XXXX
XXXX
Sarona SY 2015-2016
I.
II.
sssaaafffddddPART I: CONCEPT OF
CREDIT TRANSACTIONS
Concept
Commodatum
PAJUYO VS. CA
Guevarra
freely
entered
into
the
Kasunduan. Guevarra cannot now impugn
the Kasunduan after he had benefited from
it. The Kasunduan binds Guevarra.
gratuitous,"
With that expectation in view, it appears more
likely that Francisco intended to allow his
brother Andres a surface right; but this right
supposes the payment of an annual rent, and
Andres had the gratuitous use of the lot.
III.
Mutuum
122.
ISSUE: WON a contract of loan is a
consensual contract. NO, A CONTRACT OF
LOAN IS A REAL CONTRACT.
HELD: A loan contract is not a consensual
contract but a real contract. It is perfected only
upon the DELIVERY of the object of the
contract. BPIIC misapplied Bonnevie. The
contract in Bonnevie declared by this Court as
a perfected consensual contract falls under the
first clause of Article 1934, CC. It is an
accepted promise to deliver something by way
of simple loan. A perfected consensual
contract, as shown above, can give rise to an
action for damages. However, said contract
does not constitute the real contract of loan
which requires the delivery of the object of the
contract for its perfection and which gives rise
to obligations only on the part of the borrower.
In the present case, the loan contract between
BPI, on the one hand, and ALS and Litonjua,
on the other, was perfected only on September
13, 1982, the date of the second release of the
loan. Following the intentions of the parties on
the
commencement
of
the
monthly
amortization, as found by the CA, ALSs
obligation to pay commenced only on October
13, 1982, a month after the perfection of the
contract. A contract of loan involves a
reciprocal obligation, wherein the obligation or
promise of each party is the consideration for
that of the other.
As averred by ALS, the promise of BPIIC to
extend and deliver the loan is upon the
consideration that ALS and Litonjua shall pay
the monthly amortization commencing on May
1, 1981, one month after the supposed release
of the loan. It is a basic principle in reciprocal
obligations that neither party incurs in delay, if
the other does not comply or is not ready to
comply in a proper manner with what is
incumbent upon him. Only when a party has
performed his part of the contract can he
demand that the other party also fulfills his own
obligation and if the latter fails, default sets in.
Consequently, petitioner could only demand for
the payment of the monthly amortization after
September 13, 1982 for it was only then when
it complied with its obligation under the loan
contract. Therefore, in computing the amount
10
11
engaged in
works
on
ISSUE:
1. Whether or not a claim for damage
sustained on a shipment of goods can be a
solidary, or joint and several, liability of the
common carrier, the arrastre operator and
the customs broker. YES
2. Whether the payment of legal interest on an
award for loss or damage is to be computed
from the time the complaint is filed or from
the date the decision appealed from is
rendered.
3. Whether the applicable rate of interest,
referred to above, is twelve percent (12%) or
six percent (6%). 6%
HELD:
1. Solidary. Since it is the duty of the
ARRASTRE to take good care of the goods
that are in its custody and to deliver them in
good condition to the consignee, such
responsibility also devolves upon the
CARRIER. Both the ARRASTRE and the
CARRIER are therefore charged with the
obligation to deliver the goods in good
condition to the consignee.
20
21
admit
they
owe petitioner P350,000
and do not question any lawful interest on their
loan but they maintain that the Deed of Real
Estate Mortgage is null and void since it did not
state the true intent of the parties, which
limited the 5% interest rate to only two (2)
months from the date of the loan and which
did not provide for
penalties and other
charges in the event of default or delay.
Respondents vehemently contend that they
never consented to the said stipulations and
hence, should not be bound by them.
On the first issue, we are constrained to
rule against the petitioners contentions.
Central Bank Circular No. 905, which took
effect on January 1, 1983, effectively removed
the ceiling on interest rates for both secured
and unsecured loans, regardless of maturity.
However, nothing in said Circular grants
lenders carte blanche authority to impose
interest rates, which would result in the
enslavement of their borrowers or to the
hemorrhaging of their assets. While a
stipulated rate of interest may not technically
and necessarily be usurious under Circular No.
905, usury now being legally non-existent in
our jurisdiction, nonetheless, said rate may be
equitably reduced should the same be found to
be iniquitous, unconscionable, and exorbitant,
and hence, contrary to
morals (contra
bonos mores), if not against the law. What is
iniquitous, unconscionable, and
exorbitant
shall depend upon the factual circumstances of
each case.
In the instant case, the Court of Appeals found
that the 5% interest rate per month and 5%
Nacar then filed a Motion praying for the recomputation of the monetary award to include
the appropriate interests.
The Labor Arbiter granted the motion, but
reasoned that it is the October 15, 1998
Decision that should be enforced considering
that it was the one that became final and
executory. However, the Labor Arbiter
reasoned that since the decision states that the
separation pay and backwages are computed
only up to the promulgation of the said
decision, it is the amount of P158,919.92 that
should be executed. Thus, since petitioner
already received P147,560.19, he is only
entitled to the balance of P11,459.73.
Nacar appealed to the CA. Denied. It opined
that since petitioner no longer appealed the
October 15, 1998 Decision of the Labor
Arbiter, which already became final and
executory, a belated correction thereof is no
longer allowed. The CA stated that there is
nothing left to be done except to enforce the
said judgment.
ISSUE: WON a re-computation in the course
of execution of the labor arbiter's original
computation of the awards made is legally
proper. YES
HELD: Computation should start from the time
Nacar was illegally dismissed until judgment
has become final and executory on May 27,
2013. Moreover, a recomputation is necessary
and is not a violation of the principle of
immutability
of
final
judgments.
The
recomputation of the consequences of illegal
dismissal upon execution of the decision does
not constitute an alteration or amendment of
the final decision being implemented. The
illegal dismissal ruling stands; only the
computation of monetary consequences of the
dismissal is affected.
As to the payment of legal interest, the
guidelines laid down in the case of Eastern
Shipping Lines are accordingly modified to
embody BSP-MB Circular No. 799, as follows:
I. When an obligation, regardless of its source,
i.e., law, contracts, quasi-contracts, delicts or
quasi-delicts is breached, the contravenor can
be held liable for damages. The provisions
under Title XVIII on Damages of the Civil
be
liable
to
30
31
is
entitled
to
demanded.
Article 1956 of the Civil Code, which refers to
monetary interest, specifically mandates that
no interest shall be due unless it has been
expressly stipulated in writing. Payment of
monetary interest is allowed only if:
(1) there was an express stipulation for the
payment of interest; and
(2) the agreement for the payment of interest was
reduced in writing.
The concurrence of the two conditions is
required. Thus, we have held that collection of
interest without any stipulation therefor in
writing is prohibited by law.
Petitioner and respondent did not agree on the
payment of interest for the loan. Neither was
there convincing proof of written agreement
between the two regarding the payment of
interest.
As to the contention of petitioner that
respondent executed a promissory note: the
presented promissory note was in her
handwriting because Siga-an told her to copy it
and she did because she feared the threats of
Sigaan to block her deals with the PhilNavy.
And as to the alleged admission in the BP 22
cases that they had agreed on the payment of
interest at the rate of 7%, respondent merely
testified that after paying the total amount of
loan, petitioner ordered her to pay interest.
Respondent did not categorically declare in the
same case that she and respondent made an
express stipulation in writing as regards
payment of interest at the rate of 7%.
An interest may be imposed even in the
absence of express stipulation, verbal or
written, regarding payment of interest under Art
2209 of CC that if the obligation consists in the
payment of a sum of money, and the debtor
incurs delay, a legal interest of 12% per annum
may be imposed as indemnity for damages if
no stipulation on the payment of interest was
agreed upon. It only applies to compensatory
interest and not to monetary interest. The case
at bar involves petitioners claim for monetary
interest. Further, said compensatory interest is
not chargeable in the instant case because it
was not duly proven that respondent defaulted
in paying the loan.
