Professional Documents
Culture Documents
the
obligation
to
pay
is
Issue:
3. In
light
of
the
downpayment,
respondent had 6 months (1st) to notify
the Petitioner of her intention to
purchase the land. However, the
balance is to be paid within another 6
months.
4. Prior to the first six months, the
Petitioner may still offer the cited land
to other persons provided that the P3
million downpayment shall be returned
to the Respondent including interest
based on prevailing compounded bank
interest.
5. Nevertheless, in case there are no
other buyers within the first 6 months,
no interest shall be charged on the P3
million.
6. However, in the event that on the 6th
month the Respondent does not
purchase the land, the Petitioner has a
Ruling:
No. SC ruled in favour of Respondent.
OUTRIGHT SALE
o Co accepted the invoice of the
ballet shoes and he even noted
down in his own handwriting the
partial payments that he made.
o If the sale has been on
consignment, a stipulation as to
the period of time for the return of
the unsold shoes should have been
made, however, this was not done
NOT BOUND BY THE INTEREST
o He did not sign the invoice slip the
stipulated interest was 20%, hence,
not binding
o However, he is bound by the legal
interest of 6%
Hence, Co was ordered to pay the balance
of the purchase price for the ballet shoes
+ legal interest
Issue:
1) Whether or not the Purchase Agreement
entered into by the Parties is a debt
instrument?
2) If so, Is Basilio liable as surety?
3) Whether or not Lirag is liable for the
interest as liquidated damages?
Held:
1) YES, the Purchase Agreement is a debt
instrument. The terms and conditions of the
Agreement show that parties intended the
repurchase of preferred shares on the
respective scheduled dates to be an absolute
obligation, which does not depend on the
financial ability of the corporation.
o This absolute obligation on the part of the
Petitioner corporation is made manifest by
the fact that a surety was required to see
to it that the obligation is fulfilled in the
event the principal debtors inability to do
so.
o It cannot be said that SSS is a preferred
stockholder. The rights given by the
Purchase Agreement to SSS are not rights
enjoyed by ordinary stockholders. Since
there was a condition that failure to
repurchase the stocks on the scheduled
dates renders the entire obligation due
and demandable with interest.
These
features clearly show that intent of the
parties to be bound therein as debtor and
creditor and not as a corporation and
stockholder.
2) YES, Basilio is liable as surety. Thus it follows
that he cannot deny liability for Lirags
default. As surety, he is bound immediately to
pay SSS the amount then outstanding.
3) The award of liquidated damages represented
by 12% of the amount then outstanding is
correct, considering that the petitioners in the
stipulation of facts admitted having failed to
interest.
Ruling: It is well settled that, under article 1109 of
the Civil Code, as well as under section 5 of the
Usury Law (Act No. 2655), the parties may
stipulate that interest shall be compounded; and
rests for the computation of compound interest
can certainly be made monthly, as well as
quarterly, semiannually, or annually. But in the
absence
of
express
stipulation
for
the
accumulation of compound interest, no interest
can be collected upon interest until the debt is
judicially claimed, and then the rate at which
interest upon accrued interest must be computed
is fixed at 6 per cent per annum. In this case,
there was no compound interest in the
agreement.
DAVID vs. CA
G.R.No. 115821, October 13, 1999
Facts:
A writ of attachment over the real
properties owned by Valentin Afable, Jr.. RTC
ordered Afable, Jr. To pay David P66,500 plus
interest from July 24, 1974, until fully paid. RTC
amended its decison and ruled that legal rate of
interest should be computed from January 4,
1966, instead of from July 24, 1974.
Afable appealed to the Court of Appeals
and then to the Supreme Court. In both
instances, the decision of the lower court was
affirmed. Entries of judgment were made and the
record of the case was remanded to Branch 27 for
the final execution.
An Alias Writ of Execution was issued by
virtue of which respondent Sheriff Melchor P. Pea
conducted a public auction.
Sheriff Pea
informed the petitioner that the total amount of
the judgment is P270,940.52. The amount
included a computation of simple interest.
Afable, however, claimed that the judgment
award should be P3,027,238.50, because the
amount due ought to be based on compounded
interest.
Although the auctioned properties were
sold to the petitioner, Sheriff Pea did not issue
the Certificate of Sale because there was an
excess in the bid price in the amount of
P2,941,524.47, which the petitioner failed to pay
despite notice.
David filed a Motion praying
that respondent Judge Cruz issue an order
directing respondent Sheriff Pea to prepare and
execute a certificate of sale in his favor. His
HELD:
Payments were NOT rents, interests
Neri took possession of land and collected
fruits. The creditor having enjoyed the
beneficial use of the lands delivered as
security for the loan, it appears to have
been the intention of the parties that the
creditor should be compensated thereby.
Though receipts, payments are called
rents, they were prepared by Neri (Ps
husband) and Plaintiff, and defendants in
their ignorance did not look into the
wording, being merely satisfied that they
were proofs of payment.
The liability of plaintiff to return the excess
payments is in keeping with Article 1895
(Old Civil Code) which provides that,
when something is received which there
is no right to collect, and which by mistake
has been unduly delivered, the obligation
to restore it arises.
The 2 requisites are present: 1) There is no
right to collect these excess sums; and 2)
the amounts have been paid through
mistake by defendants. Such mistake is
shown by the fact that their contracts
never intended that either rents or interest
should be paid, and by the further fact
that when these payments were made,
they were intended by defendants to be
applied to the principal, but they overpaid
the amounts loaned to them.
no
USURY LAW
Topic: Simple Loan or Mutuum; Article 1960
Velez v. Balzarra
FACTS:
Plaintiff Velez filed a complaint for the
return of parcels of land sold by Defendant
to Plaintiffs husband. She further alleged
that
defendants
had
remained
in
possession of said land under Contract of
Lease but for over 2 years defendants had
not paid the agreed rentals.
Defendant alleged that the real agreement
was a loan secured by a mortgage of
those lands.
Trial court found that the payments made
by defendants were not made by way of
interest but as payments for the principal.
Defendant overpaid therefore Plaintiff
should return excess.
INVESTORS FINANCE
CORPORATION, petitioner,
vs.
AUTOWORLD SALES CORPORATION, and PIO
BARRETTO REALTY DEVELOPMENT
CORPORATION,respondents.
FACTS:
Petitioner Investors Finance Corporation, then
known also as FNCB Finance (now doing business
under the name of Citytrust Finance Corporation),
is a financing company doing business with
private respondent Autoworld Sales Corporation
(AUTOWORLD) since 1975. Anthony Que,
president of AUTOWORLD, also held the same
position at its affiliate corporation, private
respondent Pio
(BARRETTO).
Barretto
Realty
Corporation
10
Solangon vs Salazar
G.R. No. 125944
Facts:
Petitioner-spouses executed 3 real estate
mortgages on a parcel of land situated in
Bulacan, in favor of the same Respondent
Salazar to secure payment of loans of P60 K,
P136 K and P230 K payable within 4 months,
1 year, and 4 months in that order, with 6%
monthly interest on the first loan, and legal
interests on the others.
This action was initiated by the Petitionerspouses to prevent the foreclosure of the
mortgaged property.
11
Issue:
Whether or not the 6% monthly interest is
unconscionable?
