the previous payments made in the
amount of P57,000.00, thus leaving a balance due in the amount of
P59,565.00.On May 18, 1962 appellant sent appellee a resume of fees
due to the latter. Said fees, according to appellant. amounted to
P10,861.08 instead of the amount claimed by the appellee. On June
14, 1962 appellant sent appellee a check for said amount, which
appellee refused to accept as full payment of the balance of the
fees due him.On August 10, 1962, appellee filed a complaint against
appellant, containing four causes of action. In the first cause of
action, appellee alleged that for services rendered in connection
with the different projects therein mentioned there was due him
fees in sum s consisting of $28,000 (U.S.) and P100,204.46,
excluding interests, of which sums only P69,323.21 had been paid,
thus leaving unpaid the $28,000.00 and the balance of P30,881.25.
In the second cause of action, appellee claimed P17,000.00 as
consequential and moral damages; in the third cause of action
claimed P55,000.00 as moral damages, attorney's fees and expenses
of litigation; and in the fourth cause of action he claimed
P25,000.00 as actual damages, and also for attorney's fees and
expenses of litigation.In his answer, appellant admitted that
appellee rendered engineering services, as alleged in the first
cause of action, but averred that some of appellee's services were
not in accordance with the agreement and appellee's claims were not
justified by the services actually rendered, and that the aggregate
amount actually due to appellee was only P80,336.29, of which
P69,475.21 had already been paid, thus leaving a balance of only
P10,861.08. Appellant denied liability for any damage claimed by
appellee to have suffered, as alleged in the second, third and
fourth causes of action. Appellant also set up affirmative and
special defenses, alleging that appellee had no cause of action,
that appellee was in estoppel because of certain acts,
representations, admissions and/or silence, which led appellant to
believe certain facts to exist and to act upon said facts, that
appellee's claim regarding the Menzi project was premature because
appellant had not yet been paid for said project, and that
appellee's services were not complete or were performed in
violation of the agreement and/or otherwise unsatisfactory.
Appellant also set up a counterclaim for actual and moral damages
for such amount as the court may deem fair to assess, and for
attorney's fees of P10,000.00.Inasmuch as the pleadings showed that
the appellee's right to certain fees for services rendered was not
denied, the only question being the assessment of the proper fees
and the balance due to appellee after deducting the admitted
payments made by appellant, the trial court, upon agreement of the
parties, authorized the case to be heard before a Commissioner. The
Commissioner rendered a report which, in resume, states that the
amount due to appellee was $28,000.00 (U.S.) as his fee in the
International Research Institute Project which was twenty percent
(20%) of the $140,000.00 that was paid to appellant, and P51,539.91
for the other projects, less the sum of P69,475.46 which was
already paid by the appellant. The Commissioner also recommended
the payment to appellee of the sum of P5,000.00 as attorney's
fees.At the hearing on the Report of the Commissioner, the
respective counsel of the parties manifested to the court that they
had no objection to the findings of fact of the Commissioner
contained in the Report, and they agreed that the said Report posed
only two legal issues, namely: (1) whether under the facts stated
in the Report, the doctrine of estoppel would apply; and (2)
whether the recommendation in the Report that the payment of the
amount. due to the plaintiff in dollars was legally permissible,
and if not, at what rate of exchange it should be paid in pesos.
After the parties had submitted their respective memorandum on said
issues, the trial court rendered its decision dated February 10,
1967, the dispositive portion of which reads as follows:WHEREFORE,
judgment is rendered in favor of plaintiff and against the
defendant, by ordering the defendant to pay plaintiff the sum of
P51,539.91 and $28,000.00, the latter to be converted into the
Philippine currency on the basis of the current rate of exchange at
the time of the payment of this judgment, as certified to by the
Central Bank of the Philippines, from which shall be deducted the
sum of P69,475.46, which the defendant had paid the plaintiff, and
the legal rate of interest thereon from the filing of the complaint
in the case until fully paid for; by ordering the defendant to pay
to plaintiff the further sum of P8,000.00 by way of attorney's fees
which the Court finds to be reasonable in the premises, with costs
against the defendant. The counterclaim of the defendant is ordered
dismissed.From the decision, this appeal was brought, directly to
this Court, raising only questions of law.During the pendency of
this appeal, appellee filed a petition for the issuance of a writ
of attachment under Section 1 (f) of Rule 57 of the Rules of Court
upon the ground that appellant is presently residing in Canada as a
permanent resident thereof. On June 3, 1969, this Court resolved,
upon appellee's posting a bond of P10,000.00, to issue the writ of
attachment, and ordered the Provincial Sheriff of Rizal to attach
the estate, real and personal, of appellant Alfredo J. Luz within
the province, to the value of not less than P140,000.00.The
appellant made the following assignments of errors:I. The lower
court erred in not declaring and holding that plaintiff-appellee's
letter dated December 11, 1961 (Exhibit "1") and the statement of
account (Exhibit "1-A") therein enclosed, had the effect,
cumulatively or alternatively, of placing plaintiff-appellee in
estoppel from thereafter modifying the representations made in said
exhibits, or of making plaintiff-appellee otherwise bound by said
representations, or of being of decisive weight in determining the
true intent of the parties as to the nature and extent of the
engineering services rendered and/or the amount of fees due.II. The
lower court erred in declaring and holding that the balance owing
from defendant-appellant to plaintiff-appellee on the IRRI Project
should be paid on the basis of the rate of exchange of the U.S.
dollar to the Philippine peso at the time of payment of judgment.
.III. The lower court erred in not declaring and holding that the
aggregate amount of the balance due from defendant-appellant to
plaintiff-appellee is only P15,792.05.IV. The lower court erred in
awarding attorney's fees in the sum of P8,000.00, despite the
commissioner's finding, which plaintiff-appellee has accepted and
has not questioned, that said fee be only P5,000.00; andV. The
lower court erred in not granting defendant-appellant relief on his
counter-claim.1. In support of his first assignment of error
appellant argues that in Exhibit 1-A, which is a statement of
accounts dated December 11, 1961, sent by appellee to appellant,
appellee specified the various projects for which he claimed
engineering fees, the precise amount due on each particular
engineering service rendered on each of the various projects, and
the total of his claims; that such a statement barred appellee from
asserting any claim contrary to what was stated therein, or from
taking any position different from what he asserted therein with
respect to the nature of the engineering services rendered; and
consequently the trial court could not award fees in excess of what
was stated in said statement of accounts. Appellant argues that for
estoppel to apply it is not necessary, contrary to the ruling of
the trial court, that the appellant should haveactuallyrelied on
the representation, but that it is sufficient that the
representations were intended to make the defendant act there on;
that assumingarguendothat Exhibit 1-A did not put appellee in
estoppel, the said Exhibit 1-A nevertheless constituted a formal
admission that would be binding on appellee under the law on
evidence, and would not only belie any inconsistent claim but also
would discredit any evidence adduced by appellee in support of any
claim inconsistent with what appears therein; that, moreover,
Exhibit 1-A, being a statement of account, establishesprima
faciethe accuracy and correctness of the items stated therein and
its correctness can no longer be impeached except for fraud or
mistake; that Exhibit 1-A furthermore, constitutes appellee's own
interpretation of the contract between him and appellant, and
hence, is conclusive against him.On the other hand, appellee admits
that Exhibit 1-A itemized the services rendered by him in the
various construction projects of appellant and that the total
engineering fees charged therein was P116,565.00, but maintains
that he was not in estoppel: first, because when he prepared
Exhibit 1-A he was laboring under an innocent mistake, as found by
the trial court; second, because appellant was not ignorant of the
services actually rendered by appellee and the fees due to the
latter under the original agreement, Exhibit "A."We find merit in
the stand of appellee.The statement of accounts (Exh. 1-A) could
not estop appellee, because appellant did not rely thereon as found
by the Commissioner, from whose Report we read:While it is true
that plaintiff vacillated in his claim, yet, defendant did not in
anyway rely or believe in the different claims asserted by the
plaintiff and instead insisted on a claim that plaintiff was only
entitled to P10,861.08 as per a separate resume of fees he sent to
the plaintiff on May 18, 1962 (See Exhibit 6).4The foregoing
finding of the Commissioner, not disputed by appellant, was adopted
by the trial court in its decision. Under article 1431 of the Civil
Code, in order that estoppel may apply the person, to whom
representations have been made and who claims the estoppel in his
favor must have relied or acted on such representations. Said
article provides:Art. 1431. Through estoppel an admission or
representation is rendered conclusive upon the person making it,
and cannot be denied or disproved as against the person relying
thereon.An essential element of estoppel is that the person
invoking it has been influenced and has relied on the
representations or conduct of the person sought to be estopped, and
this element is wanting in the instant case. InCristobal vs.
