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DATION IN PAYMENT

SPS. RAFAEL P. ESTANISLAO AND ZENAIDA ESTANISLAO, petitioners,vs.EAST WEST BANKINGCORPORATION, respondent.

DECISION

YNARES-SANTIAGO, J.:

This is a petition for review of the Decision1of the Court of Appeals dated April 13, 2007 in CA-G.. C! "o. #711$ which reversed and set aside the Decision of the e%ional Trial Court of

Antipolo Cit&, 'ranch 73 in Civil Case "o. 00-(731. The appellate court entered a new )ud%*entorderin% petitioners spouses +stanislao to pa& respondent +ast est 'anin% Corporation$,27(,/1/.( plus interest and attorne&s fees. Also assailed is the esolution2dated une 2(,2007 den&in% the *otion for reconsideration.

The facts are as follows

4n ul& 2$, 1//7, petitioners o5tained a loan fro* the respondent in the a*ount of3,/2(,000.00 evidenced 5& a pro*issor& note and secured 5& two deeds of chattel *ort%a%edated ul& 10, 1//7 one coverin% two du*p trucs and a 5ulldo6er to secure the loan a*ountof 2,37(,000.00, and another coverin% 5ulldo6er and a wheel loader to secure the loan a*ountof 1,((0,000.00. etitioners defaulted in the a*orti6ations and the entire o5li%ation 5eca*edue and de*anda5le.

4n April 10, 2000, respondent 5an filed a suit for replevin with da*a%es, pra&in% that theeuip*ent covered 5& the first deed of chattel *ort%a%e 5e sei6ed and delivered to it. 8n thealternative, respondent pra&ed that petitioners 5e ordered to pa& the outstandin% principala*ount of 3,#$,127.73 with 1/.(9 interest per annu* reconed fro* )udicial de*and untilfull& paid, e:e*plar& da*a%es of (0,000.00, attorne&s fees euivalent to 209 of the totala*ount due, other e:penses and costs of suit.

The case was filed in the e%ional Trial Court of Antipolo and raffled to 'ranch 73 thereof.

;u5seuentl&, respondent *oved for suspension of the proceedin%s on account of an earnestatte*pt to arrive at an a*ica5le settle*ent of the case. The trial court suspended theproceedin%s, and durin% the course of ne%otiations, a deed of assi%n*ent3dated Au%ust 1,2000 was drafted 5& the respondent, which provides in part, that

: : : the A;;8G"4 is indebted t t!e ASSIGNEE in t!e "##$e#"te %&' ( SE)ENMILLION T*REE *+NDRED FI)E T*O+SAND FO+R *+NDRED FIFTY NINE PESOS"nd FIFTY TWO CENTA)OS P,/0,102.034, P!i5i66ine 7&$$en78, in75&%i9e ( "77$&edinte$e%t% "nd 6en"5tie% "% ( A&%t ;, 3///, "nd in (&55 6"8'ent t!e$e(, t!eASSIGNOR de% !e$eb8 ASSIGN, TRANSFER "nd CON)EY &nt t!e ASSIGNEE t!%e't$ 9e!i75e%, with all their tools and accessories, *ore particularl& descri5ed as follows

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4n

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4n the other hand, respondent ar%ues that a> the deed of assi%n*ent produced no le%al effect5etween the parties for failure of the respondent to si%n the sa*e 5> the deed was founded ona *istae on its part 5ecause it honestl& 5elieved that onl& one chattel *ort%a%e had 5eenconstituted to secure the petitioners o5li%ation c> the non-inclusion of the second deed ofchattel *ort%a%e in the ori%inal co*plaint was a case of Fplain oversi%htF on the part of the loan

operations unit of respondent 5an, which failed to forward to the le%al depart*ent the co*pletedocu*ents pertainin% to the petitioners loan account d> the continued ne%otiations in Au%ust2001 5etween the parties, after deliver& of the three units of heav& euip*ent, proves thatpetitioners acnowled%ed their continuin% o5li%ations to respondent under the second deed of*ort%a%e and, e> the deed of assi%n*ent did not have the effect of novatin% the ori%inal loano5li%ation.

The issue for resolution is Did the deed of assi%n*ent @ which e:pressl& provides that thetransfer and conve&ance to respondent of the three units of heav& euip*ent, and itsacceptance thereof, shall 5e in (&55 6"8'entof the petitioners total outstandin% o5li%ation tothe latter @ operate to e:tin%uish petitioners de5t to respondent, such that the replevin suit couldno lon%er prosperH

e find *erit in the petition.

The appellate court erroneousl& deno*inated the replevin suit as a collection case. A readin% ofthe ori%inal and a*ended co*plaints show that what the respondent initiated was a purereplevin suit, and not a collection case. ecover& of the heav& euip*ent was the principal ai*of the suit pa&*ent of the total o5li%ation was *erel& an alternative pra&er which respondentsou%ht in the event *anual deliver& of the heav& euip*ent could no lon%er 5e *ade.

eplevin, 5roadl& understood, is 5oth a for* of principal re*ed& and a provisional relief. 8t *a&refer either to the action itself, i.e., to re%ain the possession of personal chattels 5ein%

wron%full& detained fro* the plaintiff 5& another, or to the provisional re*ed& that would allowthe plaintiff to retain the thin% durin% the pendenc& of the action and hold itpendente lite.(

The deed of assi%n*ent was a perfected a%ree*ent which e:tin%uished petitioners totaloutstandin% o5li%ation to the respondent. The deed e:plicitl& provides that the assi%nor=petitioners>,

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Consent to contracts is *anifested 5& the *eetin% of the offer and the acceptance of the thin%and the cause which are to constitute the contract the offer *ust 5e certain and the acceptancea5solute.7The acceptance of an offer *ust 5e *ade nown to the offeror, and unless the offerornows of the acceptance, there is no *eetin% of the *inds of the parties, no real concurrence ofoffer and acceptance.#Bpon due acceptance, the contract is perfected, and fro* that *o*ent

the parties are 5ound not onl& to the fulfill*ent of what has 5een e:pressl& stipulated 5ut also toall the conseuences which, accordin% to their nature, *a& 5e in eepin% with %ood faith, usa%eand law./

ith its &ears of 5anin% e:perience, resources and *anpower, respondent 5an is presu*edto 5e fa*iliar with the i*plications of enterin% into the deed of assi%n*ent, whose ter*s arecate%orical and left nothin% for interpretation. The alle%ed non-inclusion in the deed of certainunits of heav& euip*ent due to inadvertence, plain oversi%ht or *istae, is tanta*ount toine:cusa5le *anifest ne%li%ence, which should not invalidate the )uridical tie that wascreated.10espondent is presu*ed to have *aintained a hi%h level of *eticulousness in itsdealin%s with petitioners. The 5usiness of a 5an is affected with pu5lic interest thus, it *aes asworn profession of dili%ence and *eticulousness in %ivin% irreproacha5le service.11

'esides, respondents protestations of *istae and plain oversi%ht are self-servin%. Theevidence show that fro* Au%ust 1, 2000 =date of the deed of assi%n*ent> up to , respondentdid not raise an& o5)ections nor *ae an& *ove to uestion, invalidate or rescind the deed ofassi%n*ent. 8t was not until une 20, 2001 that respondent raised the issue of its alle%ed*istae 5& filin% an a*ended co*plaint for replevin involvin% different chattels, althou%hfounded on the sa*e principal o5li%ation.

