G.R. No.

L-44349 October 29, 1976

JESUS V. OCCENA and EFIGENIA C. OCCENA, petitioners,

vs.
HON. RAMON V. JABSON, Presiding Judge of the Court Of First Instance of Rizal, Branch XXVI; COURT OF
APPEALS and TROPICAL HOMES, INC., respondents.

Occena Law Office for petitioners.

Serrano, Diokno & Serrano for respondents.

TEEHANKEE, J.:

The Court reverses the Court of Appeals appealed resolution. The Civil Code authorizes the release of an obligor when the
service has become so difficult as to be manifestly beyond the contemplation of the parties but does not authorize the
courts to modify or revise the subdivision contract between the parties or fix a different sharing ratio from that
contractually stipulated with the force of law between the parties. Private respondent's complaint for modification of the
contract manifestly has no basis in law and must therefore be dismissed for failure to state a cause of action. On February
25, 1975 private respondent Tropical Homes, Inc. filed a complaint for modification of the terms and conditions of its
subdivision contract with petitioners (landowners of a 55,330 square meter parcel of land in Davao City), making the
following allegations:

"That due to the increase in price of oil and its derivatives and the concomitant worldwide spiralling of prices, which are
not within the control of plaintiff, of all commodities including basis raw materials required for such development work,
the cost of development has risen to levels which are unanticipated, unimagined and not within the remotest
contemplation of the parties at the time said agreement was entered into and to such a degree that the conditions and
factors which formed the original basis of said contract, Annex 'A', have been totally changed; 'That further performance
by the plaintiff under the contract.

That further performance by the plaintiff under the contract,Annex 'S', will result in situation where
defendants would be unustly enriched at the expense of the plaintiff; will cause an inequitous distribution
of proceeds from the sales of subdivided lots in manifest actually result in the unjust and intolerable
exposure of plaintiff to implacable losses, all such situations resulting in an unconscionable, unjust and
immoral situation contrary to and in violation of the primordial concepts of good faith, fairness and equity
which should pervade all human relations.

Under the subdivision contract, respondent "guaranteed (petitioners as landowners) as the latter's fixed and sole share and
participation an amount equivalent to forty (40%) percent of all cash receifpts fromthe sale of the subdivision lots"

Respondent pray of the Rizal court of first instance that "after due trial, this Honorable Court render judgment modifying
the terms and conditions of the contract ... by fixing the proer shares that shouls pertain to the herein parties out of the
gross proceeds from the sales of subdivided lots of subjects subdivision".

Petitioners moved to dismiss the complaint principally for lack of cause of action, and upon denial thereof and of
reconsideration by the lower court elevated the matter on certiorari to respondent Court of Appeals.

Respondent court in its questioned resolution of June 28, 1976 set aside the preliminary injunction previously issued by it
and dimissed petition on the ground that under Article 1267 of the Civil Code which provides that

ART. 1267. When the service has become so difficult as to be manifestly beyond the contemplation of the
parties, the obligor may also be released therefrom, in whole or in part. 1

... a positive right is created in favor of the obligor to be released from the performance of an obligation in
full or in part when its performance 'has become so difficult as to be manifestly beyond the contemplation
of the parties.

Hence, the petition at abar wherein petitioners insist that the worldwide increase inprices cited by respondent does not
constitute a sufficient casue of action for modification of the subdivision contrct. After receipt of respondent's comment,
the Court in its Resolution of September 13, 1976 resolved to treat the petition as special civil actionand declared the case
submitted for decision.

The petition must be granted.

While respondent court correctly cited in its decision the Code Commission's report giving the rationale for Article 1267
of the Civil Code, to wit;

The general rule is that impossibility of performance releases the obligor. However, it is submitted that
when the service has become so difficult as to be manifestly beyond the contemplation of the parties, the
court should be authorized to release the obligor in whole or in part. The intention of the parties should
govern and if it appears that the service turns out to be so difficult as have been beyond their
contemplation, it would be doing violence to that intention to hold the obligor still responsible. ... 2

It misapplied the same to respondent's complaint.

If respondent's complaint were to be released from having to comply with the subdivision contract, assuming it could
show at the trial that the service undertaken contractually by it had "become so difficult as to be manifestly beyond the
contemplation of the parties", then respondent court's upholding of respondet's complaint and dismissal of the petition
would be justifiable under the cited codal article. Without said article, respondent would remain bound by its contract
under the theretofore prevailing doctrine that performance therewith is ot excused "by the fact that the contract turns out
to be hard and improvident, unprofitable, or unespectedly burdensome", 3 since in case a party desires to be excuse from
performance in the event of such contingencies arising, it is his duty to provide threfor in the contract.

But respondent's complaint seeks not release from the subdivision contract but that the court "render judgment I
modifying the terms and Conditions of the Contract by fixing the proper shares that should pertain to the herein parties out
of the gross proceed., from the sales of subdivided lots of subject subdivision". The cited article does not grant the courts
this authority to remake, modify or revise the contract or to fix the division of shares between the parties as contractually
stipulated with the force of law between the parties, so as to substitute its own terms for those covenanted by the parties
themselves. Respondent's complaint for modification of contract manifestly has no basis in law and therefore states no
cause of action. Under the particular allegations of respondent's complaint and the circumstances therein averred, the
courts cannot even in equity grant the relief sought.

A final procedural note. Respondent cites the general rule that an erroneous order denying a motion to dismiss is
interlocutory and should not be corrected by certiorari but by appeal in due course. This case however manifestly falls
within the recognized exception that certiorari will lie when appeal would not prove to be a speedy and adequate remedy.'
Where the remedy of appeal would not, as in this case, promptly relieve petitioners from the injurious effects of the
patently erroneous order maintaining respondent's baseless action and compelling petitioners needlessly to go through a
protracted trial and clogging the court dockets by one more futile case, certiorari will issue as the plain, speedy and
adequate remedy of an aggrieved party.

ACCORDINGLY, the resolution of respondent appellate court is reversed and the petition for certiorari is granted and
private respondent's complaint in the lower court is ordered dismissed for failure to state a sufficient cause of action. With
costs in all instances against private respondent.

G.R. No. L-23546 August 29, 1974

LAGUNA TAYABAS BUS COMPANY and BATANGAS TRANSPORTATION COMPANY, petitioners,

vs.
FRANCISCO C. MANABAT, as assignee of Bian Transportation Company, Insolvent, respondent.

Domingo E. de Lara for petitioners.