Gomez,5this Court held that no estoppel based on a document can be
invoked by one who has not been mislead by the false statements
contained therein. And inRepublic of the Philippines vs. Garcia, et
al.,6this Court ruled that there is no estoppel when the statement
or action invoked as its basis did not mislead the adverse
party-Estoppel has been characterized as harsh or odious and not
favored in law.7When misapplied, estoppel becomes a most effective
weapon to accomplish an injustice, inasmuch as it shuts a man's
mouth from speaking the truth and debars the truth in a particular
case.8Estoppel cannot be sustained by mere argument or doubtful
inference: it must be clearly proved in all its essential elements
by clear, convincing and satisfactory evidence.9No party should be
precluded from making out his case according to its truth unless by
force of some positive principle of law, and, consequently,
estoppel in pains must be applied strictly and should not be
enforced unless substantiated in every particular.10The essential
elements of estoppel in pais may be considered in relation to the
party sought to be estopped, and in relation to the party invoking
the estoppel in his favor. As related to the party to be estopped,
the essential elements are: (1) conduct amounting to false
representation or concealment of material facts or at least
calculated to convey the impression that the facts are otherwise
than, and inconsistent with, those which the party subsequently
attempts to assert; (2) intent, or at least expectation that his
conduct shall be acted upon by, or at least influence, the other
party; and (3) knowledge, actual or constructive, of the real
facts. As related to the party claiming the estoppel, the essential
elements are (1) lack of knowledge and of the means of knowledge of
the truth as the facts in questions; (2) (reliance, in good faith,
upon the conduct or statements of the party to be estopped; (3)
action or inaction based thereon of such character as To change the
position or status of the party claiming the estoppel, to his
injury, detriment or prejudice.11The first essential element in
relation to the party sought to be estopped does not obtain in the
instant case, for, as appears in the Report of the Commissioner,
appellee testified "that when he wrote Exhibit 1 and prepared
Exhibit 1-A, he had not yet consulted the services of his counsel
and it was only upon advice of counsel that the terms of the
contract were interpreted to him resulting in his subsequent
letters to the defendant demanding payments of his fees pursuant to
the contract Exhibit A."12This finding of the Commissioner was
adopted by the trial court.13It is established , therefore, that
Exhibit 1-A was written by appellee through ignorance or mistake.
Anent this matter, it has been held that if an act, conduct or
misrepresentation of the party sought to be estopped is due to
ignorance founded on innocent mistake, estoppel will not
arise.14Regarding the essential elements of estoppel in relation to
the party claiming the estoppel, the first element does not obtain
in the instant case, for it cannot be said that appellant did not
know, or at least did not have the means of knowing, the services
rendered to him by appellee and the fees due thereon as provided in
Exhibit A. The second element is also wanting, for, as adverted to,
appellant did not rely on Exhibit 1-A but consistently denied the
accounts stated therein. Neither does the third element obtain, for
appellant did not act on the basis of the representations in
Exhibit 1-A, and there was no change in his position, to his own
injury or prejudice.Appellant, however, insists that if Exhibit 1-A
did not put appellee in estoppel, it at least constituted an
admission binding upon the latter. In this connection, it cannot be
gainsaid that Exhibit 1-A is not a judicial admission. Statements
which are not estoppels nor judicial admissions have no quality of
conclusiveness, and an opponent. whose admissions have been offered
against him may offer any evidence which serves as an explanation
for his former assertion of what he now denies as a fact. This may
involve the showing of a mistake. Accordingly, inOas vs. Roa,16it
was held that when a party to a suit has made an admission of any
fact pertinent to the issue involved, the admission can be received
against him; but such an admission is not conclusive against him,
and he is entitled to present evidence to overcome the effect of
the admission. Appellee did explain, and the trial court concluded,
that Exhibit 1-A was based on either his ignorance or innocent
mistake and he, therefore, is not bound by it.Appellant further
contends that Exhibit 1-A being a statement of account,
establishesprima faciethe accuracy and correctness of the items
stated therein. If prima facie, as contended by appellant, then it
is not absolutely conclusive upon the parties. An account stated
may be impeached for fraud, mistake or error. In American
Decisions, Vol. 62, p. 95, cited as authority by appellant himself.