The le%al presu*ption is alwa&s on the validit& of contracts.128n order to )ud%e the intention ofthe contractin% parties, their conte*poraneous and su5seuent acts shall 5e principall&

considered.13hen respondent accepted deliver& of all three units of heav& euip*ent underthe deed of assi%n*ent, there could 5e no dou5t that it intended to 5e 5ound under thea%ree*ent.

;ince the a%ree*ent was consu**ated 5& the deliver& on

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SO ORDERED.

SPO+SES WILFREDO N. ONG "nd EDNA S*EILA PAG+IO-ONG,etitioners,vs.

ROBAN LENDING CORPORATION,espondent.

AUSTRIA-MARTINEZ,I

D + C 8 ; 8 4 "

CARPIO MORALES, J.:

4n different dates fro* ul& 1$, 1/// to of Tarlac Cit&, for declaration of *ort%a%e contractas a5andoned, annul*ent of deeds, ille%al e:action, un)ust enrich*ent, accountin%, and

da*a%es, alle%in% that the

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and revoltin% to the conscience as the& hardl& allow an& 5orrower an& chance of survival incase of default.F10

etitioners further alle%ed that the& had previousl& *ade pa&*ents on their loan accounts, 5ut5ecause of the ille%al e:actions thereon, the total 5alance appears not to have *oved at all,

hence, accountin% was in order.

11

etitioners thus pra&ed for )ud%*ent

a> Declarin% the eal +state Declarin% the F Declarin% the interests, penalties, +vat JsicK and attorne&s fees assessed and loaded intothe loan accounts of the plaintiffs with defendant as un)ust, iniuitous, unconsciona5le and

ille%al and therefore, stricen out or set aside

d> 4rderin% an accountin% on plaintiffs loan accounts to deter*ine the true and correct5alances on their o5li%ation a%ainst le%al char%es onl& and

e> 4rderin% defendant to Jpa&K to the plaintiffs --

e.1

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"evertheless, findin% the error in no*enclature Fto 5e *ere se*antics with no 5earin% on the*erits of the caseF,2$the Court of Appeals upheld the TC decision that there was nopactumcommissorium.2(

Their

This Court finds that the there should5e a propert& *ort%a%ed 5& wa& of securit& for the pa&*ent of the principal o5li%ation, and =2>there should 5e a stipulation for auto*atic appropriation 5& the creditor of the thin% *ort%a%ed

in case of non-pa&*ent of the principal o5li%ation within the stipulated period.31

8n the case at 5ar, the

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espondent ar%ues that the law reco%ni6es dacion en pa"oas a special for* of pa&*entwhere5& the de5tor alienates propert& to the creditor in satisfaction of a *onetar&o5li%ation.32This does not persuade. 8n a true dacion en pa"o, the assi%n*ent of the propert&e:tin%uishes the *onetar& de5t.338n the case at 5ar, the alienation of the properties was 5& wa&of securit&, and not 5& wa& of satisf&in% the de5t.3$The Dacion in a&*ent did not e:tin%uish

petitioners o5li%ation to respondent. 4n the contrar&, under the

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a&*ent are ille%al and that the e:tra char%es on the loans are unconsciona5le.(0espondentdisputed too petitioners alle%ation of 5ad faith.(1

?++4+, the challen%ed Court of Appeals Decision is +!+;+D and ;+T A;8D+. The of the e%ister of Deeds of

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;an uan, in the na*e of ina and her sons, after first pa&in% respondent ar +ast 'an andTrust Co*pan& =+'TC> the 5alance of a pro*issor& note to clear the title of a eal +state.

espondents ;&chin%hos averred in the *ain that it was +'TC that was unlawfull& withholdin%deliver& of the owners duplicate cop& of the title despite full pa&*ent of the *ort%a%e loan(withit.

+'TC, which was a5sor5ed after a *er%er 5& 'an of the hilippine 8slands ='8>, contendedthat spouses ina and ohnson had unsettled o5li%ations as sureties for ; 8nternationalhilippines, 8nc. and N 'rothers Corporation under Co*prehensive ;uret& A%ree*ents whichthe& had e:ecuted authori6in% +'TC to retain and proceed a%ainst their properties in itspossession that the eal +state in7!"te6$tin ( t!e %&b?e7t 6$6e$t87or that pertainin% to ina as co-owner =as the 2E3 5elon%s toher sons err& and acson>, she 5ein% a si%nator& to the eal +state isinad*issi5le, the witness who identified it havin% no personal nowled%e of its e:istence anddue e:ecution, hence, should not 5e considered annotated on the title and that there was noevidence that respondents ;&chin%hos had other unpaid o5li%ations with +'TC for which thetitle should continue to stand as securit&.13

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'& , the Court

finds that this is not a concern of petitioner as he is not a part& to the loan docu*ents coverin%it. ;ince petitioner a%reed to the full e:tin%uish*ent of respondents spouses then outstandin%o5li%ation in view of the unconditional conve&ance to hi* of the su5)ect propert&,1#there is aperfected and enforcea5le dacion en pa%o. ?e should thus en)o& full entitle*ent to the su5)ectpropert&.