M. A. Concordia & V.A. Guevarra for respondent.

MAKASIAR, J.:p

This is an appeal by certiorari from a judgment of the Court of Appeals dated August 31, 1964, which WE AFFIRM.

The undisputed facts are recounted by the Court of Appeals through then Associate Justice Salvador Esguerra thus:

On January 20, 1956, a contract was executed whereby the Bian Transportation Company leased to the
Laguna-Tayabas Bus Company at a monthly rental of P2,500.00 its certificates of public convenience
over the lines known as Manila-Bian, Manila-Canlubang and Sta. Rosa-Manila, and to the Batangas
Transportation Company its certificate of public convenience over the line known as Manila-Batangas
Wharf, together with one "International" truck, for a period of five years, renewable for another similar
period, to commence from the approval of the lease contract by the Public Service Commission. On the
same date the Public Service Commission provisionally approved the lease contract on condition that the
lessees should operate on the leased lines in accordance with the prescribed time schedule and that such
 approval was subject to modification or cancellation and to whatever decision that in due time might be
rendered in the case.

Sometime after the execution of the lease contract, the plaintiff Bian Transportation Company was
declared insolvent in Special Proceedings No. B-30 of the Court of First Instance of Laguna, and
Francisco C. Manabat was appointed as its assignee. From time to time, the defendants paid the lease
rentals up to December, 1957, with the exception of the rental for August 1957, from which there was
deducted the sum of P1,836.92 without the consent of the plaintiff. This deduction was based on the
ground that the employees of the defendants on the leased lines went on strike for 6 days in June and
another 6 days in July, 1957, and caused a loss of P500 for each strike, or a total of P1,000.00; and that in
Civil Case No. 696 of the Court of First Instance of Batangas, Branch II, judgment was rendered in favor
of defendant Batangas Transportation Company against the Bian Transportation Company for the sum of
P836.92. The assignee of the plaintiff objected to such deduction, claiming that the contract of lease
would be suspended only if the defendants could not operate the leased lines due to the action of the
officers, employees or laborers of the lessor but not of the lessees, and that the deduction of P836.92
amounted to a fraudulent preference in the insolvency proceedings as whatever judgment might have
been rendered in favor of any of the lessees should have been filed as a claim in said proceedings. The
defendants neither refunded the deductions nor paid the rentals beginning January, 1958, notwithstanding
demands therefor made from time to time. At first, the defendants assured the plaintiff that the lease
rentals would be paid, although it might be delayed, but in the end they failed to comply with their
promise.

On February 18, 1958, the Batangas Transportation Company and Laguna-Tayabas Bus Company
separately filed with the Public Service Commission a petition for authority to suspend the operation on
the lines covered by the certificates of public convenience leased to each of them by the Bian
Transportation Company. The defendants alleged as reasons the reduction in the amount of dollars
allowed by the Monetary Board of the Central Bank of the Philippines for the purchase of spare parts
needed in the operation of their trucks, the alleged difficulty encountered in securing said parts, and their
procurement at exorbitant costs, thus rendering the operation of the leased lines prohibitive. The
defendants further alleged that the high cost of operation, coupled with the lack of passenger traffic on the
leased lines resulted in financial losses. For these reasons they asked permission to suspend the operation
of the leased lines until such time as the operating expenses were restored to normal levels so as to allow
the lessees to realize a reasonable margin of profit from their operation.

Plaintiff's assignee opposed the petition on the ground that the Public Service Commission had no
jurisdiction to grant the relief prayed for as it should involve the interpretation of the lease contract, which
act falls exclusively within the jurisdiction of the ordinary courts; that the petitioners had not asked for the
suspension of the operation of the lines covered by their own certificates of public convenience; that to
grant the petition would amount to an impairment of the obligation of contract; and that the defendants
have no legal personality to ask for suspension of the operation of the leased lines since they belonged
exclusively to the plaintiffwho is the grantee of the corresponding certificate of public convenience. Aside
from the assignee, the Commissioner of the Internal Revenue and other creditors of the Bian
Transportation Company, like the Standard Vacuum Oil Co. and Parsons Hardware Company, filed
oppositions to the petitions for suspension of operation.

On October 15, 1958, the Public Service Commission overruled all oppositions filed by the assignee and
other creditors of the insolvent, holding that upon its approval of the lease contract, the lessees acquired
the operating rights of the lessor and assumed full responsibility for compliance with all the terms and
conditions of the certificate of public convenience. The Public Service Commission further stated that the
petition to suspend operation did not pertain to any act of dominion or ownership but only to the use of
the certificate of public convenience which had been transferred by the plaintiff to the defendants, and
that the suspension prayed for was but an incident of the operation of the lines leased to the defendants.
The Public Service Commission further ruled that being a quasi-judicial body of limited jurisdiction, it
had no authority to interpret contracts, which function belongs to the exclusive domain of the ordinary
courts, but the petition did not call for interpretation of any provision of the lease contract as the authority
of the Public Service Commission to grant or deny the prayer therein was derived from its regulatory
power over the leased certificates of public convenience.

While proceedings before the Public Service Commission were thus going on, as a consequence of the continuing failure
of the lessees to fulfill their earlier promise to pay the accruing rentals on the leased certificates,

On May 19, 1959, plaintiff Bian Transportation Company represented by Francisco C. Manabat,
assignee, filed this action against defendants Laguna Tayabas Bus Company and Batangas Transportation
Company for the recovery of the sum of P42,500 representing the accrued rentals for the lease of the
certificates of public convenience of the former to the latter, corresponding to the period from January
1958, to May 1959, inclusive, plus the sum of P1,836.92 which was deducted by the defendants from the
rentals due for August, 1957, together with all subsequent rentals from June, 1959, that became due and
 payable; P5,000.00 for attorney's fees and such corrective and exemplary damages as the court may find
reasonable.

The defendants moved to dismiss the complaint for lack of jurisdiction over the subject matter of the
action, there being another case pending in the Public Service Commission between the same parties for
the same cause. ... (pp. 20-21, rec.; pp. 54-55, ROA).

The motion to dismiss was, however, denied. Meanwhile

The Public Service Commission delegated its Chief Attorney to receive evidence of the parties on the
petition of the herein defendants for authority to suspend operation on the lines leased to them by the
plaintiff. The defendants, the assignee of the plaintiff and other creditors of the insolvent presented
evidence before the Chief Attorney and the hearing was concluded on June 29, 1959. On October 20,
1959, the Public Service Commission issued an order the dispositive part of which reads as follows:

In view of the foregoing, the petitioners herein are authorized to suspend their operation
of the trips of the Bian Transportation Company between Batangas Piers-Manila, Bian-
Manila, Sta. Rosa-Manila and Canlubang-Manila authorized in the aforementioned cases
from the date of the filing of their petition on February 18, 1958, until December 31,
1959. (p. 25, rec.; pp. 60-61, ROA).