SC
also
recognize
that Solidbank
I.
II.
Voluntary Deposit
CALIBO, JR. VS COURT OF APPEALS
SIA v. CA
FACTS: Herein petitioner and respondent
entered into a contract denominated as a
Lease Agreement whereby the former rented a
safety deposit box owned by the latter .
Petitioner placed in the deposit box her stamp
collection which was subsequently lost and
damaged due to a flood that took place in 1985
and 1986. The defendant bank rejected the
petitioner s claim for compensation for his
damaged stamps collection, so, the plaintiff
instituted an action for damages against the
defendant bank.
The bank alleged that the contract was that of
lease and its liability was limited to the exercise
of the diligence to prevent the opening of the
safe by any person other than the Renter, his
authorized agent or legal representative; The
Bank is not a depository of the contents of the
safe and it has neither the possession nor the
control of the same. The Bank has no interest
whatsoever in said contents, except as herein
provided, and it assumes absolutely no liability
in connection therewith.
RTC ruled in favor of petitioner. CA reversed
the decision.
ISSUE: Is SBTC liable for damages and loss?
YES
CA AGRO-INDUSTRIAL DEVELOPMENT
CORP. vs CA and SECURITY BANK AND
TRUST COMPANY
FACTS: On July 3, 1979, petitioner through its
president Sergio Aguirre, and spouses Ramon
which
40
policy.
2.
Although the contract
between
petitioner
and
respondent
bank
was
considered as a contract of deposit, the Court
still affirmed the CA's decision to dismiss the
case because no competent proof was
presented to show that respondent bank was
aware of the agreement between the petitioner
and spouses Pugaos to the effect that the
certificates of title were withdrawable from the
safety deposit box only upon both parties' joint
signatures. Also, no evidence was submitted to
reveal that the loss of the certificates of title
was due to fraud or negligence of the
respondent bank.
41
contract of commodatum.
Under Article 1768 of the Civil Code, when the
depository has the permission to make use of
the thing deposited, the contract loses the
character of mere deposit and becomes a loan
or a commodatum; and of course by
appropriating the thing, the bailee becomes
responsible for its value. In the present case,
the parties agreed that Pablo was at liberty to
convert it into rice and dispose of it at his
pleasure. It was insignificant whether the
contract between the parties is that of a sale
or a deposit for even supposing that the palay
may have been delivered in the character of
deposit subject to future sale or withdrawal at
plaintiff's election because it was understood
that Pablo might mill the palay and he has in
fact appropriated it to his own use, therefore he
is bound to account for its value.
2) Pablo David is liable for the value of the
palay.
It should be stated that the palay in question
was place by the plaintiffs in the defendant's
mill with the understanding that the defendant
was at liberty to convert it into rice and dispose
of it at his pleasure. The mill was actively
running during the entire season, and as palay
was daily coming in from many customers and
as rice was being constantly shipped by the
defendant to Manila, or other rice markets, it
was impossible to keep the plaintiffs' palay
segregated. In fact the defendant admits that
the plaintiffs' palay was mixed with that of
others. In view of the nature of the defendant's
activities and the way in which the palay was
handled in the defendant's mill, it is quite
certain that all of the plaintiffs' palay, which
was put in before June 1, 1920, been milled
and disposed of long prior to the fire of January
17, 1921.
Considering the fact that the defendant had
thus milled and doubtless sold the plaintiffs'
palay prior to the date of the fire, it result that
he is bound to account for its value, and his
liability was not extinguished by the occurrence
of the fire.
necessity
of
the
borrower.
BPI v. CA
FACTS: Private respondents Eastern Plywood
Corporation (Eastern) and Benigno D. Lim
(Lim), held one joint bank account with the
Commercial Bank and Trust Co. (CBTC), the
predecessor-in-interest of petitioner Bank of
the Philippine Islands (BPI).
Sometime in March 1975, a joint checking
account with Lim in the amount of P120,000.00
was opened by Mariano Velasco with funds
withdrawn from the account of Eastern and/or
Lim.
Velasco died. At the time of his death, the
outstanding balance of the account stood at
P662,522.87.
On 5 May 1977, by virtue of an Indemnity
Undertaking executed by Lim one-half of this
amounts was provisionally released and
transferred to one of the bank accounts of
Eastern with CBTC. Thereafter, Eastern
METROBANK VS BA FINANCE
FACTS: Lamberto Bitanga obtained from
respondent BA Finance a loan, to secure
which, he mortgaged his car to respondent BA
Finance. Bitanga had the mortgaged car
insured by respondent Malayan Insurance.
REYES vs CA
FACTS: In view of the 20th Asian Racing
Conference to be held in Sydney, Australia, the
Philippine Racing Club, Inc. (PRCI) sent 4
delegates to the said conference. Petitioner
Gregorio Reyes, as VP for finance racing
manager, treasurer, and directory of PRCI,
sent Godofredo Reyes, the club's chief cashier,
to Far East Bank and Trust Company
(respondent) to apply for a foreign exchange
demand draft in Australian dollars (AU$
1,610.00).
Mr. Yasis, bank's assistant cashier, first denied
the application for the reason that respondent
bank did not have an Australian dollar account
in any bank in Sydney. Since Godofredo asked
if there could be a way for respondent bank to
accommodate PRCI's urgent need to remit
AUS$ to SYdney, Yasis informed him of
another way of effecting the requested
remittance.
The respondent bank would draw a demand
draft against Westpac-Sydney and have the
latter reimburse itself from the US$ account of
the respondent in Westpac-New York. This
arrangement has been customarily resorted to
since the 1960s and the procedure has proven
to be problem-free.
July 28, 1988, the respondent bank approved
the said application of PRCI and issued
Foreign Exchange Demand Draft(FXDD) No.
209968 in the sum applied for payable to the
order of the 20th Asian Racing Conference
Secretariat of
Sydney, Australia, and
addressed to Westpac-Sydney as the drawee
bank.
August 10, 1988, upon due presentment of the
50
51
escrow.
X X X the impugned orders appear to us as a
fair response to the exigencies and equities of
the situation.
Parenthetically, it is not disputed that even
before the institution of the case, the Province
of Bataan has been utilizing the rental
payments on the Baseco Property to meet its
financial
requirements.
To
us,
this
circumstance adds a more compelling
dimension for the issuance of the assailed
orders. X X X
Applying the foregoing principles and
considering the peculiarities of the instant
case, the lower court, in the course of
adjudicating and resolving the
issues
presented in the main suit, is clearly
empowered to control the proceedings therein
through the adoption, formulation and issuance
of orders and other ancillary writs, including the
authority to place the properties in custodia
legis, for the purpose of effectuating its
judgment or decree and protecting further the
interests of the rightful claimants of the subject
property.
To trace its source, the courts authority
proceeds from its jurisdiction and power to
decide, adjudicate and resolve the issues
raised in the principal suit. Stated differently,
the deposit of the rentals in escrow with the
bank, in the name of the lower court, is only
an incident in the main proceeding. To be
sure, placing property in litigation under judicial
possession, whether in the hands of a receiver,
and administrator, or as in this case, in a
government bank is an ancient and accepted
procedure. Consequently, we find no cogency
to disturb the questioned orders of the lower
court and in effect uphold the propriety of the
subject escrow orders.
III.
Necessary Deposit
YHT REALTY VS. CA
(451 SCRA 638, G.R. No. 126780, February
17, 2005)
IV.
HELD:
Main Issue:
Propriety of Preliminary Injunction
We agree with respondents.