The uestion of whether the su5)ect propert& stands as a continuin% securit& for an& outstandin%o5li%ations of ina and her sons to '8 =then +'TC> should not detain the Court an& further.;urrender of the certificate of title will not i*pair an& e:istin% *ort%a%e on the su5)ect propert&.8t is an ele*entar& principle in civil law that a real estate *ort%a%e su5sists notwithstandin%chan%es in ownership, and all su5seuent purchasers of the propert& *ust respect the

*ort%a%e.1/

inall&, while the re*ed& of petitioner is to file a petition in court, followin% residential Decree"o. 1(2/, to co*pel then +'TC =now '8> to surrender the owners duplicate cop& of the titleto the e%ister of Deeds of ;an uan to facilitate the issuance of a new title in his na*e,20theCourt dee*s his action for specific perfor*ance and recover&of the title as su5stantialco*pliance with the prescri5ed procedure. To reuire hi* to institute a new action seein%

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essentiall& the sa*e relief would 5e to encoura%e endless liti%ations and *ultiplicit& of suits @an end a5horrent to the proper ad*inistration of )ustice.

?++4+, the challen%ed Decision of the Court of Appeals is +!+;+D and ;+TA;8D+. 'an of the hilippine 8slands, to which ar +ast 'an and Trust Co*pan& was *er%ed,

is ordered to surrender the owners duplicate cop& of TCT "o. 2(/- to the e%ister of Deedsof ;an uan, salapin%ilipino. 8naao o na isusulit sa an&a an% ain% BCAD at 5a5a&aran oan% nasa5in% hala%a. Pun% hindi ao *aasulit n% BCAD o *aa5a&ad5a%o su*apit an% OOOOOOOO., 1/ OO *aaari ni&a aon% i5i%a& sa*a& apan%&arihan. Pun% an% pa%sisin%ilan a& *aaaratin% sa u6%ado a&

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sinasa%utan o an% lahat n% ani&an% %u%ol.

OOOOOOOOO................ J;%d. 5& respondentKOOOOOOOOOOOOOO.

a%da

.

Accordin% to !icente, part of their a%ree*ent with Guiller*o was that the& would put theannotation Fsulon%F on the pesada when partial pa&*ent for the loan was *ade.

etitioner alle%ed that despite repeated de*ands, Guiller*o re*itted onl& 23,000 in Au%ust1//# and (,(00 in 4cto5er 1//#, or a total of 2#,(00.$?e clai*ed that respondent had anoutstandin% 5alance of 3/1,(00. Thus, convinced that Guiller*o no lon%er had the intention topa& the loan, petitioner 5rou%ht the controvers& to the upon Ta%apa*a&apa. hen nosettle*ent was reached, petitioner filed a Co*plaint 5efore the e%ional Trial Court =TC>.

espondent Guiller*o countered that he had alread& paid the su5)ect loan in full. Accordin% tohi*, he continuousl& delivered and sold copra to petitioner fro* April 1//# to April 1///.espondent said the& had an oral arran%e*ent that the net proceeds thereof shall 5e applied asinstall*ent pa&*ents for the loan. ?e alle%ed that his deliveries a*ounted to $20,(37.#worth of copra. To 5olster his clai*, he presented copies of pesadas issued 5& +lena and!icente. ?e pointed out that the pesadas did not contain the notation Fpd,F which *eant thatactual pa&*ent of the net proceeds fro* copra deliveries was not %iven to hi*, 5ut was insteadapplied as loan pa&*ent. ?e averred that Tan ;hu& filed a case a%ainst hi*, 5ecause petitioner%ot *ad at hi* for sellin% copra to other copra 5u&ers.

4n 27 ul& 2007, the trial court issued a Decision, rulin% that the net proceeds fro* Guiller*oscopra deliveries @ represented in the pesadas, which did not 5ear the notation FpdF @ should 5eapplied as install*ent pa&*ents for the loan. 8t %ave wei%ht and credence to the pesadas, astheir due e:ecution and authenticit& was esta5lished 5& +lena and !icente, children ofpetitioner.(?owever, the court did not credit the net proceeds fro* 12 pesadas, as the& weredeliveries for corn and not copra. Accordin% to the TC, Guiller*o hi*self testified that it wasthe net proceeds fro* the copra deliveries that were to 5e applied as install*ent pa&*ents forthe loan. Thus, it ruled that the total a*ount of $1,(#(.2(, which corresponded to the netproceeds fro* corn deliveries, should 5e deducted fro* the a*ount of $20,(37.# clai*ed 5&Guiller*o to 5e the total value of his copra deliveries. Accordin%l&, the trial court found thatrespondent had not *ade a full pa&*ent for the loan, as the total credita5le copra deliveries*erel& a*ounted to 37#,/(2.$3, leavin% a 5alance of $1,0$7.(7 in his loan.

4n 31 ul& 200/, the CA issued its assailed Decision, which affir*ed the findin% of the trialcourt. Accordin% to the appellate court, petitioner could have easil& 5elied the e:istence of thepesadas and the purpose for which the& were offered in evidence 5& presentin% his dau%hter+lena as witness however, he failed to do so. Thus, it %ave credence to the testi*on& ofrespondent Guiller*o in that the net proceeds fro* the copra deliveries were applied asinstall*ent pa&*ents for the loan.74n 13 "ove*5er 200/, the CA issued its assailedesolution, which denied the

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etitioner now assails 5efore this Court the afore*entioned Decision and esolution of the CAand presents the followin% issues

8ssues

1. hether the pesadas reuire authentication 5efore the& can 5e ad*itted in evidence, and

2. hether the deliver& of copra a*ounted to install*ent pa&*ents for the loan o5tained 5&respondents fro* petitioner.

Discussion

As re%ards the first issue, petitioner asserts that the pesadas should not have 5een ad*itted inevidence, since the& were private docu*ents that were not dul& authenticated.#?e furthercontends that the pesadas were fa5ricated in order to show that the %oods delivered were copraand not corn. inall&, he ar%ues that five of the pesadas *entioned in the or*al 4ffer of+vidence of respondent were not actuall& offered./

ith re%ard to the second issue, petitioner ar%ues that respondent undertoo two separateo5li%ations @ =1> to pa& for the loan in cash and =2> to sell the latters lucad or copra. ;ince theirwritten a%ree*ent did not specificall& provide for the application of the net proceeds fro* thedeliveries of copra for the loan, petitioner contends that he cannot 5e co*pelled to accept copraas pa&*ent for the loan. ?e e*phasi6es that the pesadas did not specificall& indicate that thenet proceeds fro* the copra deliveries were to 5e used as install*ent pa&*ents for the loan. ?ealso clai*s that respondents copra deliveries were dul& paid for in cash, and that the pesadaswere in fact docu*entar& receipts for those pa&*ents.