Going back to the Court of First Instance of Laguna

... The motion (to dismiss) having been denied, the defendants answered the complaint, alleging among
others, that the Public Service Commission authorized the suspension of operation over the leased lines
from February 18, 1950, up to December 31, 1959, and hence the lease contract should be deemed
suspended during that period; that plaintiff failed to place defendants in peaceful and adequate enjoyment
and possession of the things leased; that as a result of the plaintiff being declared insolvent the lease
contract lost further force and effect and payment of rentals thereafter was made under a mistake and
should be refunded to the defendants. (p. 21; rec.; p. 55, ROA).

The Court of Appeals proceeded to state that

After hearing in the court a quo and presentation by the parties herein of their respective memoranda, the
trial court on March 18, 1960, rendered judgment in favor of plaintiff, ordering the defendants jointly and
severally to pay to the former the sum of P65,000.00 for the rentals of the certificates of public
convenience corresponding to the period from January, 1958, to February, 1960, inclusive, including the
withheld amount of P836.92 from the rentals for August, 1957, plus the rentals that might become due
and payable beginning March, 1960, at the rate of P2,500.00 a month, with interest on the sums of
P42,500 and P836.92 at the rate of 6% per annum from the date of the filing of the complaint, with
interest on the subsequent rentals at the same rate beginning the first of the following month, plus the sum
of P3,000.00 as attorney's fees, and the cost of the suit. (pp. 25-26, rec.)

From the decision of the Court of First Instance, defendants appealed to the Court of Appeals, which affirmed the same in
toto in its decision dated August 31, 1964. Said decision was received by the appellants on September 7, 1964.

On September 21, 1964, appellants filed the present appeal, raising the following questions of law:

1. Considering that the Court of Appeals found that the Public Service Commission provisionally
approved the lease contract of January 20, 1956 between petitioners and Bian Transportation Company
upon the condition, amongothers, that such approval was subject to modification and cancellation and
towhatever decision that in due time might be rendered in the case, the Court ofAppeals erred in giving no
legal effect and significance whatever to the suspension of operations later granted by the Public Service
Commission after due hearing covering the lines leased to petitioners thereby nullifying, contrary to law
and decisions of this Honorable Court, the authority and powersconferred on the Public Service
Commission.

2. The Court of Appeals misapplied the statutory rules on interpreting contracts and erred in its
construction of the clauses in the lease agreement authorizing petitioners to suspend operation without the
corresponding liability for rentals during the period of suspension.

3. Contrary to various decisions of this Honorable Court relieving the lessee from the obligation to pay
rent where there is failure to use or enjoy the thing leased, the Court of Appeals erroneously required
petitioners to pay rentals, with interest, during the period of suspension of the lease from January, 1958 up
to the expiration of the agreement on January 20, 1961. (p. 7, rec.)
On October 12, 1964, the Supreme Court issued a resolution dismissing said petition "for lack of merit." (p. 43, rec.). Said
resolution was received by petitioners on October 16, 1964.

On October 31, 1964, the day the Court's resolution was to become final, petitioners filed a "Motion to Admit Amended
Petition and to Give Due Course Thereto." In said motion, petitioners explained

... The amendment includes an alternative ground relating to petitioners' prayer for the reduction of the
rentals payable by them. This alternative petition was not included in the original one as petitioners where
genuinely convinced that they should have been absolved from all liabilities whatever. However, in view
of the apparent position taken by this Honorable Court, as implied in its resolution on October 12, 1964,
notice of which was received on October 16, 1964, petitioners now squarely submit their alternative
position for consideration. There is decisional authority for the reduction of rentals payable (see Reyes v.
Caltex, 47 O.G. 1193, 1203-1204) (p. 44, rec).

The new question raised is presented thus:

xxx xxx xxx

IV

This Honorable Court is authorized to equitably reduce the rentals payableby the petitioners, should this
Honorable Court adopt the position of the Courtof Appeals and the lower court that petitioners have not
been releived from thepayment of rentals on the leased lines. (p. 7 Amended Petition for Certiorari,pp. 46,
52, rec.).

On November 5, 1964, the Supreme Court required respondents herein to file an answer to the amended
petition. On the same date, respondents filed, quite belatedly, an opposition to the motion of the
petitioners. Said opposition was later "noted" by the Court in its resolution dated December 1, 1964.

First, it must be pointed out that the first three questions of law raised by petitioners were already disposed of in Our
resolution dated October 12, 1964 dismissing the original petition for lack of merit, which in effect affirmed the appealed
decision of the Court of Appeals. Although, in their motion to admit amended petition dated October 31, 1964, petitioners
sought a reconsideration of the said resolution not only in the light of the fourth legal issue raised but also on the said first
three legal questions, the petitioners advanced no additional arguments nor cited new authorities in support of their stand
on the first three questions of law. They merely reproduced verbatim from their original petition their discussion on said
questions.

To the extent therefore that the motion filed by the petitioner seeks a reconsideration of our order of dismissal by
submitting anew, through the amended petition, the very same arguments already dismissed by this Court, the motion shall
be considered pro forma, (See Estrada v. Sto. Domingo, 28 SCRA 890, 905-906, 911) and hence is without merit.

Consequently, we limit the resolution of this case solely on the discussions on the last (fourth) question of law raised,
taking into consideration the discussion on the first three questions only insofar as they place the petitioners' discussion on
the fourth question in its proper context and perspective.

II

The undisguised object of petitioners' discussion on the fourth question of law raised is to justify their plea for a reduction
of the rentals on the ground that the subject matter of the lease was allegedly not used by them as a result of the
suspension of operations on the lines authorized by the Public Service Commission.

In support of said plea, petitioners invoke article 1680 of the Civil Code which grants lessees of rural lands a right to a
reduction of rentals whenever the harvest on the land leased is considerably damaged by an extraordinary fortuitous event.
Reliance was also placed by the petitioners on Our decision in Reyes v. Caltex (Phil.) Inc., 84 Phil. 654, which supposedly
applied said article by analogy to a lease other than that covered by said legal provision.

The authorities from which the petitioners draw support, however, are not applicable to the case at bar.

