Merger Payment

8/11/2019 Merger Payment

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G.R. No. L-30597 June 30, 1987

GUILLERMO AZCONA and FE JALANDONI AZCONA, petitioners,

vs.

JOSE JAMANDRE, Administrator of the Intestate Estate of Cirilo Jamandre (Sp. Proc. 6921 of the Court of

First Instance of Negros Occidental), and the HONORABLE COURT OF APPEALS, respondents.

CRUZ, J.:

This involves the interpretation of a contract of lease which was found by the trial court to have been

violated by both the plaintiff and the defendant. On appeal, its decision was modified by the respondent

court in favor of the plaintiff, for which reason the defendant has now come to us in a petition for

certiorari.

By the said contract, 1 Guillermo Azcona (hereinafter called the petitioner) leased 80 hectares of his

150-hectare pro indiviso share in Hacienda Sta. Fe in Escalante, Negros Occidental, to Cirilo Jamandre

(represented here by the administrator of his intestate estate, and hereinafter called the private

respondent). The agreed yearly rental was P7,200.00. The lease was for three agricultural years

beginning 1960, extendible at the lessee's option to two more agricultural years, up to 1965.

The first annual rental was due on or before March 30, 1960, but because the petitioner did not deliver

possession of the leased property to the respondent, he "waived" payment, as he put it, of that rental. 2

The respondent actually entered the premises only on October 26, 1960, after payment by him to the

petitioner of the sum of P7,000.00, which was acknowledged in the receipt later offered as Exhibit "B".

On April 6, 1961, the petitioner, through his lawyer, notified the respondent that the contract of lease

was deemed cancelled, terminated, and of no further effect," pursuant to its paragraph 8, for violationof the conditions specified in the said agreement. 3 Earlier, in fact, the respondent had been ousted

from the possession of 60 hectares of the leased premises and left with only 20 hectares of the original

area. 4


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The reaction of the respondent to these developments was to file a complaint for damages against the

petitioner, who retaliated with a counterclaim. As previously stated, both the complaint and the

counterclaim were dismissed by the trial court * on the finding that the parties were in pari delicto. 5

The specific reasons invoked by the petitioner for canceling the lease contract were the respondent'sfailure: 1) to attach thereto the parcelary plan Identifying the exact area subject of the agreement, as

stipulated in the contract; 2; to secure the approval by the Philippine National Bank of the said contract;

and 3) to pay the rentals. 6

The parcelary plan was provided for in the contract as follows:

That the LESSOR by these presents do hereby agree to lease in favor of the LESSEE a portion of the said

lots above-described with an extension of EIGHTY (80) hectares, more or less, which portion is to beIdentified by the parcelary plan duly marked and to be initialed by both LESSOR and LESSEE, and which

parcelary plan is known as Annex "A" of this contract and considered as an integral part hereof. 7

According to the petitioners, the parcelary plan was never agreed upon or annexed to the contract,

which thereby became null and void under Article 1318 of the Civil Code for lack of a subject matter.

Moreover, the failure of the parties to approve and annex the said parcelary plan had the effect of a

breach of the contract that justified its cancellation under its paragraph 8. 8

In one breath, the petitioner is arguing that there was no contract because there was no object and at

the same time that there was a contract except that it was violated.

The correct view, as we see it, is that there was an agreed subject-matter, to wit, the 80 hectares of the

petitioner's share in the Sta. Fe hacienda, although it was not expressly defined because the parcelary

plan was not annexed and never approved by the parties. Despite this lack, however, there was an

ascertainable object because the leased premises were sufficiently Identified and delineated as the

petitioner admitted in his amended answer and in his direct testimony. 9

Thus, in his amended answer, he asserted that "the plaintiff . . .must delimit his work to the area

previously designated and delivered." Asked during the trial how many hectares the private respondent

actually occupied, the petitioner declared: "About 80 hectares. The whole 80 hectares." 10 The

petitioner cannot now contradict these written and oral admissions." 11


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Moreover, it appears that the failure to attach the parcelary plan to the contract is imputable to the

petitioner himself because it was he who was supposed to cause the preparation of the said plan. As he

testified on direct examination, "Our agreement was to sign our agreement, then I will have the

parcelary plan prepared so that it will be a part of our contract." 12 That this was never done is not the

respondent's fault as he had no control of the survey of the petitioner's land.

Apparently, the Court of Appeals ** found, the parties impliedly decided to forego the annexing of the

parcelary plan because they had already agreed on the area and limits of the leased premises. 13 The

Identification of the 80 hectares being leased rendered the parcelary plan unnecessary, and its absence

did not nullify the agreement.

Coming next to the alleged default in the payment of the stipulated rentals, we observe first that when

in Exhibit "B" the petitioner declared that "I hereby waive payment for the rentals corresponding to the

crop year 1960-61 and which was due on March 30, 1960, " there was really nothing to waive because,

as he himself put it in the same document, possession of the leased property "was not actually

delivered" to the respondent. 14

The petitioner claims that such possession was not delivered because the approval by the PNB of the

lease contract had not "materialized" due to the respondent's neglect. Such approval, he submitted, was

to have been obtained by the respondents, which seems logical to us, for it was the respondent who

was negotiating the loan from the PNB. As the respondent court saw it, however, "paragraph 6 (of the

contract) does not state upon whom fell the obligation to secure the approval" so that it was not clear

that "the fault, if any, was due solely to one or the other." 15

At any rate, that issue and the omission of the parcelary plan became immaterial when the parties

agreed on the lease for the succeeding agricultural year 1961-62, the respondent paying and the

petitioner receiving therefrom the sum of P7,000.00, as acknowledged in Exhibit "B," which is

reproduced in full as follows:

Bacolod City

October 26, 1960

R E C E I P T


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RECEIVED from Mr. Cirilo Jamandre at the City of Bacolod, Philippines, this 26th day of October, 1960,

Philippine National Bank Check No. 180646-A (Manager's Check Binalbagan Branch) for the amount of

SEVEN THOUSAND PESOS (P7,000.00), Philippine Currency as payment for the rental corresponding to

crop year 1961-62, by virtue of the contract of lease I have executed in his favor dated November 23,

1959, and ratified under Notary Public Mr. Enrique F. Marino as Doc. No. 119, Page No. 25, Book No. XII,

Series of 1959. It is hereby understood, that this payment corresponds to the rentals due on or beforeJanuary 30, 1961, as per contract. It is further understood that I hereby waive payment for the rentals

corresponding to crop year 1960-61 and which was due on March 30, 1960, as possession of the

property lease in favor of Mr. Cirilo Jamandre was not actually delivered to him, but the same to be

delivered only after receipt of the amount as stated in this receipt. That Mr. Cirilo Jamandre is hereby

authorized to take immediate possession of the property under lease effective today, October 26, 1960.

WITNESS my hand at the City of Bacolod, Philippines, this 26th day of October, 1960.

(SGD.) GUILLERMO AZCONA

SIGNED IN THE PRESENCE OF:

(SGD.) JOSE T. JAMANDRE

Citing the stipulation in the lease contract for an annual rental of P7,200.00, the petitioner now submits

that there was default in the payment thereof by the respondent because he was P200.00 short of such

rental. That deficiency never having been repaired, the petitioner concludes, the contract should be

deemed cancelled in accordance with its paragraph 8. 16

For his part, the respondent argues that the receipt represented an express reduction of the stipulated

rental in consideration of his allowing the use of 16 hectares of the leased area by the petitioner as

grazing land for his cattle. Having unqualifiedly accepted the amount of P7,000.00 as rental for the

agricultural year 1961-62, the petitioner should not now be heard to argue that the payment was

incomplete. 17

After a study of the receipt as signed by the petitioner and witnessed for the respondent, this Court has

come to the conclusion, and so holds, that the amount of P7,000.00 paid to by the respondent and

received by the petitioner represented payment in full of the rental for the agricultural year 1961-62.


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The language is clear enough: "The amount of SEVEN THOUSAND PESOS (P7,000.00), Philippine

Currency, as payment for the rental corresponding to crop year 1961-62 ... to the rental due on or

before January 30, 1961, as per contract." The conclusion should be equally clear.

The words "as per contract" are especially significant as they suggest that the parties were aware of theprovisions of the agreement, which was described in detail elsewhere in the receipt. The rental

stipulated therein was P7,200.00. The payment being acknowledged in the receipt was P7,000.00 only.

Yet no mention was made in the receipt of the discrepancy and, on the contrary, the payment was

acknowledged "as per contract." We read this as meaning that the provisions of the contract were being

maintained and respected except only for the reduction of the agreed rental.

The respondent court held that the amount of P200.00 had been condoned, but we do not think so. The

petitioner is correct in arguing that the requisites of condonation under Article 1270 of the Civil Code

are not present. What we see here instead is a mere reduction of the stipulated rental in consideration

of the withdrawal from the leased premises of the 16 hectares where the petitioner intended to graze

his cattle. The signing of Exhibit "B " by the petitioner and its acceptance by the respondent manifested

their agreement on the reduction, which modified the lease contract as to the agreed consideration

while leaving the other stipulations intact.