The grounds for the issuance of a writ
of
61
secure
the
loan.
However,
Falcon
subsequently defaulted in its payments. After
PDCP foreclosed on the chattel mortgage,
there remained a subsisting deficiency of Php
5,031,004.07 which falcon did not satisfy
despite demands.
ISSUE: Whether the obligation to repay is
solidary, as contended by respondent and the
lower courts, or merely joint as argued by
petitioners.
HELD: The obligation to repay is only jointly as
declared by the Court. In case there is a
concurrence of two or more creditors or of two
or more debtors in one and the same
obligation, Article 1207 of the Civil Code states
that among them, there is a solidary liability
only when the obligation expressly so states,
or when the law or the nature of the obligation
requires solidarity. Article 1210 supplies
further caution against the broad interpretation
of solidarity by providing: The indivisibility of
an obligation does not necessarily give rise to
solidarity. Nor does solidarity of itself imply
indivisibility. These Civil Code provisions
establish that in case of concurrence of two or
more creditors or of two or more debtors in one
and the same obligation, and in the absence of
express and indubitable terms characterizing
the obligation as solidary, the presumption is
that the obligation is only joint. It thus becomes
incumbent upon the party alleging that the
obligation is indeed solidary in character to
prove such fact with a preponderance of
evidence. Note that Article 2047 itself
specifically calls for the application of the
provisions on joint and solidary obligations to
surety ship contracts. Article 1217 of the Civil
Code thus comes into play, recognizing the
right of reimbursement from a co-debtor (the
principal debtor, in case of suretyship) in favor
of the one who paid (i.e. the surety).
However, a significant distinction still lies
between a joint and several debtor, on one
hand, and a surety on the other. Solidarity
signifies that the creditor can compel any one
of the joint and several debtors or the surety
alone to answer for the entirety of the principal
debt. The difference lies in the respective
faculties of the joint and several debtor and the
surety to seek reimbursement for the sums
they paid out to the creditor. In the case of joint
and several debtors, Article1217 makes plain
SOLIDARY CODEBTOR
Solidarity signifies that
the creditor can compel
any one of the joint and
several debtors or the
surety alone to answer
for the entirety of the
principal debt.
May claim from his codebtors only the share
which corresponds to
each, with the interest
for the payment already
made.
Solidary
60
Lucky
Star
Drilling
&
Construction
Corporation (Lucky Star) - obligor
Stronghold Insurance Company (Stronghold)
surety, respondent
FACTS: ABC entered into an agreement
with Lucky Star as part of the completion of
its project to construct the ACG Commercial
Complex. Lucky Star was to supply labor,
materials, tools, and equipment including
technical supervision to drill one (1)
exploratory production well on the project
site.
To guarantee faithful compliance with their
agreement, Lucky Star engaged respondent
Stronghold which issued two (2) bonds in
favor of petitioner ABC.
ABC paid Lucky Star P575,000.00 as
advance payment, representing 50% of the
contract price. Lucky Star, thereafter,
commenced the drilling work.
On agreed completion date, Lucky Star
managed to accomplish only 10% of the
drilling work. ABC sent a demand letter to
Lucky Star for the immediate completion of
60
61
transaction?
PALMARES VS CA
(288 SCRA, 422, G.R. No. 126490, March 31,
1998)
FACTS: Pursuant to a promissory note dated
March 13, 1990, private respondent M.B.
Lending Corporation extended a loan to the
spouses Osmea and Merlyn Azarraga,
together with petitioner Estrella Palmares, in
the amount of P30,000.00 payable on or
before May 12, 1990, with compounded
interest at the rate of 6% per annum to be
computed every 30 days from the date thereof.
On four occasions after the execution of the
promissory note and even after the loan
matured, petitioner and the Azarraga spouses
were able to pay a total of P16,300.00, thereby
leaving a balance of P13,700.00. No payments
were made after the last payment on
September 26, 1991.
Consequently, on the basis of petitioner's
solidary liability under the promissory note,
Respondent Corporation filed a complaint
against petitioner Palmares as the lone party
defendant, to the exclusion of the principal
debtors, allegedly by reason of the insolvency
of the latter.
In her Amended Answer with Counterclaim,
petitioner alleged that sometime in August
1990, immediately after the loan matured, she
offered to settle the obligation with respondent
corporation but the latter informed her that they
would try to collect from the spouses Azarraga
and that she need not worry about it; that there
has already been a partial payment in the
amount of P17,010.00; that the interest of 6%
per month compounded at the same rate per
month, as well as the penalty charges of 3%
per month, are usurious and unconscionable;
and that while she agrees to be liable on the
note but only upon default of the principal
debtor, respondent corporation acted in bad
from
70
70
71
entrusted goods in the event of nonsale or, if sold, the proceeds of the
sale thereof, on or before September
2, 1979.
However, UTEFS did not acquiesce to the
obligatory stipulations in the trust receipt.
METROBANK sent letters to the said principal
obligor and its sureties, Uy and Uy Dio,
demanding payment of the amount due.
Dio denied his liability saying that he cannot
be held liable for the 1979 credit
accommodation because it is a new obligation
contracted without his participation. Besides,
the 1977 credit accommodation which he
guaranteed has been fully paid. Accordingly,
the Continuing Suretyships executed in 1977
cannot be availed of to secure Uy Tiam's Letter
of Credit obtained in 1979 because a guaranty
cannot exist without a valid obligation. It was
further argued that they cannot be held liable
for the obligation contracted in 1979 because
they are not privies thereto as it was
contracted without their participation.
METROBANK contends that the terms and
conditions embodied in the comprehensive
suretyships separately executed by suretiesdefendants, the bank argued that suretiesmovants bound themselves as solidary
obligors of defendant Uy Tiam to both existing
obligations and future ones based on Article
2053
ISSUE: Whether petitioners are liable as
sureties for the 1979 obligations of Uy Tiam to
METROBANK by virtue of the Continuing
Suretyship Agreements they separately signed
in 1977. YES but only for the amount or limit
stated in the surety contract
HELD: A continuing guaranty is one which
covers all transactions, including those arising
in the future, which are within the description or
contemplation of the contract, of guaranty, until
the expiration or termination thereof. A
guaranty shall be construed as continuing
when by the terms thereof it is evident that the
object is to give a standing credit to the
principal debtor to be used from time to time
either indefinitely or until a certain period,
especially if the right to recall the guaranty is
expressly reserved. Hence, where the contract
of guaranty states that the same is to secure
advances to be made "from time to time" the
guaranty will be construed to be a continuing
one.
The use of particular words and expressions
such as payment of "any debt," "any
indebtedness," "any deficiency," or "any sum,"
or the guaranty of "any transaction" or money
to be furnished the principal debtor "at any
time," or "on such time" that the principal
debtor may require, have been construed to
indicate a continuing guaranty.
The Court looked into the provisions of the
Surety entered by Dio.
It shows that the suretyship agreement are
continuing in nature. Petitioners do not deny
this; in fact, they candidly admitted it. Neither
have they denied the fact that they had not
revoked the suretyship agreements. The
purpose of the execution of the Continuing
Suretyships was to induce appellant to grant
any application for credit accommodation
(letter of credit/trust receipt) UTEFS may
desire to obtain from appellant bank. By its
terms, each suretyship is a continuing one
C.
80
81
give
CONTINUING SURETY
In the present case, the Indemnity Agreement
was subject to the two limitations of the credit
accommodation: (1) that the obligation should
not exceed P8 million, and (2) that the
accommodation should expire not later than
November 30, 1981. Hence, it was a
continuing surety only in regard to loans
obtained on or before the aforementioned
expiry date and not exceeding the total of P8
million. Accordingly, the surety of Cuenca
secured only the first loan of P6.1 million
obtained on November 26, 1991. It did not
secure the subsequent loans, purportedly
under the 1980 credit accommodation, that
were obtained in 1986. Certainly, he could not
have guaranteed the 1989 Loan Agreement,
which was executed after November 30, 1981
and which exceeded the stipulated P8 million
ceiling.