Article 1680 of the Civil Code reads thus:

Art. 1680. The lessee shall have no right to a reduction of the rent on accountof the sterility of the land
leased, or by reason of the loss of fruits due toordinary fortuitous events; but he shall have such right in
case of the loss ofmore than one-half of the fruits through extraordinary and unforeseen fortuitous events,
save always when there is a specific stipulation to the contrary.
 Extraordinary fortuitous events are understood to be: fire, war, pestilence, unusual flood, locusts,
earthquake, or others which are uncommon, and which thecontracting parties could not have reasonably
foreseen.

Article 1680, it will be observed is a special provision for leases of rural lands. No other legal provision makes it
applicable to ordinary leases. Had theintention of the lawmakers been so, they would have placed the article among the
general provisions on lease. Nor can the article be applied analogously to ordinary leases, for precisely because of its
special character, it was meant to apply only to a special specie of lease. It is a provision of social justice designed to
relieve poor farmers from the harsh consequences of their contracts with rich landowners. And taken in that light, the
article provides no refuge to lessees whose financial standing or social position is equal to, or even better than, the lessor
as in the case at bar.

Even if the cited article were a general rule on lease, its provisions nevertheless do not extend to petitioners. One of its
requisites is that the cause of loss of the fruits of the leased property must be an "extraordinary and unforeseen fortuitous
event." The circumstances of the instant case fail tosatisfy such requisite. As correctly ruled by the Court of Appeals, the
alleged causes for the suspension of operations on the lines leased, namely, the high prices of spare parts and gasoline and
the reduction of the dollar allocations, "already existed when the contract of lease was executed" (p. 11, Decision; p. 30,
rec.; Cuyugan v. Dizon, 89 Phil. 80). The cause of petitioners' inability to operate on the lines cannot, therefore, be
ascribed to fortuitous events or circumstances beyond their control, but to their own voluntary desistance (p. 13, Decision;
p. 32, rec.).

If the petitioners would predicate their plea on the basis solely of their inability to use the certificates of public
convenience, absent the requisite of fortuitous event, the cited article would speak strongly against their plea.Article 1680
opens with the statement: "The lessee shall have no right to reduction of the rent on account of the sterility of the land
leased ... ." Obviously, no reduction can be sustained on the ground that the operation of the leased lines was suspended
upon the mere speculation that it would yield no substantial profit for the lessee bus company. Petitioners' profits may be
reduced due to increase operating costs; but the volume of passenger traffic along the leased lines not only remains same
but may even increase as the tempo of the movement of population is intensified by the industrial development of the
areas covered or connected by the leased routes. Moreover, upon proper showing, the Public Service Commission might
have granted petitioners an increase in rates, as it has done so in several instances, so that public interest will always be
promoted by a continuous flow of transportation facilities to service the population and the economy. The citizenry and
the economy will suffer by reason of any disruption in the transportation facilities.

Furthermore, we are not at all convinced that the lease contract brought no material advantage to the lessor for the period
of suspension. It must be recalled that the lease contract not only stipulated for the transfer of the lessor's right to operate
the lines covered by the contract, but also for a forbearance on the part of the lessor to operate transportation business
along the same lines and to hold a certificate for that purpose. Thus, even if the lessee would not actually make use of
the lessor's certificates over the leased lines, the contractual commitment of the lessor not to operate on the lines would
sufficiently insure added profit to the lessees on account of the lease contract. In other words, the commitment alone of
the lessor under the contract would enable the lessees to reap full benefits therefrom since the commuting public would,
after all, be forced at their inconvenience and prejudice to patronize petitioner's remaining buses.

Contrary to what petitioners want to suggest, WE refused in the Reyes case, supra, to apply by analogy Article 1680 and
consequently, WE denied the plea oflessee therein for an equitable reduction of the stipulated rentals, holding that:

The general rule on performance of contracts is graphically set forth in American treatises which is also
the rule, in our opinion, obtaining under the Civil Code.

Where a person by his contract charges himself with an obligation possible to be performed, he must
perform it, unless the performance is rendered impossible by the act of God, by the law, or by the other
party, it being the rule that in case the party desires to be excused from the performance in the event of
contingencies arising, it is his duty to provide therefor in his contract. Hence, performance is not excused
by subsequent inability to perform, by unforeseen difficulties, by unusual or unexpected expenses, by
danger, by inevitable accident, by breaking of machinery, by strikes, by sickness, by failure of a party to
avail himself of the benefits tobe had under the contract, by weather conditions, by financial stringency
or bystagnation of business. Neither is performance excused by the fact that the contract turns out to be
hard and improvident, unprofitable, or impracticable, ill-advised, or even foolish, or less profitable,
unexpectedly burdensome. (17 CJS 946-948) (Reyes vs. Caltex, supra, 664. Emphasis supplied).

Also expressed in said case is a ruling in American jurisprudence, which found relevance again in the case at bar, to wit:
"(S)ince, by the lease, the lessee was to have the advantage of casual profits of the leased premises, he should run the
hazard of casual losses during the term and not lay the whole burden upon the lessor." (Reyes vs. Caltex, supra, 664).

Militating further against a grant of reduction of the rentals to the petitioners is the petitioners' conduct which is not in
accord with the rules of fair play and justice. Petitioners, it must be recalled, promised to pay the accrued rentals in due
time. Later, however, when they believed they found a convenient excuse for escaping their obligation, they reneged on
their earlier promise. Moreover, petitioners' option to suspend operation on the leased lines appears malicious. Thus,
Justice Esguerra, speaking for the Court of Appeals, propounded the following questions: "If it were true that thecause of
the suspension was the high prices of spare parts, gasoline and needed materials and the reduction of the dollar allocation,
why was it that only plaintiff-appellee's certificate of public convenience was sought to be suspended? Why did not the
defendants-appellants ask for a corresponding reduction or suspension under their own certificate along the same route?
Suppose the prices of the spare parts and needed materials were cheap, would the defendants-appellants have paid more
than what is stipulated in the lease contract? We believe not. Hence, the suspension of operation on the leased lines was
conceived as a scheme to lessen operation costs with the expectation of greater profit." (p. 14, Decision).

Indeed, petitioners came to court with unclean hands, which fact militates against their plea for equity.

WHEREFORE, THE ORIGINAL AND AMENDED PETITIONS ARE HEREBY DISMISSED, AND THE DECISION
OF THE COURT OF APPEALS DATED AUGUST 31, 1964 IS HEREBY AFFIRMED, WITH COSTS AGAINST
PETITIONERS.

G.R. No. 109172 August 19, 1994

TRANS-PACIFIC INDUSTRIAL SUPPLIES, INC., petitioner,

vs.
The COURT OF APPEALS and ASSOCIATED BANK, respondents.