The petitioner says that having admittedly been drafted by lawyer Jose Jamandre, the respondent's son,

the receipt would have described the amount of P7,000.00 as "payment in full" of the rental if that were

really the case.

It seems to us that this meaning was adequately conveyed in the acknowledgment made by the

petitioner that this was "payment for the rental corresponding to crop year 1961-62" and "corresponds

to the rentals due on or before January 30, 1961, as per contract." On the other hand, if this was not the

intention, the petitioner does not explain why he did not specify in the receipt that there was still a

balance of P200.00 and, to be complete, the date when it was to be paid by the respondent.

It is noted that the receipt was meticulously worded, suggesting that the parties were taking great pains,

indeed, to provide against any possible misunderstanding, as if they were even then already

apprehensive of future litigation. Such a reservation-if there was one-would have been easilyincorporated in the receipt, as befitted the legal document it was intended to be.

In any event, the relative insignificance of the alleged balance seems to us a paltry justification for

annulling the contract for its supposed violation. If the petitioner is fussy enough to invoke it now, it

stands to reason that he would have fussed over it too in the receipt he willingly signed after accepting,

without reservation and apparently without protest, only P7,000.00.


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The applicable provision is Article 1235 of the Civil Code, declaring that:

Art. 1235. When the obligee accepts the performance, knowing its incompleteness or irregularity,

and without expressing any protest or objection, the obligation is deemed fully complied with.

The petitioner says that he could not demand payment of the balance of P200.00 on October 26, 1960,

date of the receipt because the rental for the crop year 1961-62 was due on or before January 30, 1961.

18 But this would not have prevented him from reserving in the receipt his right to collect the balance

when it fell due. Moreover, there is no evidence in the record that when the due date arrived, he made

any demand, written or verbal, for the payment of that amount.

As this Court is not a trier of facts, 19 we defer to the findings of the respondent court regarding thelosses sustained by the respondent on the basis of the estimated yield of the properties in question in

the years he was supposed to possess and exploit them. While the calculations offered by the petitioner

are painstaking and even apparently exhaustive, we do not find any grave abuse of discretion on the

part of the respondent court to warrant its reversal on this matter. We also sustain the P5,000.00

attorney's fee.

WHEREFORE, the decision of the respondent Court of Appeals is AFFIRMED in full, with costs against the

petitioners.

SO ORDERED.

SECOND DIVISION

G.R. No. L-41764 December 19, 1980

NEW PACIFIC TIMBER & SUPPLY COMPANY, INC., Petitioner, vs. HON. ALBERTO V. SENERIS, RICARDO A.

TONG and EX-OFFICIO SHERIFF HAKIM S. ABDULWAHID, Respondents.

CONCEPCION JR., J.:


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A petition for certiorari with preliminary injunction to annul and/or modify the order of the Court of

First Instance of Zamboanga City (Branch ii) dated August 28, 1975 denying petitioner's Ex-Parte Motion

for Issuance of Certificate Of Satisfaction Of Judgment.chanroblesvirtualawlibrary chanrobles virtual law

library

Herein petitioner is the defendant in a complaint for collection of a sum of money filed by the private

respondent. 1 On July 19, 1974, a compromise judgment was rendered by the respondent Judge in

accordance with an amicable settlement entered into by the parties the terms and conditions of which,

are as follows: chanrobles virtual law library

(1) That defendant will pay to the plaintiff the amount of Fifty Four Thousand Five Hundred Pesos

(P54,500.00) at 6% interest per annum to be reckoned from August 25, 1972; chanrobles virtual law

library

(2) That defendant will pay to the plaintiff the amount of Six Thousand Pesos (P6,000.00) as

attorney's fees for which P5,000.00 had been acknowledged received by the plaintiff under

Consolidated Bank and Trust Corporation Check No. 16-135022 amounting to P5,000.00 leaving a

balance of One Thousand Pesos (P1,000.00); chanrobles virtual law library

(3) That the entire amount of P54,500.00 plus interest, plus the balance of P1,000.00 for attorney's

fees will be paid by defendant to the plaintiff within five months from today, July 19, 1974; and

chanrobles virtual law library

(4) Failure one the part of the defendant to comply with any of the above-conditions, a writ of

execution may be issued by this Court for the satisfaction of the obligation. 2

For failure of the petitioner to comply with his judgment obligation, the respondent Judge, upon motion

of the private respondent, issued an order for the issuance of a writ of execution on December 21, 1974.

Accordingly, writ of execution was issued for the amount of P63,130.00 pursuant to which, the Ex-

Officio Sheriff levied upon the following personal properties of the petitioner, to wit: chanrobles virtual

law library

(1) Unit American Lathe 24chanrobles virtual law library

(1) Unit American Lathe 18 Cracker Wheeler chanrobles virtual law library


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(1) Unit Rockford Shaper 24

and set the auction sale thereof on January 15, 1975. However, prior to January 15, 1975, petitioner

deposited with the Clerk of Court, Court of First Instance, Zamboanga City, in his capacity as Ex-Officio

Sheriff of Zamboanga City, the sum of P63,130.00 for the payment of the judgment obligation,

consisting of the following: chanrobles virtual law library

1. P50.000.00 in Cashier's Check No. S-314361 dated January 3, 1975 of the Equitable Banking

Corporation; and chanrobles virtual law library

2. P13,130.00 incash. 3

In a letter dated January 14, 1975, to the Ex-Officio Sheriff, 4 private respondent through counsel,

refused to accept the check as well as the cash deposit. In the 'same letter, private respondent

requested the scheduled auction sale on January 15, 1975 to proceed if the petitioner cannot produce

the cash. However, the scheduled auction sale at 10:00 a.m. on January 15, 1975 was postponed to 3:00

o'clock p.m. of the same day due to further attempts to settle the case. Again, the scheduled auction

sale that afternoon did not push through because of a last ditch attempt to convince the private

respondent to accept the check. The auction sale was then postponed on the following day, January 16,

1975 at 10:00 o'clock a.m. 5 At about 9:15 a.m., on January 16, 1975, a certain Mr. Taedo representing

the petitioner appeared in the office of the Ex-Officio Sheriff and the latter reminded Mr. Taedo thatthe auction sale would proceed at 10:00 o'clock. At 10:00 a.m., Mr. Taedo and Mr. Librado, both

representing the petitioner requested the Ex-Officio Sheriff to give them fifteen minutes within which to

contract their lawyer which request was granted. After Mr. Taedo and Mr. Librado failed to return,

counsel for private respondent insisted that the sale must proceed and the Ex-Officio Sheriff proceeded

with the auction sale. 6 In the course of the proceedings, Deputy Sheriff Castro sold the levied

properties item by item to the private respondent as the highest bidder in the amount of P50,000.00. As

a result thereof, the Ex-Officio Sheriff declared a deficiency of P13,130.00. 7Thereafter, on January 16,

1975, the Ex-Officio Sheriff issued a "Sheriff's Certificate of Sale" in favor of the private respondent,

Ricardo Tong, married to Pascuala Tong for the total amount of P50,000.00 only. 8Subsequently, on

January 17, 1975, petitioner filed an ex-parte motion for issuance of certificate of satisfaction of

judgment. This motion was denied by the respondent Judge in his order dated August 28, 1975. In viewthereof, petitioner now questions said order by way of the present petition alleging in the main that said

respondent Judge capriciously and whimsically abused his discretion in not granting the motion for

issuance of certificate of satisfaction of judgment for the following reasons: (1) that there was already a

full satisfaction of the judgment before the auction sale was conducted with the deposit made to the Ex-

Officio Sheriff in the amount of P63,000.00 consisting of P50,000.00 in Cashier's Check and P13,130.00

in cash; and (2) that the auction sale was invalid for lack of proper notice to the petitioner and its


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counsel when the Ex-Officio Sheriff postponed the sale from June 15, 1975 to January 16, 1976 contrary

to Section 24, Rule 39 of the Rules of Court. On November 10, 1975, the Court issued a temporary

restraining order enjoining the respondent Ex-Officio Sheriff from delivering the personal properties

subject of the petition to Ricardo A. Tong in view of the issuance of the "Sheriff Certificate of Sale."


We find the petition to be impressed with merit.chanroblesvirtualawlibrary chanrobles virtual law

library

The main issue to be resolved in this instance is as to whether or not the private respondent can validly

refuse acceptance of the payment of the judgment obligation made by the petitioner consisting of

P50,000.00 in Cashier's Check and P13,130.00 in cash which it deposited with the Ex-Officio Sheriff

before the date of the scheduled auction sale. In upholding private respondent's claim that he has the

right to refuse payment by means of a check, the respondent Judge cited the following: chanrobles

virtual law library

Section 63 of the Central Bank Act: chanrobles virtual law library

Sec. 63. Legal Character. - Checks representing deposit money do not have legal tender power and their

acceptance in payment of debts, both public and private, is at the option of the creditor, Provided,

however, that a check which has been cleared and credited to the account of the creditor shall be

equivalent to a delivery to the creditor in cash in an amount equal to the amount credited to his

account.