Ruling:
Yes. The SC ruled that this is unconscionable.
5% month is
unreasonable,
12
claim is made
(judicially/extrajudicially)
o But if it cannot be reasonably
established at the time demand
was made = interest to run from
date of judgment of the court
If judgment becomes Final and Executory
o Rate of legal interest = 12%
o From finality to satisfaction
o Why? It is already considered as
forbearance
Facts:
1) On April 9, 1981, private respondent
Vicente Tan insured his building in
Dumaguete City against fire with
petitioner Eastern Assurance and Surety
Corporation (EASCO) for P250,000.00.
2) On June 26, 1981, the building was
destroyed by fire. As his claim for
indemnity was refused, private respondent
filed a complaint for breach of contract
with damages against petitioner. The RTC
Court, decided in favour of Vicente Tan. In
its ruling, the RTC court imposed the rate
of interest at 12% per annum, and
decided that EASCO to pay immediately to
Vicente Tan the unpaid balance of interest
of the principal amount of P250,000.00
equivalent to 6% per annum from June 26,
1981 to September 30,1994.
3) Petitioner EASCO appealed to the Court of
Appeals, which, on July 30, 1993, affirmed
the decision of the trial court. The CA, on
the authority of prior case, Eastern
Shipping Lines, Inc. v. Court of Appeals,
that the interest rate on the amount due
should be 6% per annum from June 26,
1981 to August 24, 1993, and 12% per
annum beginning August 25, 1993 until
the money judgment is paid.
4) Thereafter, petitioner EASCO tendered
payment of the money judgment in the
amount of P250,000.00 plus interest of 6%
per annum from June 26, 1981 to July 30,
1993.
5) However, private respondent refused to
accept payment on the ground that the
applicable legal rate of interest was 12%
13
14
The Court of Appeals rendered a decision in CAG.R. No. CV-06017, which modified the judgment
of the trial court
SC: YES!
-
PNB v CA
FACTS:
-
Issue: Whether
irregularities?
or
not
Sheriff
is
guilty
of
Held:
15
RCBC vs ALFA
Facts:
Alfa on separate instances was
granted by RCBC 4 letters of credit to facilitate
the purchase of raw materials for their garments
business. Alfa executed 4 trust receipts and made
comprehensive surety agreements wherein the
signatory officers of Alfa agreed in joint/several
capacity to pay RCBC in case the company
defaulted. RCBC filed a case versus Alfa for a sum
of money. The CA awarded only P3M (minimum
amount) to RCBC instead of P18M as stipulated in
their contract.
Issue:
W/N the CA can deviate from the
provisions of the contract between the parties?
Ruling:
No.
Contracting
parties
may
establish agreements terms, deemed advisable
provided they are not contrary to law/public
policy. A contract is a law between the parties. In
this case its valid because it was not excessive
under the Usury Law.
*Atty. Aguinaldo assigned this case because he
just wanted to show us how to compute for the
interest in long term deals. He even made a
diagram on the board. Di ko na ilalagay un sa
digest because I assume that my industrious &
responsible classmates took down notes... = p
MENDOZA vs CA
G.R.No. 116710, June 25,2001
Facts:
PNB extended P500,000 credit line and P1
million letter of credit infavor of Mendoza. As
security for the credit accomodations, he
mortgaged real and personal properties to PNB.
The real estate mortgage provided for an
escalation clause.
16
17
institution
replevin.
of
the
instant
action
for
Issues:
1. Whether or not the disputed contract is an
ordinary contract of lease?
2. Whether or not the provisions of the cited
contract are valid?
3. Whether or not Respondent Bank is liable for
damages?
Ruling:
1. No. SC ruled that it is a special kind of deposit
because:
the full and absolute possession and
control of the SDB was not given to the
joint renters the Petitioner and the
Pugaos.
The guard key of the box remained with the
Respondent Bank; without this key, neither
of the renters could open the box and vice
versa.
18
SC: NO
-
19
20
Issue:
Whether or not PNB has a right to apply a deposit
to the debt of a depositor to the bank?
Held:
Yes, PNB has a right to apply the payment against
the account of the depositor.
The relation between a depositor and a bank is
that if creditor and debtor. The general rule is
that a bank has a right to set off of the deposit in
Ruling:
No. There is no breach of trust from
a banks failure to return the subject matter of
the deposit. Bank deposits are in the nature of
irregular deposits. All kinds of bank deposits are
to be treated as loans and are to be covered by
the law on loans Art.1980. In reality the depositor
is the creditor while the bank is the debtor. Failure
of the respondent bank to honor the time deposit
is failure to pay its obligation as a debtor.
SESBRENO V. CA
Facts: Sesbreno entered into a money market,
giving 300k to Philfinance. As an exchange,
Philfinance gave checks and confirmation of sale
of Delta Motor Corp certificates. Checks bounced.
Sesbreno is running after Philipinas Bank (payee)
(Holder of security of primissory note) and Delta
(maker). Delta contends that it is not liable
because there was "reconstruction" of debt of
Delta to Philfinance, the promissory note is not
valid anymore. It also contends that the
document cannot be assigned because its non
negotiable. RTC ruled that Philfinance is liable
because Philfinance already knows that the
21
Notice
The Court ruled that there was no doubt
that the person in charge had knowledge of his
revolver, the bag, and pants of the guest, De los
Santos.
The requirement of notice being evidently
for the purpose of closing the door to fraudulent
claims for non-existent articles, the lack thereof
22
Precautions
23
COMMISSIONER OF INTERNAL
REVENUE, petitioner,
vs.
HAWAIIAN-PHILIPPINE
COMPANY, respondent.
FACTS:
The petitioner, a corporation duly organized in
accordance with law, is operating a sugar central
in the City of Silay, Occidental Negros. It produces
centrifugal sugar from sugarcane supplied by
planters. The processed sugar is divided between
the planters and the petitioner in the proportion
stipulated in the milling contracts, and thereafter
is deposited in the warehouses of the latter. (Pp.
4-5, t.s.n.) For the sugar deposited by the
planters, the petitioner issues the corresponding
warehouse receipts of "quedans". It does not
collect storage charges on the sugar deposited in
its warehouse during the first 90 days period
counted from the time it is extracted from the
sugarcane. Upon the lapse of the first ninety days
and up to the beginning of the next milling
season, it collects a fee of P0.30 per picul a
month. Henceforth, if the sugar is not yet
withdrawn, a penalty of P0.25 per picul or fraction
thereof a month is imposed. (Exhibits "B-1", "C1", "D-1", "B-2", "C-2", p. 10, t.s.n.)
The storage of sugar is carried in the books of the
company under Account No. 5000, denominated
"Manufacturing Cost Ledger Control"; the storage
fees under Account No. 521620; the expense
accounts of the factory under Account No. 5200;
and the so-called "Sugar Bodega Operations"
under Account No. 5216, under which is a SubAccount No. 20, captioned, "Credits". (Pp. 16-17,
t.s.n., Exhibit "F".) The collections from storage
after the lapse of the first 90 days period are
entered in the company's books as debit to CASH,
and credit to Expense Account No. 2516-20 (p.
18, t.s.n.).