Petitioner, however, cites the Dino ruling in
which the Court found the surety liable for the
loan obtained after the payment of the original
one, which was covered by a continuing surety
agreement. At the risk of being repetitious, we
hold that in Dino, the surety Agreement
specifically provided that each suretyship is a
continuing one which shall remain in full force
and effect until this bank is notified of its
revocation. Since the bank had not been
notified of such revocation, the surety was held
liable even for the subsequent obligations of
the principal borrower. No similar provision is
found in the present case. On the contrary,
respondents liability was confined to the 1980
credit accommodation, the amount and the
expiry date of which were set down in the
Credit Approval Memorandum.
BA FINANCE vs. CA
FACTS: Renato Gaytano, doing business
under the name Gebbs International, applied
for and was granted a loan with respondent
Traders Royal Bank in the amount of
P60,000.00. As security for the payment of
said loan, the Gaytano spouses executed a
deed of suretyship whereby they agreed to pay
jointly and severally to Traders Royal Bank
bank the amount of the loan including
interests, penalty and other bank charges.
In a letter addressed toTraders Royal Bank,
Philip Wong as credit administrator of BA
Finance Corporation for and in behalf of the
latter, undertook to guarantee the loan of the
Gaytano spouses. Partial payments were
made on the loan leaving an unpaid balance in
the amount of P85,807.25. Since the Gaytano
spouses refused to pay their obligation,
Traders Royal Bank filed with the trial court
complaint for sum of money against the
Gaytano spouses and petitioner BA Finance
Corporation as alternative defendant. The
Gaytano spouses did not present evidence for
their defense. BA Finance Corporation
corporation, on the other hand, raised the
defense of lack of authority of its credit
administrator to bind the corporation.
The trial court rendered a decision in favor of
plaintiff and against defendants Gaytano
spouses, ordering the latter to jointly and
severally pay the plaintiff. Not satisfied with the
decision, Traders Royal Bank appealed with
the Court of Appeals. Respondent appellate
court rendered judgment modifying the
decision of the trial court. Hence, this petition.
ISSUE: WON the letter of guaranty is ultra
vires and thus invalid and/or unenforceable.
YES
HELD: It is a settled rule that persons dealing
with an assumed agent, whether the assumed
agency be a general or special one are bound
at their peril, if they would hold the principal
liable, to ascertain not only the fact of agency
but also the nature and extent of authority, and
in case either is controverted, the burden of
proof is upon them to establish it (Harry Keeler
v. Rodriguez, 4 Phil. 19).
VISAYAN SURETY vs CA
surety cannot be
FOLLOWS THAT
HELD LIABLE TO
WHEN
THE
90
III.
Effects of Guaranty
WISE CO. VS. TANGLAO
91
92
are
is otherwise
excussion.
known
as
the
benefit
of
ISSUES:
100
100
101
102
111
112
CALIBO VS. CA
(G.R. No. 120528, January 29, 2001)
FACTS: January 25, 1979, Dr. Pablo U.
Abella purchased an MF 210 agricultural
tractor which he used in his farm in
Dagohoy, Bohol. Sometime in October or
November 1985, Pablo Abellas son, Mike
Abella rented for residential purposes the
house of defendant-appellant Dionisio R.
Calibo, Jr., in Tagbilaran City.
In October 1986, Pablo Abella pulled out
his aforementioned tractor from his farm in
Dagohoy, Bohol, and left it in the
safekeeping of his son, Mike Abella, in
Tagbilaran City. Mike kept the tractor in the
garage of the house he was leasing from
Calibo.
Since he started renting Calibos house,
Mike had been religiously paying the
monthly rentals therefor, but beginning
November of 1986, he stopped doing so.
The following month, Calibo learned that
Mike had never paid the charges for
electric and water consumption in the
leased premises which the latter was dutybound to shoulder.
Thus, Calibo confronted Mike about his
rental arrears and the unpaid electric and
water bills. During this confrontation, Mike
informed Calibo that he (Mike) would be
could sooner
obligation.
pay
his
outstanding
120
120
ISSUES:
(1) What is the legal relation between the
parties?
(2) Whether or not Rodolfo Guansing/CDB
was the absolute owner of the subject
property as required under Art. 2085 to
effect a valid mortgage/sale?
(3) Whether or not CDB is a mortgagee in
good faith?
HELD:
(1) The parties entered into a CONTRACT
OF SALE.
The formal written offer of the
Spouses Lim was accepted by
CDB.
The Spouses Lim paid the option
money, which left only the
balance of the purchase price to
be paid.
In the Law on Sales, one does
not need to be the owner at the
perfection of the contract.
HOWEVER, NEMO DAT QUOD
NON HABET [One cannot give
what he does not have]. At the
consummation stage, it was
impossible for CDB to comply
with its legal obligation.
(2) NO. The sale by CDB to Lim of the
property mortgaged in 1983 by
Rodolfo Guansing must, therefore,
be deemed a nullity for CDB did not
have a valid title to the said property.
CDB never acquired a valid title
to the property because the
foreclosure sale, by virtue of
which the property had been
awarded to CDB as highest
bidder, is likewise void since the
mortgagor was not the owner of
the property foreclosed
A forced sale is still a sale
within the contemplation of the
law. Thus, the principle that the
seller must be the owner of the
thing sold also applies.
121
Eventually,
MBTC
extrajudicially
foreclosed the mortgage. A public
auction was held on February 4, 1981.
MBTC was the highest bidder for
P1,067,344.35. A certificate of sale was
issued and was registered with the
Register of Deeds.
Petitioners claim that Neri and Asiancars
did not tell them that the indebtedness
secured by the mortgage was for
P6,000,000 and that the security was the
whole of Lot 2700. Petitioners allege that
the deed presented to the Jayme
spouses
was
in
blank,
without
explanation on the stipulations contained
therein, except that its conditions were
identical to those of the stipulations when
they mortgaged half the lots area
previously with General Bank. Petitioners
also alleged that the Jayme spouses
were illiterate and only knew how to sign
their names. That because they did not
know how to read nor write, and had
given their full trust and confidence to
HECHANOVA vs ADIL
FACTS: Pio Servando sought to annul the
sale made by Jose Servando of three
parcels of land which according to him
were mortgaged in his favor. Alternatively,
if the sale is not annulled, to order the
defendant Jose Servando to pay the
amount of P20,000.00, plus interests, and
to order defendants to pay damages.
Attached to the complaint was a copy of
the private document evidencing the
alleged mortgage (Annex A), which is
quoted hereunder:
its
the
to
the
the
ALCANTARA vs ALINEA et al
FACTS: Alcantara filed a complaint in
the Court of First Instance of La Laguna,
praying that judgment be rendered in his
behalf ordering the defendants to deliver
to him the house and lot claimed, and to
UY TONG VS. CA
G.R. No. 77465, May 21, 1988
FACTS: Uy Tong (also known as Henry
Uy) and Kho Po Giok (Spouses Uy) used
to be the owners of Apartment No. 307 of
the Ligaya Building, together with the
leasehold right for 99 years over the land
on which the building stands. The land is
registered in the name of Ligaya
Investments, Inc. It appears that Ligaya
Investments, Inc. owned the building which
houses the apartment units but sold
Apartment No. 307 and leased a portion of
the land in which the building stands to the
Spouses.