Article 1249 of the New Civil Code: chanrobles virtual law library

Art. 1249. - The payment of debts in money shall be made in the currency stipulated, and if it is not

possible to deliver such currency, then in the currency which is legal tender in the

Philippines.chanroblesvirtualawlibrary chanrobles virtual law library

The delivery of promissory notes payable to order, or bills of exchange or other mercantile documents

shall produce the effect of payment only when they have been cashed, or when through the fault of the

creditor they have been impaired.chanroblesvirtualawlibrary chanrobles virtual law library

In the meantime, the action derived from the original obligation shall be held in abeyance.


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Likewise, the respondent Judge sustained the contention of the private respondent that he has the right

to refuse payment of the amount of P13,130.00 in cash because the said amount is less than the

judgment obligation, citing the following Article of the New Civil Code: chanrobles virtual law library

Art. 1248. Unless there is an express stipulation to that effect, the creditor cannot be compelled partially

to receive the presentations in which the obligation consists. Neither may the debtor be required to

make partial payment.chanroblesvirtualawlibrary chanrobles virtual law library

However, when the debt is in part liquidated and in part unliquidated, the creditor may demand and the

debtor may effect the payment of the former without waiting for the liquidation of the latter.

It is to be emphasized in this connection that the check deposited by the petitioner in the amount ofP50,000.00 is not an ordinary check but a Cashier's Check of the Equitable Banking Corporation, a bank

of good standing and reputation. As testified to by the Ex-Officio Sheriff with whom it has been

deposited, it is a certified crossed check. 9 It is a well-known and accepted practice in the business

sector that a Cashier's Check is deemed as cash. Moreover, since the said check had been certified by

the drawee bank, by the certification, the funds represented by the check are transferred from the

credit of the maker to that of the payee or holder, and for all intents and purposes, the latter becomes

the depositor of the drawee bank, with rights and duties of one in such situation. 10 Where a check is

certified by the bank on which it is drawn, the certification is equivalent to acceptance. 11 Said

certification "implies that the check is drawn upon sufficient funds in the hands of the drawee, that they

have been set apart for its satisfaction, and that they shall be so applied whenever the check ispresented for payment. It is an understanding that the check is good then, and shall continue good, and

this agreement is as binding on the bank as its notes in circulation, a certificate of deposit payable to the

order of the depositor, or any other obligation it can assume. The object of certifying a check, as regards

both parties, is to enable the holder to use it as money." 12 When the holder procures the check to be

certified, "the check operates as an assignment of a part of the funds to the creditors." 13 Hence, the

exception to the rule enunciated under Section 63 of the Central Bank Act to the effect "that a check

which has been cleared and credited to the account of the creditor shall be equivalent to a delivery to

the creditor in cash in an amount equal to the amount credited to his account" shall apply in this case.

Considering that the whole amount deposited by the petitioner consisting of Cashier's Check of

P50,000.00 and P13,130.00 in cash covers the judgment obligation of P63,000.00 as mentioned in the

writ of execution, then, We see no valid reason for the private respondent to have refused acceptanceof the payment of the obligation in his favor. The auction sale, therefore, was uncalled for. Furthermore,

it appears that on January 17, 1975, the Cashier's Check was even withdrawn by the petitioner and

replaced with cash in the corresponding amount of P50,000.00 on January 27, 1975 pursuant to an

agreement entered into by the parties at the instance of the respondent Judge. However, the private

respondent still refused to receive the same. Obviously, the private respondent is more interested in the

levied properties than in the mere satisfaction of the judgment obligation. Thus, petitioner's motion for


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the issuance of a certificate of satisfaction of judgment is clearly meritorious and the respondent Judge

gravely abused his discretion in not granting the same under the

circumstances.chanroblesvirtualawlibrary chanrobles virtual law library

In view of the conclusion reached in this instance, We find no more need to discuss the ground relied inthe petition.chanroblesvirtualawlibrary chanrobles virtual law library

It is also contended by the private respondent that Appeal and not a special civil action for certiorari is

the proper remedy in this case, and that since the period to appeal from the decision of the respondent

Judge has already expired, then, the present petition has been filed out of time. The contention is

untenable. The decision of the respondent Judge in Civil Case No. 250 (166) has long become final and

executory and so, the same is not being questioned herein. The subject of the petition at bar as having

been issued in grave abuse of discretion is the order dated August 28, 1975 of the respondent Judge

which was merely issued in execution of the said decision. Thus, even granting that appeal is open to the

petitioner, the same is not an adequate and speedy remedy for the respondent Judge had already issued

a writ of execution. 14chanrobles virtual law library

WHEREFORE, in view of all the foregoing, judgment is hereby rendered: chanrobles virtual law library

1. Declaring as null and void the order of the respondent Judge dated August 28, 1975; chanrobles

virtual law library

2. Declaring as null and void the auction sale conducted on January 16, 1975 and the certificate of sale

issued pursuant thereto; chanrobles virtual law library

3. Ordering the private respondent to accept the sum of P63,130.00 under deposit as payment of the

judgment obligation in his favor; chanrobles virtual law library

4. Ordering the respondent Judge and respondent Ex-Officio Sheriff to release the levied properties to

the herein petitioner.chanroblesvirtualawlibrary chanrobles virtual law library

The temporary restraining order issued is hereby made permanent.chanroblesvirtualawlibrary



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Costs against the private respondent.chanroblesvirtualawlibrarychanrobles virtual law library

SO ORDERED.


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G.R. No. 72110. November 16, 1990.*

ROMAN CATHOLIC BISHOP OF MALOLOS, INC., petitioner, vs. INTERMEDIATE APPELLATE COURT, and

ROBES-FRANCISCO REALTY AND DEVELOPMENT CORPORATION, respondents.

PETITION for certiorari to review the decision of the Court of Appeals.

The facts are stated in the opinion of the Court.

Rodrigo Law Office for petitioner.

Antonio P. Barredo and Napoleon M. Malinas for private respondent.

SARMIENTO, J.:

This is a petition for review on certiorari which seeks the reversal and setting aside of the decision1 of

the Court of Appeals,2 the dispositive portion of which reads:

WHEREFORE, the decision appealed from is hereby reversed

2 AC-G.R. CV No. 69626, Robes-Francisco Realty & Development Corporation vs. Roman Catholic Bishop

of Malolos, Inc. and set aside and another one entered for the plaintiff ordering the defendant-appellee

Roman Catholic Bishop of Malolos, Inc. to accept the balance of P124,000.00 being paid by plaintiff-

appellant and thereafter to execute in favor of Robes-Francisco Realty Corporation a registerable Deed

of Absolute Sale over 20,655 square meters portion of that parcel of land situated in San Jose del

Monte, Bulacan described in OCT No. 575 (now Transfer Certificates of Title Nos. T-169493, 169494,

169495 and 169496) of the Register of Deeds of Bulacan. In case of refusal of the defendant to execute

the Deed of Final Sale, the clerk of court is directed to execute the said document. Withoutpronouncement as to damages and attorneys fees. Costs against the defendant-appellee.3

The case at bar arose from a complaint filed by the private respondent, then plaintiff, against the

petitioner, then defendant, in the Court of First Instance (now Regional Trial Court) of Bulacan, at Sta.

Maria, Bulacan,4 for specific performance with damages, based on a contract5 executed on July 7, 1971.

The property subject matter of the contract consists of a 20,655 sq.m.-portion, out of the 30,655 sq.m.

total area, of a parcel of land covered by Original Certificate of Title No. 575 of the Province of Bulacan,

issued and registered in the name of the petitioner which it sold to the private respondent for and in

consideration of P123,930.00.

The crux of the instant controversy lies in the compliance or non-compliance by the private respondent

with the provision for payment to the petitioner of the principal balance of P100,000.00 and the accrued

interest of P24,000.00 within the grace period.

A chronological narration of the antecedent facts is as follows:


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On July 7, 1971, the subject contract over the land in question was executed between the petitioner as

vendor and the private respondent through its then president, Mr. Carlos F. Robes, as vendee,

stipulating for a downpayment of P23,930.00 and the balance of P100,000.00 plus 12% interest per

annum to be paid within four (4) years from execution of the contract, that is, on or before July 7, 1975.

The contract likewise provides for cancellation, forfeiture of previous payments, and reconveyance of

the land in question in case the private respondent would fail to complete payment within the saidperiod.

On March 12, 1973, the private respondent, through its new president, Atty. Adalia Francisco, addressed

a letter6 to Father Vasquez, parish priest of San Jose Del Monte, Bulacan, requesting to be furnished

with a copy of the subject contract and the supporting documents.

On July 17, 1975, admittedly after the expiration of the stipulated period for payment, the same Atty.