e reiterate our rulin% in a line of cases that the )urisdiction of this Court, in cases 5rou%ht5efore it fro* the CA, is li*ited to reviewin% or revisin% errors of law.10actual findin%s of courts,

when adopted and confir*ed 5& the CA, are final and conclusive on this Court e:cept ifunsupported 5& the evidence on record.11There is a uestion of fact when dou5t arises as to thetruth or falsehood of facts or when there is a need to cali5rate the whole evidence, considerin%*ainl& the credi5ilit& of the witnesses and the pro5ative wei%ht thereof, the e:istence andrelevanc& of specific surroundin% circu*stances, as well as their relation to one another and tothe whole, and the pro5a5ilit& of the situation.12

?ere, a findin% of fact is reuired in the ascertain*ent of the due e:ecution and authenticit& ofthe pesadas, as well as the deter*ination of the true intention 5ehind the parties orala%ree*ent on the application of the net proceeds fro* the copra deliveries as install*entpa&*ents for the loan.13This function was alread& e:ercised 5& the trial court and affir*ed 5&the CA. 'elow is a reproduction of the relevant portion of the trial courts Decision

: : : The defendant further averred that if in the receipts or FpesadasF issued 5& the plaintiff tothose who delivered copras to the* there is a notation FpdF on the total a*ount of purchaseprice of the copras, it *eans that said a*ount was actuall& paid or %iven 5& the plaintiff or hisdau%hter +lena Tan ;hu& to the seller of the copras. To prove his aver*ents the defendantpresented as evidence two =2> receipts or pesadas issued 5& the plaintiff to a certain FCariQoF=+:hi5its F1F and F2F @ defendant> showin% the notation FpdF on the total a*ount of the purchaseprice for the copras. ;uch clai* of the defendant was further 5olstered 5& the testi*on& of

Apolinario CariQo which affir*ed that he also sell copras to the plaintiff Tan ;hu&. ?e also added

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that he incurred inde5tedness to the plaintiff and whenever he delivered copras the a*ount ofthe copras sold were applied as pa&*ents to his loan. The witness also pointed out that theplaintiff did not %ive an& official receipts to those who transact 5usiness with hi* =plaintiff>. ThisCourt %ave wei%ht and credence to the docu*ents receipts =pesadas> =+:hi5its F3F to F$F>offered as evidence 5& the defendant which does not 5ear the notation FpdF or paid on the totala*ount of the purchase price of copras appearin% therein. Althou%h said FpesadasF were private

instru*ent their e:ecution and authenticit& were esta5lished 5& the plaintiffs dau%hter +lenaTan and so*eti*es 5& plaintiffs son !icente Tan. : : :.1$=+*phasis supplied>

8n affir*in% the findin% of the TC, the CA reasoned thus

8n his last assi%ned error, plaintiff-appellant herein i*pu%ns the conclusion arrived at 5& the trialcourt, particularl& with respect to the %ivin% of evidentiar& value to +:hs. F3F to F$F 5& the latterin order to prove the clai* of defendant-appellee Guiller*o that he had full& paid the su5)ectloan alread&.

The fore%oin% deserves scant consideration.

?ere, plaintiff-appellant could have easil& 5elied the e:istence of +:hs. F3F to F$F, the pesadasor receipts, and the purposes for which the& were offered in evidence 5& si*pl& presentin% hisdau%hter, +lena Tan ;hu&, 5ut no effort to do so was actuall& done 5& the for*er %iven thatscenario.1(=+*phasis supplied>

e found no clear showin% that the trial court and the CA co**itted reversi5le errors of law in%ivin% credence and accordin% wei%ht to the pesadas presented 5& respondents. Accordin% toule 132, ;ection 20 of the ules of Court, there are two wa&s of provin% the due e:ecution andauthenticit& of a private docu*ent, to wit

;+C. 20. roof of private docu*ent. @ 'efore an& private docu*ent offered as authentic is

received in evidence, its due e:ecution and authenticit& *ust 5e proved either

=a> '& an&one who saw the docu*ent e:ecuted or written or

=5> '& evidence of the %enuineness of the si%nature or handwritin% of the *aer.

An& other private docu*ent need onl& 5e identified as that which it is clai*ed to 5e. =21a>

As reproduced a5ove, the trial court found that the due e:ecution and authenticit& of thepesadas were Festa5lished 5& the plaintiffs dau%hter +lena Tan and so*eti*es 5& plaintiffs son!icente Tan.F1The TC said

4n cross-e:a*ination, J!icenteK reiterated that he and her JsicK sister +lena Tan who acted astheir cashier are helpin% their father in their 5usiness of 5u&in% copras and *ais. That witnessa%reed that in the 5usiness of 5u&in% copra and *ais of their father, if a seller is sellin% copra, apesada is 5ein% issued 5& his sister. The pesada that she is preparin% consists of the date whenthe copra is 5ein% sold to the seller. 'ein% fa*iliar with the pen*anship of +lena Tan, thewitness was shown a sa*ple of the pesada issued 5& his sister +lena Tan. : : :

: : : : : : : : :

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: : :. ?e clarified that in the FpesadaF =+:h. F1F> prepared 5& +lena and also in +:h F2F, thereappears on the lower ri%ht hand portion of the said pesadas the letter FpdF, the *eanin% ofwhich is to the effect that the seller of the copra has alread& 5een paid durin% that da&. ?e alsoconfir*ed the pen*anship and handwritin% of his sister Ate +lena who acted as a cashier in thepesada 5ein% shown to hi*. ?e was even *ade to co*pare the :ero: copies of the pesadaswith the ori%inal copies presented to hi* and affir*ed that the& are faithful reproduction of the

ori%inals.17=+*phasis supplied>

8n an& event, petitioner is alread& estopped fro* uestionin% the due e:ecution and authenticit&of the pesadas. 1)*phi1As found 5& the CA, Tan ;hu& Fcould have easil& 5elied the e:istence of : : :the pesadas or receipts, and the purposes for which the& were offered in evidence 5& si*pl&presentin% his dau%hter, +lena Tan ;hu&, 5ut no effort to do so was actuall& done 5& the for*er%iven that scenario.F The pesadas havin% 5een ad*itted in evidence, with petitioner failin% toti*el& o5)ect thereto, these docu*ents are alread& dee*ed sufficient proof of the factscontained therein.1#e here5& uphold the factual findin%s of the TC, as affir*ed 5& the CA, inthat the pesadas served as proof that the net proceeds fro* the copra deliveries were used asinstall*ent pa&*ents for the de5ts of respondents.1/

