Nereo J. Paculdo v. Bonifacio C. Regalado

Summary

This case involves a lease dispute over a wet market property in Quezon City between Nereo Paculdo (lessee) and Bonifacio Regalado (lessor). The lessor filed an ejectment complaint claiming the lessee was in arrears in rental payments. The core issue was whether the lessee had properly paid rentals or was in default. The lessee had made substantial payments totaling over P10 million, but the lessor applied portions to other obligations including unpaid equipment purchases without clear consent. The Supreme Court reversed the lower courts' decisions, ruling that the debtor has the right under Article 1252 of the Civil Code to specify which obligations to satisfy first, and that the lessee's silence did not constitute consent to the lessor's application of payments to other debts. The Court found no rental arrears existed and dismissed the ejectment case.