1969, the Spouses purchased from
Bayanihan Automotive, Inc. (Bayanihan) 7
units of motor vehicles for a total amount of
P47,700.00 payable in 3 installments. After
making a down payment of P7,700.00, the
130
found
unconscionable and reduced to 12%
Penalty interest of 5% per month (60%
annum) found iniquitous and reduced
to 12% per annum from date of demand.
130
judgment.
ISSUE: WON there was a pledge. NO.
HELD: The court concluded that the
property was not delivered in accordance
with the provisions of article 1863 of the
Civil Code. The pledge was ineffective
against Martinez. It appears, however, that
the document of pledge is a public
document which contains an admission of
indebtedness. In other words, while it is
intended to be a pledge, it is also a credit
which appears in a public document.
Article 1924, paragraph 3, letter a, is
therefore applicable; and, said public
document antedating the judgment of
defendant Martinez, takes preference
thereover.
The validity of that document in so far as it
shows an indebtedness against Maria
Aniversario and its effectiveness against
her have not, however, been determined.
She is not a party to this action. No
judgment can be rendered affecting her
rights or liabilities under said instrument. If
said instrument is invalid or for any other
cause unenforceable against her, it would
be wholly unjust, by declaring its
preference over a debt acknowledged by
and conclusive against her, to require that
said funds be paid over to the holder of
said document. That would be to require
her to pay a debt which has not only been
shown to be enforceable against her but
which, as a witness for the defendant
Martinez on the trial of this cause, she
expressly and vehemently repudiated as a
valid claim against her.
131
132
of
Young, acting in his behalf and as attorneyin-fact of the other stockholders, executed on
the same day a Deed of Pledge over
1,324,864 shares which represented 99.82%
of the outstanding capital stock of the Bank.
The next day, he also executed a promissory
note in favor of
140
140
141
142
affirmed
by
respondent
court,
ordering the annulment of the deed of
absolute
sale,
such
decreed
nullification of the document has
already achieved finality.
(2) Was there a contract of mortgage? NO,
the fact of
annulment of the sale resulted in the
invalidity of themortgage, the subject
property
being
classified
as
timberland. Hence, DBP had no title to
the property.
(3) Will the invalidity of the contract of
mortgage affect the principal loan
obligation? NO, since it is an
accessory contract.
(3)
(4)
(5)
(2) True, public documents by themselves
may be adequate to establish the
presumption of their validity. However,
their probative weight must be evaluated
not in isolation but in conjunction with
other evidence adduced by the parties in
the controversy, much more so in this
case where the contents of a copy
thereof subsequently registered.
(6)
granted,
petitioner
mortgaged
to
respondent PNB the following: 1) three (3)
parcels of land with improvements 2) his
house and lot and 3) several pieces of
machinery and equipment in his Pasig
cocochemical plant.
Petitioner executed in favor of respondent
PNB three (3) promissory notes covering
the Five Hundred Thousand Pesos
(P500,000.00) credit line. Petitioner made
use of his LC/TR line to purchase raw
materials from foreign importers.
On March 9, 1981, he wrote a letter to
respondent PNB requesting for the
restructuring of his past due accounts into
a five-year term loan and for an additional
LC/TR line of Two Million Pesos
(P2,000,000.00). According to the letter,
because of the shut-down of his end-user
companies and the huge amount spent for
the expansion of his business, petitioner
failed to pay to respondent bank his LC/TR
accounts as they became due and
demandable. PNB Mandaluyong replied on
behalf of the respondent bank and required
petitioner to submit documents its:
1) Audited Financial Statements for 1979 and
1980;
2) Projected cash flow (cash in - cash out) for
five (5) years detailed yearly; and
3) List of additional machinery and
equipment and proof of ownership thereof.
On September 25, 1981, petitioner sent
another letter addressed to PNB VicePresident Jose Salvador, regarding his
request for restructuring of his loans. He
offered respondent PNB the following
proposals: 1) the disposal his house and
lot and a vacant lot in order to pay the
overdue trust receipts; 2) capitalization and
conversion of the balance into a 5-year
respondent bank.
SPOUSES VIOLA vs EQUITABLE (2008)
A stipulation in the mortgage, extending
its scope and effect to after-acquired
property is valid and binding where the
after- acquired property is in renewal of,
or in substitution for, goods on hand
when the mortgage was executed, or is
purchased with the proceeds of the sale
of such goods. More importantly,
respondent bank makes a valid
argument for the retention of the subject
movables. Respondent PNB asserts that
those
movables
were
in
fact
"immovables by destination" under Art.
415
(5) of the Civil Code. It is an established
rule that a mortgage constituted on an
immovable includes not only the land but
also the buildings, machinery and
accessories installed at the time the
mortgage was constituted as well as the
buildings, machinery and accessories
belonging to the mortgagor, installed
after the constitution thereof.
P4,783,254.6
9
P1,345,290.3
8
P7,896,078.1
5
P14,024,623.
22
150
150
151
152
costs.
CANLAS VS. CA
FACTS: The private respondent own
several parcels of land located in Quezon
City for which he is the registered owner.
He secured loans from L and R
corporations and executed deeds of
mortgage over the parcels of land for the
security of the same. Upon the maturity of
said loans, the firm initiated an extrajudicial
foreclosure of the properties in question
after private respondent failed to pay until
maturity. The private respondent filed a
complaint for injunction over the said
foreclosure and for redemption of the
parcels of land. Two years after the filing of
the petition, private respondent and L and
R corporation entered into a compromise
agreement that renders the former to be
insured another year for the said
properties. Included in the stipulations
were the attorneys fees amounting to Php
100,000.00. The private respondent
however, remained to be in turmoil when it
came to finances and was apparently
unable to pay and secure the attorneys
fees, more so the redemption liability.
Relief was discussed by petitioner and
private respondent executed a document
to redeem the parcels of land and to
register the same to his name.
Allegations were made by the private
respondent claiming the parcels of land to
his name but without prior notice, the
properties were already registered under
the petitioners name. The private
respondent calls for a review and for the
court to act on the said adverse claim by
petitioner on said certificates for the
properties consolidated by the redemption
price he paid for said properties. The
AGRICULTURAL CREDIT
COOPERATIVE ASSOCIATION OF
HINIGARAN vs. ESTANISLAO YULO
YUSAY, ET AL.
FACTS: July 20, 1952, Rafaela Yulo
executed in favor of the movant
a
mortgage for P33,626.29, due from her,
her mother, sisters, brothers, and others,
which amount she assumed to pay to the
movant. A motion was presented to the
court by the movant demanding the
surrender of the owner's duplicate
160
160
161
162
estate mortgage
properties.
over
respondents
1)
On 17 November 1989, respondent
instituted an action for the annulment of
the extrajudicial foreclosure with prayer
for preliminary injunction and damages
against petitioner and the Register of
Deeds of Marikina. Docketed as Civil
Case No. 1587-A, the complaint was
raffled to Branch 73 of the RTC of
2)
3)
4)
ISSUE:
Whether or not Excelsa is liable for the
dishonor of the draft and export - YES
Whether or not the real estate mortgage
also served as security for respondent's
drafts that were not accepted and paid by
Kwang Ju Bank, Ltd. - YES
Whether or not extrajudicial foreclosure of
the mortgage may be invalidated for lack of
notice to respondent - NO
Whether or not respondent may still
question the foreclosure sale - NO
HELD:
1) Excelsa is liable.
Much of the discussion has revolved
around who should be liable for the
dishonor of the draft and export
documents. In the two undertakings
executed by respondent as a condition for
the negotiation of the drafts, respondent
held itself liable if the drafts were not
accepted. The two undertakings signed by
respondent are similarly-worded and
contained
respondents
express
warranties, to wit:
In consideration of your negotiating the
above described draft(s), we hereby
warrant that the said draft(s) and
accompanying documents thereon are
valid, genuine and accurately represent
the facts stated therein, and that such
draft(s) will be accepted and paid in
accordance with its/their tenor. We
further undertake and agree, jointly and
severally, to defend and hold you free and
harmless from any and all actions, claims
and demands whatsoever, and to pay on
demand
all
damages
actual
or
compensatory including attorneys fees,
costs and other awards or be adjudged to
pay, in case of suit, which you may suffer
arising from, by reason, or on account of
your negotiating the above draft(s)
because of the following discrepancies or
reasons or any other discrepancy or
reason whatever.
