Lachica v.

Araneta
47 OG 5699 – 19 August 1949
Paredes, J.

Topic: Obligations with a Period – In General

Petitioners: Maria Lachica, etc.

FACTS:
• Appeal from CFI of Manila
• July 1943 – Araneta, Inc. offered for sale a parcel of land with improvements (TCT No. 1484 of the
Land Records of Manila)
➢ Rizal Investment Corp. acted as Araneta, Inc.’s agent in the sale of property (company where
Esteban Sadang was Sales Manager)
• July 1943 (first week) – Gabriel Navarro (field man of the Investment Corporation) informed Sadang
of the offer to sell the property
• July 12, 1943 – Sadang submitted to Araneta a proposal of the buyer to purchase the property for
P18,000, with a down payment of P7,500 and the balance to be paid at any time within 90 days from
the signing of the peace treaty between the warring nations (REJECTED by Araneta)
• Afternoon of the same day – Sadang submitted another written offer of the same Investment Corp.,
with a proposal for P20,000 with a down payment of P7,500 and the balance to be paid at any time
within 90 days from the signing of the peace treaty between the warring nations
➢ Araneta told Sadang to return after two days so he can consider other offers
• July 14, 1943 – Araneta signed a letter (Exhibit A) addressed to the Investment Corporation of
Sadang, who was accompanied by Investment Corporation President and Manager Mariano Flores
with the following terms:
➢ Price of P20,000, P8,000 of which to be paid in cash and the remaining P12,000 in installments
of:
o P1,000 on or before Dec. 31, 1943
o P1,000 on or before Dec. 31, 1944
o P10,000 on or before Dec. 31, 1945
➢ Additional term: Same property will be mortgaged to guarantee the unpaid balance with an
interest of 8 per cent per annum to be paid monthly in advance
• July 15, 1943 – Plaintiffs deposited P1,000 as “good faith money” (Exhibit B)
• Noon of July 16, 1943 – Deed of sale with mortgage was executed by and between Lachica with the
concurrence of her husband Esteban Sadang as vendee mortgagor, and Araneta Inc. as vendor-
mortgagee (Exhibit C)
➢ Additional terms
➢ Plaintiffs paid additional P7,000
• April 10, 1944 – Plaintiffs paid P5,000
• April 11, 1944 – Araneta returned the P5,000 check to Lachica, saying their collector, Mr. Perez, is not
authorized to receive said amount because according to the terms, they are only to pay P1,000 on or
before Dec. 31, 1944
• April 12, 1944 – Lachica returned the check again to Araneta, with a letter which states in part,
“Where would be the law of justice and equity if, as a debtor, I would now be forced to assume an
obligation which I could not very well pay”
➢ Araneta returned the check again to Lachica on that same date with the same reasons he initially
stated, adding they are having a hard time finding an investment for the amount Lachica paid, and
that despite the advance payment, they will still be charged with the interest in accordance to the
 contract. Lachica replied to Araneta, deciding to pay off the remaining balance together with the
interest
• As of September 15, 1944, Lachica’s account under the mortgage contract was P6,000 unpaid balance
of the principal
➢ Sept. 5 – Sadang went to Araneta to pay off the remaining balance and cancel the mortgage but
the latter refused to accept the payment
➢ Sept. 6 – Atty. Lucio Salazar, whom Sadang asked to intervene, gave to Araneta P7,060.03 for
the balance of the mortgage, including interests not yet due which Araneta would have earned had
Sadang paid on Dec. 31, 1945
➢ Araneta did not accept, saying it was not in accordance with the terms of the deed of sale with
mortgage
➢ Atty. Salazar notified Araneta of the plaintiffs’ intention to consign the sum of P7,060.03 as he
did in effect deposited P7,061 in the Court of First Instance of Manila by way of consignation and
at the same time presented the complaint
➢ Sept. 11 – Counsel for plaintiffs notified the defendant in writing of the fact of consignation
• Araneta alleged the trial court erred, raising the following issues