The credit for storage charges decreased the
deductible expense resulting in the corresponding
increase of the taxable income of the petitioner.
This is reflected by the entries enclosed in
parenthesis in Exhibit "G", under the heading
"Storage Charges". (P. 18, t.s.n.) The alleged
reason for this accounting operation is that,
inasmuch as the "Sugar Bodega Operations" is
considered as an expense account, entries under
it are "debits". Similarly, since "Storage Charges"
constitute "credit", the corresponding figures (see
Exhibit "C") are enclosed in parenthesis as they
decrease the expenses of maintaining the sugar
warehouses.
24
Gonzalez vs Go Tiong
Facts:
ISSUE:
Whether or not Plaintiffs claim is governed by the
Bonded Warehouse Act due to Go Tiongs act of
issuing to the former ordinary receipts, not
warehouse receipts?
RULING:
YES. SC ruled in favor Plaintiff.
25
FACTS:
26
ISSSUE:
Whether or not the warehouse receipts issued are
negotiable?
HELD:
Yes,
a
warehouseman
who
deposited
merchandise in his own warehouse, issued a
warehouse receipts therefore and thereafter
negotiated the receipts by endorsement. The
receipt recites that the goods were deposited
por orden of the depositor, the warehouseman,
but contained no statement that the goods were
to be delivered to the bearer of the receipts or to
a specified person. It is in the form of a
warehouse
receipts
and
was
not
mark
nonnegotiable.
Therefore the receipts was negotiable warehouse
receipts and the words por orden must be
construed to mean to the order.
27
Facts:
Valero is president of the Luzon Sugar Co. while
appellant Cruz had a share amounting to
1,544.38 piculs export centrifugal sugar, which
was exchanged for an equal amount of domestic
centrifugal sugar. Cruz deposited in the Luzon
Sugar Company's warehouse within its
compound, with the obligation on its part to
deliver it to the appellant on demand, that the
appellant was entitled to 238.20 piculs of
domestic centrifugal sugar as his share in the
1940-1941 crop. On different dates, the appellant
had withdrawn several piculs of sugar, reducing
reducing the number of gallons of molasses.
Issue:
28
Held:
LUA KIAN VS. MANILA RAILROAD
CONSOLIDATED vs ARTEX
Facts:
Consolidated Terminals Inc (CTI)
operated a customs warehouse in Manila. It
received 193 bales of high density compressed
raw cotton worth P99k. It was understood that CTI
would keep the cotton on behalf of Luzon
Brokerage until the consignee Paramount Textile
had opened the corresponding letter of credit in
favor of Adolph Hanslik Cotton. By virtue of
forged permits, Artex was able to obtain the bales
of cotton and paid P15k.
Issue:
W/N CTI as warehouseman was
entitled to the possession of the bales of cotton?
Ruling: No. CTI had no cause of action. It was not
the owner of the cotton. It was not a real party of
29
30
MARTINEZ V. PNB
Siy Cong Bien vs HSBC
FACTS
ISSUE
Whether or not the Quedans endorsed in blank
gave the HSBC rightful and valid title to the
goods?
HELD
YES. SC ruled in favour of Defendant HSBC.
It may be noted,
o first, that the quedans in question
were negotiable in form;
o second, that they were pledged by
Otto Ranft to the Defendant bank to
secure the payment of his preexisting
debts to said bank;
o third, that such of the quedans as were
issued in the name of the Plaintiff were
duly endorsed in blank by the Plaintiff
and by Otto Ranft;
o and fourth, that the two remaining
quedans which were duly endorsed in
blank by him.
The bank had a perfect right to act as it did,
and its action is in accordance with sections
47, 38, and 40 of the Warehouse Receipts Act
However, the pertinent provision regarding
the rights the Defendant bank acquired over
the aforesaid quedans after indorsement and
delivery to it by Ranft, is found in section 41
of the Warehouse Receipts Act (Act No. 2137):
o
31
ISSUES:
1. WON the non-payment of the purchase price
for the sugar stock evidenced by the quedans,
rendered invalid the negotiation of said quedans
by Sy and Ng to indorsers Ramos and Zoleta and
the subsequent negotiation of Ramos and Zoleat
to PNB?
2. WON PNB as indorsee of quedans was entitled
to
delivery
of
sugar
stocks
from
the
warehouseman, Noahs Ark?
32
33
DOCTRINE:
By guaranty a person, called the
guarantor, binds himself to the creditor to fulfill
the obligation of the principal debtor in case the
latter should fail to do so; if the person binds
himself solidarily with the principal debtor, the
contract is called suretyship.
That the guarantee issued by the
petitioner is unconditional and irrevocable does
not make the petitioner a surety. As a guaranty, it
is still characterized by its subsidiary and
conditional quality because it does not take effect
until
the
fulfillment
of
the
condition.
Unconditional guarantee is still subject to the
condition that the principal debtor should default
in his obligation first before resort to the
guarantor could be had.
Facts:
HELD:
34
35
36
Philippine
American
Construction Company with a capital of
P14k.
P10k of which were taken by way of loan
from Paulino Candelaria. The partnership
and the co-partners undertook and bound
themselves to pay jointly and severally
the indebtedness.
Upon default, Paulino filed civil case
against Phil-Am Construction Company
and co-partners for the recovery of loan
TC ordered all Defendants to pay jointly
and severally; CA affirmed
Upon filing of complaint, Paulino obtained
a writ of attachment against Defendants.
The Sheriff attached properties of 3
partners. Partnership offered to post a
bond of P10k.
Phil-Am
Construction
Company
as
principal then represented by the partner
Antonio Abad, Santiago Lucero and
Meliton Carlos as guarantors executed a
bond of P10k in favour of Paulino for the
lifting of the attachment.
After issuance of writ of execution, Sheriff
found no property of the judgment
debtors. Paulino moved for the issuance of
writ of execution against the guarantors of
Defendants.
Guarantor-Plaintiff
and
co-guarantor
Meliton Carlos later paid the creditor and
were able to recover from Antonio Abad a
sum of P3800, which they divided equally.
It appeared that the payment made by the
plaintiff to Paulino was reduced to the sum
of P3665. Plaintiff now demands from
Anastacio Santos the return of the
aforesaid sum but Anastacio refused.
ISSUE: Whether or not Defendant is bound to pay
Plaintiff what he had advanced to Paulino?
HELD: YES
Article 1838 provides that any guarantor
who pays for the debtor shall be
indemnified by the latter even should the
guaranty have been undertaken without
the knowledge of the debtor.
37
HELD:
No. The contract was not only considered not
consummated but cancelled.
It ceased to be valid when it was cancelled
Neither the appellant nor his sureties were bound
to comply with the terms of their respective
contracts of fishing privilege and suretyship.
This is so particularly with respect to the sureties,
because suretyship cannot exist without a valid
obligation.
Guaranty is not presumed.
The elimination of the obligation for which said
sureties desired to answer with their bond also
rendered the bond also eliminated.
SMITH BELL v PNB
FACTS
38
Issue:
RCBC v ARRO
FACTS:
39
FACTS:
- Inter Resin opened a Letter of Credit with
Manila Banking Corp. with security of
Continuing Surety Agreement signed by
Inter
Resin
and
Investment
and
Underwriting Corp (IUCP) wherein they
bound themselves solidarily for the.
