Paculdo v.

Regalado
G.R. No. 123855, 20 November 2000

FACTS:

Petitioner Nereo Paculdo and respondent Bonifacio Regalado entered into a contract of
lease over a parcel of land. Aside from the lease, petitioner leased eleven (11) other
property from the respondent, ten (10) of which was located within the Fairview
compound, while the eleventh was located along Quirino Highway Quezon City.
Petitioner also purchased from respondent eight (8) units of heavy equipment and
vehicles.

On account of petitioner’s failure to pay rent for the month of May and the monthly rental
for the months of June and July the respondent sent two demand letters to petitioner
demanding payment of the back rentals, and if no payment was made within fifteen (15)
days from the receipt of the letter, it would cause the cancellation of the lease contract.  
Without the knowledge of petitioner, respondent mortgaged the land subject of the lease
contract, including the improvements which petitioner introduced into the land amounting
to Monte de Piedad Savings Bank, as a security for a loan. Respondent refused to
accept petitioner’s daily rental payments.

ISSUE:

Whether or not the petitioner was truly in arrears in the payment of rentals on the subject
property at the time of the filing of the complaint about ejectment.

RULING:

NO, the petitioner was not in arrears in the payment of rentals on the subject property at
the time of the filing of the complaint about ejectment.

As provided in Article 1252 of the Civil Code, the right to specify which among his various
obligations to the same creditor is to be satisfied first rest with the debtor.

In the case at bar, at the time petitioner made the payment, he made it clear to the
respondent that they were to be applied to his rental obligations on the Fairview wet
market property. Though he entered into various contracts and obligations with
respondent, all the payments made, were to be applied to rental and security deposit on
the Fairview wet market property. However, respondent applied a big portion of the
amount paid by petitioner to the satisfaction of an obligation which was not yet due and
demandable which is the payment of heavy equipment.

Under the law, if the debtor did not declare at the time he made the payment to which of
his debts with the creditor the payment is to be applied, the law provided the guideline;
i.e. no payment is to be applied to a debt which is not yet due and the payment has to be
applied first to the debt which is most onerous to the debtor.
Kalalo v. Luz
G.R. No. L-27782, 31 July 1970

FACTS:

Kalalo the plaintiff is a licensed civil engineer he entered into an agreement with
defendant Alfredo J. Luz a license architect. Plaintiff sent a statement of account to
defendant stating his fee for the service that he rendered. The defendant however did not
pay the plaintiff of the exact amount that he requested because some of appellee’s
services were not in accordance with the agreement and appellee’s claims were not
justified by the services actually rendered. Defendant alleges that plaintiff had no cause
of action, that plaintiff 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.

ISSUE:

Whether or not under the doctrine of estoppel would apply in this case.

RULING:

No. The statement of accounts could not estop appellee, because appellant did not rely
thereon as found by the Commissioner. 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.

The 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

Sarming, et. al. v. Cresencio Dy, et. al.

FACTS:

In this case a certain Silveria Flores sold her lot to Alejandra Delfino, now were all
represented by their successors-in-interest. The petitioner wanted for the reformation of
the contract of sale entered between Silveria and Delfino because of the mistake in the
lot number in the contract. Silveria and Delfino inquired from the Registry of Deeds about
the status of the lot finding that the lot was still on file. Alejandra paid all the necessary
expenses and the title was given to Silveria however despite repeated demand Silveria
failed to give the title to Delfino.

ISSUE:

Whether or not there is a cause of action for reformation of instrument against Silveria
Flores.

RULING:

Yes. Reformation is that remedy in equity by means of which a written instrument is

Art. 1359. When, there having been a meeting of the minds of the parties to a contract,
their true intention is not expressed in the instrument purporting to embody the
agreement by reason of mistake, fraud, inequitable conduct or accident, one of the
parties may ask for the reformation of the instrument to the end that such true intention
may be expressed.

If mistake, fraud, inequitable conduct, or accident has prevented a meeting of the minds
of the parties, the proper remedy is not reformation of the instrument but annulment of
the contract.

An action for reformation of instrument under this provision of law may prosper only upon
the concurrence of the following requisites: (1) there must have been a meeting of the
minds of the parties to the contact; (2) the instrument does not express the true intention
of the parties; and (3) the failure of the instrument to express the true intention of the
parties is due to mistake, fraud, inequitable conduct or accident.

All of these requisites, in our view, are present in this case. There was a meeting of the
minds between the parties to the contract but the deed did not express the true intention
of the parties due to mistake in the designation of the lot subject of the deed. There is no
dispute as to the intention of the parties to sell the land to Alejandra Delfino but there was
a mistake as to the designation of the lot intended to be sold as stated in the Settlement
of Estate and Sale.