8ndeed, pursuant to Article 1232 of the Civil Code, an o5li%ation is e:tin%uished 5& pa&*ent orperfor*ance. There is pa&*ent when there is deliver& of *one& or perfor*ance of ano5li%ation.20Article 12$( of the Civil Code provides for a special *ode of pa&*ent called dationin pa&*ent =daciRn en pa%o>. There is dation in pa&*ent when propert& is alienated to thecreditor in satisfaction of a de5t in *one&.21?ere, the de5tor delivers and trans*its to thecreditor the for*ers ownership over a thin% as an accepted euivalent of the pa&*ent orperfor*ance of an outstandin% de5t.228n such cases, Article 12$( provides that the law on salesshall appl&, since the undertain% reall& partaes @ in one sense @ of the nature of sale that is,the creditor is reall& 5u&in% the thin% or propert& of the de5tor, the pa&*ent for which is to 5echar%ed a%ainst the de5tors o5li%ation.23Dation in pa&*ent e:tin%uishes the o5li%ation to thee:tent of the value of the thin% delivered, either as a%reed upon 5& the parties or as *a& 5eproved, unless the parties 5& a%ree*ent @ e:press or i*plied, or 5& their silence @ consider the

thin% as euivalent to the o5li%ation, in which case the o5li%ation is totall& e:tin%uished.2$

The trial court found thus

: : : JTKhe preponderance of evidence is on the side of the defendant. : : : The defendante:plained that for the receipts =pesadas> fro* April 1//# to April 1/// he onl& %ets thepa&*ents for trucin% while the total a*ount which represent the total purchase price for thecopras that he delivered to the plaintiff were all %iven to +lena Tan ;hu& as install*ents for theloan he owed to plaintiff. The defendant further averred that if in the receipts or FpesadasFissued 5& the plaintiff to those who delivered copras to the* there is a notation FpdF on the totala*ount of purchase price of the copras, it *eans that said a*ount was actuall& paid or %iven 5&the plaintiff or his dau%hter +lena Tan ;hu& to the seller of the copras. To prove his aver*entsthe defendant presented as evidence two =2> receipts or pesadas issued 5& the plaintiff to acertain FCariQoF =+:hi5its F1F and F2F @ defendant> showin% the notation FpdF on the total a*ountof the purchase price for the copras. ;uch clai* of the defendant was further 5olstered 5& thetesti*on& of Apolinario CariQo which affir*ed that he also sell JsicK copras to the plaintiff Tan;hu&. ?e also added that he incurred inde5tedness to the plaintiff and whenever he deliveredcopras the a*ount of the copras sold were applied as pa&*ents to his loan. The witness alsopointed out that the plaintiff did not %ive an& official receipts to those who transact 5usiness withhi* =plaintiff>. : : :

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'e that it *a&, this Court cannot however su5scri5e to the aver*ents of the defendant that hehas full& paid the a*ount of his loan to the plaintiff fro* the proceeds of the copras he deliveredto the plaintiff as shown in the FpesadasF =+:hi5its F3F to F$F>. Defendant clai*ed that 5ased onthe said FpesadasF he has paid the total a*ount of $20,(37.# to the plaintiff. ?owever, thisCourt eenl& noted that so*e of the FpesadasF offered in evidence 5& the defendant were notfor copras that he delivered to the plaintiff 5ut for F*aisF =corn>. The said pesadas for *ais or

corn were the followin%, to wit

: : : : : : : : :

To the *ind of this Court the aforestated a*ount =$1,(#(.2(> which the a5ove listed pesadasshow as pa&*ent for *ais or corn delivered 5& the defendant to the plaintiff cannot 5e clai*ed5& the defendant to have 5een applied also as pa&*ent to his loan with the plaintiff 5ecause hedoes not testif& on such fact. ?e even stressed durin% his testi*on& that it was the proceedsfro* the copras that he delivered to the plaintiff which will 5e applied as pa&*ents to his loan. :: : Thus, euit& dictates that the total a*ount of $1,(#(.2( which corresponds to the pa&*entfor F*aisF =corn> delivered 5& the plaintiff shall 5e deducted fro* the total a*ount of$20,(37.# which accordin% to the defendant 5ased on the pesadas =+:hi5its F3F to F$F> that

he presented as evidence, is the total a*ount of the pa&*ent that he *ade for his loan to theplaintiff. : : :

: : : : : : : : :

Clearl& fro* the fore%oin%, since the total a*ount of defendants loan to the plaintiff is$20,000.00 and the evidence on record shows that the actual a*ount of pa&*ent *ade 5& thedefendant fro* the proceeds of the copras he delivered to the plaintiff is 37#,/(2.$3, thedefendant is still inde5ted to the plaintiff in the a*ount of $1,0$7.(3 =sic> =$20,000.00-37#,/(2.$3>.2(=+*phasis supplied>

8n affir*in% this findin% of fact 5& the trial court, the CA cited the a5ove-uoted portion of theTCs Decision and stated the followin%

8n fact, as 5orne 5& the records on hand, herein defendant-appellee Guiller*o was a5le todescri5e and spell out the contents of +:hs. F3F to F$F which were then prepared 5& +lena Tan;hu& or so*eti*es 5& witness !icente Tan. ?erein defendant-appellee Guiller*o professed thatsince the release of the su5)ect loan was su5)ect to the condition that he shall sell his copras tothe plaintiff-appellant, the for*er did not alread& receive an& *one& for the copras he deliveredto the latter startin% April 1//# to April 1///. ?ence, this Court can onl& e:press its approval tothe apt o5servation of the trial court on this *atterJ.K

: : : : : : : : :

"otwithstandin% the a5ove, however, this Court full& a%rees with the pronounce*ent of the trialcourt that not all a*ounts indicated in +:hs. F3F to F$F should 5e applied as pa&*ents to thesu5)ect loan since several of which clearl& indicated F*aisF deliveries on the part of defendant-appellee Guiller*o instead of FcoprasFJ.K2=+*phasis supplied>

The su5seuent arran%e*ent 5etween Tan ;hu& and Guiller*o can thus 5e considered as onein the nature of dation in pa&*ent. There was partial pa&*ent ever& ti*e Guiller*o deliveredcopra to petitioner, chose not to collect the net proceeds of his copra deliveries, and instead

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applied the collecti5le as install*ent pa&*ents for his loan fro* Tan ;hu&. e therefore upholdthe findin%s of the trial court, as affir*ed 5& the CA, that the net proceeds fro* Guiller*oscopra deliveries a*ounted to 37#,/(2.$3. ith this partial pa&*ent, respondent re*ainslia5le for the 5alance totalin% $1,0$7.(7.27

