#14 PACULDO v CA GR NO. 123855 NOV. 20, 2000 By: GUZMAN Topic: EXTINGUISHMENT OF OBLIGATIONS; APPLICATION OF PAYMENT Petitioners: NEREO J PACULDO Respondents: COURT OF APPEALS AND BONIFACIO C. RE GALADO Ponente: PARDO, J RECIT-READY/SUMMARY: After judgment was rendered ordering the petitioner to vacate the leased wet market building and to pay back rentals, he paid the amount of P11,478,121.85 for security deposit and rentals but the respondent, without petitioner's consent, applied portions of the payment to his other obligations with the respondent. The petitioner filed a petition for review with the CA but the CA dismissed the petition finding that petitioner impliedly consented to respondent's application of payment to heavy equipment brought by petitioner from respondent. Petitioner submits that his silence is not consent but is in fact a rejection. Ruling in petitioner's favor, the Supreme Court held: that at the time petitioner made the payments, he made it clear to respondent that they were to be applied to his rental obligation on the wet market property; that there was no clear assent by petitioner to the change in the manner of application of payment; and that even if petitioner did not declare to which of his debts the payment is to be applied, the application made by respondent to pay the purchase price of equipment that was not yet due and demandable is contrary to the provisions of the law.
DOCTRINE: The right to specify which among his various obligations to the same creditor is to be satisfied first rests with the debtor, as provided by law. Under the law, if the debtor did not declare at the time he made the payment to which of his debts with the creditor the payment is to be applied, the law provided the guideline — no payment is to be made to a debt that is not yet due and the payment has to be applied first to the debt most onerous to the debtor. ISSUE
FACTS
For the first 5 yrs of the contract beginning Dec. 27, 1990, petitioner would pay monthly rental of P450k payable within the first 5 days of each month at respondent’s office, with a 2% penalty for every month of late payment. Petitioner also leased 11 other properties from respondent and purchased 8 units of heavy equipment and v ehicles in the amount of P1.02m. Upon petitioner’s failure to pay P361,895.5 in rental for the month of May 1992, and the monthly rental of P450k for the months of June and July 1992. On July 6, 1992, respondent sent a demand letter to petitioner o demanding payment of the back rentals and if no payment was made within 15 days from receipt of the letter, it will cancel the lease contract. Then another demand letter on July 17, 1992. Without the knowledge of the petitioner, respondent mortgaged the land subject of the lease contract, including the improvements. MTC: rendered a decision in favor of respondent. (1) Ordering the petitioner to vacate the leased land. o (2) to pay the sum of P527,119.28 for the unpaid monthly o rentals. (3) To pay the sum of P450k a month plus 2%. o (4) To pay the Atty’s fee, sum of P5m. o (5) To pay the costs of suit. o RTC: Affirmed the decision of MTC. Issued a writ of execution, ordering the petitioner to vacate the o subject premises voluntarily. CA: Dismissed the petition for lack of merit. Paculdo impliedly consented to Regalado’s application of payment to his other obligat ions. Petitioner alleged that he paid P11,478,121.85 as security o deposit & rentals on the wet market building. Portions of the amount paid was applied by Regalado w/o his o consent, to his other obligations. Vouchers & receipts indicated that the o
The case is a petition for certiorari, seeking to set aside the decision of t he CA, which affirmed the RTC ordering the ejectment of petitioner from the property. On Dec. 27, 1990, petitioner and respondent entered into a contract to lease over a 16,478 sqm parcel of land with a we market building. Contract was for 25 yrs, commencing on Jan. 1, 1991 and ending o on Dec. 31, 2015.
WON Paculdo was truly in arrears in the payment of rentals on the subject property at the time of th e filing of the complaint for ejectment.
HELD/RATIO NO. PETITION GRANTED. CA DECISION REVERSED AND SET ASIDE. Based on MTC & RTC findings, Paculdo paid a total of o P10,949,447.18 to Regalado as of July 2, 1992. And if this will be
o
o
applied solely to the rentals on the Fairview wet market, there would even be an excess payment of P1,049,447.18. (see p.139 for computation) Paculdo goes back to the July 15, 1991 letter. He emphasized that applying the payment to the purchased equipment was crucial because it was equivalent to 2 mos rental & was the basis for the ejectment case. He further claims that his silence/lack of protest did not mean consent; rather, it was a rejection. CC Art. 1252 & 1254: Debtor has the rt to specify w/c among his various obligations to the same creditor is to be satisfied at the time of making the payment. If the debtor did not exercise this rt, law provides that no payment is to be made to a debt that is not yet due (CC Art. 1252) and payment has to be applied first to the debt most onerous to the debtor (CC Art. 1254). Paculdo made it clear that payments were to be applied to his rental obligations on the wet market property. Regalado claims that Paculdo assented to the application as inferred from his silence. A big chunk of the amount paid went into the satisfaction of an obligation w/c was not yet due & demandable (payment of heavy equipment). Application was contrary to law. Paculdo’s silence was not tantamount to consent. Consent must be clear & definite. There was no meeting of the minds. Though there was an offer by Regalado, there was no acceptance by Paculdo. Even if Paculdo did not exercise his rt to choose the obligation to be satisfied first & such rt was transferred to Regalado, latter’s choice is still subject to former’s consent. Lease over the Fairview property is the most onerous among all the obligations of petitioner to respondent. It’s a going-concern (?) and investments on the improvements were made amounting to P35M. Paculdo was bound to lose more if lease would be rescinded than if the contract of sale of heavy equipment would not proceed.