- Later Inter Resin together with Willex (P)
executed a continuing guaranty in favor of
IUCP, stating that Inter Resin and P are
solidarily liable. Due to this, IUCP paid
Manila Bank P4M (Letter of Credit)
- IUCP then demanded payment of the
amount, however, Inter Resin and P failed
to do so. Hence, this case
- P contends that it should not be liable
since P is merely a guarantor
ISSUE: WoN P ma be held jointly and severally
liable with Inter Resin for the amount paid by
Interbank to Manila Bank
SC: YES
- The amount had been paid by InterBank to
Manila bank
- The intention of the parties is to secure
the payment of the obligation.
o CA held-to secure the guarantee
undertaken by Interbank of the
credit accommodation granted to
Inter Resin by Manila Bank,
40
41
Facts:
42
NAMARCO v MARQUEZ
FACTS:
Properties, rights, obligations, and
contracts of the Philippine Relief and Trade
Rehabilitation Administration (PRATRA) had been
transferred to the Price Stabilization Corporation
(PRISCO) and subsequently all rights and
contracts of the PRISCO involving real estate,
fixed assets and stock in trade had been assumed
by herein plaintiff, the NAMARCO.
Marquez secured from the PRATRA one tractor
and one rice thresher, with a total value of
P20,000.00 for which the said defendant paid
RULING: Yes
While the guarantee was for the original amount
of the debt of Gabino Marquez, the amount of the
judgment by the trial court in no way violates the
rights of the surety. The judgment on the principal
was only for P10,000.00, while the remaining
P9,990.91 represent the moratory interest due on
account of the failure to pay the principal
obligation from and after the same had fallen
due, and default had taken place. Appellant
surety was fully aware that the obligation earned
interest, since the note was annexed to its
contract, Exhibit "C".
43
44
45
ISSUE
Whether or not Atty. Tanglao is liable?
RULING
NO.
The SC ruled that there is nothing stated in
the Compromise Agreement to the effect that
Tanglao became David's surety for the
payment of the sum in question. Neither is
this inferable from any of the clauses thereof,
and even if this inference might be made, it
would be insufficient to create an obligation of
46
SAAVEDRA v PRICE
FACTS:
ARROYO v JUNGSAY
FACTS:
- Arroyo (P) is an appointed guardian of an
imbecile, while Jungsay et al (D) are the
previous guardian and bondsmen who
absconded.
- D, the former guardian of the ward,
absconded with the funds of his ward.
- LC ordered D to pay P, which the
bondsmen appealed. D also pointed out
properties of the previous guardian which
are now being adversely claimed by 3rd
parties
47
FACTS:
1) On March 26 1997, Pyramid entered into an
agreement with Macrogen Realty, of which
Bitanga is the President, to construct for the
latter a building, located in Sucat, Paraaque.
Pyramid then commenced civil, structural, and
architectural works on the construction project.
However, Macrogen Realty failed to settle
respondents progress billings. Bitanga, assured
Pyramid that the outstanding account of
Macrogen Realty would be paid.Thus, Pyramid
continued the construction project.
2) In August 1998, Pyramid suspended work on
the construction project since the conditions that
it imposed for the continuation thereof, including
payment of unsettled accounts, had not been
complied with by Macrogen Realty and
eventually, on 1 September 1999, respondent
instituted with the Construction Industry
Arbitration Commission (CIAC) a case for
arbitration against Macrogen Realty seeking
payment by the latter of its unpaid billings and
project costs. Macrogen, chose to amicably settle
the arbitration case and both parties entered into
a Compromise Agreement, with Bitanga acting as
signatory for and in behalf of Macrogen Realty.
3) Under the Agreement, Macrogen Realty agreed
to pay Pyramid the total amount in six equal
monthly installments, that if it would default in
the payment of two successive monthly
installments, immediate execution could issue
against it for the unpaid balance, without need of
judgment from any court or tribunal. Bitanga
guaranteed the obligations of Macrogen Realty
under the Compromise Agreement by executing a
Contract of Guaranty in favor of respondent, by
virtue of which he irrevocably and unconditionally
guaranteed the full and complete payment of the
principal amount of liability of Macrogen Realty.
48
Held:
No, the bond of 3,000 filed by PI responded for
the obligation of MT up to the some of 3,000,
inasmuch as the bond of 2,000 filed by MCS
responded for the obligation of MT only insofar as
it might exceed 3,000 and up to 5,000.
The provision in the NCC with regard to several
sureties of only one debtor for the same debt
does not apply in this case. Although the two
bonds on their face appear to guarantee the
same debt coextensively up to 2,000 that of PI
alone extending beyond that sum up to 3,000 it
was pleaded and conclusively proven that in
reality said bonds, or the two sureties, do not
guarantee the same debt because PI guarantees
only the first 3,000 while MCS only the excess up
to 5,000.
49
CACHO v VALLES
Facts: On October 29, 1920, the National Sporting
Club, of Manila, obligated itself by a promissory
note payable at four months to pay to Jose Ma.
Cacho. Below the signature of said National
Sporting Club, as signed by the proper officers of
the Club, the following personal guaranty was
written: "We guarantee this obligation." (Sgd.) J.
A. Valles, J. L. Mateu, G. J. Heffting, Ed. Chesley,
Baldomero Roxas. This note was not paid at
maturity. An action was instituted thereon against
the National Sporting Club and the guarantors.
Baldomero Roxas interposed a defence claiming
the right of division as among the co-sureties,
and asking that in case he should be found liable
that he should be held responsible only for his
aliquot part of the debt.
Issue: W/N in case of the insolvency of one or
more of several simple sureties, those who
remain solvent can be made to pay the entire
debt?
Ruling: None of the sureties, so far as this record
shows, has been declared bankrupt. The benefit
of division therefore has not been lost, and the
rule declaring each surety liable only for his
aliquot part of the guaranteed debt, must hold.
The obligation of the surety cannot be extended
beyond its specified limits. A co-surety is entitled
to the benefit of division from the very moment
that he contracts the obligation, except where
there is stipulation to the contrary.
TUASON v MACHUCA
F: Universal Trading Company was going to
withdraw goods from the Bureau of Customs to
be delivered to BPI. To withdraw, they gave a
bond executed by Manila Compania de Seguros.
That bond was secured solidarily by Tuason Co.
and Machuca of Universal Trading. It was to be
paid whether or not Manila Compania already
paid CIR. Manila Compania demanded payment
from Tuason. Manila Compania filed a case
against tuason. Tuason later payed but incurred
litigation expenses. Tuason now demands
payment from Machuca. Tuason filed a case for
collection of money from Machuca. The lower
court ruled that Machuca should pay the debt and
the expenses incurred by Tuason in the case for
collection of money.
Issue: Won Machuca should pay the expenses
incurred by Tuason in its case vs. Manila
Compania
Ruling: NO! it was not Machucas fault why tuason
incurred expenses in the litigation of Manila
50
Autocrops liability
Actual forfeiture of the subject bonds is not
necessary for petitioners to be liable thereon to
ISAC as surety under the Indemnity Agreements.