We hereby undertake to pay on demand
the full amount of the above draft(s) or
any unpaid balance thereof, the
Philippine perso equivalent converted at
the prevailing selling rate (or selling rate
prevailing at the date you negotiate our
draft, whichever is higher) allowed by the
Central Bank with interest at the rate
prevailing today from the date of
negotiation, plus all charges and expenses
whatsoever
incurred
in
connection
defenses
which
respondents.
are
available
to
of
170
170
171
this
172
agreement.
The Court finds that there is no specific
mention of interest to be added in case of
either default or redemption. The Real
Estate Mortgage Contract itself is silent on
the computation of the redemption price.
Although it refers to the Promissory Notes
as constitutive of Tubles secured
obligations, the said contract does not
state that the interest to be charged in case
of redemption should be what is specified
in the Promissory Notes.
Thus, an ambiguity results as to which
interest shall be applied, for to apply an
18% interest per annum based on
Promissory Note No. 0143 will negate the
existence of the 0% interest charged by
Promissory Note No. 0142. Notably, it is
this latter Promissory Note that refers to
the principal agreement to which the
security attaches.
In resolving this ambiguity, the SC refer to
a basic principle in the law of contracts:
"Any ambiguity is to be taken contra
proferentem, that is, construed against
the party who caused the ambiguity
which could have avoided it by the
exercise of a little more care."
Therefore, the ambiguity in the mortgage
deed whose terms are susceptible of
different interpretations must be read
against the bank that drafted it.
Furthermore, the Court refuses to be
blindsided by the dragnet clause in the
Real Estate Mortgage Contract to
automatically include the consumption
loan, and its corresponding interest, in
computing the redemption price.
controversy,
commenced
by
third
persons
and
communicated n due time to the debtor.
PINEDA VS. CA
FACTS: Spouses Benitez mortgaged a
house and lot in favor of Juanita P. Pineda
(Pineda) and Leila P. Sayoc (Sayoc)
which was not registered . With the
consent of Pineda, spouses Benitez sold
the house, which was part of the Property,
to Olivia G. Mojica (Mojica). On the same
date, Mojica filed a petition for the issuance
of a second owners duplicate alleging that
she purchased a parcel of land and the
owners duplicate copy was lost. The
same was granted.
The lot was also subsequently sold to
Mojica. Mojica executed a deed of
mortgage over the same property in favor
of Gonzales which deed was registered.
Pineda and Sayoc filed a complaint against
the Spouses Benitez and Mojica. The
complaint prayed for the cancellation of the
second owners duplicate. During the
pendency of the case, Pineda caused the
annotation of a notice of lis pendens. The
Court ruled that the second owners
duplicate was void.
Meanwhile, Mojica defaulted in paying the
obligation to Gonzales so the latter
foreclosed the mortgaged and purchased it
at the auction sale. A new TCT was issued
in the name of Gonzales.
Pineda and Sayoc filed a motion with the
trial court for the issuance of an order
requiring Gonzales to surrender the
owners duplicate of TCT to the ROD.
The Trial Court declared the title of
Gonzales as void and ordered the
reinstatement of the TC in the name of
HELD:
Mojicas Title is Void Since the TCT of
the property was not actually lost but
was in the possession of Pineda, the
reconstitution proceeding and the
second TCT issue in favor of Mojica by
virtue of the sale were void.
However, the prior mortgage of the
Property by the Spouses Benitez to
Pineda and Sayoc did not prevent the
Spouses Benitez, as owners of the
Property, from selling the Property to
Mojica. A mortgage is merely an
encumbrance on the property and does
not extinguish the title of the debtor who
does not lose his principal attribute as
owner to dispose of the property. The law
even considers void a stipulation
forbidding the owner of the property from
alienating the mortgaged immovable.
Since the Spouses Benitez were the
undisputed owners of the Property, they
could validly sell and deliver the Property
redemption
mortgage.
in
judicial
foreclosure
of
foreclosure sale
confirmation.
but
prior
to
its
180
180
181
182
GOLDENWAY MERCHANDISING
CORPORATION vs. EQUITABLE
PCI BANK
FACTS:
Goldenway
Merchandising
Corporation (petitioner) executed a Real
Estate Mortgage in favor of Equitable
PCI Bank (respondent) over its real
properties situated in Valenzuela,
Bulacan (now Valenzuela City). The
190
190
191
192
that
had
the
said
in it
possession.
A writ of possession, which commands
the sheriff to place a person in
possession of real property, may be
issued in:
(1) Land registration proceedings under
Section 17 of Act No. 496;
(2) Judicial foreclosure, provided the debtor
is in possession of the mortgaged
property, and no third person, not a party
to the foreclosure suit, had intervened;
(3) Extrajudicial foreclosure of a real estate
mortgage, pending redemption under
Section 7 of Act No. 3135, as amended
by Act No. 4118; and
(4) Execution sales, pursuant to the last
paragraph of Section 33, Rule 39 of the
31
Rules of Court.
Anent the redemption of property sold in
an extrajudicial foreclosure sale made
pursuant to the special power referred to
32
33
in Section 1 of Act No. 3135, as
amended,
the debtor, his successor-in-interest, or
any judicial creditor or judgment creditor
exercise of judgment.
42
It is clear from the foregoing that a nonredeeming mortgagor like the petitioner
had no more right to challenge the
issuance of the writ of execution cum writ
of possession upon the ex parte
application of GSIS. He could not also
impugn anymore the extrajudicial
foreclosure, and could not undo the
consolidation in GSIS of the ownership
of the properties covered by TCT No.
284272-R and TCT
No. 284273-R,
which
consolidation was already irreversible.
Hence, his moves against the writ of
of sale.
The form of the notice of extrajudicial
sale is now prescribed in Circular No. 726
2002 issued by the Office of the Court
Administrator on 22 January 2002.
Section 4(a) of Circular No. 7-2002
provides that:
XXX
"In the event the public auction
should not take place on the said
date, it shall be held on ,_
without further notice."
The last paragraph of the prescribed
notice of sale allows the holding of a
rescheduled
auction
sale
without
reposting or republication of the notice.
However, the rescheduled auction sale
will only be valid if the rescheduled date
of auction is clearly specified in the prior
notice of sale. The absence of this
information in the prior notice of sale will
render the rescheduled auction sale void
for lack of reposting or republication. If
the notice of auction sale contains this
510.50.
Julieta failed to redeem the properties
within the one year period from
registration of sale. PNB later conveyed
the properties to Alfredo Ouano, the
brother of Julieta.
On March 28, 1983, Julieta sent demand
letters to PNB and petitioner, pointing out
irregularities in the foreclosure sale.On
April 18, 1983, Julieta filed a complaint
with the Regional Trial Court (RTC) of
Cebu for the nullification of the May 29,
1981 foreclosure sale.
ISSUE: W/N the requirements of Act No.
3135 were complied with in the May 29,
1981 foreclosure sale.
HELD:
The
governing
law
for
extrajudicial foreclosures is Act No. 3135
as amended by Act No. 4118. The
provision relevant to this case is Section
3, which provides:
SEC. 3. Notice shall be given by
posting notices of the sale for not
200
200
201
VR Enterprise.