?++4+ the etition is D+"8+D. The 31 ul& 200/ Decision and 13 "ove*5er 200/

esolution of the Court of Appeals in CA-G.. C! "o. /0070 are here5& A8, 'ranch 1 of Ce5u Cit&.The&clai*ed that +uita5le inducedthe* to avail of its peso and dollar credit facilities 5& offerin% low interest rates7so the&accepted +uita5leSs proposal and si%ned the 5anSs pre-printed pro*issor& notes on variousdates 5e%innin% 1//. The&, however, were unaware that the docu*ents contained identicalescalation clauses %rantin% +uita5le authorit& to increase interest rates without their consent.#

+uita5le, in its answer, asserted that respondents nowin%l& accepted all the ter*s andconditions contained in the pro*issor& notes./8n fact, the& continuousl& availed of and 5enefitedfro* +uita5leSs credit facilities for five &ears.10

After trial, the TC upheld the validit& of the pro*issor& notes. 8t found that, in 2001 alone,

+uita5le restructured respondentsSloans a*ountin% to B;M22#,200 and 1,000,000.11

The trialcourt, however, invalidated the escalation clause contained therein 5ecause it violated theprinciple of *utualit& of contracts.12"evertheless, it too )udicial notice of the steep depreciationof the peso durin% the intervenin% period13and declared the e:istence of e:traordinar&deflation.1$Conseuentl&, the TC ordered the use of the 1// dollar e:chan%e rate inco*putin% respondentsS dollar-deno*inated loans.1(astl&, 5ecause the 5usiness reputation ofrespondentswas =alle%edl&> severel& da*a%ed when +uita5le fro6e their accounts,1the trialcourt awarded *oral and e:e*plar& da*a%es to the*.17

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The dispositive portion of the e5ruar& (, 200$ TC decision1#provided

W*EREFORE, pre*ises considered, )ud%*ent is here5& rendered

A> 4rderin% J+uita5leK to reinstate and return the a*ount of JrespondentsSK deposit placedon hold status

'> 4rderin% J+uita5leK to pa& JrespondentsK the su* of 12 J*Killion JpKesos as *oralda*a%es

C> 4rderin% J+uita5leK to pa& JrespondentsK the su* of 10 J*Killion JpKesos as e:e*plar&da*a%es

D> 4rderin% defendants Ai*ee u and 'e)an JionelK Apas to pa& JrespondentsK, )ointl& andseverall&, the su* of JtKwo J*Killion JpKesos as *oral and e:e*plar& da*a%es

+> 4rderin% J+uita5le, Ai*ee u and 'e)an ionel ApasK, )ointl& and severall&, to pa&

JrespondentsSK attorne&Ss fees in the su* of 300,000 liti%ation e:penses in the su*of (0,000 and the cost of suit

> Directin% plaintiffs "% ;heun% "%or and Pen Directin% plaintiff "% ;heun% "%or and Pen 129 per annu* for the peso loans

2> #9 per annu* for the dollar loans. The 5asis for the pa&*ent of the dollaro5li%ation is the conversion rate of 2.(0 per dollar availed of at the ti*e ofincurrin% of the o5li%ation in accordance with Article 12(0 of the Civil Code of the

hilippines

?> Dis*issin% J+uita5leSsK counterclai* e:cept the pa&*ent of the aforestated unpaidprincipal loan o5li%ations and interest.

SO ORDERED.1/

+uita5le and respondents filed their respective notices of appeal.20

8n the

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+uita5le *oved for the reconsideration of the

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This petition is *eritorious.

E&it"b5e W"% Nt G&i5t8 O( F$&' %!66in#

oru* shoppin% e:ists when two or *ore actions involvin% the sa*e transactions, essential

facts and circu*stances are filed and those actions raise identical issues, su5)ect *atter andcauses of action.$(The test is whether, in two or *ore pendin% cases, there is identit& of parties,ri%hts or causes of actions and reliefs.$

+uita5leSs petition for relief in the TC and its petition for certiorari in the CA did not haveidentical causes of action. The petition for relief fro* the denial of its notice of appeal was 5asedon the TCs )ud%*ent or final order preventin% it fro* tain% an appeal 5& Ffraud, accident,*istae or e:cusa5le ne%li%ence.F$74n the other hand, its petition for certiorari in the CA, aspecial civil action, sou%ht to correct the %rave a5use of discretion a*ountin% to lac of

)urisdiction co**itted 5& the TC.$#

8n a petition for relief, the )ud%*ent or final order is rendered 5& a court with co*petent)urisdiction. 8n a petition for certiorari, the order is rendered 5& a court without or in e:cess of its)urisdiction.

it filed the petition for certiorari in the CA. +ven if +uita5le failed to disclose thatit had a pendin% petition for relief in the TC, it rectified what was dou5tlessl& a carelessoversi%ht 5& withdrawin% the petition for relief )ust a few hours after it filed its petition forcertiorari in the CA a clear indication that it had no intention of *aintainin% the two actions atthe sa*e ti*e.

T!e T$i"5 C&$t C''itted G$"9e Ab&%e ( Di%7$etin In I%%&in# It% M"$7! , 3//1 "ndM"$7! 31, 3//1 O$de$%

;ection 1, ule ( of the ules of Court provides

;ection 1. Petition %or ertiorari$ hen "n8 t$ib&n"5, b"$d $ ((i7e$ ee$7i%in# ?&di7i"5 $&"%i-?&di7i"5 (&n7tin !"% "7ted @it!&t $ in e7e%% ( it% $ !i% ?&$i%di7tin, $@it!#$"9e "b&%e ( di%7$etin "'&ntin# t 5"7 $ e7e%% ( ?&$i%di7tin, and t!e$e i% n"66e"5, n$ "n8 65"in, %6eed8 $ "de&"te $e'ed8 in t!e $din"$8 7&$%e ( 5"@, a persona%%rieved there5& *a& file a verified petition in the proper court, alle%in% the facts with certaint&and pra&in% that )ud%*ent 5e rendered annullin% or *odif&in% the proceedin%s of such tri5unal,

5oard or officer, and %rantin% such incidental reliefs as law and )ustice *a& reuire.

The petition shall 5e acco*panied 5& a certified true cop& of the )ud%*ent, order or resolutionsu5)ect thereof, copies of all pleadin%s and docu*ents relevant and pertinent thereto, and asworn certificate of non-foru* shoppin% as provided in the third para%raph of ;ection 3, ule$.