Gancayco Law Offices for petitioners.

Jose A. Soluta, Jr. & Associates for private respondent.

BIDIN, J.:

In this petition for review on certiorari, petitioner Trans-Pacific Industrial Supplies, Inc. seeks the reversal of the decision
of respondent court, the decretal portion of which reads:

WHEREFORE, the decision of June 11, 1991 is SET ASIDE and NULLIFIED; the complaint is
dismissed, and on the counterclaim, Transpacific is ordered to pay Associated attorney's fees of
P15,000.00.

Costs against Transpacific.

SO ORDERED. (Rollo, p. 47)

Sometime in 1979, petitioner applied for and was granted several financial accommodations amounting to P1,300,000.00
by respondent Associated Bank. The loans were evidenced and secured by four (4) promissory notes, a real estate
mortgage covering three parcels of land and a chattel mortgage over petitioner's stock and inventories.

Unable to settle its obligation in full, petitioner requested for, and was granted by respondent bank, a restructuring of the
remaining indebtedness which then amounted to P1,057,500.00, as all the previous payments made were applied to
penalties and interests.

To secure the re-structured loan of P1,213,400.00, three new promissory notes were executed by Trans-Pacific as follows:
(1) Promissory Note No. TL-9077-82 for the amount of P1,050,000.00 denominated as working capital; (2) Promissory
Note No. TL-9078-82 for the amount of P121,166.00 denominated as restructured interest; (3) Promissory Note No. TL-
9079-82 for the amount of P42,234.00 denominated similarly as restructured interest (Rollo. pp. 113-115).

The mortgaged parcels of land were substituted by another mortgage covering two other parcels of land and a chattel
mortgage on petitioner's stock inventory. The released parcels of land were then sold and the proceeds amounting to
P1,386,614.20, according to petitioner, were turned over to the bank and applied to Trans-Pacific's restructured loan.
Subsequently, respondent bank returned the duplicate original copies of the three promissory notes to Trans-Pacific with
the word "PAID" stamped thereon.

Despite the return of the notes, or on December 12, 1985, Associated Bank demanded from Trans-Pacific payment of the
amount of P492,100.00 representing accrued interest on PN No. TL-9077-82. According to the bank, the promissory notes
were erroneously released.

Initially, Trans-Pacific expressed its willingness to pay the amount demanded by respondent bank. Later, it had a change
of heart and instead initiated an action before the Regional Trial Court of Makati, Br. 146, for specific performance and
damages. There it prayed that the mortgage over the two parcels of land be released and its stock inventory be lifted and
that its obligation to the bank be declared as having been fully paid.
After trial, the court a quo rendered judgment in favor of Trans-Pacific, to wit:

WHEREFORE, premises considered and upon a clear preponderance of evidence in support of the stated
causes of action, the Court finds for the plaintiffs and against defendant, and

(a) declares plaintiff's obligations to defendant to have been already fully paid;

(b) orders defendant to execute and deliver to plaintiffs a release on the i September 11,
1981 mortgage over TCT (50858)
S-10086 and TCT (50859) S-109087, and ii December 20, 1983 chattel mortgage, within
fifteen (15) days from the finality hereof;

(c) orders defendant to pay plaintiffs Romeo Javier and Romana Bataclan-Javier the sum
of P50,000.00 as and for moral damages; and

(d) orders defendant to pay plaintiffs the sum of P30,000.00 as attorney's fees, plus
expenses of the suit.

Defendant's counterclaims are dismissed for lack of merit.

With costs against defendant.

SO ORDERED. (Rollo, p. 101)

Respondent bank elevated the case to the appellate court which, as aforesaid, reversed the decision of the trial court. In
this appeal, petitioner raises four errors allegedly committed by the respondent court, namely:

RESPONDENT APPELLATE COURT ERRED IN HOLDING THAT THE ACCRUED INTEREST IN

THE AMOUNT OF 492,100.00 HAS NOT BEEN PAID WHEN ARTICLE 1176 OF THE CIVIL CODE
PROVIDES THAT SUCH CLAIM FOR INTEREST UPON RECEIPT OF PAYMENT OF THE
PRINCIPAL MUST BE RESERVED OTHERWISE IT IS DEEMED PAID.

II

RESPONDENT APPELLATE COURT ERRED IN HOLDING THAT WITH THE DELIVERY OF THE
DOCUMENTS EVIDENCING THE PRINCIPAL OBLIGATION, THE ANCILLARY OBLIGATION OF
PAYING INTEREST WAS NOT RENOUNCED CONTRARY TO THE PROVISIONS OF ART. 1273
OF THE CIVIL CODE AND THE UNDISPUTED EVIDENCE ON RECORD.

III

RESPONDENT APPELLATE COURT ERRED IN NOT HOLDING THAT PETITIONER HAS FULLY
PAID ITS OBLIGATION CONFORMABLY WITH ARTICLE 1234 OF THE CIVIL CODE.

IV

RESPONDENT APPELLATE COURT ERRED IN AWARDING ATTORNEY'S FEES IN FAVOR OF

ASSOCIATED BANK (Rollo, p. 15).

The first three assigned errors will be treated jointly since their resolution border on the common issue, i.e., whether or not
petitioner has indeed paid in full its obligation to respondent bank.

Applying the legal presumption provided by Art. 1271 of the Civil Code, the trial court ruled that petitioner has fully
discharged its obligation by virtue of its possession of the documents (stamped "PAID") evidencing its indebtedness.
Respondent court disagreed and held, among others, that the documents found in possession of Trans-Pacific are mere
duplicates and cannot be the basis of petitioner's claim that its obligation has been fully paid. Accordingly, since the
promissory notes submitted by petitioner were duplicates and not the originals, the delivery thereof by respondent bank to
the petitioner does not merit the application of Article 1271 (1st par.) of the Civil Code which reads:

Art. 1271. The delivery of a private document evidencing a credit, made voluntarily by the creditor to the
debtor, implies the renunciation of the action which the former had against the latter.