Petitioners say that they immediately
noted that the purported signatures of
their mother on the 3 mortgage contracts
were actually forgeries, and that the
mortgage contracts did not state when
the supposed loan obligations would
become due and demandable.
They maintain that their mother did not
contract the loans, and they point to their
brothers Manuel and Arturo, whose
signatures appear as witnesses on the
mortgage documents, as guilty of forging
her signatures and of receiving the
proceeds of the loans. The petitioners
also disclaim any knowledge of the
loans, or of their consent thereto, either
before or after.
VR Enterprise extrajudicially foreclosed
the mortgage over the lots, but
meanwhile,
petitioners
filed
for
Annulment of Mortgage, Extra-Judicial
Foreclosure, Auction Sale, Certificate of
202
ISSUES:
1. WON there was a contract of
antichresis. YES
2. WON the creditor acquires through
possession the ownership of the real
property in antichresis when debtor fails
time.
the
Repides contention:
Repide insisted that his title has become
indefeasible and the action of Macapinlac
already prescribed, owing to the fact that
the conveyance of the land to him has
been followed by the issuance of a TCT in
his name, and the original certificate in the
name of Macapinlac has been cancelled
all of which had been accomplished more
than one year before the present action
was begun.
In the first place, it must be borne in mind
that the equitable doctrine, to the effect
that any conveyance intended as security
for a debt will be held in effect to be
amortgage, whether so actually expressed
in the instrument or not, operates
regardless of the form of the agreement
chosen by the contracting parties as the
repository of their will.
Equity looks through the form and
considers the substance; and no kind of
ALOJADO VS SIONCO
FACTS: Juana Mabaquiao sold the landin-dispute described in the complaint to
Nicolas Alegata . Alegata died. Settlement
proceedings of his estate was instituted,
his property, which included the land-indispute was adjudicated to Lim Kang Sang
and Lim Eng Teeng, his only heirs. Lim
Kang and Lim Eng sold the land to Lim
Ponso & Co., with the right to repurchase
for the period of one year Period expired
without this right having exercised.
Lim Ponso & Co. transferred this land
unconditionally to Lim Siongco and Lim
Kingko.
Juana
Mabaquiao
dies.
Intestate
proceedings took place and Ambrosio T.
Alojado was appointed administrator.
Ambrosio, as administration, brought this
action against Lim Sionco, Lim Kingko and
Lim Ponso & Co. prays that he be declared
the absolute owner of this land with the
improvements thereon, and that the
defendants be ordered to restore and
respect his right of ownership, possession
and usufruct of the property;
RTC: in favor of Lim Sionco, Lim Kingko,
Lim Ponso &Co.
Ambrosio contends that the contract
executed by Juana Mabaquiao
with
Nicolas Alegata was not a contract of sale
RAMIREZ v. CA
G.R. No. L-38185. September 24, 1986
FACTS: On September 15, 1959,
petitioners-spouses Hilario Ramirez and
Valentina Bonifacio filed an application for
registration of a parcel of riceland in
Pamplona, Las Pinas, Rizal. After notice
and publication, nobody appeared to
oppose the application. An order of general
default was issued and the court allowed
the petitioners to present evidence in
support of their claim. Thereafter, the
petitioners presented parole evidence that
they acquired the land in question by
purchase from Gregoria Pascual during the
early part of the American regime but the
corresponding contract of sale was lost
and no copy or record of the same was
available. On January 30, 1960, the court
ordered the issuance of the decree of
registration and consequently, Original
Certificate of Title No. 2273 of the Registry
of Deeds of Rizal was issued in the
petitioners names. On March 30, 1960,
private respondents filed a petition to
review the decree of registration on the
ground of fraud. The respondents alleged
among others that they obtained a loan of
P400.00 from the petitioners in which they
secured with a mortgage on the land in
question by way of antichresis and that
there were several attempts to redeem the
land but were refused by the petitioners.
The trial court ordered the cancellation of
the original certificate of title. The Court of
Appeals affirmed the decision.
210
210
211
212
certificate of ownership.
The holder of a lien who is derelict in his
duty to comply and require compliance with
the statutory provisions acts at his own
peril, and must suffer the consequence of
his own negligence; and accordingly, he is
not entitled to the lien as against a
subsequent innocent purchaser filed as
provided by other chattel mortgage
statutes.
The above authorities leave no room for
doubt that purchaser O. N. Borlough's right
to the vehicle should be upheld as against
the previous and prior mortgage Fortune
Enterprises, Inc., which failed to record its
lien in accordance with the Revised Motor
Vehicles Law.
HELD:
The duties of a register of
deeds in respect to the registration of
chattel mortgage are of a purely ministerial
character; and no provision of law can be
cited which confers upon him any judicial
or quasi-judicial power to determine the
nature of any document of which
registration is sought as a chattel
mortgage.
His duties in respect to such instruments
are ministerial only. The efficacy of the act
of recording a chattel mortgage consists in
the fact that it operates as constructive
notice of the existence of the contract, and
the legal effects of the contract must be
discovered in the instrument itself in
relation with the fact of notice. Registration
adds nothing to the instrument, considered
as a source of title, and affects nobody's
rights except as a specifies of notice.
Articles 334 and 335 of the Civil Code
supply
no
absolute
criterion
for
discriminating between real property and
Companys
train.
They sustained
lifethreatening wounds, fractures and
other
injuries,
which
left
them
permanently disfigured. The Supreme
Court ruled in favor of Aleko Lilius, et al,
awarding them
in the amount of
P33,525.03 as damages, including
interest and costs.
In G.R. No. 42551, herein case, Laura
Lindley Shuman, the Manila Wine
Merchants, Ltd., the Bank of the
Philippine Islands and the Manila Motor
Co., Inc(creditors of the spouses Lilius).,
have appealed from an order of the
Court of First Instance of Manila fixing
the degree of preference of the claimants
and distributing the proceeds of the
judgment of this court in the case of
Lilius vs. Manila Railroad Co.
APPEAL OF LAURA LINDLEY SHUMAN
:The lower court erred in holding that Dr.
W.H. Waterous and Dr. M. Marfori had a
claim against the plaintiff, Aleko E. Lilius
chattel
mortgage
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property,
hence
unconscionable
and
inequitable (P322,350.00 from 2M), and
therefore null and void.
Petitioners contend that the amount of
220
CABRAL vs EVANGELISTA
FACTS: On 12 Dec 1959, George had
executed in favor of Cabral Spouses a
chattel mortgage covering a Morrison
English piano and a Frigidaire GM Electric
Stove as security for payment to the latter
of a promissory note in the sum of P1k
executed on the same date in the Chattel
Mortgage Register of Rizal on 14 Dec
1959. Meanwhile, the Evangelista spouses
obtained a final money judgment against
Tanuya in a Civil Case. They caused the
levy in execution on Tanuyas personal
properties, including the piano and the
stove mortgaged to Cabral spouses.
The said mortgage chattels, together with
other personal properties of the judgment
debtor, were sold at public auction to
Evangelista spouses as the highest
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222
CORDOVA vs REYES
FACTS: Sometime in 1977 and 1978,
petitioner Jose Cordova bought from
Philfinance certificates of stock of Celebrity
Sports Plaza Inc (CSPI) and shares of
stock of other corporations. He was issued
a confirmation of sale. CSPI shares were
delivered to former Filmanbank and
Philtrust Banks (as custodian banks to hold
the shares in behalf of Cordova).
In 1981, Philfinance was placed under
receivership by SEC. Thereafter, private
respondents Reyes and Atty Wendell
Coronel were appointed as liquidators. In
1991, without the knowledge and consent
of Cordova and without authority from
SEC, private respondents withdrew the
CSPI shares from the custodian banks.
