TEDDY G. PABUGAIS, petitioner, vs. DAVE P. SAHIJWANI, respondent.

FACTS
Pursuant to an "Agreement And Undertaking" dated December 3, 1993, petitioner Teddy G. Pabugais, in
consideration of the amount of Fifteen Million Four Hundred Eighty Seven Thousand Five Hundred Pesos
(P15,487,500.00), agreed to sell to respondent Dave P. Sahijwani a lot containing 1,239 square meters located
at Jacaranda Street, North Forbes Park, Makati, Metro Manila. Respondent paid petitioner the amount of
P600,000.00 as option/reservation fee and the balance of P14,887,500.00 to be paid within 60 days from the
execution of the contract, simultaneous with delivery of the owner's duplicate Transfer Certificate of Title in
respondent's name the Deed of Absolute Sale; the Certificate of Non-Tax Delinquency on real estate taxes and
Clearance on Payment of Association Dues. Thus
5.
DEFAULT In case the FIRST PARTY [herein respondent] fails to pay the balance of the
purchase price within the stipulated due date, the sum of P600,000.00 shall be deemed
forfeited, on the other hand, should the SECOND PARTY [herein petitioner] fail to deliver within
the stipulated period the documents hereby undertaken, the SECOND PARTY shall return the
sum of P600,000.00 with interest at 18% per annum.
Petitioner failed to deliver the required documents.
In compliance with their agreement, he returned to respondent the latter's P600,000.00 option/reservation fee
by way of Far East Bank & Trust Company Check which was, however, dishonored.
What transpired thereafter is disputed by both parties.
Petitioner claimed*that he twice tendered to respondent, through his counsel, the amount of P672,900.00 (representing the
P600,000.00 option/reservation fee plus 18% interest per annum computed from December 3, 1993 to
August 3, 1994) in the form of Far East Bank & Trust Company Manager's Check No. 088498, dated
August 3, 1994, but said counsel refused to accept the same. His first attempt to tender payment was
allegedly made on August 3, 1994 through his messenger; while the second one was on August 8, 1994,
when he sent via DHL Worldwide Services, the manager's check attached to a letter dated August 5,
1994. On August 11, 1994, petitioner wrote a letter to respondent saying that he is consigning the amount
tendered with the Regional Trial Court of Makati City. On August 15, 1994, petitioner filed a complaint for
consignation.
Respondent's counsel*on the other hand, admitted that his office received petitioner's letter dated August 5, 1994, but claimed
that no check was appended thereto. He averred that there was no valid tender of payment because no
check was tendered and the computation of the amount to be tendered was insufficient, because
petitioner verbally promised to pay 3% monthly interest and 25% attorney's fees as penalty for default, in
addition to the interest of 18% per annum on the P600,000.00 option/reservation fee.
Trial court rendered a decision
declaring the consignation invalid for failure to prove that petitioner tendered payment to respondent
and that the latter refused to receive the same. It further held that even assuming that respondent
refused the tender, the same is justified because the manager's check allegedly offered by petitioner
was not legal tender, hence, there was no valid tender of payment. The trial court ordered petitioner to
pay respondent the amount of P600,000.00 with interest of 18% per annum from December 3, 1993
until fully paid, plus moral damages and attorney's fees.
Meanwhile, his counsel, Atty. Joven, died and she was substituted by Atty. De Guzman, Jr.,
*Petitioner executed a "Deed of Assignments" assigning in favor of Atty. De Guzman, Jr., part of
the P672,900.00 consigned with the trial court as partial payment of the latter's attorney's fees.
*Petitioner filed an Ex Parte Motion to Withdraw Consigned Money.
*Followed by a "Motion to Intervene" filed by Atty. De Guzman, Jr., praying that the amount
consigned be released to him by virtue of the Deed of Assignment.
The Court of Appeals
Petitioner's motion to withdraw the amount consigned was denied and the decision of the trial court
was affirmed with modification as to the amount of moral damages and attorney's fees.
On a motion for reconsideration, the Court of Appeals declared the consignation as valid.

It held that the validity of the consignation had the effect of extinguishing petitioner's obligation to
return the option/reservation fee to respondent. Hence, petitioner can no longer withdraw the same.

ISSUE:
Whether or not there;
(1) Was there a valid consignation?
(2) Can petitioner withdraw the amount consigned as a matter of right?