Petitioners' obligation to indemnify ISAC became
due and demandable the moment the bonds
issued by ISAC became answerable for
petitioners' non-compliance with its undertaking
with the BOC. Stated differently, petitioners
became liable to indemnify ISAC at the same time
the bonds issued by ISAC were placed at the risk
of forfeiture by the BOC for non-compliance by
petitioners with its undertaking.
It is worthy to note that petitioners did not
impugn the validity of the stipulation in the
Indemnity Agreements allowing ISAC to proceed
against petitioners the moment the subject bonds
become due and demandable, even prior to
actual forfeiture or payment thereof. Even if they
did so, the Court would be constrained to uphold
the validity of such a stipulation for it is but a
slightly expanded contractual expression of
Article 2071 of the Civil Code which provides,
inter alia, that the guarantor may proceed
against the principal debtor the moment
the debt becomes due and demandable.
Art. 2071. The guarantor, even before having
paid, may proceed against the principal
debtor:
(1) When he is sued for the payment;
(2) In case of insolvency of the principal debtor;
(3) When the debtor has bound himself to relieve
him from the guaranty within a specified period,
and this period has expired;
(4) When the debt has become demandable,
by reason of the expiration of the period for
payment;
(5) After the lapse of ten years, when the
principal obligation has no fixed period for its
maturity, unless it be of such nature that it
cannot be extinguished except within a period
longer than ten years;
(6) If there are reasonable grounds to fear that
the principal debtor intends to abscond;
(7) If the principal debtor is in imminent danger of
becoming insolvent.
In all these cases, the action of the guarantor is
to obtain release from the guaranty, or to
demand a security that shall protect him from
51
FACTS:
On July 8, 1950, the defendant Batu Construction
& Company, as principal, and the plaintiff Manila
Surety & Fidelity Co. Inc., as surety, executed a
surety bond for the sum of P8,812.00 to insure
faithful performance of the former's obligation as
contractor for the construction of the Bacarra
Bridge, Project PR-72 (No. 3) Ilocos Norte
Province. On the same date, July 8,1950, the Batu
Construction & Company and the defendants
Carlos N. Baquiran and Gonzales P. Amboy
executed an indemnity agreement to protect the
Manila Surety & Fidelity Co. Inc.., against
damage, loss or expenses which it may sustain as
a consequence of the surety bond executed by it
jointly with Batu Construction & Company.
On or about May 30, 1951, the plaintiff received a
notice from the Director of Public Works (Exhibit
B) annulling its contract with the Government for
the construction of the Bacarra Bridge because of
its failure to make satisfactory progress in the
execution of the works, with the warning that
,any amount spent by the Government in the
continuation of the work, in excess of the contract
price, will be charged against the surety bond
furnished by the plaintiff. It also appears that a
complaint by the laborers in said project of the
Batu Construction & Company was filed against it
and the Manila Surety and Fidelity Co., Inc., for
unpaid wages amounting to P5,960.10.
Trial Court dismissed the case holding that
provisions of article 2071 of the new Civil Code
may be availed of by a guarantor only and not by
a surety the complaint, with costs against the
plaintiff.
ISSUE: The main question to determine is
whether the last paragraph of article 2071 of the
new Civil Code taken from article 1843 of the old
Civil Code may be availed of by a surety.
HELD:
A guarantor is the insurer of the solvency of the
debtor; a surety is an insurer of the debt. A
guarantor binds himself to pay if the principal is
unable to pay; a surety undertakes to pay if the
principal does not pay. 1 The reason which could
be invoked for the non-availability to a surety of
the provisions of the last paragraph of article
2071 of the new Civil Code would be the fact that
guaranty like commodatum2 is gratuitous. But
guaranty could also be for a price or
consideration as provided for in article 2048. So,
even if there should be a consideration or price
paid to a guarantor for him to insure the
performance of an obligation by the principal
52
the
53
Issue:
Whether or not Defendant Alvarez is liable?
Ruling:
54
FACTS:
55
ISSUE:
HELD:
DOCTRINE:
An extension granted to the debtor
by the creditor without the consent of the
guarantor extinguishes the guaranty. The 1989
Loan Agreement expressly stipulated that its
purpose was to liquidate, not to renew or
extend, the outstanding indebtedness. Moreover,
respondent did not sign or consent to the 1989
Loan Agreeement, which had alledgedly extended
the original P8 million credit facility. Hence, his
obligation as a surety should be deemed
extinguished, pursuant to Article 2079 of the Civil
Code, which specifically states that [a]n
extension granted to the debtor by the creditor
without the consent of the guarantor extinguishes
the guaranty.
An essential alteration in the terms of a
Loan Agreement without the consent of the
surety extinguishes the latters obligation. The
submission that only the borrower, not the surety,
is entitled to be notified of any modification in the
original loan accommodation is untenable-such
theory is contrary to the to the principle that a
surety cannot assume an obligation more onerous
than that of the principal. That the Indemnity
Agreement is a continuing surety does not
authorize the lender to extend the scope of the
principal obligation inordinately; A continuing
guaranty is one which covers all transaction,
including those arising in the future, which are
within the description or contemplation of the
contract of guaranty, until the expiration or
termination thereof.
SC:
-
56
57
58
ESTATE
MORTGAGE
59
60
BUSTAMANTE v ROSEL
ALCANTARA v ALINEA
Facts:
61
Issue:
1) WON there was a valid mortgage?
2) WON the defendants should deliver
property to Alcantara?
the
Held:
1) No. The property, the sale of which was
agreed to by the debtors does not appear
mortgaged in favor of the creditor because in
order to constitute a valid mortgage it is
indispensable
that
the
instrument
be
registered in the Register of Property and the
document contract does not constitute a
mortgage nor it could possibly be a mortgage,
for the reason that the said document is not
vested with the character and conditions of a
public instrument.
The contract is not a pledge since the said
property is not personal property and the
debtor continued in possession thereof and
was never been occupied by the creditor.
It is also not an antichresis by reason that as
the creditor has never been in possession of
the property nor has enjoyed the said
property nor for one moment received its
rents.
2) Yes. The will of the parties are controlling, In
this case, a contract of loan and a promise of
sale of a house and lot, the price of which
should be the amount loaned, if within a fixed
period of time such amount should not be
paid by the debtor-vendor of the property to
the creditor-vendee of same. The fact that the
parties have agreed at the same time, in such
a manner that the fulfillment of the promise of
sale would depend upon the nonpayment or
return of the amount loaned, has not
produced any change in the nature and legal
conditions of either contract, or any essential
defect which would tend to nullify the same.
MAHONEY v TUASON
Facts: P. Blanc, the owner of the jewels, entered
into a contract of pledge, delivering to the
creditor Mariano Tuason several jewels and other
merchandise for the purpose of securing the
fulfillment of the obligation which he (Blanc) had
contracted in favor of the latter who had
guaranteed the payment of a considerable
62
63
FACTS:
On October 25, 1995, Dylanco and SLGT each
entered into a contract to sell with ASB for the
purchase of a unit (Unit 1106 for Dylanco and
Unit 1211 for SLGT) at BSA Towers then being
developed by the latter. As stipulated, ASB will
deliver the units thus sold upon completion of the
construction or before December 1999. Relying
on this and other undertakings, Dylanco and
SLGT each paid in full the contract price of their
respective units. The promised completion date
came and went, but ASB failed to deliver, as the
Project remained unfinished at that time. To make
matters worse, they learned that the lots on
which the BSA Towers were to be erected had
been mortgaged6 to Metrobank, as the lead bank,
and UCPB7 without the prior written approval of
the Housing and Land Use Regulatory Board
(HLURB).