Respondent court is of the view that the above provision must be construed to mean the original copy of the document
evidencing the credit and not its duplicate, thus:
 . . . [W]hen the law speaks of the delivery of the private document evidencing a credit, it must be
construed as referring to the original. In this case, appellees (Trans-Pacific) presented, not the originals
but the duplicates of the three promissory notes." (Rollo, p. 42)

The above pronouncement of respondent court is manifestly groundless. It is undisputed that the documents presented
were duplicate originals and are therefore admissible as evidence. Further, it must be noted that respondent bank itself did
not bother to challenge the authenticity of the duplicate copies submitted by petitioner. In People vs. Tan, (105 Phil. 1242
[1959]), we said:

When carbon sheets are inserted between two or more sheets of writing paper so that the writing of a
contract upon the outside sheet, including the signature of the party to be charged thereby, produces a
facsimile upon the sheets beneath, such signature being thus reproduced by the same stroke of pen which
made the surface or exposed impression, all of the sheets so written on are regarded as duplicate originals
and either of them may be introduced in evidence as such without accounting for the nonproduction of the
others.

A duplicate copy of the original may be admitted in evidence when the original is in the possession of the party against
whom the evidence is offered, and the latter fails to produce it after reasonable notice (Sec. 2[b], Rule 130), as in the case
of respondent bank.

This notwithstanding, we find no reversible error committed by the respondent court in disposing of the appealed
decision. As gleaned from the decision of the court a quo, judgment was rendered in favor of petitioner on the basis of
presumptions, to wit:

The surrender and return to plaintiffs of the promissory notes evidencing the consolidated obligation as
restructured, produces a legal presumption that Associated had thereby renounced its actionable claim
against plaintiffs (Art. 1271, NCC). The presumption is fortified by a showing that said promissory notes
all bear the stamp "PAID", and has not been otherwise overcome. Upon a clear perception that
Associated's record keeping has been less than exemplary . . ., a proffer of bank copies of the promissory
notes without the "PAID" stamps thereon does not impress the Court as sufficient to overcome presumed
remission of the obligation vis-a-vis the return of said promissory notes. Indeed, applicable law is
supportive of a finding that in interest bearing obligations-as is the case here, payment of principal (sic)
shall not be deemed to have been made until the interests have been covered (Art. 1253, NCC).
Conversely, competent showing that the principal has been paid, militates against postured entitlement to
unpaid interests.

In fine. the Court is satisfied that plaintiffs must be found to have settled their obligations in full.

As corollary, a finding is accordingly compelled that plaintiffs (sic) accessory obligations under the real
estate mortgage over two (2) substituted lots as well as the chattel mortgage, have been extinguished by
the renunciation of the principal debt (Art. 1273, NCC), following the time-honored axiom that the
accessory follows the principal. There is, therefore, compelling warrant (sic) to find in favor of plaintiffs
insofar as specific performance for the release of the mortgages on the substituted lots and chattel is
concerned. (Rollo, p. 100)

premised by:

Records show that Associated's Salvador M. Mesina is on record as having testified that all three (3)
December 8, 1990 promissory notes for the consolidated principal obligation, interest and penalties had
been fully paid (TSN, July 18, 1990, p. 18). It is, moreover, admitted that said promissory notes were
accordingly returned to Romeo Javier. (Ibid.)

The above disquisition finds no factual support, however, per review of the records. The presumption created by the Art.
1271 of the Civil Code is not conclusive but merely prima facie. If there be no evidence to the contrary, the presumption
stands. Conversely, the presumption loses its legal efficacy in the face of proof or evidence to the contrary. In the case
before us, we find sufficient justification to overthrow the presumption of payment generated by the delivery of the
documents evidencing petitioners indebtedness.

It may not be amiss to add that Article 1271 of the Civil Code raises a presumption, not of payment, but of the
renunciation of the credit where more convincing evidence would be required than what normally would be called for to
prove payment. The rationale for allowing the presumption of renunciation in the delivery of a private instrument is that,
unlike that of a public instrument, there could be just one copy of the evidence of credit. Where several originals are made
out of a private document, the intendment of the law would thus be to refer to the delivery only of the original original
rather than to the original duplicate of which the debtor would normally retain a copy. It would thus be absurd if Article
1271 were to be applied differently.
While it has been consistently held that findings of facts are not reviewable by this Court, this rule does not find
application where both the trial and the appellate courts differ thereon (Asia Brewery, Inc. v. CA, 224 SCRA 437 [1993]).

Petitioner maintains that the findings of the trial court should be sustained because of its advantage in observing the
demeanor of the witnesses while testifying (citing Crisostomo v. Court of Appeals, 197 SCRA 833) more so where it is
supported by the records (Roman Catholic Bishop of Malolos v. Court of Appeals, 192 SCRA 169).

This case, however, does not concern itself with the demeanor of witnesses. As for the records, there is actually none
submitted by petitioner to prove that the contested amount, i.e., the interest, has been paid in full. In civil cases, the party
that alleges a fact has the burden of proving it (Imperial Victory Shipping Agency v. NLRC 200 SCRA 178 [1991]).
Petitioner could have easily adduced the receipts corresponding to the amounts paid inclusive of the interest to prove that
it has fully discharged its obligation but it did not.

There is likewise nothing on the records relied upon by the trial court to support its claim, by empirical evidence, that the
amount corresponding to the interest has indeed been paid. The trial court totally relied on a disputable presumption that
the obligation of petitioner as regards interest has been fully liquidated by the respondent's act of delivering the instrument
evidencing the principal obligation. Rebuttable as they are, the court a quo chose to ignore an earlier testimony of Mr.
Mesina anent the outstanding balance pertaining to interest, as follows:

Court:

Q Notwithstanding, let us go now specifically to promissory note No. 9077-82 in the

amount of consolidated principal of P1,050,000.00. Does the Court get it correctly that
this consolidated balance has been fully paid?

A Yes, the principal, yes, sir.

Q Fully settled?

A Fully settled, but the interest of that promissory note has not been paid, Your Honor.

Q In other words, you are saying, fully settled but not truly fully settled?

A The interest was not paid.

Q Not fully settled?

A The interest was not paid, but the principal obligation was removed from our books,
Your Honor.

Q And you returned the promissory note?

A We returned the promissory note. (TSN, July 18, 1990, p. 22)

That petitioner has not fully liquidated its financial obligation to the Associated Bank finds more than ample confirmation
and self-defeating posture in its letter dated December 16, 1985, addressed to respondent bank, viz.:

. . . that because of the prevailing unhealthy economic conditions, the business is unable to generate
sufficient resources for debt servicing.

Fundamentally on account of this, we propose that you permit us to fully liquidate the remaining
obligations to you of P492,100 through a payment in kind (dacion en pago) arrangement by way of the
equipments (sic) and spare parts under chattel mortgage to you to the extent of their latest appraised
values." (Rollo, pp. 153-154; Emphasis supplied)

Followed by its August 20, 1986 letter which reads:

We have had a series of communications with your bank regarding our proposal for the eventual
settlement of our remaining obligations . . .