There are two su5stantial reuire*ents in a petition for certiorari. These are

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1. that the tri5unal, 5oard or officer e:ercisin% )udicial or uasi-)udicial functions acted withoutor in e:cess of his or its )urisdiction or with %rave a5use of discretion a*ountin% to lac or

e:cess of )urisdiction and

2. that there is no appeal or an& plain, speed& and adeuate re*ed& in the ordinar& courseof law.

or a petition for certiorari pre*ised on %rave a5use of discretion to prosper, petitioner *ustshow that the pu5lic respondent patentl& and %rossl& a5used his discretion and that a5usea*ounted to an evasion of positive dut& or a virtual refusal to perfor* a dut& en)oined 5& law orto act at all in conte*plation of law, as where the power was e:ercised in an ar5itrar& anddespotic *anner 5& reason of passion or hostilit&.$/

The

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patentl& erroneous, %6e7i"558 t!e e$bit"nt "@"$d ( d"'"#e%, as it was inconsistent withe:istin% law and )urisprudence.(7

T!e P$'i%%$8 Nte% We$e )"5id

The TC upheld the validit& of the pro*issor& notes despite respondents assertion that thosedocu*ents were contracts of adhesion.

A contract of adhesion is a contract where5& al*ost all of its provisions are drafted 5& onepart&.(#The participation of the other part& is li*ited to affi:in% his si%nature or his FadhesionF tothe contract.(/or this reason, contracts of adhesion are strictl& construed a%ainst the part& whodrafted it.0

8t is erroneous, however, to conclude that contracts of adhesion are invalidper se$ The& are, onthe contrar&, as 5indin% as ordinar& contracts. A part& is in realit& free to accept or re)ect it. Acontract of adhesion 5eco*es void onl& when the do*inant part& taes advanta%e of theweaness of the other part&, co*pletel& deprivin% the latter of the opportunit& to 5ar%ain oneual footin%.1

That was not the case here. As the trial court noted, if the ter*s and conditions offered 5&+uita5le had 5een trul& pre)udicial to respondents, the& would have waled out and ne%otiatedwith another 5an at the first availa5le instance. 'ut the& did not. 8nstead, the& continuousl&availed of +uita5leSs credit facilities for five lon% &ears.

hile the TC cate%oricall& found that respondents had outstandin% dollar- and peso-deno*inated loans with +uita5le, it, however, failed to ascertain the total a*ount due=principal, interest and penalties, if an&> as of ul& /, 2001. The trial court did not e:plain how itarrived at the a*ounts of B;M22#,200 and 1,000,000.28n Metro Manila Transit orporation v$&$M$ onsuni,3we reiterated that this Court is not a trier of facts and it shall pass upon the*onl& for co*pellin% reasons which unfortunatel& are not present in this case.$?ence, weordered the partial re*and of the case for the sole purpose of deter*inin% the a*ount of actualda*a%es.(

E%7"5"tin C5"&%e )i5"ted T!e P$in7i65e O( M&t&"5it8 O( Cnt$"7t%

+scalation clauses are not voidper se. ?owever, one Fwhich %rants the creditor an un5ridledri%ht to ad)ust the interest independentl& and upwardl&, co*pletel& deprivin% the de5tor of theri%ht to assent to an i*portant *odification in the a%ree*entF is void. Clauses of that natureviolate the principle of *utualit& of contracts.Article 130#7of the Civil Code holds that a

contract *ust 5ind 5oth contractin% parties its validit& or co*pliance cannot 5e left to the will ofone of the*.#

or this reason, we have consistentl& held that a valid escalation clause provides

1. that the rate of interest will onl& 5e increased if the applica5le *a:i*u* rate of interest isincreased 5& law or 5& the

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2. that the stipulated rate of interest will 5e reduced if the applica5le *a:i*u* rate of interest isreduced 5& law or 5& the

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3. that the parties e:pressl& a%reed to consider the effects of the e:traordinar& inflation ordeflation.7

Despite the devaluation of the peso, the '; never declared a situation of e:traordinar&inflation. .77The TC never*entioned that there was a such stipulation either in the pro*issor& note or loan a%ree*ent.Therefore, respondents should pa& their dollar-deno*inated loans at the e:chan%e rate fi:ed 5&the '; on the date of *aturit&.7#

T!e A@"$d O( M$"5 And Ee'65"$8 D"'"#e% L"7ed B"%i%

#(or the a*ount due =principal plusinterest> due on ul& /, 2001.#Conseuentl&, +uita5le applied respondentsS deposits to theirloans upon *aturit&.

The relationship 5etween a 5an and its depositor is that of creditor and de5tor.#7or thisreason, a 5an has the ri%ht to set-off the deposits in its hands for the pa&*ent of a depositorSsinde5tedness.##

espondents indeed defaulted on their o5li%ation. or this reason, +uita5le had the option toe:ercise its le%al ri%ht to set-off or co*pensation. ?owever, the TC *istaenl& =or, as it nowappears, deli5eratel&> concluded that +uita5le acted Ffraudulentl& or in 5ad faith or in wantondisre%ardF of its contractual o5li%ations despite the a5sence of proof. The undenia5le fact wasthat, whatever da*a%e respondents sustained was 6&$e58 t!e 7n%e&en7e ( t!ei$ ("i5&$e t6"8 t!ei$ 5"n%. There was therefore a5solutel& no 5asis for the award of *oral da*a%es tothe*.

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"either was there reason to award e:e*plar& da*a%es. ;ince respondents were not entitled to*oral da*a%es, neither should the& 5e awarded e:e*plar& da*a%es.#/And if respondentswere not entitled to *oral and e:e*plar& da*a%es, neither could the& 5e awarded attorne&Ssfees and liti%ation e:penses./0

ACCORDINGLY, the petition is here5& GRANTED.

The 4cto5er 2#, 200( decision and e5ruar& 3, 200 resolution of the Court of Appeals in CA-G.. ; "o. #3112 are here5& RE)ERSED and SET ASIDE.