we read thus:An account stated or settled is a mere admission that
the account is correct. It is not an estoppel. The account is still
open to impeachment for mistakes or errors. Its effect is to
establish,prima facie, the accuracy of the items without other
proof; and the party seeking to impeach it is bound to show
affirmatively the mistake or error alleged. The force of the
admission and the strength of the evidence necessary to overcome it
will depend upon the circumstances of the case.In the instant case,
it is Our view that the ignorance mistake that attended the writing
of Exhibit 1-A by appellee was sufficient to overcome theprima
facieevidence of correctness and accuracy of said Exhibit
1-A.Appellant also urges that Exhibit 1-A constitutes appellee's
own interpretation of the contract, and is, therefore, conclusive
against him. Although the practical construction of the contract by
one party, evidenced by his words or acts, can be used against him
in behalf of the other party,17yet, if one of the parties
carelessly makes a wrong interpretation of the words of his
contract, or performs more than the contract requires (as
reasonably interpreted independently of his performance), as
happened in the instant case, he should be entitled to a
restitutionary remedy, instead of being bound to continue to his
erroneous interpretation or his erroneous performance and "the
other party should not be permitted to profit by such mistake
unless he can establish an estoppel by proving a material change of
position made in good faith. The rule as to practical construction
does not nullify the equitable rules with respect to performance by
mistake."18In the instant case, it has been shown that Exhibit 1-A
was written through mistake by appellee and that the latter is not
estopped by it. Hence, even if said Exhibit 1-A be considered as
practical construction of the contract by appellee, he cannot be
bound by such erroneous interpretation. It has been held that if by
mistake the parties followed a practice in violation of the terms
of the agreement, the court should not perpetuate the error.192. In
support of the second assignment of error, that the lower court
erred in holding that the balance from appellant on the IRRI
project should be paid on the basis of the rate of exchange of the
U.S. dollar to the Philippine peso at the time of payment of the
judgment, appellant contends: first, that the official rate at the
time appellant received his architect's fees for the IRRI project,
and correspondingly his obligation to appellee's fee on August 25,
1961, was P2.00 to $1.00, and cites in support thereof Section 1612
of the Revised Administrative Code, Section 48 of Republic Act 265
and Section 6 of Commonwealth Act No. 699; second, that the lower
court's conclusion that the rate of exchange to be applied in the
conversion of the $28,000.00 is the current rate of exchange at the
time the judgment shall be satisfied was based solely on a mere
presumption of the trial court that the defendant did not convert,
there being no showing to that effect, the dollars into Philippine
currency at the official rate, when the legal presumption should be
that the dollars were converted at the official rate of $1.00 to
P2.00 because on August 25, 1961, when the IRRI project became due
and payable, foreign exchange controls were in full force and
effect, andpartial decontrolwas effected only afterwards, during
the Macapagal administration; third, that the other ground advanced
by the lower court for its ruling, to wit, that appellant committed
a breach of his obligation to turn over to the appellee the
engineering fees received in U.S. dollars for the IRRI project,
cannot be upheld, because there was no such breach, as proven by
the fact that appellee never claimed in Exhibit 1-A that he should
be paid in dollars; and there was no provision in the basic
contract (Exh. "A") that he should be paid in dollars; and,
finally, even if there were such provision, it would have no
binding effect under the provision of Republic Act 529; that,
moreover, it cannot really be said that no payment was made on that
account for appellant had already paid P57,000.00 to appellee, and
under Article 125 of the Civil Code, said payment could be said to
have been applied to the fees due from the IRRI project, this
project being the biggest and this debt being the most onerous.In
refutation of appellant's argument in support of the second
assignment of error, appellee argues that notwithstanding Republic
Act 529, appellant can be compelled to pay the appellee in dollars
in view of the fact that appellant received his fees in dollars,
and appellee's fee is 20% of appellant's fees; and that if said
amount is be converted into Philippine Currency, the rate of
exchange should be that at the time of the execution of the
judgment.20We have taken note of the fact that on August 25, 1961,
the date when appellant said his obligation to pay appellee's fees
became due, there was two rates of exchange, to wit: the preferred
rate of P2.00 to $1.00, and the free market rate. It was so
provided in Circular No. 121 of the Central Bank of the
Philippines, dated March 2, 1961. amending an earlier Circular No.
117, and in force until January 21, 1962 when it was amended by
Circular No. 133, thus:1. All foreign exchange receipts shall be
surrendered to the Central Bank of those authorized to deal in
foreign exchange as follows:Percentage of Total to be surrendered
atPreferred: Free Market Rate: Rate:(a) Export Proceeds, U.S.
Government Expenditures invisibles other than those specifically
mentioned below. ................................................
25 75(b) Foreign Investments, Gold Proceeds, Tourists and Inward
Remittances of Veterans and Filipino Citizens; and Personal
Expenses of Diplomatic Per personnel
................................. 100"21The amount of $140,000.00
received by appellant foil the International Rice Research
Institute project is not within the scope of sub-paragraph (a) of
paragraph No. 1 of Circular No. 121. Appellant has not shown that
25% of said amount had to be surrendered to the Central Bank at the
preferred rate because it was either export proceeds, or U.S.
Government expenditures, or invisibles not included in
sub-paragraph (b). Hence, it cannot be said that the trial court
erred in presuming that appellant converted said amount at the free
market rate. It is hard to believe that a person possessing dollars
would exchange his dollars at the preferred rate of P2.00 to $1.00,
when he is not obligated to do so, rather than at the free market
rate which is much higher. A person is presumed to take ordinary
care of his concerns, and that the ordinary course of business has
beenfollowed.22Under the agreement, Exhibit A, appellee was
entitled to 20% of $140,000.00, or the amount of $28,000.00.
Appellee, however, cannot oblige the appellant to pay him in
dollars, even if appellant himself had received his fee for the
IRRI project in dollars. This payment in dollars is prohibited by
Republic Act 529 which was enacted on June 16, 1950. Said act
provides as follows:SECTION 1. Every provision contained in, or
made with respect to, any obligation which provision purports to
give the obligee the right to require payment in gold or in a
particular kind of coin or currency other than Philippine currency
or in an amount of money of the Philippines measured thereby, be as
it is hereby declared against public policy, and null, void and of
no effect, and no such provision shall be contained in, or made
with respect to, any obligation hereafter incurred. Every
obligation heretofore or here after incurred, whether or not any
such provision as to payment is contained therein or made with
respect thereto, shall be discharged upon payment in any coin or
currency which at the time of payment is legal tender for public
and private debts:Provided, That, ( a) if the obligation was
incurred prior to the enactment of this Act and required payment in
a particular kind of coin or currency other than Philippine
currency, it shall be discharged in Philippine currency measured at
the prevailing rate of exchange at the time the obligation was
incurred, (b) except in case of a loan made in a foreign currency
stipulated to be payable in the same currency in which case the
rate of exchange prevailing at the time of the stipulated date of
payment shall prevail. All coin and currency, including Central
Bank notes, heretofore or hereafter issued and declared by the
Government of the Philippines shall be legal tender for all debts,
public and private.Under the above-quoted provision of Republic Act
529, if the obligation was incurredprior to the enactmentof the Act
and require payment in a particular kind of coin or currency other
than the Philippine currency the same shall be discharged in
Philippine currency measured at the prevailingrate of exchange at
the time the obligation was incurred. As We have adverted to,
Republic Act 529 was enacted on June 16, 1950. In the case now
before Us the obligation of appellant to pay appellee the 20% of
$140,000.00, or the sum of $28,000.00, accrued on August 25, 1961,
or after the enactment of Republic Act 529. It follows that the
provision of Republic Act 529 which requires payment at the
prevailing rate of exchange when the obligation was incurred cannot
be applied. Republic Act 529 does not provide for the rate of
exchange for the payment of obligation incurred after the enactment
of said Act. The logical Conclusion, therefore, is that the rate of
exchange should be that prevailing at the time of payment. This
view finds support in the ruling of this Court in the case ofEngel
vs. Velasco & Co.23where this Court held that even if the
obligation assumed by the defendant was to pay the plaintiff a sum
of money expressed in American currency, the indemnity to be
allowed should be expressed in Philippine currency at the rate of
exchange at the time of judgment rather than at the rate of
exchange prevailing on the date of defendant's breach. This is also
the ruling of American court as follows:The value in domestic money
of a payment made in foreign money is fixed with respect to the
rate of exchange at the time of payment. (70 CJS p. 228)According
to the weight of authority the amount of recovery depends upon the
current rate of exchange, and not the par value of the particular
money involved. (48 C.J. 605-606)The value in domestic money of a
payment made in foreign money is fixed in reference to the rate of
exchange at the time of such payment. (48 C.J. 605)It is Our
considered view, therefore, that appellant should pay the appellee
the equivalent in pesos of the $28,000.00 at the free market rate
of exchange at the time of payment. And so the trial court did not
err when it held that herein appellant should pay appellee
$28,000.00 "to be converted into the Philippine currency on the
basis of the current rate of exchange at the time of payment of
this judgment, as certified to by the Central Bank of the
Philippines, ...."24Appellant also contends that the P57,000.00
that he had paid to appellee should have been applied to the due to
the latter on the IRRI project because such debt was the most
onerous to appellant. This contention is untenable. The
Commissioner who was authorized by the trial court to receive
evidence in this case, however, reports that the appellee had not
been paid for the account of the $28,000.00 which represents the
fees of appellee equivalent to 20% of the $140,000.00 that the
appellant received as fee for the IRRI project. This is a finding
of fact by the Commissioner which was adopted by the trial court.