Alarmed by this foregoing turn of events,
Dylanco, on August 10, 2004, filed with the
HLURB a complaint for delivery of property and
title and for the declaration of nullity of
mortgage. A similar complaint filed by SLGT
64
65
FACTS:
66
FACTS:
Laureano Atendido (LA) obtained from PNB (P) a
loan payable in 120 days with interest. To
guarantee its payment LA pledge to the bank
2,000 cavans of palay which were deposited in a
warehouse and to that effect endorsed in favor of
the bank the corresponding WH receipt. Before
the maturity of the loan, the cavans of rice
dissappeared from the WH. LA failed to pay the
loan upon matrity and so the present action was
instituted. LA set up the defense that the quedan
covering the palay which was given as security
having been endorsed in blank in favor of the
bank and the palay having been lost or
disappeared, he thereby became relieved of
liability.
ISSUE: WoN LA is relieved from liability
SC: NO!
The surrender of the warehouse receipt fiven as
security, endorsed in blank was NOT that of a
final transfer or that WH receipt but merely as a
guaranty to the fulfillment of the obligation of
P3k. This being so, the ownership remains with
the pledgor subject only to foreclosure in case of
nonfulfillment
of
obligation.
The
pledgor,
continuing to be the owner of the goods pledged
during the pendency of the obligation in case of
the loss of the property, the loss is borne by him.
OCEJO PEREZ v INTERNATIONAL BANK
FACTS:
1) On March 7, 1914, Chua Teng Chong, executed
to the International Banking Corporation a
promissory note, payable one month after date,
for the sum of P20,000 which note was also
attached to another private document, signed by
Chua, which stated that he had deposited with
the bank, as security for the said note, 5,000
piculs of sugar, which were said stored in a
warehouse in Binondo, Manila.
2) The bank made no effort to exercise any active
ownership over said merchandise until the April
16, when it discovered that the amount of sugar
stored in the said warehouse was much less than
what was mentioned in the contract. The
agreement between the bank and Chua Teng
Chong with respect to the alleged pledge of the
sugar was never recorded in a public instrument.
3) On March 24, 1914, the plaintiff partnership
Ocejo, Perez and Co., entered into contract with
Chua for the sale to him of sugar where the
delivery should be made in April. The delivery
was completed April 16, 1914, and the sugar was
stored in the buyer's warehouse situated at
67
68
SARMIENTO v JAVELLANA
Issues:
1) WON Villasenor can still redeem the jewels?
2) WON the right to redeem has already expired?
Held:
1) Yes. As the jewels in question were in the
possession of the defendant to secure the
payment of a loan of 1,500 with interest
thereon
and
for
having
subsequently
extended the term of the loan indefinitely,
and so long as the value of the jewels pledged
was sufficient to secure the payment of the
capital and the accrued interest, the
defendant is bound to return the jewels or
their value to the plaintiffs, and the plaintiffs
have the right to demand the same upon the
payment by them of the sum of 1,500 plus
interest.
69
70
FACTS:
BEFORE 1936: Laureano Marquez (LM) was
indebted to Fortunato Resurreccion (FR) in
the sum of P5k as the balance of purchase
price of a parcel of land which LM bought
and received from FR.
FR was in turn indebted to Luzon Surety
Company in the same amt, secured by a
mortgage on 3 parcels of land one of
which was bought by LM from him
AS EARLY AS 193: LM had agreed to pay
FRs indebtedness to Luzon Surety
Company by way of satisfaction of his own
indebtedness to FR in the same amt
LM failed to pay indebtedness of FR to the
Luzon Surety Company, and the latter
foreclosed
judicially
the
mortgage
executed in its favour by FR
Since LM did not fulfil his promise, FR
commenced an action against LM to
recover the value of lost properties
LM sale at public auction of 5 parcels of
land mentioned in FRs complaint is invalid
because
they
are
not
specifically
described in the mortgage deed. LM
acquired those parcels of land subsequent
to the execution of mortgage deed.
In the fifth clause of said document
Laureano
Marquez
stipulated
that
inasmuch as the five parcels of land
described in the fourth clause were not
sufficient to cover all his obligations in
favor of Fortunato Resurreccion, he also
constituted a mortgage in favor of the
latter and his assignees on any other
71
HOME BANKERS v CA
Private respondents entered into a
Contract
to
Sell
Agreement
with
TransAmerican through Engr. Garcia over
portions of land with one unit three-storey
townhouse to be built on each portion.
Engr. Garcia obtained a loan from
petitioner and as security executed a
mortgage over the property subject to the
Contract to Sell with the private
respondents. Petitioner registered its
mortgage on these titles without any other
encumbrance or lien annotated therein.
When the loan was due, Engr. Garcia failed
to pay hence petitioner instituted an
extrajudicial foreclosure on the subject
lots.
Private respondents prayed for the
annulment of the mortgage in favor of
petitioner.
Petitioner filed its Answer contending that
private respondents have no cause of
action against it; that at the time of the
loan application and execution of the
promissory note and real estate mortgage
by Garcia, there were no known individual
buyers of the subject land nor annotation
of any contracts, liens or encumbrances of
third persons on the titles of the subject
72
ISSUES:
1. WON HLURB has jurisdiction over the
case?
2. WON the mortgage is valid?
3. WON petitioner is a mortgagee in good
faith and since the titles on their face were
free
from
any
claims,
liens
and
encumbrances at the time of the
mortgage, it is not obliged under the law
to go beyond the certificates of title
registered under the Torrens system and
had every reason to rely on the
correctness and validity of those titles.?
HELD:
1. HLURB has jurisdiction. The Court ruled in
a prior case that the jurisdiction of the
HLURB to regulate the real estate trade is
broad enough to include jurisdiction over
complaints for specific performance of the
sale, or annulment of the mortgage, of
a condominium unit, with damages.
2. THE MORTGAGE IS VOID. Under Section 18
of P.D. No. 957, it is provided that no
mortgage on any unit or lot shall be made
by the owner or developer without prior
written approval of the HLURB Such
approval shall not be granted unless it is
shown that the proceeds of the mortgage
loan shall be used for the development of
the condominium or subdivision project
and effective measures have been
provided to ensure such utilization.
Without the prior written approval of the
HLURB, the latter has the jurisdiction to
annul the mortgage for being void.
3. Petitioner is NOT A MORTGAGEE IN GOOD
FAITH. Petitioner knew that the loan it was
extending to Garcia/TransAmerican was for
the purpose of the development of the
eight-unit
townhouses.
Petitioners
insistence that prior to the approval of the
loan, it undertook a thorough check on the
property and found the titles free from
liens and encumbrances would not
suffice. It was incumbent upon petitioner
to inquire into the status of the lots which
includes verification on whether Garcia
had secured the authority from the HLURB
to mortgage the subject lots. Petitioner
failed to do so. We likewise find petitioner
negligent in failing to even ascertain from
Garcia if there are buyers of the lots who
turned out to be private respondents.