RULING:
1) YES, there was a valid tender of payment in an amount sufficient to extinguish the obligation, the
consignation is valid.
Consignation is the act of depositing the thing due with the court or judicial authorities whenever the creditor
cannot accept or refuses to accept payment and it generally requires a prior tender of payment. In order that
consignation may be effective, the debtor must show that: (1) there was a debt due; (2) the consignation of the
obligation had been made because the creditor to whom tender of payment was made refused to accept it, or
because he was absent or incapacitated, or because several persons claimed to be entitled to receive the amount
due or because the title to the obligation has been lost; (3) previous notice of the consignation had been given to
the person interested in the performance of the obligation; (4) the amount due was placed at the disposal of the
court; and (5) after the consignation had been made the person interested was notified thereof. Failure in any of
these requirements is enough ground to render a consignation ineffective.
The issues to be resolved in the instant case concerns one of the important requisites of consignation,
i.e., the existence of a valid tender of payment.
As testified by the counsel for respondent, the reasons why his client did not accept petitioner's tender of
payment were (1) the check mentioned in the August 5, 1994 letter of petitioner manifesting that he is
settling the obligation was not attached to the said letter; and (2) the amount tendered was insufficient to cover
the obligation.
It is obvious that the reason for respondent's non-acceptance of the tender of payment was the alleged
insufficiency thereof and not because the said check was not tendered to respondent, or because it was in the
form of manager's check. While it is true that in general, a manager's check is not legal tender, the creditor has
the option of refusing or accepting it. Payment in check by the debtor may be acceptable as valid, if no prompt
objection to said payment is made. Consequently, petitioner's tender of payment in the form of manager's check
is valid.
Anent the sufficiency of the amount tendered, it appears that only the interest of 18% per annum on the
P600,000.00 option/reservation fee stated in the default clause of the "Agreement And Undertaking" was agreed
upon by the parties, thus
5.
DEFAULT In case the FIRST PARTY [herein respondent] fails to pay the balance of the purchase
price within the stipulated due date, the sum of P600,000.00 shall be deemed forfeited, on the other hand,
should the SECOND PARTY [herein petitioner] fail to deliver within the stipulated period the documents hereby
undertaken, the SECOND PARTY shall return the sum of P600,000.00 with interest at 18% per annum. 26
The manager's check in the amount of P672,900.00 (representing the P600,000.00 option/reservation fee plus
18% interest per annum computed from December 3, 1993 to August 3, 1994) which was tendered but refused
by respondent, and thereafter consigned with the court, was enough to satisfy the obligation.
There being a valid tender of payment in an amount sufficient to extinguish the obligation, the
consignation is valid.

2. NO. As regards petitioner's right to withdraw the amount consigned, reliance on Article 1260 of the
Civil Code is misplaced. The said Article provides
Art. 1260. Once the consignation has been duly made, the debtor may ask the judge to order
the cancellation of the obligation.
Before the creditor has accepted the consignation, or before a judicial confirmation that the consignation has
been properly made, the debtor may withdraw the thing or the sum deposited, allowing the obligation to remain
in force.

The amount consigned with the trial court can no longer be withdrawn by petitioner because respondent's
prayer in his answer that the amount consigned be awarded to him is equivalent to an acceptance of the
consignation, which has the effect of extinguishing petitioner's obligation.
Moreover, petitioner failed to manifest his intention to comply with the "Agreement And Undertaking" by
delivering the necessary documents and the lot subject of the sale to respondent in exchange for the amount
deposited. Withdrawal of the money consigned would enrich petitioner and unjustly prejudice respondent.
The withdrawal of the amount deposited in order to pay attorney's fees to petitioner's counsel, Atty. De Guzman,
Jr., violates Article 1491 of the Civil Code which forbids lawyers from acquiring by assignment, property and
rights which are the object of any litigation in which they may take part by virtue of their profession.
The assailed transaction falls within the prohibition because the Deed assigning the amount of P672,900.00 to
Atty. De Guzman, Jr., as part of his attorney's fees was executed during the pendency of this case with the
Court of Appeals. In his Motion to Intervene, Atty. De Guzman, Jr., not only asserted ownership over said
amount, but likewise prayed that the same be released to him. That petitioner knowingly and voluntarily
assigned the subject amount to his counsel did not remove their agreement within the ambit of the prohibitory
provisions. To grant the withdrawal would be to sanction a void contract.

[G.R. No. 157836. May 26, 2005.]

NOEMI M. CORONEL, petitioner, vs. ENCARNACION C. CAPATI, respondent.