Francisco wrote the petitioner a formal request7 that her company be allowed to pay the principal

amount of P100,000.00 in three (3) equal installments of six (6) months each with the first installment

and the accrued interest of P24,000.00 to be paid immediately upon approval of the said request.

On July 29, 1975, the petitioner, through its counsel, Atty. Carmelo Fernandez, formally denied the said

request of the private respondent, but granted the latter a grace period of five (5) days from the receipt

of the denial8 to pay the total balance of P124,000.00, otherwise, the provisions of the contract

regarding cancellation, forfeiture, and reconveyance would be implemented.

On August 4, 1975, the private respondent, through its president, Atty. Francisco, wrote9 the counsel of

the petitioner requesting an extension of 30 days from said date to fully settle its account. The counsel

for the petitioner, Atty. Fernandez, received the said letter on the same day. Upon consultation with the

petitioner in Malolos, Bulacan, Atty. Fernandez, as instructed, wrote the private respondent a letter10dated August.

Consequently, Atty. Francisco, the private respondents president, wrote a letter11 dated August 22,

1975, directly addressed to the petitioner, protesting the alleged refusal of the latter to accept tender of

payment purportedly made by the former on August 5, 1975, the last day of the grace period. In the

same letter of August 22, 1975, received on the following day by the petitioner, the private respondent

demanded the execution of a deed of absolute sale over the land in question and after which it would

pay its account in full, otherwise, judicial action would be resorted to.

On August 27, 1975, the petitioners counsel, Atty. Fernandez, wrote a reply12 to the private

respondent stating the refusal of his client to execute the deed of absolute sale due to its (private

respondents) failure to pay its full obligation. Moreover, the petitioner denied that the private

respondent had made any tender of payment whatsoever within the grace period. In view of this alleged

breach of contract, the petitioner cancelled the contract and considered all previous payments forfeited

and the land as ipso facto reconveyed.


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From a perusal of the foregoing facts, we find that both the contending parties have conflicting versions

on the main question of tender of payment.

The trial court, in its ratiocination, preferred not to give credence to the evidence presented by the

private respondent. According to the trial court:

x x x What made Atty. Francisco suddenly decide to pay plaintiffs obligation on August 5, 1975, go to

defendants office at Malolos, and there tender her payment, when her request of August 4, 1975 had

not yet been acted upon until August 7, 1975? If Atty. Francisco had decided to pay the obligation and

had available funds for the purpose on August 5, 1975, then there would have been no need for her to

write defendant on August 4, 1975 to request an extension of time. Indeed, Atty. Franciscos claim that

she made a tender of payment on August 5, 1975such alleged act, considered in relation to the

circumstances both antecedent and subsequent thereto, being not in accord with the normal pattern of

human conductis not worthy of credence.13

The trial court likewise noted the inconsistency in the testimony of Atty. Francisco, president of the

private respondent, who earlier testified that a certain Mila Policarpio accompanied her on August 5,

1975 to the office of the petitioner. Another person, however, named Aurora Oracion, was presented to

testify as the secretary-companion of Atty. Francisco on that same occasion.

Furthermore, the trial court considered as fatal the failure of Atty. Francisco to present in court the

certified personal check allegedly tendered as payment or, at least, its xerox copy, or even bank records

thereof. Finally, the trial court found that the private respondent had insufficient funds available to fulfillthe entire obligation considering that the latter, through its president, Atty. Francisco, only had a savings

account deposit of P64,840.00, and although the latter had a money-market placement of P300,000.00.

the same was to mature only after the expiration of the 5-day grace period.

Based on the above considerations, the trial court rendered a decision in favor of the petitioner, the

dispositive portion of which reads:

WHEREFORE, finding plaintiff to have failed to make out its case, the court hereby declares the subjectcontract cancelled and plaintiffs down payment of P23,930.00 forfeited in favor of defendant, and

hereby dismisses the complaint; and on the counterclaim, the Court orders plaintiff to pay defendant.

(1) Attorneys fees of P10,000.00;

(2) Litigation expenses of P2,000.00; and


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(3) Judicial costs.

SO ORDERED.14

Not satisfied with the said decision, the private respondent appealed to the respondent Intermediate

Appellate Court (now Court of Appeals) assigning as reversible errors, among others, the findings of the

trial court that the available funds of the private respondent were insufficient and that the latter did not

effect a valid tender of payment and consignation.

The respondent court, in reversing the decision of the trial court, essentially relies on the following

findings:

x x x We are convinced from the testimony of Atty. Adalia Francisco and her witnesses that in behalf of

the plaintiff-appellant they have a total available sum of P364,840.00 at her and at the plaintiffsdisposal on or before August 4, 1975 to answer for the obligation of the plaintiff-appellant. It was not

correct for the trial court to conclude that the plaintiff-appellant had only about P64,840.00 in savings

deposit on or before August 5, 1975, a sum not enough to pay the outstanding account of P124,000.00.

The plaintiff-appellant, through Atty. Francisco proved and the trial court even acknowledged that Atty.

Adalia Francisco had about P300,000.00 in money market placement. The error of the trial court lies in

concluding that the money market placement of P300,000.00 was out of reach of Atty. Francisco. But as

testified to by Mr. Catalino Estrella, a representative of the Insular Bank of Asia and America, Atty.

Francisco could withdraw anytime her money market placement and place it at her disposal, thus

proving her financial capability of meeting more than the whole of P124,000.00 then due per contract.

This situation, We believe, proves the truth that Atty. Francisco apprehensive that her request for a 30-day grace period would be denied, she tendered payment on August 4, 1975 which offer defendant

through its representative and counsel refused to receive. x x x15 (Italics supplied)

In other words, the respondent court, finding that the private respondent had sufficient available funds,

ipso facto concluded that the latter had tendered payment. Is such conclusion warranted by the facts

proven? The petitioner submits that it is not.

Hence, this petition.16

The petitioner presents the following issues for resolution:

A. Is a finding that private respondent had sufficient available funds on or before the grace period for

the payment of its obligation proof that it (private respondent) did tender of (sic) payment for its said

obligation within said period?

x x x x x x x x x


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B. Is it the legal obligation of the petitioner (as vendor) to execute a deed of absolute sale in favor of

the private respondent (as vendee) before the latter has actually paid the complete consideration of the

salewhere the contract between and executed by the parties stipulates

That upon complete payment of the agreed consideration by the herein VENDEE, the VENDOR shall

cause the execution of a Deed of Absolute Sale in favor of the VENDEE.

x x x x x x x x x

C. Is an offer of a check a valid tender of payment of an obligation under a contract which stipulates

that the consideration of the sale is in Philippine Currency?17

We find the petition impressed with merit.

With respect to the first issue, we agree with the petitioner that a finding that the private respondent

had sufficient available funds on or before the grace period for the payment of its obligation does not

constitute proof of tender of payment by the latter for its obligation within the said period. Tender of

payment involves a positive and unconditional act by the obligor of offering legal tender currency as

payment to the obligee for the formers obligation and demanding that the latter accept the same. Thus,

tender of payment cannot be presumed by a mere inference from surrounding circumstances. At most,

sufficiency of available funds is only affirmative of the capacity or ability of the obligor to fulfill his part

of the bargain. But whether or not the obligor avails himself of such funds to settle his outstanding

account remains to be proven by independent and credible evidence. Tender of payment presupposesnot only that the obligor is able, ready, and willing, but more so, in the act of performing his obligation.

Ab posse ad actu non vale illatio. A proof that an act could have been done is no proof that it was

actually done.

The respondent court was therefore in error to have concluded from the sheer proof of sufficient

available funds on the part of the private respondent to meet more than the total obligation within the

grace period, the alleged truth of tender of payment. The same is a classic case of non-sequitur.

On the contrary, the respondent court finds itself remiss in overlooking or taking lightly the more

important findings of fact made by the trial court which we have earlier mentioned and which as a rule,

are entitled to great weight on appeal and should be accorded full consideration and respect and should

not be disturbed unless for strong and cogent reasons.18

While the Court is not a trier of facts, yet, when the findings of fact of the Court of Appeals are at

variance with those of the trial court,19 or when the inference of the Court of Appeals from its findings


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of fact is manifestly mistaken,20 the Court has to review the evidence in order to arrive at the correct

findings based on the record.

Apropos the second issue raised, although admittedly the documents for the deed of absolute sale had

not been prepared, the subject contract clearly provides that the full payment by the private respondentis an a priori condition for the execution of the said documents by the petitioner.

That upon complete payment of the agreed consideration by the herein VENDEE, the VENDOR shall

cause the execution of a Deed of Absolute Sale in favor of the VENDEE.21

The private respondent is therefore in estoppel to claim otherwise as the latter did in the testimony in

cross-examination of its president, Atty. Francisco, which reads:

Q Now, you mentioned, Atty. Francisco, that you wanted the defendant to execute the final deed of sale

before you would given (sic) the personal certified check in payment of your balance, is that correct?