Petitioners want of knowledge due to its
negligence takes the place of registration thus it is presumed to know the rights of
respondents over the lot - and the
conversion of its status as mortgagee to
buyer-owner
will
not
lessen
the
importance of such knowledge.
SAMANILLA v CAJUCOM
MOBIL PHILIPPINES v DIOCARES
FACTS:
The parties Mobil and Diocares entered an
agreement wherein on cash basis, Mobil will
deliver minimum of 50k liters of petroleum a
month. To secure this, diocares executed a Real
Mortgage. Diocares failed to pay the balance of
their indebtedness and Mobil filed an action for
the collection of the balance of the purchase
amount or that the Real Property mortgaged by
Diocares be sold to a public auction and the
proceeds be applied to the payment of the
obligation. LC did not grant foreclosure on the
ground that the mortgage was not validly
executed (not registered).
ISSUE: WON failure to register the Real Mortgage
would render it invalid
SC: NO!
- If the instrument is not recorded, the
mortgage is nevertheless binding between
the parties. Its conclusion, however, is that
what was thus created was merely a
personal obligation but did not establish
a real estate mortgage.
- The mere fact that there is as yet no
compliance with the requirement that it be
recorded cannot be a bar to foreclosure
MCCULLOUGH v VELOSO
FACTS:
1) On March 23, 1920, the plaintiff McCullough &
Co., sold to Mariano Veloso the "McCullough
Building," and the land thereon, for the price of
73
SANTIAGO v DIONISIO
DOCTRINE:
All persons having or claiming an
interest in the mortgaged premises subordinate
in right to that of the holder of the mortgage
should be made defendants in the action for the
foreclosure of the mortgage. Intervening as a
subordinate lienholder in a foreclosure case
merely to oppose the confirmation of the sale
upon learning that such a sale had been made, is
no the same as being a party to the suit to the
extent of being bound by the judgement in the
foreclosure suit.
The effect of the failure to implead a
subordinate lienholder or subsequent purchaser
or both is to render the foreclosure ineffective as
against them, with the result that there remains
in their favor the unforeclosed equity of
redemption.
Facts:
PADERES v CA
74
VELASCO v CA
AFABLE v BELANDO
75
As
security
for
the
payment
of
the
abovementioned loans, DALCO executed in favor
of the BANK the latter acting for itself and as
trustee for the Export-Import Bank of Washington
D.C. a deed of mortgage covering five parcels
of land together with all the buildings and other
improvements existing thereon and all the
personal properties of the mortgagor located in
its place of business.
76
v CAMPS
and delivered to
certain real estate,
described therein,
77
LOPEZ v ALVAREZ
FACTS: Appellee Evaristo holds a lien over the
estate of one Vicente Lopez as the latter
executed a mortgage deed in favor of Evaristo.
On April 5, 1904, Evaristo assigned his lien on the
estate to appellant Manuel Lopez through a public
instrument but the same was not registered in
the Registry of Deeds. Appellee Grindrod is a
creditor of Evaristo, to whom the latter promised
to pay his obligation through the sugar yielded by
the hacienda, said agreement was entered into
July 7, 1900. But the hacienda was not able to
increase the sugar it yielded and defendant On
August 5, 1904, Grindrod who feared of not
getting paid obtained a preliminary attachment
over all the property of Evaristo including the lien
that was assigned to appellant. The same was
registered on August 12, 1904. A dispute arised
over the rightful owner of the lien, defendants
main contention is that since the assignment
made to Lopez was not registered it is not binding
and has no effect.
ISSUE: WON THE ASSIGNMENT OF A MORTGAGE
CREDIT NEED TO BE REGISTERED FOR IT TO BE
VALID AND EFFECTIVE?
HELD: NO. Although the Civil Code provides that
A mortgage credit may be alienated or assigned
to a third person, wholly or partially, with the
formalities required by law, the fact that
such assignment was not registered in the
property register is no obstacle to the transfer of
the dominion or ownership of said credit in the
sum therein stated in favor of Lopez. In as much
as the assignment or alienation of a credit, made
by the owner thereof in favor of another, is prior
to the act of its registration, and entirely
independent of such formality to such an extent
that, if any question should arise over the
contract between the assignor and the assignee,
it would have to be decided according to common
law without need of previous registration of the
title, which shows that a credit secured by a
mortgage may be assigned or alienated, and is a
78
of the assignment or
secured by mortgage,
of the Mortgage Law, is
that it may be effectual
BPI v CONCEPCION
LITONJUA v L&R CORPORATION
FACTS:
- Spouses Litonjua (P) obtained a loan from
L & R Corporation (R) Aug 6, 1974
(P200k) and Mar 27, 1978 (P200k) which
are secured by a mortgage on 2 parcels of
land owned by P
- However, P sold to Phil White House Auto
Supply (PWHAS) the subject parcels of
land, without prior written consent of R,
pursuant to the Mortgage agreement that
they have.
- Upon default of P, R initiated an
extrajudicial sale and won the bidding.
- P later on filed for redemption of the
property but R refused to do accept the
payment contending that P violated the
contract
- R informed the Sheriff and Register of
Deeds, stating: (1) that the sale of the
mortgaged properties to PWHAS was
without its consent, in contravention of
their Deed of Real Estate Mortgage; and
(2) that it was not the spouses Litonjua,
but PWHAS, who was seeking to redeem
the foreclosed properties,
- Register of Deeds issued TCT in favor of R
- A complaint for Quieting of Title,
Annulment of Title and Damages with
preliminary injunction was filed by the
spouses Litonjua and PWHAS against R
- LC ruled in favor of R and affirmed by CA
ISSUE: WON paragraphs 8 and 9 of the Real
Estate Mortgage are valid and enforceable;
SC: NO!
- Art. 2130 stipulation forbidding
alienation of mortgaged property is VOID
- A real mortgage is merely an
encumbrance; it does not extinguish the
title of the debtor, whose right to dispose
a principal attribute of ownership is
not thereby lost. Thus, a mortgagor had
every right to sell his mortgaged property,
which right the mortgagee cannot oppose.
- Although the provision does not absolutely
prohibit the mortgagor from selling his
FACTS:
1) A real estate mortgage was executed on
December 1991 by spouses Dario (hereafter
mortgagors) in favor of UNIONBANK to secure a
P3 million loan which covered a Quezon City
property in Leopoldo Dario's name and was
annotated on the title. For non-payment of the
principal obligation, UNIONBANK extrajudicially
foreclosed the property mortgaged on August
1993 and sold the same at public auction, with
itself posting the highest bid.
2) One week before the one-year redemption
period expired, private respondents filed a
complaint with the RTC against the mortgagors,
UNIONBANK and the Register of Deeds annulment
of sale and real estate mortgage reconveyance
and prayer for restraining notice of lis pendens
was annotated on the title.
3) On October 1994, the RTC issued a TRO
enjoining the redemption of property within the
statutory period and its consolidation under
UNIONBANK's name.
4) Without notifying private respondents,
UNIONBANK consolidated its title over the
foreclosed property on October 1994,
UNIONBANK's name was issued in the new TCT.