PNB v CHAN
PHILIPPINE NATIONAL BANK, Petitioner VS. LILIBETH S. CHAN, Respondent
G.R. No. 206037
May 13, 2017

FACTS:

The petitioner Philippine National Bank (PNB) and the respondent Lilibeth S. Chan have an
agreement, where the respondent is the owner of a three-storey commercial building situated in A.
Linao Street, Paco, Manila with Transfer Certificate of Title No. 208782. The respondent leased
the commercial building to PNB last May 10, 2000 for a five years contract period starting from
December 15, 1999 to December 14, 2004 with a monthly rental of Php 76,160.00. However, the
petitioner continued to occupy the property on a monthly basis with a monthly rental of Php
116,788.44 after the contract period has expired. The petitioner vacated the premises on March
23, 2006.

On August 26, 2005, the respondent filed a complaint for unlawful detainer before the Metropolitan
Trial Court against PNB for failure to pay the monthly rentals from October 2004 until August 2005.
Hearing held in Metropolitan Trial Court on April 25, 2006 wherein both parties agreed to apply the
rental proceeds from October 2004 to January 15, based on the respondents outstanding loan. In
August 9, 2006 Metropolitan Trial Court ordered PNB to pay respondent accrued rentals in the
amount of Php 1,348,643.92 with interest at 6% per annum from January 16, 2005 up to March 23,
2006.

The petitioner appealed to the Regional Trial Court in Metropolitan Trial Court decision last August
9, 2006. Philippine National Bank insisted that the respondent is not entitled to the disputed rental
proceeds amounting to Php 1,348,643.92.

The Regional Trial Court affirmed the Metropolitan Trial Court ruling. The RTC ruled that the
respondent is entitled to legal interest of 6% per annum and attorney’s fees for having been
compelled to litigate to protect her interest, the same with Metropolitan Trial Court decision.
Philippine National Bank filed a motion for reconsideration but the RTC denied the motion. After
the denial, the petitioner filed a Petition for Review under the Rule of Court before the Court of
Appeals challenging the RTC decision.

The Court of Appeals found no sufficient evidence on record that the amount of respondent’s
liability as of October 31, 2006 is indeed Php 18,016,300.71 as the petitioner claims. The Court of
Appeals found that the petitioner is liable to pay the 6% legal interest rate as prescribed under the
Article 2209 of Civil Code. The Court of Appeals deleted attorney’s fees because of the public
policy that no premium should be placed on the right to litigate. Moreover, PNB filed a partial
Motion for Reconsideration but the Court of Appeals denied the motion. The petitioner filed Petition
for Review on Certiorari before the Court, assailing the Court of Appeals decision.

ISSUES:

1. Whether or not the petitioner can properly consigned the disputed rental payments in the
amount of P1, 348,643.92 with the Office of the Clerk of Court of the MeTC of Manila.

2. Whether or not the petitioner incurred delay payment of rentals to the respondent, making it
liable to pay legal interest to the latter.

3. Whether or not the petitioner is entitled to the disputed rental proceeds in order to cover the
alleged deficiency in payment of the respondent’s liability after the foreclosure proceedings.

HELD:

1. Yes. Under Article 1256 of the Civil Code, consignation alone is sufficient even without a prior
tender payment a) when the creditor is absent or unknown or does not appear at the place of
payment, b) when he is incapacitated to receive the payment at the time it is due, c) when, without
just cause, he refuses to give a receipt, d) when two or more persons claim the same right to
collect, and e) when the title of the obligation has been lost. In addition, for consignation to be
valid, the debtor must comply with the following requirements under the law: 1) there was a debt
due, 2) valid prior tender of payment, unless the consignation was made of some legal cause
provided in Article 1256, 3) previous notice of the consignation has been given to the persons
interested in the performance of the obligation, 4) the amount or thing due was placed at the
disposal of the court, and 5) after the consignation had been made, the persons interested were
notified thereof. Failure in any of these requirements is enough ground to render consignation
ineffective.

2. Yes. Article 2209 provides that if the debtor incurs delay in the performance of an obligation
consisting of the payment of a sum of money, he shall be liable to pay the interest agreed upon,
and in the absence of stipulation, the legal interest at 6% per annum, from January 16, 2005 up to
May 30, 2006.

3. No. As for the issue on the petitioner’s entitlement to the subject rental proceeds to cover the
deficiency in payment after the foreclosure sale of the mortgaged property, SC agree with CA’s
finding that there is no sufficient evidence on record to show that such a deficiency exists.
Unfortunately, the Statement of Account submitted by PNB is not enough to prove his claim,
considering that is unsupported by any corroborating evidence. Besides, the copy of the document
in the records, both in the CA rollo and the Supreme Court rollo, consists of illegible pages. The
Supreme Court denied the Petition for Review on Centiorari.