ISSUES:
1. W/N the trial court erred in holding that the plaintiffs had a right to pay the remaining principal of
P6,000 before December 31, 1945
2. W/N the trial court erred in holding that the plaintiffs made a valid tender of payment to defendant
3. W/N the trial court erred in dismissing the defendant’s counterclaim

HELD:
1. W/N the trial court erred in holding the plaintiffs had a right to pay P6,000 before Dec. 31, 1945
– No, trial court did not err in holding the plaintiffs had a right to pay the balance of their
obligation before the date of maturity, Dec. 31, 1945
• Question is which document expresses the true agreement of the parties with respect to the times of
payment of the purchase price of the property
➢ Plaintiffs say Exhibit A (July 14 offer of Lachica with P1,000 deposit) due to the following
reasons:
o Deposit signified the formal offer of sale was accepted by the plaintiffs
o Contract was perfected, according to Arts. 1254, 1258, 1262, and 1450 of the Civil Code
o Exhibit A was binding between the two parties
o Exhibit C cannot be considered a novation because there was no consideration of it
➢ Defendant says Exhibit C (notarial deed of sale with mortgage on July 16)
• Exhibit A is only one of the steps which led to the formulation of Exhibit C
• Theory of integration of jural acts – a written contract merges all prior and contemporaneous
negotiations in connection with the same subject, and all agreements, verbal or written, made at or
before the time of the execution of that contract are to be considered as merged and integrated in
the same written instrument
• Plaintiffs claim they signed Exhibit C without reading the contents as it was already late and
because Araneta told them they were a big corporation and should not read any more
➢ But Sadang was a captain of the USAFFE and a licensed real estate man; the court believed they
read the document before signing it
➢ However, the court also said it is reasonable to conclude that the plaintiffs assumed that Exhibit C
only had the same contents as in Exhibit A except for the omission of the words “or before” and
the technical clause “These periods of payment have been agreed for the benefit of both the
vendor and the vendee”
 ➢ The plaintiffs understood “on or before” as, the installments might be paid on or before the due
dates specified
➢ Also note, the plaintiffs were not assisted by a lawyer and Atty. Araneta, who prepared Exhibit C,
did not explain the effect or call the attention of the plaintiffs to the changes
• Construction by the plaintiffs as to the terms of the agreement should prevail, based on Sec. 65,
Rule 123 of the Rules of Court: When the terms of an agreement have been intended in a different
sense by the different parties to it, that sense is to prevail against either party in which he supposed
the other understood it
• Contract Exhibit C is binding, but how the parties came up with it must be scrutinized
• Contract does not prohibit a payment done before the date specified
• Art. 1127 of the Civil Code: Exhibit C specifically said the periods of payment have been agreed
for the benefit of the vendor and the vendee
• The only impediment to a debtor making payment before the term fixed is the denial to the creditor
of the benefits such as interests, which the latter can get because of the fixed term
• The law should not be interpreted as to compel a debtor to remain so, when he is in a position to
release himself
• Refusal of the defendant to accept the Sept. 5 payment was because the Japanese notes then has
greatly depreciated
2. W/N the trial court erred in holding that the plaintiffs made a valid tender of payment to
defendant – Yes, the plaintiffs made a valid tender of payment, hence consignation should be
given effect
• Appellant did not refuse the payment for insufficiency of funds in the bank or on account of the
medium in which payment was made; he refused because he believed he could not be forced to
accept the payment prior to the date specified in the contract
• Objection to a tender must be made in good time and the grounds for objection must be specified
• Ordinarily required of one to whom payment is offered in the form of a check that he make his
objection at the time to the offer of a check instead of an offer of payment in money (Gunby v.
Ingram)
• Payment by check has become a generally recognized as acceptable in business transactions, and
omission to make an objection to a check as payment is regarded as a waiver of the right to demand
payment in money (Gount v. Alabama B. Oil Co.)
➢ Reason: To afford the debtor an opportunity to secure the specific money which the law
prescribes shall be accepted in payment of debts
➢ Appellees insist the President did not see the check, but how could he have not seen the check
when he wrote a letter refusing such payment

3. W/N the trial court erred in dismissing the defendant’s counterclaim – No

RULING:
Judgment appealed from is affirmed.