provisions of Article 1250 of New Civil Code is deleted.
OBLIGATIONS TO PAY MONEY: EFFECTS OF INFLATION
CF SHARP VS. NORTHWEST AIRLINES 381 SCRA 314
FACTS:
On May 9, 1974, respondent, through its Japan Branch, entered an International Passenger Sales Agency Agreement with petitioner, authorizing the latter to sell its air transport tickets. Petitioner, however, failed to remit the proceeds of the ticket sales, for which reason the respondent filed a collection suit against petitioner before the Tokyo District Court.
The said court ordered petitioner to pay respondent including damages for the delay. Unable to execute the decision in Japan, respondent filed a case to enforce said judgment with the regional trial court of Manila which dismissed the case. This was affirmed by the Court of Appeals, and was subsequently partly affirmed by the Supreme Court. CF Sharp was then ordered to pay Northwest so that the RTC issued a writ of execution of decision ruling that Sharp is to pay Northwest the sum of 83,158,195 yen at the exchange rate prevailing on the date of the foreign judgment plus 6% per annum until fully paid, 6% damages and 6% interest.
An appeal, the Court of Appeals reduced the interest and it ruled that the basis of the conversion of petitioner’s liability in its peso equivalent should be the prevailing rate at the time of payment and not the rate on the date of the foreign judgment.
ISSUE:
Whether or not the basis for the payment of the amount due is the value of the currency at the time of the establishment of the obligation.
RULING:
NO, the rule that the value of currency at the time of the establishment of the obligation shall be the basis of payment finds application only when there is an official pronouncement or declaration of the existence of an extraordinary inflation or deflation. Hence, petitioners contention that Article 1250 of the Civil Code which provides that “in case of an extra ordinary inflation or deflation of the currency stipulated should supervene, the value of the currency at the time of establishment of the obligation shall be the basis of payment, unless there is an agreement to the contrary” shall apply in this case is untenable.
OBLIGATIONS TO PAY MONEY
ALBERT R. PADILLA
VS. SPOUSES FLORESCO PAREDES and ADELINA PAREDES, and THE HONORABLE COURT OF APPEALS
G.R. No. 124874 March 17, 2000
328 SCRA 434 FACTS:
On October 20, 1988, petitioner Albert R. Padilla and private respondents Floresco and Adelina Paredes entered into a contract to sell involving a parcel of land in San Juan, La Union. At that time, the land was untitled although private respondents were paying taxes thereon. Under the contract, petitioner undertook to secure title to the property in private respondents' names. Of the P312,840.00 purchase price, petitioner was to pay a downpayment of
P50,000.00 upon signing of the contract, and the balance was to be paid within ten days from the issuance of a court order directing issuance of a decree of registration for the property.
On December 27, 1989, the court ordered the issuance of a decree of land registration for the subject property. The property was titled in the name of private respondent Adelina Paredes. Private respondents then demanded payment of the balance of the purchase price.
Petitioner then made several payments to private respondents, some even before the court issued an order for the issuance of a decree of registration and they also offered to pay the land through a check. Still, petitioner failed to pay the full purchase price even after the expiration of the period set. In a letter dated February 14, 1990, private respondents, through counsel, demanded payment of the remaining balance, with interest and attorney's fees, within five days from receipt of the letter. Otherwise, private respondents stated they would consider the contract rescinded.
On February 28, 1990, petitioner made a payment of P100,000.00 to private respondents, still insufficient to cover the full purchase price. Shortly thereafter, in a letter dated April 17, 1990 private respondents offered to sell to petitioner one-half of the property for all the payments the latter had made, instead of rescinding the contract. If petitioner did not agree with the proposal, private respondents said they would take steps to enforce the automatic rescission of the contract. Petitioner did not accept private respondents' proposal. Instead, in a letter dated May 2, 1990, he offered to pay the balance in full for the entire property, plus interest and attorney's fees. Private respondents refused the offer.
On May 14, 1990, petitioner instituted an action for specific performance against private respondents, alleging that he had already substantially complied with his obligation under the contract to sell. He also averred that he had already spent P190,000.00 in obtaining title to the property, subdividing it, and improving its right-of-way. The lower court decided in favor of the petitioners stating that the breach committed was only casual and slight but the Court of Appeals reversed the ruling and favored respondents’ rescission of the contract to sell.
ISSUE:
Whether or not the payment made by petitioner is one which is contemplated on the contract.
RULING:
Petitioner’s offer to pay is clearly not the payment contemplated in the contract. While he might have tendered payment through a check, this is not considered payment until the check is encashed. Besides, a mere tender of payment is not sufficient. Consignation is essential to extinguish petitioner's obligation to pay the purchase price.
The Supreme Court also affirmed the decision of the Court of Appeals where the respondents have the right to rescind the contract on the ground that there is failure on the part of the petitioners to pay the balance within ten days upon the conveyance of the Court of the Title of Land to respondents. Thus, private respondents are under no obligation, and may not be compelled, to convey title to petitioner and receive the full purchase price.
OBLIGATIONS TO PAY MONEY