They subsequently sold the shares to
DE BARRETO vs VILLANUEVA
FACTS: Rosario Cruzado sold all her right,
title, and interest and that of her children in
the house and lot herein involved to
Villanueva for P19K. The purchaser paid
P1,500 in advance, and executed a
promissory note for the balance. However,
the buyer could only pay P5,500 On
account of the note, for which reason the
vendor obtained judgment for the unpaid
balance. In the meantime, the buyer
Villanueva was able to secure a clean
certificate of title and mortgaged the
property to appellant Barretto to secure a
loan of P30K, said mortgage having been
duly recorded.
1.
2.
foreclosure sale.
ISSUE: Appellants argument: inasmuch
as the unpaid vendor's lien in this case
was not registered, it should not
prejudice the said appellants' registered
rights over the property.
HELD: There is nothing to this argument.
Note must be taken of the fact that article
2242 of the new Civil Code enumerating
the preferred claims, mortgages and
liens
on
immovables,
specifically
requires that. Unlike the unpaid price of
real property sold. mortgage credits, in
order to be given preference, should be
recorded in the Registry of Property. If
the legislative intent was to impose the
same requirement in the case of the
vendor's lien, or the unpaid price of real
property sold, the lawmakers could have
easily inserted the same qualification
which now modifies the mortgage
credits. The law, however, does not
make any distinction between registered
on
December
16,
1966,
230
the others.
J.L. BERNARDO VS CA
The proceedings in the court below do not
partake of the nature of the insolvency
proceedings or settlement of a decedents
estate. The action filed by Ramos was only
to collect the unpaid cost of the
construction of the duplex apartment. It is
far from being a general liquidation of the
estate of the Tabligan spouses.
Insolvency proceedings and settlement of
a decedents estate are both proceedings
in rem which are binding against the whole
world. All persons having interest in the
subject matter involved, whether they were
notified or not, are equally bound.
Consequently, a liquidation of similar
import or "other equivalent general
liquidation must also necessarily be a
proceeding in rem so that all interested
persons whether known to the parties or
not may be bound by such proceeding.
In the case at bar, although the lower court
found that "there were no known creditors
other than the plaintiff and the defendant
herein", this can not be conclusive. It will
not bar other creditors in the event they
show up and present their claims against
the petitioner bank, claiming that they also
have preferred liens against the property
involved.
Consequently,
Transfer
Certificate of Title No. 101864 issued in
favor of the bank which is supposed to be
indefeasible would remain constantly
unstable and questionable. Such could not
have been the intention of Article 2243 of
the Civil Code although it considers claims
and credits under Article 2242 as statutory
liens. Neither does the De Barretto case
sanction such instability.
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directly to petitioners.
Petitioners allege that, although the whole
amount of the cash equity became due, the
Municipality refused to pay the same,
despite
repeated
demands
and
notwithstanding that the public market was
more than ninety-eight percent (98%)
complete as of July 20, 1991.
Furthermore, petitioners maintain that
Salonga induced them to advance the
expenses for the demolition, clearing and
site filling work by making representations
that the Municipality had the financial
capability to reimburse them later on.
However, petitioners claim that they have
not been reimbursed for their expenses.
On July 31, 1991, J.L. Bernardo
Construction, Santiago Sugay, Edwin
Sugay and Fernando Erana, with the latter
three bringing the case in their own
personal
capacities
and
also
in
representation
of
J.L.
Bernardo
Construction, filed a complaint for breach
of contract, specific performance, and
collection of a sum of money, with prayer
for
preliminary
attachment
and
enforcement of contractors lien against the
Municipality of San Antonio, Nueva Ecija
and Salonga, in his personal and official
capacity as municipal mayor. After
defendants filed their answer, the Regional
Trial Court held hearings on the ancillary
remedies prayed for by plaintiffs.
On September 5, 1991, the Regional Trial
Court issued the writ of preliminary
attachment prayed for by plaintiffs. It also
granted J.L. Bernardo Construction the
right to maintain possession of the public
market and to operate the same.
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HELD:
1. NO, the lis pendens annotations were
improper.
As a general rule, the only instances in
which a notice of lis pendens may be
availed of are as follows: (a) an action to
recover possession of real estate; (b) an
action for partition; and (c) any other court
proceedings that directly affect the title to
the land or the building thereon or the use
or the occupation thereof. Additionally, this
Court has held that resorting to lis
pendens is not necessarily confined to
cases that involve title to or possession of
real property. This annotation also applies
to suits seeking to establish a right to, or
an equitable estate or interest in, a specific
real property; or to enforce a lien, a charge
or an encumbrance against it.
Petitioner's money claim is not a
contractor's lien
Apparently, petitioner proceeds on the
premise that its money claim involves the
enforcement of a lien. Since the money
construction
materials
and
other
merchandise from Remington Industrial
Sales Corporation (Remington) worth
P921,755.95. The purchases remained
unpaid as of August 1, 1984 when
Remington filed a complaint for a sum of
money and damages against Marinduque
Mining for the value of the unpaid
construction
materials
and
other
merchandise purchased by Marinduque
Mining, as well as interest, attorney's fees
and the costs of suit.
Remington's original complaint was later
amended to implead additional defendants
and in the end, the co-defendants were
MMIC, PNB, DBP, Nonoc Mining,
Maricalum Mining, Island Cement and
Asset Privatization Trust.
The RTC ruled in favor of Remington,
whose decision was later affirmed by the
CA. The CA held that there exists in
Remington's favor a lien on the unpaid
purchases of MMIC and as transferee,
DBP must be held liable for the value
thereof.
ISSUE: Whether or not Remington can
enforce its claim for unpaid purchases
made by MMIC against DBP
HELD: No, in the absence of liquidation
proceedings, Remington's claim cannot
be enforced against DBP.
ARTICLE 2241. With reference to specific
movable property of the debtor, the
following claims or liens shall be preferred:
xxx
xxx
xxx
(3) Claims for the unpaid price of movables
sold, on said movables, so long as they are
in the possession of the debtor, up to the
value of the same; and if the movable has
been resold by the debtor and the price is
still unpaid, the lien may be enforced on
cases,
then
other
creditor-debtor
relationships where there are concurrence
of credits would be left without any rules to
govern them, and it would render
purposeless the special laws
on
insolvency.
Upon motion by appellants, however, the
Court reconsidered its decision. Justice
J.B.L. Reyes, speaking for the Court,
explained the reasons for the reversal:
The previous decision failed to take fully
into account the radical changes
introduced by the Civil Code of the
Philippines into the system of priorities
among creditors ordained by the Civil Code
of 1889.
Pursuant to the former Code, conflicts
among creditors entitled to preference as
to specific real property under Article 1923
were to be resolved according to an order
of priorities established by Article 1927,
whereby one class of creditors could
exclude the creditors of lower order until
the claims of the former were fully satisfied
out of the proceeds of the sale of the real
property subject of the preference, and
could even exhaust proceeds if necessary.
Under the system of the Civil Code of the
Philippines, however, only taxes enjoy a
similar absolute preference. All the
remaining thirteen classes of preferred
creditors under Article 2242 enjoy no
priority among themselves, but must be
paid pro rata, i.e., in proportion to the
amount of the respective credits. Thus,
Article 2249 provides:
"If there are two or more credits with
respect to the same specific real property
or real rights, they shall be satisfied pro
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240
obligations.
Thereby,
an
orderly
determination of preference of creditors'
claims is assured; the adjudication made
will be binding on all parties-in-interest,
since those proceedings are proceedings
in rem; and the legal scheme of
classification, concurrence and preference
of credits in the Civil Code, the Insolvency
Law, and the Labor Code is preserved in
harmony.
Isaiah 41:10
So do not fear, for I am with you; do not
be dismayed, for I am your God. I will
strengthen you and help you; I will uphold
you with my righteous right hand.
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