FACTS
Petitioner contracted two loans from respondent on September 4, 1992 and October 25, 1992. The first
amounted to P121,000.00 payable on or before February 4, 1993 and the second amounted to P363,000.00
payable on or before March 25, 1993.
In return, petitioner issued respondent two Metrobank checks: The two loans are embodied in two
handwritten instruments.
Petitioner failed to pay her loans upon maturity despite repeated demands from respondent.
The two checks she issued were dishonored when presented for payment on February 16, 1993 and April
7, 1993.
Respondent filed a complaint for sum of money and damages with attachment against petitioner before
the Regional Trial Court of Guagua, Pampanga.
On April 30, 1997, the trial court ruled in favor of respondent, ordering petitioner to pay
The Court of Appeals affirmed the ruling of the trial court.
Petitioner's Motion for Reconsideration was denied.
Petitioner denied contracting the two loans in the amounts of P121,000.00 and P363,000.00 from respondent.
1) She alleged that the Metrobank checks representing the foregoing amounts were two of several
checks she issued in favor of respondent for a loan amounting to P1.101 million which she has fully
paid. She claimed that despite full payment, respondent still deposited the two checks because of a
dispute between them arising from respondent's demand for exorbitant and additional interest on the
P1.101 million loan.
2) Petitioner alleged further that there were instances when respondent asked her to affix her signature
on blank sheets of paper thereby implying that the contents of Exhibits "A-1" and "B-1," containing the
loan agreements were written by respondent on sheets of paper signed in advance by petitioner.

ISSUE:
Whether or not petitioner has sufficiently proven that payment has been made?

RULING
We find petitioner's contentions unmeritorious.
The existence of petitioner's obligation is supported by documentary evidence. Exhibits "A-1" and "B-1" are
written instruments containing the loan agreements. The signature of petitioner as debtor appears in both
instruments. Petitioner does not deny she owns these signatures. These exhibits are the best evidence of the
subject obligation. Petitioner's contrary evidence has no leg to stand on. At first, she claims that her total loan
obligation amounted to P1.101 million, the amount of consideration stated in the document entitled "Pacto de
Retro Sale." At the end, however, she came up with a different computation of her obligation as totaling P1.156
million, without any document to support her allegation. The discrepancy between the two computations is not
explained. The age old rule of evidence is that oral testimony as to a certain fact, depending as it does on
human memory that is most often than not, momentary and fleeting, is not as reliable as written or
documentary evidence.
We are, thus, more convinced that Exhibits "A-1" and "B-1" express the true agreement of the parties,
contrary to the oral testimony of petitioner that those amounts are part of a loan amounting to P1.101
million which she has fully paid. The latter appears to be another loan, distinct from the one involved in the
case at bar. Incidentally, the pacto de retro sale referred to by petitioner, is the subject matter of another
litigation between the same parties pending with the same court.
Petitioner tries to escape responsibility by testifying that it has been respondent's practice to ask her to sign
blank sheets of paper. She wants the court to believe that she did not know of the contents of Exhibits "A-1"
and "B-1," and that these documentary evidence could have been one of those blank sheets of paper that

respondent has asked her to sign. We find this tale unacceptable, absent any form of duress or intimidation
from respondent, which petitioner does not even allege.
Time and again, we have held that one who is of age and a businesswise is presumed to have acted with due
care and to have signed the documents in question with full knowledge of its contents and consequences.
Petitioner is not one ignorant, illiterate person who could be easily duped into signing blank sheets of papers.
She has borrowed large sums of money from respondent. In fact, petitioner's total loan obligation to respondent
has reached over millions of pesos. Petitioner has transacted business with respondent several times. Among
others, they include transactions involving a pacto de retro sale which is the subject of another pending case
between the parties and loans amounting to P2M and P1M. As the lower court correctly pointed out, petitioner
apparently knows how to take care of her business dealings.
Interestingly, in the case of the two checks subject matter of this litigation, petitioner did not even
demand their return from respondent, notwithstanding her claim that she has paid in full her loan
obligation. All she presented was a letter ordering Metrobank Guagua to stop payment of the checks
without proof that it has been received by, nor actually sent to Metrobank Guagua.
Again, we reiterate the rule that when the existence of a debt is fully established by the evidence contained in
the record, the burden of proving that it has been extinguished by payment devolves upon the debtor who offers
such defense to the claim of the creditor. Even where respondent-creditor who was plaintiff in the lower court,
alleges non-payment, the general rule is that the onus rests on the petitioner-debtor who was defendant in the
lower court, to prove payment, rather than on the plaintiff-creditor to prove non-payment. The debtor has the
burden of showing with legal certainty that the obligation has been discharged by payment. This, petitioner
failed to do.
IN VIEW THEREOF, petitioner's appeal is DENIED.

[G.R. No. 172825. October 11, 2012.]