A Yes, sir.22

x x x x x x x x x

Art. 1159 of the Civil Code of the Philippines provides that obligations arising from contracts have the

force of law between the contracting parties and should be complied with in good faith. And unless the

stipulations in said contract are contrary to law, morals, good customs, public order, or public policy, the

same are binding as between the parties.23

What the private respondent should have done if it was indeed desirous of complying with itsobligations would have been to pay the petitioner within the grace period and obtain a receipt of such

payment duly issued by the latter. Thereafter, or, allowing a reasonable time, the private respondent

could have demanded from the petitioner the execution of the necessary documents. In case the

petitioner refused, the private respondent could have had always resorted to judicial action for the

legitimate enforcement of its right. For the failure of the private respondent to undertake this more

judicious course of action, it alone shall suffer the consequences.

With regard to the third issue, granting arguendo that we would rule affirmatively on the two preceding

issues, the case of the private respondent still can not succeed in view of the fact that the latter used a

certified personal check which is not legal tender nor the currency stipulated, and therefore, can not

constitute valid tender of payment. The first paragraph of Art. 1249 of the Civil Code provides that thepayment of debts in money shall be made in the currency stipulated, and if it is not possible to deliver

such currency, then in the currency which is legal tender in the Philippines.

The Court en banc in the recent case of Philippine Airlines v. Court of Appeals,24 G.R. No. L-49188,

stated thus:

Since a negotiable instrument is only a substitute for money and not money, the delivery of such an

instrument does not, by itself, operate as payment (citing Sec. 189, Act 2031 on Negs. Insts.; Art. 1249,


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Civil Code; Bryan London Co. v. American Bank, 7 Phil. 255; Tan Sunco v. Santos, 9 Phil. 44; 21 R.C.L. 60,

61). A check, whether a managers check or ordinary check, is not legal tender, and an offer of a check in

payment of a debt is not a valid tender of payment and may be refused receipt by the obligee or

creditor.

Hence, where the tender of payment by the private respondent was not valid for failure to comply with

the requisite payment in legal tender or currency stipulated within the grace period and as such, was

validly refused receipt by the petitioner, the subsequent consignation did not operate to discharge the

former from its obligation to the latter.

In view of the foregoing, the petitioner in the legitimate exercise of its rights pursuant to the subject

contract, did validly order therefore the cancellation of the said contract, the forfeiture of the previous

payment, and the reconveyance ipso facto of the land in question.

WHEREFORE, the petition for review on certiorari is GRANTED and the DECISION of the respondent

court promulgated on April 25, 1985 is hereby SET ASIDE and ANNULLED and the DECISION of the trial

court dated May 25, 1981 is hereby REINSTATED. Costs against the private respondent.

SO ORDERED.

Melencio-Herrera (Chairman), Paras and Regalado, JJ., concur.

Padilla, J., No part, former counsel of petitioner.

Petition granted. Decision set aside and annulled.


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G.R. No. L-18390 August 6, 1971

PEDRO J. VELASCO, plaintiff-appellant,

vs.

MANILA ELECTRIC CO., WILLIAM SNYDER, its President; JOHN COTTON and HERMENEGILDO B. REYES, its

Vice-Presidents; and ANASTACIO A. AGAN, City Engineer of Quezon City, defendants-appellees.

Q. Paredes, B. Evangelista and R. T. Durian for plaintiff-appellant.

Ross, Selph and Carrascoso for defendants-appellees Manila Electric Co., etc., et al.

Asst. City Fiscal Jaime R. Agloro for defendant-appellee Anastacio A. Agan, etc.

REYES, J.B.L., J.:

The present case is direct appeal (prior to Republic Act 5440) by the herein plaintiff-appellant, Pedro J.Velasco (petitioner in L-14035; respondent in L-13992) * from the decision of the Court of First Instance

of Rizal, Quezon City Branch, in its Civil Case No. 1355, absolving the defendants from a complaint for

the abatement of the sub-station as a nuisance and for damages to his health and business in the

amount of P487,600.00.

In 1948, appellant Velasco bought from the People's Homesite and Housing Corporation three (3)

adjoining lots situated at the corner of South D and South 6 Streets, Diliman, Quezon City. These lots are

within an area zoned out as a "first residence" district by the City Council of Quezon City. Subsequently,

the appellant sold two (2) lots to the Meralco, but retained the third lot, which was farthest from the

street-corner, whereon he built his house.

In September, 1953, the appellee company started the construction of the sub-station in question and

finished it the following November, without prior building permit or authority from the Public Service

Commission (Meralco vs. Public Service Commission, 109 Phil. 603). The facility reduces high voltage

electricity to a current suitable for distribution to the company's consumers, numbering not less than


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8,500 residential homes, over 300 commercial establishments and about 30 industries (T.s.n., 19

October 1959, page 1765). The substation has a rated capacity of "2 transformers at 5000 Kva each or a

total of 10,000 Kva without fan cooling; or 6250 Kva each or a total of 12,500 Kva with fan cooling"

(Exhibit "A-3"). It was constructed at a distance of 10 to 20 meters from the appellant's house (T.s.n., 16

July 1956, page 62; 19 December 1956, page 343; 1 June 1959, page 29). The company built a stone and

cement wall at the sides along the streets but along the side adjoining the appellant's property it put upa sawale wall but later changed it to an interlink wire fence.

It is undisputed that a sound unceasingly emanates from the substation. Whether this sound constitutes

an actionable nuisance or not is the principal issue in this case.

Plaintiff-appellant Velasco contends that the sound constitutes an actionable nuisance under Article 694

of the Civil Code of the Philippines, reading as follows:

A nuisance is any act, omission, establishment, business condition of property or anything else which:

(1) Injuries or endangers the health or safety of others; or

(2) Annoys or offends the senses;

xxx xxx xxx

because subjection to the sound since 1954 had disturbed the concentration and sleep of said appellant,

and impaired his health and lowered the value of his property. Wherefore, he sought a judicial decree

for the abatement of the nuisance and asked that he be declared entitled to recover compensatory,

moral and other damages under Article 2202 of the Civil Code.

ART. 2202. In crimes and quasi-delicts, the defendant shall be liable for all damages which are the

natural and probable consequences of the act or omission complained of. It is not necessary that suchdamages have been foreseen or could have reasonably been foreseen by the defendant.

After trial, as already observed, the court below dismissed the claim of the plaintiff, finding that the

sound of substation was unavoidable and did not constitute nuisance; that it could not have caused the


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diseases of anxiety neurosis, pyelonephritis, ureteritis, lumbago and anemia; and that the items of

damage claimed by plaintiff were not adequate proved. Plaintiff then appealed to this Court.

The general rule is that everyone is bound to bear the habitual or customary inconveniences that result

from the proximity of others, and so long as this level is not surpassed, he may not complain againstthem. But if the prejudice exceeds the inconveniences that such proximity habitually brings, the

neighbor who causes such disturbance is held responsible for the resulting damage, 1 being guilty of

causing nuisance.

While no previous adjudications on the specific issue have been made in the Philippines, our law of

nuisances is of American origin, and a review of authorities clearly indicates the rule to be that the

causing or maintenance of disturbing noise or sound may constitute an actionable nuisance (V. Ed. Note,

23 ALR, 2d 1289). The basic principles are laid down in Tortorella vs. Traiser & Co., Inc., 90 ALR 1206:

A noise may constitute an actionable nuisance, Rogers vs. Elliott, 146 Mass, 349, 15 N.E. 768, 4 Am. St.

Rep. 316, Stevens v. Rockport Granite Co., 216 Mass. 486, 104 N.E. 371, Ann. Cas. 1915B, 1954, Stodder

v. Rosen Talking Machine Co., 241 Mass. 245, 135 N. E. 251, 22 A. L. R. 1197, but it must be a noise

which affects injuriously the health or comfort of ordinary people in the vicinity to an unreasonable

extent. Injury to a particular person in a peculiar position or of specially sensitive characteristics will not

render the noise an actionable nuisance. Rogers v. Elliott, 146 Mass. 349, 15 N. E. 768, 4 Am. St. Rep.

316. In the conditions of present living noise seems inseparable from the conduct of many necessary

occupations. Its presence is a nuisance in the popular sense in which that word is used, but in the

absence of statute noise becomes actionable only when it passes the limits of reasonable adjustment to

the conditions of the locality and of the needs of the maker to the needs of the listener. What thoselimits are cannot be fixed by any definite measure of quantity or quality. They depend upon the

circumstances of the particular case. They may be affected, but are not controlled, by zoning

ordinances. Beane v. H. J. Porter, Inc., 280 Mass. 538, 182 N. E. 823, Marshal v. Holbrook, 276 Mass. 341,

177 N. E. 504, Strachan v. Beacon Oil Co., 251 Mass. 479, 146 N. E. 787. The delimitation of designated

areas to use for manufacturing, industry or general business is not a license to emit every noise

profitably attending the conduct of any one of them. Bean v. H. J. Porter, Inc.. 280 Mass. 538, 182 N. E.