The parties in this case have agreed that they do not question the
finding of fact of the Commissioner. Thus, in the decision appealed
from the lower court says:At the hearing on the Report of the
Commissioner on February 15, 1966, the counsels for both parties
manifested to the court that they have no objection to the findings
of facts of the Commissioner in his report; and agreed that the
said report only poses two (2)legal issues, namely: (1) whether
under the facts stated in the Report, the doctrine of estoppel will
apply; and (2) whether the recommendation in the Report that the
payment of amount due to the plaintiff in dollars is permissible
under the law, and, if not, at what rate of exchange should it be
paid in pesos (Philippine currency) ....25In the Commissioner's
report, it is spetifically recommended that the appellant be
ordered to pay the plaintiff the sum of "$28,000. 00 or its
equivalent as the fee of the plaintiff under Exhibit A on the IRRI
project." It is clear from this report of the Commissioner that no
payment for the account of this $28,000.00 had been made. Indeed,
it is not shown in the record that the peso equivalent of the
$28,000.00 had been fixed or agreed upon by the parties at the
different times when the appellant had made partial payments to the
appellee.3. In his third assignment of error, appellant contends
that the lower court erred in not declaring that the aggregate
amount due from him to appellee is only P15,792.05. Appellant
questions the propriety or correctness of most of the items of fees
that were found by the Commissioner to be due to appellee for
services rendered. We believe that it is too late for the appellant
to question the propriety or correctness of those items in the
present appeal. The record shows that after the Commissioner had
submitted his report the lower court, on February 15, 1966, issued
the following order:When this case was called for hearing today on
the report of the Commissioner, the counsels of the parties
manifested that they have no objection to the findings of facts in
the report. However, the report poses only legal issues, namely:
(1) whether under the facts stated in the report, the doctrine of
estoppel will apply; and (2) whether the recommendation in the
report that the alleged payment of the defendant be made in dollars
is permissible by law and, if not, in what rate it should be paid
in pesos (Philippine Currency). For the purpose of resolving these
issues the parties prayed that they be allowed to file their
respective memoranda which will aid the court in the determination
of said issues.26In consonance with the afore-quoted order of the
trial court, the appellant submitted his memorandum which opens
with the following statements:As previously manifested, this
Memorandum shall be confined to:(a) the finding in the
Commissioner's Report that defendant's defense of estoppel will not
lie (pp. 17-18, Report); and(b) the recommendation in the
Commissioner's Report that defendant be ordered to pay plaintiff
the sum of '$28,000.00 (U.S.) or its equivalent as the fee of the
plaintiff under Exhibit 'A' in the IRRI project.'More specifically
this Memorandum proposes to demonstrate theaffirmative of three
legal issuesposed, namely:First: Whether or not plaintiff's letter
dated December 11, 1961 (Exhibit 'I') and/or Statement of Account
(Exhibit '1-A') therein enclosed has the effect of placing
plaintiff in estoppel from thereafter modifying
therepresentationsmade in said letter and Statement of Account or
of making plaintiff otherwise bound thereby; or of being decisive
or great weight in determining the true intent of the parties as to
the amount of the engineering fees owing from defendant to
plaintiff;Second: Whether or not defendant can be compelled to pay
whatever balance is owing to plaintiff on the IRRI (International
Rice and Research Institute) project in United States dollars;
andThird: Whether or not in case the ruling of this Honorable Court
be that defendant cannot be compelled to pay plaintiff in United
States dollars, the dollar-to-peso convertion rate for determining
the peso equivalent of whatever balance is owing to plaintiff in
connection with the IRRI project should be the 2 to 1 official rate
and not any other rate.27It is clear, therefore, that what was
submitted by appellant to the lower court for resolution did not
include the question of correctness or propriety of the amounts due
to appellee in connection with the different projects for which the
appellee had rendered engineering services. Only legal questions,
as above enumerated, were submitted to the trial court for
resolution. So much so, that the lower court in another portion of
its decision said, as follows:The objections to the Commissioner's
Report embodied in defendant's memorandum of objections, dated
March 18, 1966, cannot likewise be entertained by the Court because
at the hearing of the Commissioner's Report the parties had
expressly manifested that they had no objection to the findings of
facts embodied therein.We, therefore hold that the third assignment
of error of the appellant has no merit.4. In his fourth assignment
of error, appellant questions the award by the lower court of
P8,000.00 for attorney's fees. Appellant argues that the
Commissioner, in his report, fixed the sum of P5,000.00 as "just
and reasonable" attorney's fees, to which amount appellee did not
interpose any objection, and by not so objecting he is bound by
said finding; and that, moreover, the lower court gave no reason in
its decision for increasing the amount to P8,000.00.Appellee
contends that while the parties had not objected to the findings of
the Commissioner, the assessment of attorney's fees is always
subject to the court's appraisal, and in increasing the recommended
fees from P5,000.00 to P8,000.00 the trial court must have taken
into consideration certain circumstances which warrant the award of
P8,000.00 for attorney's fees.We believe that the trial court
committed no error in this connection. Section 12 of Rule 33 of the
Rules of Court, on which the fourth assignment of error is
presumably based, provides that when the parties stipulate that a
commissioner's findings of fact shall be final, only questions of
law arising from the facts mentioned in the report shall thereafter
be considered. Consequently, an agreement by the parties to abide
by the findings of fact of the commissioner is equivalent to an
agreement of facts binding upon them which the court cannot
disregard. The question, therefore, is whether or not the estimate
of the reasonable fees stated in the report of the Commissioner is
a finding of fact.The report of the Commissioner on this matter
reads as follows:As regards attorney's fees, under the provisions
of Art 2208, par (11), the same may be awarded, and considering the
number of hearings held in this case, the nature of the case
(taking into account the technical nature of the case and the
voluminous exhibits offered in evidence), as well as the way the
case was handled by counsel, it is believed,subject to the Court's
appraisal of the matter,that the sum of P5,000.00 is just and
reasonable as attorney's fees."28It is thus seen that the estimate
made by the Commissioner was an expression of belief, or an
opinion. Anopinionis different from afact. The generally recognized
distinction between a statement of "fact" and an expression of
"opinion" is that whatever is susceptible of exact knowledge is a
matter of fact, while that not susceptible of exact knowledge is
generally regarded as an expression of opinion.29It has also been
said that the word "fact," as employed in the legal sense includes
"those conclusions reached by the trior from shifting testimony,
weighing evidence, and passing on the credit of the witnesses, and
it does not denote those inferences drawn by the trial court from
the facts ascertained and settled by it.30In the case at bar, the
estimate made by the Commissioner of the attorney's fees was an
inference from the facts ascertained by him, and is, therefore, not
a finding of facts. The trial court was, consequently, not bound by
that estimate, in spite of the manifestation of the parties that
they had no objection to the findings of facts of the Commissioner
in his report. Moreover, under Section 11 of Rule 33 of the Rules
of Court, the court may adopt, modify, or reject the report of the
commissioner, in whole or in part, and hence, it was within the
trial court's authority to increase the recommended attorney's fees
of P5,000.00 to P8,000.00. It is a settled rule that the amount of
attorney's fees is addressed to the sound discretion of the
court.31It is true, as appellant contends, that the trial court did
not state in the decision the reasons for increasing the attorney's
fees. The trial court, however, had adopted the report of the
Commissioner, and in adopting the report the trial court is deemed
to have adopted the reasons given by the Commissioner in awarding
attorney's fees, as stated in the above-quoted portion of the
report. Based on the reasons stated in the report, the trial court
must have considered that the reasonable attorney's fees should be
P8,000.00. Considering that the judgment against the appellant
would amount to more than P100,000.00, We believe that the award of
P8,000.00 for attorney's fees is reasonable.5. In his fifth
assignment of error appellant urges that he is entitled to relief
on his counterclaim. In view of what We have stated in connection
with the preceding four assignments of error, We do not consider it
necessary to dwell any further on this assignment of
error.WHEREFORE, the decision appealed from is affirmed, with costs
against the defendant-appellant. It is so ordered.G.R. No. L-27796
March 25, 1976ST. PAUL FIRE & MARINE INSURANCE
CO.,plaintiff-appellant,vs.MACONDRAY & CO., INC., BARBER
STEAMSHIP LINES, INC., WILHELM WILHELMSEN MANILA PORT SERVICE
and/or MANILA RAILROAD COMPANY,defendants-appellees.Chuidian Law
Office for appellant.Salcedo, Del Rosario Bito & Mesa for
appellee Macondray & Co., Inc., Barber Steamship Lines, Inc.