SPOUSES MINIANO B. DELA CRUZ and LETA L. DELA CRUZ, petitioners, vs. ANA MARIE CONCEPCION,
respondent.

FACTS
On March 25, 1996, petitioners (as vendors) entered into a Contract to Sell 3 with respondent (as vendee)
involving a house and lot in Cypress St., Phase I, Town and Country Executive Village, Antipolo City for a
consideration of P2,000,000.00.
Respondent made the following payments (1) P500,000.00 by way of downpayment; (2) P500,000.00 on May
30, 1996; (3) P500,000.00 paid on January 22, 1997; and (4) P500,000.00 bounced check dated June 30, 1997
which was subsequently replaced by another check of the same amount, dated July 7, 1997. Respondent was,
therefore, able to pay a total of P2,000,000.00.
Before respondent issued the P500,000.00 replacement check, she told petitioners that based on the
computation of her accountant as of July 6, 1997, her unpaid obligation which includes interests and penalties
was only P200,000.00.
Petitioners agreed with respondent and said "if P200,000.00 is the correct balance, it is okay with us."
Meanwhile, the title to the property was transferred to respondent. Petitioners later reminded respondent to pay
P209,000.00 within three months.
Several months later, petitioners made further demands stating the supposed correct computation of
respondent's liabilities. Despite repeated demands, petitioners failed to collect the amounts they claimed from
respondent. Hence, the Complaint for Sum of Money with Damages 10 filed with the Regional Trial Court (RTC)
of Antipolo, Rizal.
Respondent claimed that her unpaid obligation to petitioners is only P200,000.00 as earlier confirmed by
petitioners and not P487,384.15 as later alleged in the complaint.
During the presentation of the parties' evidence, in addition to documents showing the statement of her paid
obligations, respondent presented a receipt purportedly indicating payment of the remaining balance of
P200,000.00 to Adoracion Losloso (Losloso) who allegedly received the same on behalf of petitioners.
RTC favored respondent
The RTC noted that the evidence formally offered by petitioners have not actually been marked as none
of the markings were recorded. Thus, it found no basis to grant their claims, especially since the
amount claimed in the complaint is different from that testified to. The court, on the other hand,
granted respondent's counterclaim.
CA affirmed the decision with modification by deleting the award of moral damages and attorney's fees
in favor of respondent.

ISSUE:
1) Whether or not the RTC cannot be faulted for admitting respondent's testimonial and documentary evidence
to prove payment even if no motion was filed and no amendment of the pleading has been ordered,
2) Whether or not the court erred in dismissing the complaint on the ground that the defendant fully paid the
claims of plaintiffs based on the alleged receipt of payment by LOSLOSO from ANA MARIE CONCEPCION
MAGLASANG which has nothing to do with the judicially admitted obligation of appellee.

RULING:
1) NO.. Since there was an implied consent on the part of petitioners to try the issue of payment, even
if no motion was filed and no amendment of the pleading has been ordered, the RTC cannot be faulted
for admitting respondent's testimonial and documentary evidence to prove payment.
It is undisputed that the parties entered into a contract to sell a house and lot for a total consideration of P2
million. Considering that the property was payable in installment, they likewise agreed on the payment of
interest as well as penalty in case of default. It is likewise settled that respondent was able to pay the total
purchase price of P2 million ahead of the agreed term. Afterwhich, they agreed on the remaining balance by way
of interest and penalties which is P200,000.00. Considering that the term of payment was not strictly followed