823. The test is whether rights of property of health or of comfort are so injuriously affected by the

noise in question that the sufferer is subjected to a loss which goes beyond the reasonable limit

imposed upon him by the condition of living, or of holding property, in a particular locality in fact

devoted to uses which involve the emission of noise although ordinary care is taken to confine it within

reasonable bounds; or in the vicinity of property of another owner who though creating a noise is acting

with reasonable regard for the rights of those affected by it. Stevens v. Rockport Granite Co., 216 Mass.

486, 104 NE 371, Ann. Cas. 1915B, 1054.


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With particular reference to noise emanating from electrical machinery and appliances, the court, in

Kentucky & West Virginia Power Co. v. Anderson, 156 S. W. 2d 857, after a review of authorities, ruled

as follows:

There can be no doubt but that commercial and industrial activities which are lawful in themselves maybecome nuisances if they are so offensive to the senses that they render the enjoyment of life and

property uncomfortable. It is no defense that skill and care have been exercised and the most improved

methods and appliances employed to prevent such result. Wheat Culvert Company v. Jenkins, 246 Ky.

319, 55 S. W. 2d 4; 46 C.J. 683, 705; 20 R. C. L. 438; Annotations, 23 A. L. R. 1407; 90 A. L. R. 1207. Of

course, the creation of trifling annoyance and inconvenience does not constitute an actionable nuisance,

and the locality and surroundings are of importance. The fact that the cause of the complaint must be

substantial has often led to expressions in the opinions that to be a nuisance the noise must be

deafening or loud or excessive and unreasonable. Usually it was shown to be of that character. The

determinating factor when noise alone is the cause of complaint is not its intensity or volume. It is that

the noise is of such character as to produce actual physical discomfort and annoyance to a person of

ordinary sensibilities, rendering adjacent property less comfortable and valuable. If the noise does that

it can well be said to be substantial and unreasonable in degree; and reasonableness is a question of fact

dependent upon all the circumstances and conditions. 20 R. C. L. 445, 453; Wheat Culvert Company v.

Jenkins, supra. There can be no fixed standard as to what kind of noise constitutes a nuisance. It is true

some witnesses in this case say they have been annoyed by the humming of these transformers, but

that fact is not conclusive as to the nonexistence of the cause of complaint, the test being the effect

which is had upon an ordinary person who is neither sensitive nor immune to the annoyance concerning

which the complaint is made. In the absence of evidence that the complainant and his family are

supersensitive to distracting noises, it is to be assumed that they are persons of ordinary and normal

sensibilities. Roukovina v. Island Farm Creamery Company, 160 Minn. 335, 200 N. W. 350, 38 A. L. R.

1502.

xxx xxx xxx

In Wheat Culvert Company vs. Jenkins, supra, we held an injunction was properly decreed to stop the

noise from the operation of a metal culvert factory at night which interfered with the sleep of the

occupants of an adjacent residence. It is true the clanging, riveting and hammering of metal plates

produces a sound different in character from the steady hum or buzz of the electric machinery described

in this case. In the Jenkins case the noise was loud, discordant and intermittent. Here it is interminable

and monotonous. Therein lies the physical annoyance and disturbance. Though the noise be harmonious

and slight and trivial in itself, the constant and monotonous sound of a cricket on the earth, or the drip

of a leaking faucet is irritating, uncomfortable, distracting and disturbing to the average man and

woman. So it is that the intolerable, steady monotony of this ceaseless sound, loud enough to interfere

with ordinary conversation in the dwelling, produces a result generally deemed sufficient to constitute

the cause of it an actionable nuisance. Thus, it has been held the continuous and monotonous playing of

a phonograph for advertising purposes on the street even though there were various records, singing,


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speaking and instrumental, injuriously affected plaintiff's employees by a gradual wear on their nervous

systems, and otherwise, is a nuisance authorizing an injunction and damages. Frank F. Stodder, et al. v.

Rosen Talking Machine Company, 241 Mass. 245, 135 N. E. 251, 22 A. L. R. 1197.

The principles thus laid down make it readily apparent that inquiry must be directed at the characterand intensity of the noise generated by the particular substation of the appellee. As can be anticipated,

character and loudness of sound being of subjective appreciation in ordinary witnesses, not much help

can be obtained from the testimonial evidence. That of plaintiff Velasco is too plainly biased and

emotional to be of much value. His exaggerations are readily apparent in paragraph V of his amended

complaint, signed by him as well as his counsel, wherein the noise complained of as

fearful hazardous noise and clangor are produced by the said electric transformer of the MEC's

substation, approximating a noise of a reactivated about-to-explode volcano, perhaps like the nerve

wracking noise of the torture chamber in Germany's Dachau or Buchenwald (Record on Appeal, page 6).

The estimate of the other witnesses on the point of inquiry are vague and imprecise, and fail to give a

definite idea of the intensity of the sound complained of. Thus:

OSCAR SANTOS, Chief Building Inspector, Department of Engineering, Quezon City ____ "the sound (at

the front door of plaintiff Velasco's house) becomes noticeable only when I tried to concentrate ........"

(T.s.n., 16 July 1956, page 50)

SERAFIN VILLARAZA, Building Inspector ____ "..... like a high pitch note." (the trial court's description as

to the imitation of noise made by witness:"........ more of a hissing sound) (T.s.n., 16 July 1956, pages 59-

60)

CONSTANCIO SORIA, City Electrician ____ "........ humming sound" ..... "of a running car". (T.s.n., 16 July

1956, page 87)

JOSE R. ALVAREZ, Sanitary Engineer, Quezon City Health Department ____ "..... substation emits acontinuous rumbling sound which is audible within the premises and at about a radius of 70 meters." "I

stayed there from 6:00 p.m. to about 1:00 o'clock in the morning" ..... "increases with the approach of

twilight." (T.s.n., 5 September 1956, pages 40-44)


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NORBERTO S. AMORANTO, Quezon City Mayor ____ (for 30 minutes in the street at a distance of 12 to

15 meters from sub-station) "I felt no effect on myself." "..... no [piercing noise]" (T.s.n., 18 September

1956, page 189)

PACIFICO AUSTRIA, architect, appellant's neighbor: "..... like an approaching airplane ..... around fivekilometers away." (T.s.n., 19 November 1956, pages 276-277)

ANGEL DEL ROSARIO, radiologist, appellant's neighbor: "..... as if it is a running motor or a running

dynamo, which disturbs the ear and the hearing of a person." T.s.n., 4 December 1956, page 21)

ANTONIO D. PAGUIA, lawyer ____ "It may be likened to the sound emitted by the whistle of a boat at a

far distance but it is very audible." (T.s.n., 19 December 1956, page 309)

RENE RODRIGUEZ, sugar planter and sugar broker, appellant's neighbor ____ "It sounds like a big motor

running continuously." (T.s.n., 19 December 1956, page 347)

SIMPLICIO BELISARIO, Army captain, ____ (on a visit to Velasco) "I can compare the noise to an airplane

C-47 being started - the motor." [Did not notice the noise from the substation when passing by, in a car,

Velasco's house] (T.s.n., 7 January 1957, pages 11-12)

MANOLO CONSTANTINO, businessman, appellant's neighbor ____ "It disturbs our concentration of

mind." (T.s.n., 10 January 1957, page 11)

PEDRO PICA, businessman, appellant's neighbor: "..... We can hear it very well [at a distance of 100 to

150 meters]. (T.s.n., 10 January 1957, page 41)

CIRENEO PUNZALAN, lawyer ____ "..... a continuous droning, ..... like the sound of an airplane." (T.s.n.,

17 January 1957, page 385)

JAIME C. ZAGUIRRE, Chief, Neuro-Psychiatry Section, V. Luna Gen. Hospital ____ "..... comparatively the

sound was really loud to bother a man sleeping." (T.s.n., 17 January 1957, page 406)


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We are thus constrained to rely on quantitative measurements shown by the record. Under instructions

from the Director of Health, samplings of the sound intensity were taken by Dr. Jesus Almonte using a

sound level meter and other instruments. Within the compound of the plaintiff-appellant, near the wire

fence serving as property line between him and the appellee, on 27 August 1957 at 11:45 a.m., the

sound level under the sampaloc tree was 46-48 decibels, while behind Velasco's kitchen, the meter

registered 49-50; at the same places on 29 August 1957, at 6:00 a.m., the readings were 56-59 and 61-62 decibels, respectively; on 7 September 1957, at 9:30 a.m., the sound level under the sampaloc tree

was 74-76 decibels; and on 8 September 1957 at 3:35 in the morning, the reading under the same tree

was 70 decibels, while near the kitchen it was 79-80 decibels. Several measurements were also taken

inside and outside the house (Exhibit "NN-7, b-f"). The ambient sound of the locality, or that sound level

characteristic of it or that sound predominating minus the sound of the sub-station is from 28 to 32

decibels. (T.s.n., 26 March 1958, pages 6-7)

Mamerto Buenafe, superintendent of the appellee's electrical laboratory, also took sound level

samplings. On 19 December 1958, between 7:00 to 7:30 o'clock in the evening, at the substation

compound near the wire fence or property line, the readings were 55 and 54 and still near the fence

close to the sampaloc tree, it was 52 decibels; outside but close to the concrete wall, the readings were

42 to 43 decibels; and near the transformers, it was 76 decibels (Exhibit "13").