and Wilhelm WilhelmsenMacaranas & Abrenica for appellee Manila
Port Service and/or Manila Railroad Company.ANTONIO,J.:Certified to
this Court by the Court of Appeals in its Resolution of May 8,
1967,1on the ground that the appeal involves purely questions of
law, thus: (a) whether or not, in case of loss or damage, the
liability of the carrier to the consignee is limited to the C.I.F.
value of the goods which were lost or damaged, and (b) whether the
insurer who has paid the claim in dollars to the consignee should
be reimbursed in its peso equivalent on the date of discharge of
the cargo or on the date of the decision.According to the records,
on June 29, 1960, Winthrop Products, Inc., of New York, New York,
U.S.A., shipped aboard the SS "Tai Ping", owned and operated by
Wilhelm Wilhelmsen 218 cartons and drums of drugs and medicine,
with the freight prepaid, which were consigned to Winthrop-Stearns
Inc., Manila, Philippines. Barber Steamship Lines, Inc., agent of
Wilhelm Wilhelmsen issued Bill of Lading No. 34, in the name of
Winthrop Products, Inc. as shipper, with arrival notice in Manila
to consignee Winthrop-Stearns, Inc., Manila, Philippines. The
shipment was insured by the shipper against loss and/or damage with
the St. Paul Fire & Marine Insurance Company under its
insurance Special Policy No. OC-173766 dated June 23, 1960 (Exhibit
"S").On August 7, 1960, the SS "Tai Ping" arrived at the Port of
Manila and discharged its aforesaid shipment into the custody of
Manila Port Service, the arrastre contractor for the Port of
Manila. The said shipment was discharged complete and in good order
with the exception of one (1) drum and several cartons which were
in bad order condition. Because consignee failed to receive the
whole shipment and as several cartons of medicine were received in
bad order condition, the consignee filed the corresponding claim in
the amount of Fl,109.67 representing the C.I.F. value of the
damaged drum and cartons of medicine with the carrier, herein
defendants- appellees (Exhibits "G" and "H") and the Manila Port
Service (Exhibits "I" & "J" However, both refused to pay such
claim. consequently, the consignee filed its claim with the
insurer, St. Paul Fire & Marine insurance Co. (Exhibit "N"),
and the insurance company, on the basis of such claim, paid to the
consignee the insured value of the lost and damaged goods,
including other expenses in connection therewith, in the total
amount of $1,134.46 U.S. currency (Exhibit "U").On August 5, 1961,
as subrogee of the rights of the shipper and/or consignee, the
insurer, St. Paul Fire & Marine Insurance Co., instituted with
the Court of First Instance of Manila the present action2against
the defendants for the recovery of said amount of $1,134.46, plus
costs.On August 23, 1961, the defendants Manila Port Service and
Manila Railroad Company resisted the action, contending, among
others, that the whole cargo was delivered to the consignee in the
same condition in which it was received from the carrying vessel;
that their rights, duties and obligations as arrastre contractor at
the Port of Manila are governed by and subject to the terms,
conditions and limitations contained in the Management Contract
between the Bureau of Customs and Manila Port Service, and their
liability is limited to the invoice value of the goods, but in no
case more than P500.00 per package, pursuant to paragraph 15 of the
said Management Contract; and that they are not the agents of the
carrying vessel in the receipt and delivery of cargoes in the Port
of Manila.On September 7, 1961, the defendants Macondray & Co.,
Inc., Barber Steamship Lines, Inc. and Wilhelm Wilhelmsen also
contested the claim alleging, among others, that the carrier's
liability for the shipment ceased upon discharge thereof from the
ship's tackle; that they and their co-defendant Manila Port Service
are not the agents of the vessel; that the said 218 packages were
discharged from the vessel SS "Tai Ping" into the custody of
defendant Manila Port Service as operator of the arrastre service
for the Port of Manila; that if any damage was sustained by the
shipment while it was under the control of the vessel, such damage
was caused by insufficiency of packing,force majeureand/or perils
of the sea; and that they, in good faith and for the purpose only
of avoiding litigation without admitting liability to the
consignee, offered to settle the latter's claim in full by paying
the C.I.F. value of 27 lbs. caramel 4.13 kilos methyl salicylate
and 12 pieces pharmaceutical vials of the shipment, but their offer
was declined by the consignee and/or the plaintiff.After due trial,
the lower court, on March 10, 1965 rendered judgment ordering
defendants Macondray & Co., Inc., Barber Steamship Lines, Inc.