and the purchase price had already been fully paid by respondent, the latter presented to petitioners her
computation of her liabilities for interests and penalties which was agreed to by petitioners: Petitioners also
manifested their conformity to the statement of account prepared by respondent.
In paragraph (9) of petitioners' Complaint, they stated that:
9)
That the Plaintiffs answered the Defendant as follows: "if P200,000 is the correct balance, it is okay
with us." . . . .
But in paragraph (17) thereof, petitioners claimed that defendant's outstanding liability as of November 6, 1997
was P487,384.15. Different amounts, however, were claimed in their demand letter and in their testimony in
court.
With the foregoing factual antecedents, petitioners cannot be permitted to assert a different
computation of the correct amount of respondent's liability.
Both the RTC and the CA concluded that respondent had already paid the remaining balance of P200,000.00.
Petitioners now assail this, insisting that the court should have maintained the judicial admissions of
respondent in her Answer with Compulsory Counterclaim, especially as to their agreed stipulations on interests
and penalties as well as the existence of outstanding obligations.
It is, thus, necessary to discuss the effect of failure of respondent to plead payment of its obligations.
Section 1, Rule 9 of the Rules of Court states that "defenses and objections not pleaded either in a motion to
dismiss or in the answer are deemed waived." Hence, respondent should have been barred from raising the
defense of payment of the unpaid P200,000.00. However, Section 5, Rule 10 of the Rules of Court allows the
amendment to conform to or authorize presentation of evidence, to wit:
Section 5.
Amendment to conform to or authorize presentation of evidence. When issues not
raised by the pleadings are tried with the express or implied consent of the parties, they shall be
treated in all respects as if they had been raised in the pleadings. Such amendment of the pleadings as
may be necessary to cause them to conform to the evidence and to raise these issues may be made
upon motion of any party at any time, even after judgment; but failure to amend does not affect the
result of the trial of these issues. If evidence is objected to at the trial on the ground that it is not within
the issues made by the pleadings, the court may allow the pleadings to be amended and shall do so
with liberality if the presentation of the merits of the action and the ends of substantial justice will be
subserved thereby. The court may grant a continuance to enable the amendment to be made.
**Thus, while respondent judicially admitted in her Answer that she only paid P2 million and that she
still owed petitioners P200,000.00, respondent claimed later and, in fact, submitted an evidence to show
that she already paid the whole amount of her unpaid obligation.
It is noteworthy that when respondent presented the evidence of payment, petitioners did not object
thereto. When the receipt was formally offered as evidence, petitioners did not manifest, their objection
to the admissibility of said document on the ground that payment was not an issue. Apparently,
petitioners only denied receipt of said payment and assailed the authority of Losloso to receive payment.
Since there was an implied consent on the part of petitioners to try the issue of payment, even if no
motion was filed and no amendment of the pleading has been ordered, the RTC cannot be faulted for
admitting respondent's testimonial and documentary evidence to prove payment.

2) NO.
Respondent's obligation consists of payment of a sum of money. In order to extinguish said obligation, payment
should be made to the proper person as set forth in Article 1240 of the Civil Code, to wit
Article 1240.
Payment shall be made to the person in whose favor the obligation has been constituted, or his
successor in interest, or any person authorized to receive it. (Emphasis supplied)
The Court explained in Cambroon v. City of Butuan, 36 cited in Republic v. De Guzman, 37 to whom payment
should be made in order to extinguish an obligation:
Payment made by the debtor to the person of the creditor or to one authorized by him or by the law to receive it
extinguishes the obligation. When payment is made to the wrong party, however, the obligation is not
extinguished as to the creditor who is without fault or negligence even if the debtor acted in utmost good faith
and by mistake as to the person of the creditor or through error induced by fraud of a third person.
In general, a payment in order to be effective to discharge an obligation, must be made to the proper person.
Thus, payment must be made to the obligee himself or to an agent having authority, express or implied, to
receive the particular payment. Payment made to one having apparent authority to receive the money will, as a

rule, be treated as though actual authority had been given for its receipt. Likewise, if payment is made to one
who by law is authorized to act for the creditor, it will work a discharge. The receipt of money due on a
judgment by an officer authorized by law to accept it will, therefore, satisfy the debt. 38
Admittedly, payment of the remaining balance of P200,000.00 was not made to the creditors
themselves. Rather, it was allegedly made to a certain Losloso. Respondent claims that Losloso was the
authorized agent of petitioners, but the latter dispute it.
Losloso's authority to receive payment was embodied in petitioners' letter addressed to respondent, dated
August 7, 1997, where they informed respondent of the amounts they advanced for the payment of the 1997
real estate taxes. In said letter, petitioners reminded respondent of her remaining balance, together with the
amount of taxes paid. Taking into consideration the busy schedule of respondent, petitioners advised the latter
to leave the payment to a certain "Dori" who admittedly is Losloso, or to her trusted helper. This is an express
authority given to Losloso to receive payment. Moreover, as correctly held by the CA:
Furthermore, that Adoracion Losloso was indeed an agent of the appellant spouses is borne out by the following
admissions of plaintiff-appellant Atty. Miniano dela Cruz, to wit:
Q:
You would agree with me that you have authorized this Doiry Losloso to receive payment of whatever
balance is due you coming from Ana Marie Concepcion, that is correct?
A:

In one or two times but not total authority, sir.

Q:

Yes, but you have authorized her to receive payment?

A:

One or two times, yes . . .

Thus, as shown in the receipt signed by petitioners' agent and pursuant to the authority granted by petitioners
to Losloso, payment made to the latter is deemed payment to petitioners. We find no reason to depart from the
RTC and the CA conclusion that payment had already been made and that it extinguished respondent's
obligations.