Buenafe also took samplings at the North General Hospital on 4 January 1959 between 9:05 to 9:45 in

the evening. In the different rooms and wards from the first to the fourth floors, the readings varied

from 45 to 67 decibels.

Technical charts submitted in evidence show the following intensity levels in decibels of some familiarsounds: average residence: 40; average office: 55; average automobile, 15 feet: 70; noisiest spot at

Niagara Falls: 92 (Exhibit "11- B"); average dwelling: 35; quiet office: 40; average office: 50;

conversation: 60; pneumatic rock drill: 130 (Exhibit "12"); quiet home average living room: 40; home

ventilation fan, outside sound of good home airconditioner or automobile at 50 feet: 70 (Exhibit "15-A").

Thus the impartial and objective evidence points to the sound emitted by the appellee's substation

transformers being of much higher level than the ambient sound of the locality. The measurements

taken by Dr. Almonte, who is not connected with either party, and is a physician to boot (unlike

appellee's electrical superintendent Buenafe), appear more reliable. The conclusion must be that,contrary to the finding of the trial court, the noise continuously emitted, day and night, constitutes an

actionable nuisance for which the appellant is entitled to relief, by requiring the appellee company to

adopt the necessary measures to deaden or reduce the sound at the plaintiff's house, by replacing the

interlink wire fence with a partition made of sound absorbent material, since the relocation of the

substation is manifestly impracticable and would be prejudicial to the customers of the Electric

Company who are being serviced from the substation.


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Appellee company insists that as the plaintiff's own evidence (Exhibit "NN-7[c]") the intensity of the

sound (as measured by Dr. Almonte) inside appellant's house is only 46 to 47 decibels at the

consultation room, and 43 to 45 decibels within the treatment room, the appellant had no ground to

complain. This argument is not meritorious, because the noise at the bedrooms was determined to be

around 64-65 decibels, and the medical evidence is to the effect that the basic root of the appellant's

ailments was his inability to sleep due to the incessant noise with consequent irritation, thus weakening

his constitution and making him easy prey to pathogenic germs that could not otherwise affect a person

of normal health.

In Kentucky and West Virginia Co., Inc. vs. Anderson, 156 SW. 857, the average of three readings along

the plaintiff's fence was only 44 decibels but, because the sound from the sub-station was interminable

and monotonous, the court authorized an injunction and damages. In the present case, the three

readings along the property line are 52, 54 and 55 decibels. Plaintiff's case is manifestly stronger.

Appellee company argues that the plaintiff should not be heard to complain because the sound level at

the North General Hospital, where silence is observed, is even higher than at his residence. This

comparison lacks basis because it has not been established that the hospital is located in surroundings

similar to the residential zone where the plaintiff lived or that the sound at the hospital is similarly

monotonous and ceaseless as the sound emitted by the sub-station.

Constancio Soria testified that "The way the transformers are built, the humming sound cannot be

avoided". On this testimony, the company emphasizes that the substation was constructed for publicconvenience. Admitting that the sound cannot be eliminated, there is no proof that it cannot be

reduced. That the sub-station is needed for the Meralco to be able to serve well its customers is no

reason, however, why it should be operated to the detriment and discomfort of others. 2

The fact that the Meralco had received no complaint although it had been operating hereabouts for the

past 50 years with substations similar to the one in controversy is not a valid argument. The absence of

suit neither lessens the company's liability under the law nor weakens the right of others against it to

demand their just due.

As to the damages caused by the noise, appellant Velasco, himself a physician, claimed that the noise, as

a precipitating factor, has caused him anxiety neurosis, which, in turn, predisposed him to, or is

concomitant with, the other ailments which he was suffering at the time of the trial, namely,

pyelonephritis, ureteritis and others; that these resulted in the loss of his professional income and

reduced his life expectancy. The breakdown of his claims is as follows:


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Loss of professional earnings P12,600

Damage to life expectancy 180,000

Moral damages 100,000

Loss due to frustration of sale of house 125,000

Exemplary damages 25,000

Attorneys' fees 45,000

A host of expert witnesses and voluminous medical literature, laboratory findings and statistics of

income were introduced in support of the above claims.

The medical evidence of plaintiff's doctors preponderates over the expert evidence for defendant-

appellee, not merely because of its positive character but also because the physicians presented by

plaintiff had actually treated him, while the defense experts had not done so. Thus the evidence of the

latter was to a large extent conjectural. That appellant's physical ailments should be due to infectious

organisms does not alter the fact that the loss of sleep, irritation and tension due to excessive noise

weakened his constitution and made him easy prey to the infection.

Regarding the amount of damages claimed by appellant, it is plain that the same are exaggerated. To

begin with, the alleged loss of earnings at the rate of P19,000 per annum is predicated on the Internal

Revenue assessment, Exhibit "QQ-1", wherein appellant was found to have undeclared income of

P8,338.20 in additional to his declared gross income of P10,975.00 for 1954. There is no competentshowing, however, that the source of such undeclared income was appellant's profession. In fact, the

inference would be to the contrary, for his gross income from the previous years 1951 to 1953 [Exhibits

"QQ-1 (d)" to "QQ-1 (f)"] was only P8,085.00, P5,860.00 and P7,120.00, respectively, an average of

P7,000.00 per annum. Moreover, while his 1947 and 1948 income was larger (P9,995.00 and

P11,900.00), it appears that P5,000 thereof was the appellant's annual salary from the Quezon

Memorial Foundation, which was not really connected with the usual earnings derived from practice as

a physician. Considering, therefore, his actual earnings, the claimed moral damages of P100,000.00 are

utterly disproportionate. The alleged losses for shortening of appellant's, life expectancy are not only

inflated but speculative.

As to the demand for exemplary or punitive damages, there appears no adequate basis for their award.

While the appellee Manila Electric Company was convicted for erecting the substation in question

without permit from the Public Service Commission, We find reasonable its explanation that its officials

and counsel had originally deemed that such permit was not required as the installation was authorized

by the terms of its franchise (as amended by Republic Act No. 150) requiring it to spend within 5 years

not less than forty million pesos for maintenance and additions to its electric system, including needed


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power plants and substations. Neither the absence of such permit from the Public Service Commission

nor the lack of permit from the Quezon City authorities (a permit that was subsequently granted) is

incompatible with the Company's good faith, until the courts finally ruled that its interpretation of the

franchise was incorrect.

There are, moreover, several factors that mitigate defendant's liability in damages. The first is that the

noise from the substation does not appear to be an exclusive causative factor of plaintiff-appellant's

illnesses. This is proved by the circumstance that no other person in Velasco's own household nor in his

immediate neighborhood was shown to have become sick despite the noise complained of. There is also

evidence that at the time the plaintiff-appellant appears to have been largely indebted to various credit

institutions, as a result of his unsuccessful gubernatorial campaign, and this court can take judicial

cognizance of the fact that financial worries can affect unfavorably the debtor's disposition and

mentality.

The other factor militating against full recovery by the petitioner Velasco in his passivity in the face of

the damage caused to him by the noise of the substation. Realizing as a physician that the latter was

disturbing or depriving him of sleep and affecting both his physical and mental well being, he did not

take any steps to bring action to abate the nuisance or remove himself from the affected area as soon as

the deleterious effects became noticeable. To evade them appellant did not even have to sell his house;

he could have leased it and rented other premises for sleeping and maintaining his office and thus

preserve his health as ordinary prudence demanded. Instead he obstinately stayed until his health

became gravely affected, apparently hoping that he would thereby saddle appellee with large damages.

The law in this jurisdiction is clear. Article 2203 prescribes that "The party suffering loss or injury mustexercise the diligence of a good father of a family to minimize the damages resulting from the act or

omission in question". This codal rule, which embodies the previous jurisprudence on the point, 3 clearly

obligates the injured party to undertake measures that will alleviate and not aggravate his condition

after the infliction of the injury, and places upon him the burden of explaining why he could not do so.

This was not done.