and Wilhelm Wilhelmsen to pay to the plaintiff, jointly and
severally, the sum of P300.00, with legal interest thereon from the
filing of the complaint until fully paid, and defendants Manila
Railroad Company and Manila Port Service to pay to plaintiff,
jointly and severally, the sum of P809.67, with legal interest
thereon from the filing of the complaint until fully paid, the
costs to be borne by all the said defendants.3On April 12, 1965,
plaintiff, contending that it should recover the amount of
$1,134.46, or its equivalent in pesos at the rate of P3.90, instead
of P2.00, for every US$1.00, filed a motion for reconsideration,
but this was denied by the lower court on May 5, 1965. Hence, the
present appeal.Plaintiff-appellant argues that, as subrogee of the
consignee, it should be entitled to recover from the
defendants-appellees the amount of $1,134.46 which it actually paid
to the consignee (Exhibits "N" & "U") and which represents the
value of the lost and damaged shipment as well as other legitimate
expenses such as the duties and cost of survey of said shipment,
and that the exchange rate on the date of the judgment, which was
P3.90 for every US$1.00, should have been applied by the lower
court.Defendants-appellees countered that their liability is
limited to the C.I.F. value of the goods, pursuant to contract of
sea carriage embodied in the bill of lading that the consignee's
(Winthrop-Stearns Inc.) claim against the carrier (Macondray &
Co., Inc., Barber Steamship Lines, Inc., Wilhelm Wilhelmsen and the
arrastre operators (Manila Port Service and Manila Railroad
Company) was only for the sum of Pl,109.67 (Exhibits "G", "H", "I"
& "J"), representing the C.I.F. value of the loss and damage
sustained by the shipment which was the amount awarded by the lower
court to the plaintiff-appellant;4defendants appellees are not
insurers of the goods and as such they should not be made to pay
the insured value therefor; the obligation of the
defendants-appellees was established as of the date of discharge,
hence the rate of exchange should be based on the rate existing on
that date, i.e., August 7, 1960,5and not the value of the currency
at the time the lower court rendered its decision on March 10,
1965.The appeal is without merit.The purpose of the bill of lading
is to provide for the rights and liabilities of the parties in
reference to the contract to carry.6The stipulation in the bill of
lading limiting the common carrier's liability to the value of the
goods appearing in the bill, unless the shipper or owner declares a
greater value, is valid and binding.7This limitation of the
carrier's liability is sanctioned by the freedom of the contracting
parties to establish such stipulations, clauses, terms, or
conditions as they may deem convenient, provided they are not
contrary to law, morals, good customs and public policy.8A
stipulation fixing or limiting the sum that may be recovered from
the carrier on the loss or deterioration of the goods is valid,
provided it is (a) reasonable and just under the circumstances,9and
(b) has been fairly and freely agreed upon.10In the case at bar,
the liabilities of the defendants- appellees with respect to the
lost or damaged shipments are expressly limited to the C.I.F. value
of the goods as per contract of sea carriage embodied in the bill
of lading, which reads:Whenever the value of the goods is less than
$500 per package or other freight unit, their value in the
calculation and adjustment of claims for which the Carrier may be
liable shall for the purpose of avoiding uncertainties and
difficulties in fixing value be deemed to be the invoice value,
plus frieght and insurance if paid, irrespective of whether any
other value is greater or less.The limitation of liability and
other provisions herein shall inure not only to the benefit of the
carrier, its agents, servants and employees, but also to the
benefit of any independent contractor performing servicesincluding
stevedoring in connection with the goods covered hereunder.
(Paragraph 17, emphasis supplied.)It is not pretended that those
conditions are unreasonable or were not freely and fairly agreed
upon. The shipper and consignee are, therefore, bound by such
stipulations since it is expressly stated in the bill of lading
that in "accepting this Bill of Lading, the shipper, owner and
consignee of the goods, and the holder of the Bill of Lading agree
to be bound by all its stipulations, exceptions and conditions,
whether written, stamped or printed, as fully as if they were all
signed by such shipper, owner, consignee or holder. It is obviously
for this reason that the consignee filed its claim against the
defendants-appellees on the basis of the C.I.F. value of the lost
or damaged goods in the aggregate amount of Pl,109.67 (Exhibits
"G", "H", "I", and "J").11The plaintiff-appellant, as insurer,
after paying the claim of the insured for damages under the
insurance, is subrogated merely to the rights of the assured. As
subrogee, it can recover only the amount that is recoverable by the
latter. Since the right of the assured, in case of loss or damage
to the goods, is limited or restricted by the provisions in the
bill of lading, a suit by the insurer as subrogee necessarily is
subject to like limitations and restrictions.The insurer after
paying the claim of the insured for damages under the insurance is
subrogated merely to the rights of the insured and therefore can
necessarilyrecover only that to what was recoverable by the
insured.12Upon payment for a total loss of goods insured, the
insurance is only subrogated to such rights of action as the
assured has against 3rd persons who caused or are responsible for
the loss. The right of action against another person, the equitable
interest in which passes to the insurer, being only that which the
assured has, it follows that if the assured has no such right of
action, none passes to the insurer, andif the assured's right of
action is limited or restricted by lawful contract between him and
the person sought to be made responsible for the loss, a suit by
the insurer, in the Tight of the assured, is subject to like
limitations or restrictions.13Equally untenable is the contention
of the plaintiff-appellant that because of extraordinary inflation,
it should be reimbursed for its dollar payments at the rate of
exchange on the date of the judgment and not on the date of the
loss or damage. The obligation of the carrier to pay for the damage
commenced on the date it failed to deliver the shipment in good
condition to the consignee.The C.I.F. Manila value of the goods
which were lost or damaged, according to the claim of the consignee
dated September 26, 1960 is $226.37 (for the pilferage, Exhibit
"G") and $324.33 (shortlanded, Exhibit "H") or P456.14 and P653.53,
respectively, in Philippine Currency. The peso equivalent was based
by the consignee on the exchange rate of P2.015 to $1.00 which was
the rate existing at that time. We find, therefore, that the trial
court committed no error in adopting the aforesaid rate of
exchange.WHEREFORE, the appealed decision is hereby affirmed, with
costs against the plaintiff-appellant.
[G.R. No. 105188.January 23, 1998]MYRON C. PAPA, Administrator
of the Testate Estate of Angela M. Butte,petitioner, vs.A. U.
VALENCIA and CO. INC., FELIX PEARROYO, SPS. ARSENIO B. REYES &
AMANDASANTOS, and DELFIN JAO,respondents.D E C I S I O
NKAPUNAN,J.:In this petition for review oncertiorariunder Rule 45
of the Rules of Court, petitioner Myron C. Papa seeks to reverse
and set aside1) the Decision dated 27 January 1992 ofthe Court of
Appeals which affirmed with modification the decision of the trial
court; and, 2) the Resolution dated 22 April 1992 ofthe same court,
which denied petitioners motion for reconsideration of the above
decision.The antecedent facts of this case are as
follows:Sometimein June 1982, herein private respondents A.U.