The

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As a startin% point, the e%ional Trial Court, 'ranch 1 of Ce5u Cit& shall co*pute the e:acta*ounts due on the respective dollar-deno*inated and peso-deno*inated loans, as of ul& /,2001, of respondents "% ;heun% "%or, doin% 5usiness under the na*e and st&le of FPen on its *onthl& rentals. 8n response, respondent

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contended that !AT *a& not 5e i*posed as the rentals fi:ed in the contract of lease weresupposed to include the !AT therein, considerin% that their contract was e:ecuted on

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;4 4D++D.13

The trial court denied petitioners their ri%ht to pass on to respondent the 5urden of pa&in% the!AT since it was not a new ta: that would call for the application of the si:th clause of thecontract. The court, liewise, denied their ri%ht to collect the de*anded increase in rental, there5ein% no e:traordinar& inflation or devaluation as provided for in the seventh clause of thecontract. 'ecause of the pa&*ent *ade 5& respondent of the rental ad)ust*ent de*anded 5&petitioners, the court ordered the restitution 5& the latter to the for*er of the a*ounts paid,notwithstandin% the well-esta5lished rule that in an action for declarator& relief, other than adeclaration of ri%hts and o5li%ations, affir*ative reliefs are not sou%ht 5& or awarded to theparties.

etitioners elevated the aforesaid case to the Court of Appeals which affir*ed with *odificationthe TC decision. The fallo reads

?++4+, pre*ises considered, the present appeal is D8;

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8!.

?+T?+ 4 "4T T?+ 8"D8"G 4 T?+ ?4"4A'+ C4BT 4 A+A; T?AT+;4"D+"T 8; "4T 8A'+ T4 A T?+ 109 !AB+ ADD+D TAU 8; 8"

ACC4DA"C+ 8T? T?+

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etitioners clai* that the instant petition is not proper 5ecause a separate action for rescission,e)ect*ent and da*a%es had 5een co**enced 5efore another court thus, the construction ofthe su5)ect contractual provisions should 5e ventilated in the sa*e foru*.

e are not convinced.

8t is true that in Pan"anian v$ Pilipinas Shell Petroleum orporation17we held that the petitionfor declarator& relief should 5e dis*issed in view of the pendenc& of a separate action forunlawful detainer. ?owever, we cannot appl& the sa*e rulin% to the instant case. 8n Pan"anian,the unlawful detainer case had alread& 5een resolved 5& the trial court 5efore the dis*issal ofthe declarator& relief case and it was petitioner in that case who insisted that the action fordeclarator& relief 5e preferred over the action for unlawful detainer. Conversel&, in the case at5ench, the trial court had not &et resolved the rescissionEe)ect*ent case durin% the pendenc& ofthe declarator& relief petition. 8n fact, the trial court, where the rescission case was on appeal,itself initiated the suspension of the proceedin%s pendin% the resolution of the action fordeclarator& relief.

e are not un*indful of the doctrine enunciated in Teodoro, 2r$ v$ Mirasol1#where thedeclarator& relief action was dis*issed 5ecause the issue therein could 5e threshed out in theunlawful detainer suit. et, a%ain, in that case, there was alread& a 5reach of contract at the ti*eof the filin% of the declarator& relief petition. This dissi*ilar factual *ilieu proscri5es the Courtfro* appl&in% Teodoroto the instant case.

Given all these attendant circu*stances, the Court is disposed to entertain the instantdeclarator& relief action instead of dis*issin% it, notwithstandin% the pendenc& of thee)ect*entErescission case 5efore the trial court. The resolution of the present petition wouldwrite %inisto the partiesS dispute, as it would settle once and for all the uestion of the properinterpretation of the two contractual stipulations su5)ect of this controvers&.

"ow, on the su5stantive law issues.

etitioners repeatedl& *ade a de*and on respondent for the pa&*ent of !AT and for rentalad)ust*ent alle%edl& 5rou%ht a5out 5& e:traordinar& inflation or devaluation. 'oth the trial courtand the appellate court found no *erit in petitionersS clai*. e see no reason to depart fro*such findin%s.

As to the lia5ilit& of respondent for the pa&*ent of !AT, we cite with approval the ratiocination ofthe appellate court, vi6.

Clearl&, the person pri*aril& lia5le for the pa&*ent of !AT is the lessor who *a& choose topass it on to the lessee or a5sor5 the sa*e. 'e%innin% anuar& 1, 1//, the lease of realpropert& in the ordinar& course of 5usiness, whether for co**ercial or residential use, when

the %ross annual receipts e:ceed (00,000.00, is su5)ect to 109 !AT. "otwithstandin% the*andator& pa&*ent of the 109 !AT 5& the lessor, the actual shiftin% of the said ta: 5urdenupon the lessee is clearl& optional on the part of the lessor, under the ter*s of the statute.The word F*a&F in the statute, %enerall& speain%, denotes that it is director& in nature. 8t is%enerall& per*issive onl& and operates to confer discretion. 8n this case, despite the

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applica5ilit& of the rule under ;ec. // of the "8C, as a*ended 5& .A. 771, %rantin% thelessor the option to pass on to the lessee the 109 !AT, to e:istin% contracts of lease as of

anuar& 1, 1//, the ori%inal lessor, onciano . Al*eda did not char%e the lessee-appelleethe 109 !AT nor provided for its additional i*position when the& renewed the contract oflease in

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8nflation has 5een defined as the sharp increase of *one& or credit, or 5oth, without acorrespondin% increase in 5usiness transaction. There is inflation when there is an increase inthe volu*e of *one& and credit relative to availa5le %oods, resultin% in a su5stantial andcontinuin% rise in the %eneral price level.238n a nu*5er of cases, this Court had provided adiscourse on what constitutes e:traordinar& inflation, thus

J+K:traordinar& inflation e:ists when there is a decrease or increase in the purchasin% power

of the hilippine currenc& which is unusual or 5e&ond the co**on fluctuation in the value ofsaid currenc&, and such increase or decrease could not have 5een reasona5l& foreseen orwas *anifestl& 5e&ond the conte*plation of the parties at the ti*e of the esta5lish*ent ofthe o5li%ation.2$

The factual circu*stances o5tainin% in the present case do not *ae out a case ofe:traordinar& inflation or devaluation as would )ustif& the application of Article 12(0 of the CivilCode. e would lie to stress that the erosion of the value of the hilippine peso in the pastthree or four decades, startin% in the *id-si:ties, is characteristic of *ost currencies. And whilethe Court *a& tae )udicial notice of the decline in the purchasin% power of the hilippine

currenc& in that span of ti*e, such downward trend of the peso cannot 5e considered as thee:traordinar& pheno*enon conte*plated 5& Article 12(0 of the Civil Code. urther*ore, a5sentan official pronounce*ent or declaration 5& co*petent authorities of the e:istence ofe:traordinar& inflation durin% a %iven period, the effects of e:traordinar& inflation are not to 5eapplied.2(

W*EREFORE, pre*ises considered, the petition is DENIED. The Decision of the Court ofAppeals in CA-G.. C! "o. 77#$, dated ;epte*5er 3, 2001, and its esolution dated"ove*5er 1/, 2001, are AFFIRMED.

SO ORDERED.

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