Appellant Velasco introduced evidence to the effect that he tried to sell his house to Jose Valencia, Jr., in

September, 1953, and on a 60 day option, for P95,000.00, but that the prospective buyer backed out on

account of his wife objecting to the noise of the substation. There is no reliable evidence, however, howmuch were appellant's lot and house worth, either before the option was given to Valencia or after he

refused to proceed with the sale or even during the intervening period. The existence of a previous offer

for P125,000.00, as claimed by the plaintiff, was not corroborated by Valencia. What Valencia testified

to in his deposition is that when they were negotiating on the price Velasco mentioned to him about an

offer by someone for P125,000.00. The testimony of Valencia proves that in the dialogue between him

and Velasco, part of the subject of their conversation was about the prior offer, but it does not

corroborate or prove the reality of the offer for P125,000.00. The testimony of Velasco on this point,


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standing alone, is not credible enough, what with his penchant for metaphor and exaggeration, as

previously adverted to. It is urged in appellant's brief, along the lines of his own testimony, that since

one (1) transformer was measured by witness, Jimenez with a noise intensity of 47.2 decibels at a

distance of 30.48 meters, the two (2) transformers of the substation should create an intensity of 94.4

decibels at the same distance. If this were true, then the residence of the plaintiff is more noisy than the

noisiest spot at the Niagara Falls, which registers only 92 decibels (Exhibit "15-A").

Since there is no evidence upon which to compute any loss or damage allegedly incurred by the plaintiff

by the frustration of the sale on account of the noise, his claim therefore was correctly disallowed by the

trial court. It may be added that there is no showing of any further attempts on the part of appellant to

dispose of the house, and this fact suffices to raise doubts as to whether he truly intended to dispose of

it. He had no actual need to do so in order to escape deterioration of his health, as heretofore noted.

Despite the wide gap between what was claimed and what was proved, the plaintiff is entitled to

damages for the annoyance and adverse effects suffered by him since the substation started functioning

in January, 1954. Considering all the circumstances disclosed by the record, as well as appellant's failure

to minimize the deleterious influences from the substation, this Court is of the opinion that an award in

the amount of P20,000.00, by way of moderate and moral damages up to the present, is reasonable.

Recovery of attorney's fees and litigation expenses in the sum of P5,000.00 is also

justified the factual and legal issues were intricate (the transcript of the stenographic notes is about

5,000 pages, side from an impressive number of exhibits), and raised for the first time in this jurisdiction.

4

The last issue is whether the City Engineer of Quezon City, Anastacio A. Agan, a co-defendant, may be

held solidarily liable with Meralco.

Agan was included as a party defendant because he allegedly (1) did not require the Meralco to secure a

building permit for the construction of the substation; (2) even defended its construction by not insisting

on such building permit; and (3) did not initiate its removal or demolition and the criminal prosecution

of the officials of the Meralco.

The record does not support these allegations. On the first plea, it was not Agan's duty to require the

Meralco to secure a permit before the construction but for Meralco to apply for it, as per Section 1.

Ordinance No. 1530, of Quezon City. The second allegation is not true, because Agan wrote the Meralco

requiring it to submit the plan and to pay permit fees (T.s.n., 14 January 1960, pages 2081-2082). On the

third allegation, no law or ordinance has been cited specifying that it is the city engineer's duty to

initiate the removal or demolition of, or for the criminal prosecution of, those persons who are

responsible for the nuisance. Republic Act 537, Section 24 (d), relied upon by the plaintiff, requires an


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order by, or previous approval of, the mayor for the city engineer to cause or order the removal of

buildings or structures in violation of law or ordinances, but the mayor could not be expected to take

action because he was of the belief, as he testified, that the sound "did not have any effect on his body."

FOR THE FOREGOING REASONS, the appealed decision is hereby reversed in part and affirmed in part.The defendant-appellee Manila Electric Company is hereby ordered to either transfer its substation at

South D and South 6 Streets, Diliman, Quezon City, or take appropriate measures to reduce its noise at

the property line between the defendant company's compound and that of the plaintiff-appellant to an

average of forty (40) to fifty (50) decibels within 90 days from finality of this decision; and to pay the said

plaintiff-appellant P20,000.00 in damages and P5,000.00 for attorney's fees. In all other respects, the

appealed decision is affirmed. No costs.

Concepcion, C.J., Makalintal, Zaldivar, Fernando, Teehankee, Barredo, Villamor and Makasiar, JJ., concur.

Dizon and Castro, JJ., are on leave.


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Velasco vs. Manila Electric Co., 42 SCRA 556 , No. L-18390, December 20, 1971

G.R. No. L-18390 December 20, 1971

PEDRO J. VELASCO, plaintiff-appellant,

vs.

MANILA ELECTRIC CO., ET AL., defendants-appellees.

R E S O L U T I O N

REYES, J.B.L., J.:

Both appellant Velasco and appellee Manila Electric have filed their respective motions to reconsider

the decision of this Court dated 6 August 1971. For the sake of clarity, the two motions will be here dealt

with separately.

A APPELLANT'S MOTION FOR RECONSIDERATION

The thrust of this motion is that the decision has incorrectly assessed appellant's damages and

unreasonably reduced their amount. It is first argued that the decision erred in not taking into account,

in computing appellant's loss of income, the appellant's undeclared income of P8,338.20, assessed by

the Bureau of Internal Revenue for the year 1954, in addition to his declared income for that year

(P10,975), it being argued that appellant never claim any other source of income besides his

professional earnings. Several circumstances of record disprove this claim. (1) That the amount of

P8,338.20 was kept apart from ordinary earnings of appellant for the year 1954 (P10,975), and not

declared with it, is in itself circumstantial evidence that it was not of comparable character. (2) If it waspart of his ordinary professional income, appellant was guilty of fraud in not declaring it and he should

not be allowed to derive advantage from his own wrongdoing. (3) The decision pointed out that by

including the undeclared amount in appellant's disclosed professional earning for 1954, to a grand total

of P19,313.20, the income for said year becomes abnormally high (in fact, more that double), as

compared to appellant's earnings for the preceding years, 1951-1953, that averaged not more that

P7,000 per annum. Such abnormality justifies the Court's refusal to consider the undisclosed P8,338.20

as part of appellant's regular income for the purpose of computing the reduction in his earnings as a

result of the complained acts of appellee. (4) Finally, the true source of the undeclared amount lay in

appellant's own knowledge, but he chose not to disclose it; neither did he call upon the assessing

revenue officer to reveal its character.

Appellant Velasco urges that the damages awarded him are inadequate considering the present high

cost of living, and calls attention to Article 1250 of the present Civil Code, and to the doctrines laid down

in People vs. Pantoja G.R. No. L-18793, 11 October 1968, 25 SCRA 468. We do not deem the rules

invoked to be applicable. Article 1250 of the Civil Code is to the effect that:


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ART. 1250. In case an extraordinary inflation or deflation of the currency stipulated should supervene,

the value of the currency at the time of the establishment of the obligation shall be the basis of

payment, unless there is an agreement to the contrary.

It can be seen from the employment of the words "extraordinary inflation or deflation of the currency

stipulated" that the legal rule envisages contractual obligations where a specific currency is selected by

the parties as the medium of payment; hence it is inapplicable to obligations arising from tort and not

from contract, as in the case at bar, besides there being no showing that the factual assumption of the

article has come into existence. As to the Pantoja ruling, the regard paid to the decreasing purchase of

the peso was considered a factor in estimating the indemnity due for loss of life, which in itself is not

susceptible of accurate estimation. It should not be forgotten that the damages awarded to herein

appellant were by no means full compensatory damages, since the decision makes clear that appellant,

by his failure to minimize his damages by means easily within his reach, was declared entitled only to a

reduced award for the nuisance sued upon (Steel vs. Rail & River Coal Co., 43 Ohio App. 228,182 N.E.

552); and the amount granted him had already taken into account the changed economic

circumstances.

Nor is the fact that appellant lost a chance to sell his house for P95,000 to Jose Valencia constitute a

ground for an award of damages in that amount. As remarked in the main decision, there is no adequate

proof of loss, since there is no evidence of the depreciation in the market value of the house in question

caused by the acts of defendant Meralco The house, after all, has remained with appellant and he

admits in his motion for reconsideration (page 48) that properties have increased in value by 200% since

then.

For the foregoing reasons, the motion for reconsideration is denied.

B APPELLEE'S MOTION TO RECONSIDER

Appellee Manila Electric Company argues that in case the noise emitted by its substation can not be

brought down to the 50 decibel level imposed by our decision in chief, the remedy of the appellant

would be to compel appellee Company to acquire and pay for the value of the house, under the so-

called doctrine of "inverse condemnation and cites in support our doctrines in Bengzon vs. Province of

Pangasinan, 62 Phil. 816, and Republic vs. Philippine Long Distance Telephone Co., L-18841, 27 January

1969, 26 SCRA 620-634. But as pointed out by appellant in his opposition, this issue was not raised, nor

was the inverse condemnation doctrine invoked in the trial court, so that it would be improper to

consider it on appeal, and worse still, on a motion for reconsideration of the decision on the merits.

Furthermore, there is no showing that it is impossible to reduce the substation noise to the level

decreed by this Court in the main decision. On the contrary, appellee's own evidence is that the noise

can be reduced by erecting a wall barrier on the line separating the substation lot and the property of

appellant.

The version that appellee did not erect the wall because of the objections of appellant's wife was denied

by her, and there is no preponderance of evidence in favor of appellee on this point. Moreover, since it

was appellant Dr. Velasco who complained, his wife's objection would not suffice to constitute a waiver

of his claim.


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