Valencia and Co., Inc. (hereinafter referred to as respondent
Valencia, for brevity) and Felix Pearroyo (hereinafter called
respondent Pearroyo), filed with the Regional Trial Court of Pasig,
Branch 151, a complaint for specific performance against herein
petitioner Myron C. Papa, in his capacity as administrator of the
Testate Estate of one Angela M. Butte.The complaint alleged that on
15 June 1973, petitioner Myron C. Papa, acting as attorney-in-fact
of Angela M. Butte, sold to respondent Pearroyo, through respondent
Valencia, a parcel of land, consisting of 286.60 square meters,
located at corner Retiro and Cadiz Streets, La Loma, Quezon City,
and covered by Transfer Certificate of Title No. 28993 of the
Register of Deeds of Quezon City; that prior to the alleged sale,
the said property, together with several other parcels of land
likewise owned by Angela M. Butte, had been mortgagedby her to the
Associated Banking Corporation (now Associated Citizens Bank); that
after the alleged sale, but before the title to the subject
property had been released, Angela M. Butte passed away; that
despite representations made by herein respondents to the bank to
release the title to the property sold to respondent Pearroyo, the
bank refused to release it unless and until all the mortgaged
properties of the late Angela M. Butte were also redeemed; that in
order to protect his rights and interests over the property,
respondent Pearroyo causedthe annotation on the title of an adverse
claim as evidenced by Entry No. P.E. - 6118/T-28993, inscribed on
18 January 1977.The complaint further alleged that it was only upon
the release of the title to the property, sometime in April 1977,
that respondents Valencia and Pearroyo discoveredthatthemortgage
rights ofthe bank had been assigned to one Tomas L. Parpana (now
deceased), as special administrator of the Estate ofRamon Papa,
Jr., on 12 April 1977;that since then, herein petitioner had been
collecting monthly rentals in the amount ofP800.00 from the tenants
of the property, knowing that said property had already been sold
to private respondents on 15 June 1973;that despite repeated
demands from said respondents, petitioner refused and failed to
deliver the title to the property.Thereupon, respondents Valencia
and Pearroyo filed a complaint for specific performance, praying
that petitioner be ordered to deliver to respondent Pearroyo the
title to the subject property (TCT 28993); to turn over to the
latter the sum ofP72,000.00 as accrued rentals as of April 1982,
and the monthly rental ofP800.00 until the property is delivered to
respondent Pearroyo; to pay respondents the sum ofP20,000.00 as
attorneys fees; and to pay the costs of the suit.In his Answer,
petitioner admitted that the lot had been mortgaged to the
Associated Banking Corporation (now Associated Citizens Bank).He
contended, however, that the complaint did not statea cause of
action; that the real property in interest was the Testate Estate
of Angela M. Butte, which should have been joined as a party
defendant; that the case amounted to a claim against the Estate of
Angela M. Butte and should have been filed in Special Proceedings
No. A-17910 before the Probate Court in Quezon City; and that, if
as alleged in the complaint, the property had been assigned to
Tomas L. Parpana, as special administrator of the Estate of Ramon
Papa, Jr., said estate should beimpleaded.Petitioner, likewise,
claimed that he could not recall in detail the transaction which
allegedly occurred in 1973; that he did not have TCT No. 28993 in
his possession; that he could not be held personally liable as he
signed the deed merely as attorney-in-fact of said Angela M.
Butte.Finally, petitioner asseverated that as a result of the
filing of the case, he was compelled to hire the services of
counsel for a fee ofP20,000.00, for which respondents should be
held liable.Upon his motion, herein private respondent Delfin Jao
was allowed to intervene in the case. Making common cause with
respondents Valencia and Pearroyo, respondent Jao alleged that the
subject lotwhich had been sold to respondent Pearroyo
throughrespondent Valencia was in turn sold to him on 20 August
1973 for the sum ofP71,500.00, upon his paying earnest money in the
amount ofP5,000.00.He, therefore, prayed that judgment be rendered
in favor of respondents Valencia and Pearroyo; and, that after the
delivery of the title to said respondents, the latter in turn be
ordered to execute in his favor the appropriate deed of conveyance
coveringthe property in question and to turn over to him the
rentals which aforesaid respondents sought to collect from
petitioner Myron C. Papa.Respondent Jao, likewise, averred that as
a result of petitioners refusal to deliver the title to the
property to respondents Valencia and Pearroyo, who in turn failed
to deliver the said title to him,he suffered mental anguish and
serious anxiety for which he sought payment of moral damages; and,
additionally, the payment of attorneys fees and costs.For his part,
petitioner, as administrator of the Testate Estate of Angela M.
Butte, filed a third-party complaint against herein private
respondents, spousesArsenio B. Reyes and Amanda Santos (respondent
Reyes spouses, for short).He averred, among others, that the late
Angela M. Butte was the owner of the subject property; that due to
non-payment of real estate tax said property was sold at public
auctionby the City Treasurer of Quezon City to the respondent Reyes
spouses on 21 January 1980 for the sum ofP14,000.00; that the
one-year period of redemption had expired; that respondents
Valencia and Pearroyo had sued petitioner Papa as administrator of
the estate ofAngela M. Butte, for the delivery of the title to the
property; that the same aforenamed respondents had acknowledged
that the price paid by them was insufficient, and that they were
willing to add a reasonable amount or a minimum ofP55,000.00 to the
price upon delivery of the property, considering that the same was
estimated to be worthP143,000.00; that petitioner was willing to
reimburse respondent Reyes spouses whatever amount they might have
paid for taxes and other charges, since the subject property was
still registered in the name of the late Angela M. Butte; that it
was inequitable to allow respondent Reyes spouses to
acquireproperty estimated to be worthP143,000.00, for a measly sum
ofP14,000.00.Petitioner prayed that judgment be rendered cancelling
the tax sale to respondent Reyes spouses; restoring the subject
property to him upon paymentby him to said respondent Reyes spouses
of the amount ofP14,000.00, plus legal interest; and, ordering
respondentsValencia andPearroyo to pay him at leastP55,000.00 plus
everything they might have to pay the Reyes spouses in recovering
the property.Respondent Reyesspouses in their Answer raised the
defense of prescription of petitioners right to redeem the
property.At the trial, only respondent Pearroyo testified.All the
other parties only submitted documentary proof.On 29 June 1987, the
trial court rendered a decision, the dispositive portion of which
reads:WHEREUPON, judgment is hereby rendered as follows:1)Allowing
defendant to redeem from third-party defendants and ordering the
latter to allow the former to redeem the property in question, by
paying the sum ofP14,000.00 plus legal interest of 12% thereon from
January 21, 1980;2)Ordering defendant to execute a Deed of Absolute
Sale in favor of plaintiff Felix Pearroyo covering the property in
question and to deliver peaceful possession and enjoyment of the
said property to the said plaintiff, free from any liens and
encumbrances;Should this not be possible, for any reason not
attributable to defendant, said defendant is ordered to pay to
plaintiff Felix Pearroyo the sum ofP45,000.00 plus legal interest
of 12% from June 15, 1973;3)Ordering plaintiff Felix Pearroyo to
execute and deliver to intervenor a deed of absolute sale over the
same property, upon the latters payment to the former of the
balance of the purchase price ofP71,500.00;Should this not be
possible, plaintiff Felix Pearroyo is ordered to pay intervenor the
sum ofP5,000.00 plus legal interest of 12% from August 23, 1973;
and4)Ordering defendant to pay plaintiffs the amount ofP5,000.00
for and as attorneys fees and litigation expenses.SO
ORDERED.[1]Petitioner appealed the aforesaid decision of the trial
court to the Court of Appeals, alleging among others that the sale
was never consummated as he did not encash the check (in the amount
ofP40,000.00) given by respondents Valencia and Pearroyo in payment
of the full purchase price of the subject lot.He maintained that
what said respondents had actually paid was only the amount
ofP5,000.00 (in cash) as earnest money.Respondent Reyes spouses,
likewise, appealed the above decision.However, their appeal was
dismissed because of failure to file their appellants brief.On 27
January 1992, the Court of Appeals rendered a decision, affirming
with modification the trial courts decision, thus:WHEREFORE, the
second paragraph of the dispositive portion of the appealed
decision is MODIFIED, by ordering the defendant-appellant to
deliver to plaintiff-appellees the owners duplicate of TCT No.