As you may be able to glean from these letters and from your credit files, we have always been conscious
of our obligation to you which had not been faithfully serviced on account of unfortunate business
reverses. Notwithstanding these however, total payments thus far remitted to you already exceede (sic)
the original principal amount of our obligation. But because of interest and other charges, we find
ourselves still obligated to you by P492,100.00. . . .
 . . . We continue to find ourselves in a very fluid (sic) situation in as much as the overall outlook of the
industry has not substantially improved. Principally for this reason, we had proposed to settle our
remaining obligations to you by way of dacion en pago of the equipments (sic) and spare parts
mortgaged to you to (the) extent of their applicable loan values. (Rollo, p. 155; Emphasis supplied)

Petitioner claims that the above offer of settlement or compromise is not an admission that anything is due and is
inadmissible against the party making the offer (Sec. 24, Rule 130, Rules of Court). Unfortunately, this is not an iron-clad
rule.

To determine the admissibility or non-admissibility of an offer to compromise, the circumstances of the case and the intent
of the party making the offer should be considered. Thus, if a party denies the existence of a debt but offers to pay the
same for the purpose of buying peace and avoiding litigation, the offer of settlement is inadmissible. If in the course
thereof, the party making the offer admits the existence of an indebtedness combined with a proposal to settle the claim
amicably, then, the admission is admissible to prove such indebtedness (Moran, Comments on the Rules of Court, Vol. 5,
p. 233 [1980 ed.); Francisco, Rules of Court, Vol. VII, p. 325 [1973 ed.] citing McNiel v. Holbrook, 12 Pac. (US) 84, 9
L.ed. 1009). Indeed, an offer of settlement is an effective admission of a borrower's loan balance (L.M. Handicraft
Manufacturing Corp. v. Court of Appeals, 186 SCRA 640 [1990]). Exactly, this is what petitioner did in the case before us
for review.

Finally, respondent court is faulted in awarding attorney's fees in favor of Associated Bank. True, attorney's fees may be
awarded in a case of clearly unfounded civil action (Art. 2208 [4], CC). However, petitioner claims that it was compelled
to file the suit for damages in the honest belief that it has fully discharged its obligations in favor of respondent bank and
therefore not unfounded.

We believe otherwise. As petitioner would rather vehemently deny, undisputed is the fact of its admission regarding the
unpaid balance of P492,100.00 representing interests. It cannot also be denied that petitioner opted to sue for specific
performance and damages after consultation with a lawyer (Rollo, p. 99) who advised that not even the claim for interests
could be recovered; hence, petitioner's attempt to seek refuge under Art. 1271 (CC). As previously discussed, the
presumption generated by Art. 1271 is not conclusive and was successfully rebutted by private respondent. Under the
circumstances, i.e., outright and honest letters of admission vis-a-vis counsel-induced recalcitrance, there could hardly be
honest belief. In this regard, we quote with approval respondent court's observation:

The countervailing evidence against the claim of full payment emanated from Transpacific itself. It
cannot profess ignorance of the existence of the two letters, Exhs. 3 & 4, or of the import of what they
contain. Notwithstanding the letters, Transpacific opted to file suit and insist(ed) that its liabilities had
already been paid. There was thus an
ill-advised attempt on the part of Transpacific to capitalize on the delivery of the duplicates of the
promissory notes, in complete disregard of what its own records show. In the circumstances, Art. 2208 (4)
and (11) justify the award of attorney's fees. The sum of P15,000.00 is fair and equitable. (Rollo, pp. 46-
47)

WHEREFORE, the petition is DENIED for lack of merit. Costs against petitioner.

SO ORDERED.

CASE DIGEST: FEB. 23, 2017

JESUS V. OCCENA and EFIGENIA C. OCCENA,
vs.
HON. RAMON V. JABSON, Presiding Judge of the Court Of First Instance of Rizal, Branch XXVI; COURT OF
APPEALS and TROPICAL HOMES, INC

FACTS:

Private respondent Tropical Homes, Inc. filed a complaint for modification of the terms and conditions of its subdivision
contract with petitioners. Petitioners dismissed the complaint principally for lack of cause of action, and upon denial
thereof and of reconsideration by the lower court elevated the matter on certiorari to respondent Court of Appeals.

ISSUE:
WON COURTS ARE AUTHORIZED TO MODIFY OR REVISE CONTRACTS BETWEEN PARTIES

RULING:

NO.
ART. 1267 of the Civil Code:
When the service has become so difficult as to be manifestly beyond the contemplation of the parties, the obligor
may also be released therefrom, in whole or in part.

Respondent's complaint seeks not release from the subdivision contract but that the court "render judgment I
modifying the terms and Conditions of the Contract by fixing the proper shares that should pertain to the herein
parties out of the gross proceed from the sales of subdivided lots of subject subdivision". The cited article does
not grant the courts this authority to remake, modify or revise the contract or to fix the division of shares between
the parties as contractually stipulated with the force of law between the parties, so as to substitute its own terms
for those covenanted by the parties themselves. Respondent's complaint for modification of contract manifestly
has no basis in law and therefore states no cause of action. Under the particular allegations of respondent's
complaint and the circumstances therein averred, the courts cannot even in equity grant the relief sought.

LAGUNA v MANABAT

FACTS:

A contract was executed whereby the Bian Transportation Company leased to the Laguna Tayabas Bus
Company at a monthly rental of P2,500.00 its certificates of public convenience over the lines known as Manila
Bian, ManilaCanlubang and Sta. RosaManila, and to the Batangas Transportation Company its certificate of
public convenience over the line known as ManilaBatangas Wharf, together with one "International" truck, for a
period of five years, renewable for another similar period, to commence from the approval of the lease contract by
the Public Service Commission. On the same date the Public Service Commission provisionally approved the
lease contract on condition that the lessees should operate on the leased lines in accordance with the prescribed
time schedule and that such approval was subject to modification or cancellation and to whatever decision that in
due time might be rendered in the case.

Sometime after the execution of the lease contract, the plaintiff Bian Transportation Company was declared
insolvent and Francisco C. Manabat was appointed as its assignee. From time to time, the defendants paid the
lease rentals up to December, 1957, with the exception of the rental for August 1957, from which there was
deducted the sum of P1,836.92 without the consent of the plaintiff. This deduction was based on the ground that
the employees of the defendants on the leased lines went on strike for 6 days in June and another 6 days in
July,1957, and caused a loss of P500 for each strike, or a total of P1,000.00; and that in Civil Case No. 696 of the
Court of First Instance of Batangas, Branch II, judgment was rendered in favor of defendant Batangas
Transportation Company against the Bian Transportation Company for the sum of P836.92.