28993 of Angela M. Butte and the peaceful possession and enjoyment
of the lot in question or, if the owners duplicate certificate
cannot be produced, to authorize the Register of Deeds to cancel it
and issue a certificate of title in the name of Felix Pearroyo.In
all other respects, the decision appealed from is AFFIRMED.Costs
against defendant-appellant Myron C. Papa.SO ORDERED.[2]In
affirming the trial courts decision, respondent court held that
contrary to petitioners claim that he did not encash the aforesaid
check, and therefore, the sale was not consummated, there was no
evidence at all that petitioner did not, in fact, encash said
check.On the other hand, respondent Pearroyo testified in court
that petitioner Papa had received the amount ofP45,000.00 and
issued receipts therefor.According to respondent court, the
presumption is that the check was encashed, especially since the
payment by check was not denied by defendant-appellant (herein
petitioner) who, in his Answer, merely alleged that he can no
longer recall the transaction which is supposed to have happened 10
years ago.[3]On petitioners claim that he cannot be held personally
liable as he had acted merely as attorney-in-fact of the owner,
Angela M. Butte, respondent court held that such contention is
without merit.This action was not brought against him in his
personal capacity, butin his capacity as the administrator of the
Testate Estate of Angela M. Butte.[4]On petitioners contention that
the estate of Angela M. Butte should have been joined in the action
as the real party in interest, respondent court held that pursuant
to Rule 3,Section 3 of the Rules of Court, the estate of Angela M.
Butte does not have to be joined in the action. Likewise, the
estate of Ramon Papa, Jr., is not an indispensable party under Rule
3, Section 7 of the same Rules. For the fact is that Ramon Papa,
Jr., or his estate, was not a party to the Deed of Absolute Sale,
and it is basic law that contracts bind only those who are parties
thereto.[5]Respondent court observed that the conditions under
which the mortgage rights of the bank were assigned are not clear.
In any case, any obligation which the estate of Angela M. Butte
might have to the estate of Ramon Papa, Jr. is strictly between
them.RespondentsValencia and Pearroyo are not bound by any such
obligation.Petitioner filed a motion for reconsideration of the
above decision, which motionwasdenied by respondent Court of
Appeals.Hence, this petitionwherein petitioner raises the following
issues:I.THE CONCLUSION OR FINDING OF THE COURT OF APPEALS THAT THE
SALE IN QUESTION WAS CONSUMMATED IS GROUNDED ON SPECULATION OR
CONJECTURE, AND IS CONTRARY TO THE APPLICABLE LEGAL
PRINCIPLE.II.THE COURT OF APPEALS, IN MODIFYING THE DECISION OF THE
TRIAL COURT, ERRED BECAUSE IT, IN EFFECT, CANCELLED OR NULLIFIED AN
ASSIGNMENT OF THE SUBJECT PROPERTY IN FAVOR OF THE ESTATE OF RAMON
PAPA, JR. WHICH IS NOT A PARTY IN THIS CASE.III.THE COURT OF
APPEALS ERRED IN NOT HOLDING THAT THE ESTATE OF ANGELA M. BUTTEAND
THE ESTATE OF RAMON PAPA, JR. ARE INDISPENSABLE PARTIES IN THIS
CASE.[6]Petitioner argues that respondent Court ofAppeals erred in
concluding that the alleged sale of the subject property had been
consummated.He contends that such a conclusion is based on the
erroneous presumption that the check (in the amount ofP40,000.00)
had been cashed, citing Art. 1249 of the Civil Code, which
provides, in part, that payment by checks shall produce the effect
of payment only when they have been cashed or when through the
fault of the creditor they have been impaired.[7]Petitioner insists
that he never cashed said check; and, such being the case, its
delivery never produced the effect of payment.Petitioner, while
admitting that he had issued receipts for the payments, asserts
that said receipts, particularly the receipt of PCIB Check No.
761025 in the amount ofP40,000.00, do not prove payment.He avers
that there must be a showing that said check had been encashed.If,
according to petitioner, the check had been encashed, respondent
Pearroyo should have presentedPCIB Check No. 761025 duly stamped
received by the payee, or at leastits microfilm
copy.Petitionerfinallyaversthat,in fact, the consideration for the
sale was still in the hands of respondents Valencia and Pearroyo,
asevidenced by a letter addressed to himin which saidrespondents
wrote,in part:x x x.Please be informed that I had been authorized
by Dr. RamonPapa, Jr., heir of Mrs. Angela M. Butte to pay you the
aforementioned amount ofP75,000.00 for the release and cancellation
of subject propertys mortgage.The money is with me and if it is
alright with you, I would like to tender the payment as soon as
possible. x x x.[8]We find no merit in petitioners arguments.It is
an undisputed fact that respondents Valencia and Pearroyo had given
petitionerMyron C. Papa the amounts ofFive Thousand Pesos
(P5,000.00) in cash on 24 May 1973, and Forty Thousand Pesos
(P40,000.00) in checkon15June 1973, in payment of the purchase
price of the subject lot.Petitioner himself admits having received
said amounts,[9]and having issued receipts therefor.[10]Petitioners
assertionthat he never encashed the aforesaid check is not
subtantiated and is at odds with his statement in his answer thathe
can no longer recall the transaction which is supposed to have
happened 10 years ago.After more than ten (10) years from the
payment in part by cash and in part by check, the presumption is
that the check had been encashed.As already stated, he even waived
the presentation of oral evidence.Granting that petitioner had
never encashed the check, his failure to do so for more than ten
(10) years undoubtedly resulted in the impairment of the check
through his unreasonable and unexplained delay.While it is true
that the delivery of a check produces the effect of payment only
when it is cashed, pursuant to Art. 1249 of the Civil Code, the
rule is otherwise if the debtor is prejudiced by the creditors
unreasonable delay in presentment.The acceptance of a check implies
an undertaking of due diligence in presenting it for payment, and
if he from whom it is received sustains loss by want of such
diligence, it will be held to operate as actual payment of the debt
or obligationfor which it was given.[11]It has, likewise, been held
that if no presentment is made at all, the drawer cannot be held
liable irrespective of loss or injury[12]unless presentment is
otherwise excused.This is in harmony with Article 1249 of the Civil
Code under which payment by way of check or other negotiable
instrument is conditioned on its being cashed, except when through
the fault of the creditor, the instrument is impaired. The payee of
a check would be a creditor under this provision and if its
non-payment is caused by his negligence, payment will be deemed
effected and the obligation for which the check was given as
conditional payment will be discharged.[13]Considering that
respondentsValencia and Pearroyo had fulfilled their part of the
contract of sale by delivering the payment of the purchase price,
saidrespondents, therefore, had the right to compel petitioner to
deliver to them the owners duplicate of TCT No. 28993 of Angela M.
Butte and the peaceful possession and enjoyment of the lot in
question.With regard to the alleged assignment of mortgage rights,
respondent Court of Appeals has found that the conditions under
whichsaid mortgage rights of the bank were assigned are not
clear.Indeed, a perusal of the original records of the case
wouldshow that there is nothingthere that could shed light on the
transactions leading to the said assignment of rights; nor is there
any evidence on record of the conditions under which said mortgage
rights were assigned.What is certain is that despite the said
assignment of mortgag