The assignee of the plaintiff objected to such deduction, claiming that the contract of lease would be suspended
only if the defendants could not operate the leased lines due to the action of the officers, employees or laborers of
the lessor but not of the lessees, and that the deduction of P836.92 amounted to a fraudulent preference in the
insolvency proceedings as whatever judgment might have been rendered in favor of any of the lessees should
have been filed as a claim in said proceedings. The defendants neither refunded the deductions nor paid the rentals
beginning January, 1958, notwithstanding demands therefor made from time to time. At first, the defendants
assured the plaintiff that the lease rentals would be paid, although it might be delayed, but in the end they failed to
comply with their promise.

On February 18, 1958, the Batangas Transportation Company and LagunaTayabas Bus Company separately filed
with the Public Service Commission a petition for authority to suspend the operation on the lines covered by the
certificates of public convenience leased to each of them by the Bian Transportation Company. The defendants
alleged as reasons the reduction in the amount of dollars allowed by the Monetary Board of the Central Bank of
 the Philippines for the purchase of spare parts needed in the operation of their trucks, the alleged difficulty
encountered in securing said parts, and their procurement at exorbitant costs, thus rendering the operation of the
leased lines prohibitive. The defendants further alleged that the high cost of operation, coupled with the lack of
passenger traffic on the leased lines resulted in financial losses. For these reasons they asked permission to
suspend the operation of the leased lines until such time as the operating expenses were restored to normal levels
so as to allow the lessees to realize a reasonable margin of profit from their operation. PSC granted the
suspension.

On May 19, 1959, plaintiff Bian Transportation Company represented by Francisco C. Manabat, assignee, filed
this action against defendants Laguna Tayabas Bus Company and Batangas Transportation Company for the
recovery of the sum of P42,500 representing the accrued rentals for the lease of the certificates of public
convenience of the former to the latter, corresponding to the period from January 1958, to May 1959, inclusive,
plus the sum of P1,836.92 which was deducted by the defendants from the rentals due for August, 1957, together
with all subsequent rentals from June, 1959, that became due and payable; P5,000.00 for attorney's fees and such
corrective and exemplary damages as the court may find reasonable.

ISSUE:

W/N Petitioner is entitled to a reduced amount of rentals on the subject matter of the lease was allegedly not used
by them as a result of the suspension of operations on the lines authorized by the Public Service Commission?

RULING:

Where a person by his contract charges himself with an obligation possible to be performed, he must perform it,
unless the performance is rendered impossible by the act of God, by the law, or by the other party, it being the rule
that in case the party desires to be excused from the performance in the event of contingencies arising, it is his
duty to provide therefor in his contract. Hence, performance is not excused by subsequent inability to perform, by
unforeseen difficulties, by unusual or unexpected expenses, by danger, by inevitable accident, by breaking of
machinery, by strikes, by sickness, by failure of a party to avail himself of the benefits tobe had under the
contract, by weather conditions, by financial stringency or by stagnation of business. Neither is performance
excused by the fact that the contract turns out to be hard and improvident, unprofitable, or impracticable, ill
advised, or even foolish, or less profitable, unexpectedly burdensome.

Petitioners, it must be recalled, promised to pay the accrued rentals in due time. Later, however, when they
believed they found a convenient excuse for escaping their obligation, they reneged on their earlier promise.
Moreover, petitioners' option to suspend operation on the leased lines appears malicious.

Since, by the lease, the lessee was to have the advantage of casual profits of the leased premises, he should run the
hazard of casual losses during the term and not lay the whole burden upon the lessor.

The suspension of operation on the leased lines was conceived as a scheme to lessen operation costs with the
expectation of greater profit. The petitioners are thus not entitled to reduced rentals.

TRANSPACIFIC INDUSTRIAL SUPPLIES INC. VS CA

( 235 s 494 )

FACTS:
Petitioner was granted financial accommodation amounting to P 1.3 M by respondent Associated Bank. The loans
were secured by 4 promissory notes, a real estate mortgage covering 3 parcels of land & a chattel mortgage over
petitioners stock & inventories.

To secure the re-structured loan of P1,213,400.00, 3 new promissory notes were executed by Trans-pacific. The
mortgage parcels of land were substituted by another mortgage covering 2 other parcels of land & chattel
mortgage on petitioners stock inventory.

The release parcels of land were then sold & the proceeds were turned over to the bank & applied to petitioners
restructured loan.
Subsequently, respondent bank returned the duplicate original copies of the 3 promissory notes to trans-pacific
with the word Paid stamped thereon. Despite the return of the notes, the bank demanded from petitioner the
accrued interest of one of the promissory notes. According to the bank the notes were erroneously released.

Initially, Trans-pacific expressed the willingness to pay but later it had a change of heart & initiated an action
before the RTC for specific performance & damages.

ISSUE:
 WON respondent has indeed paid in full its obligation to respondent bank? NO

HELD:
Under Art. 1271, provides that The delivery of a private document evidencing a credit made voluntarily by the
creditor to the debtor implies the renunciation of the action which the former had against the latter.

Art. 1271, is not conclusive but merely prima-facie if there be no evidence to the contrary, the presumption
stands. Conversely, the presumption loses its legal efficacy in the face of proof or evidence to the contrary.

The SC found sufficient justification to overthrow the presumption of payment generated by the delivery of the
documents evidencing petitioners indebtedness.

Art. 1271, raises a presumption, not of payment but of the renunciation of the credit, were more convincing
evidence would be required than what normally would be called for to prove payment. The rationale for allowing
the presumption of renunciation in the delivery of a private instrument is that, unlike that a public instrument,
there could be just on copy of the evidence of credit. Where several originals are made out of a private document,
the intendment of the law would thus be to refer to the delivery only of the original original rather than to the
original duplicate f which the debtor would normally retain a copy it would thus be absurd if Art. 1271, were to be
applied differently.

Petitioner could have easily adduce the receipts corresponding to the amounts paid inclusive of the interest to
prove that it has fully discharged its obligation but it did not.

The trial court totally relied on a disputable presumption that the interest has been fully liquidated by respondents
act of delivering the instrument and ignore the testimony of Mr. Mesina anent the outstanding balance pertaining
to interest. Petitioner has not fully liquidated its financial obligation to the associated bank by its confirmation &
self-defeating posture in its letter addressed to respondent bank.