79
DOCTRINE:
All persons having or claiming an
interest in the mortgaged premises subordinate
in right to that of the holder of the mortgage
should be made defendants in the action for the
foreclosure of the mortgage. Intervening as a
subordinate lienholder in a foreclosure case
merely to oppose the confirmation of the sale
upon learning that such a sale had been made, is
no the same as being a party to the suit to the
extent of being bound by the judgement in the
foreclosure suit.
The effect of the failure to implead a
subordinate lienholder or subsequent purchaser
or both is to render the foreclosure ineffective as
against them, with the result that there remains
in their favor the unforeclosed equity of
redemption.
DBP v GO
Facts:
80
Held:
Yes. The mortgage contract states that petitioner
may resort to either judicial or extrajudicial
foreclosure in case of default. Petitioner opted for
extrajudicial foreclosure. However, both the trial
court and the CA declared that the extrajudicial
foreclosure void for being premature. For all
intents and purposes, there has been no
foreclosure. Therefore, this Court or any court
cannot issue a writ of execution to judicially
foreclose the property.
FIESTAN v CA
81
METROBANK v WONG
FACTS: Mindanao Grains, Inc. applied for a credit
accommodation with petitioner. As security for
such credit accommodation, respondent Wong
executed a real estate mortgage in favor of
petitioner. Due to MGIs failure to pay the
obligation, petitioner filed an application for
extrajudicial foreclosure which was published in
Pagadian Times once, for three consecutive
weeks setting the date for the auction sale. No
notice was posted in the municipality or city
where the mortgaged property was situated. The
auction sale proceeded and petitioner was
adjudged as the sole and highest bidder. After the
expiration of the one year redemption period,
ownership
was
consolidated
and
TCT
correspondingly issued in the name of petitioner.
Respondent
unaware
of
the
foregoing
developments,
applied
for
a
credit
accommodation with another bank, only to find
82
ISSUE:
1.
WON
PERSONAL
NOTICE
TO
RESPONDENT IS A CONDITION SINE QUA NON TO
THE
VALIDITY
OF
THE
FORECLOSURE
PROCEEDINGS?
2. WON PETITIONERS NON-COMPLIANCE
WITH THE POSTING REQUIREMENT IS FATAL TO
THE
VALIDITY
OF
THE
FORECLOSURE
PROCEEDINGS?
HELD:
1. Section 3 of Act no. 3135 only requires: (1)
the posting of notices of sale in three
public places, and (2) the publication of
the same in a newspaper of general
circulation.
Personal
notice
to
the
mortgagor is not necessary. Nevertheless,
the parties are not precluded from
exacting additional requirements. In the
case at bar, it was stipulated that notice
should be served to the mortgagor. When
petitioner failed to send the notice of
foreclosure sale to respondent, he
committed a contractual breach sufficient
to render the foreclosure sale null and
void.
2. The general rule is that non-compliance
with the posting requirement is fatal to the
validity of the foreclosure proceedings.
The Olizon case was an exception due to
the unusual nature of the attendant facts
and
peculiarity
of
the
confluent
circumstances which are not present in
the instant case. While the law recognizes
the right of the bank to foreclose a
mortgage upon the mortgagors failure to
pay his obligation, it is important that such
right be exercised according to its clear
83
MONZON v RELOVA
DOCTRINE:
Any person having a lien on the
property subsequent to the mortgage or deed of
trust under which the property is sold, may
redeem the same at any time within the term of
one year from and after the date of sale.
Even if, for the sake of argument, Rule 68
is to be applied to extrajudicial foreclosure of
mortgages, such right can only be given to
second mortgagees who are made parties to the
(judicial) foreclosure. While a second mortgagee
is a proper and in a sense even a necessary party
to a proceeding to foreclose a first mortgage on
real property, he is not an indispensable party,
because a valid decree may be made, as between
the mortgagor and the first mortgagee, without
regard to the second mortgagee; but the
consequence of a failure to make the second
mortgagee a party to the proceeding is that the
lien of the second mortgagee on the equity of
redemption is not affected by the decree of
foreclosure.
SAGUAN v PBCOM
Facts:
HELD:
Issue:
1) WON the writ of possession should be issued?
2) WON PBC may unilaterally apply the excess
proceeds to petitioners remaining unsecured
obligations?
Held:
1) Yes. A writ of possession is an order enforcing
a judgment to allow a persons recovery of
possession of real or personal property. This
writ may be issued either 1) within the oneyear redemption period, upon filing of the
84
85
LANDRITO v CA
FACTS:
P obtained a loan of P350k from R and
secured payment by executing a deed of
real estate mortgage of their parcel of
land at Muntinlupa;
obtained again
another loan P 1mill and was granted by R
with an amendment of real estate
mortgage
P defaulted and refused to comply with
their obligation despite repeated demands
R filed a petition for the extrajudicial
foreclosure of the mortgage. Mortgaged
property was sold in a public auction with
R as highest bidder. R registered sheriffs
certificate of sale.
P filed a complaint for annulment of the
extrajudicial foreclosure and auction sale
and alleged that said foreclosure and
auction sale were null and void for failure
to comply with requirements of notice and
publication; the mortgaged property was
illegally
foreclosed;
application
for
consolidation of title was premature
because the Rs Husband granted them an
extension of the period of redemption
TC granted Rs Motion to Dismiss; action
already barred by laches. CA affirmed
ISSUE: WON the extrajudicial foreclosure and
public auction sale of the subject parcel of land
are valid and lawful?
HELD: YES
Records indubitably show that at the time
of the foreclosure sale on 11 August 1993,
petitioners were already in default in their
loan obligation to respondent Carmencita
San Diego.
A final notice of demand for payment had
been sent to them, despite which they still
failed
to
pay.
Hence,
respondent
Carmencita
San
Diegos
resort
to
extrajudicial foreclosure, provided no less
86
87
FACTS:
1) Petitioner ChinaBank granted 3 loans to
TransAmerican owned by spouses Garcia, secured
by real estate mortgages constituted by Jesus
Garcia 45 parcels of land The contracts of
mortgage were all registered in the same
Registry. Subsequently for failure of
TransAmerican to pay its loans, Chinabank
foreclosed extrajudicially the three real estate
mortgages which were then sold at public auction
for P38,004,205.01 to the same bank. The
Certificate of Sale was then registered in the
Registry of Deeds of Quezon City.
2) Thereafter Chinabank filed with the RTC a
petition for issuance of a writ of possession,
which was granted, thus placing Chinabank in
possession of the 45 parcels of land. Then,
spouses Ordinario, filed a motion for
reconsideration praying that the parcel of land be
excluded from the above order alleging, that they
purchased the land covered on which was
constructed their townhouse and that the
mortgage foreclosure cannot prevail over their
superior right as legitimate buyers of the area.
3) To this, Chinabank filed its opposition to
respondents motion for reconsideration. The trial
court denied Sps Ordinarios motion for
reconsideration. On appeal, this was overturned
by the CA.
HELD:
A) Under Section 7 of Act No. 3135, the purchaser
in a foreclosure sale is entitled to possession of
the property. Thus the writ prayed for by
petitioner granting it possession has to be issued
as a matter of course, being a ministerial
duty of the trial court to grant such writ of
possession. No discretion is left for the trial
court.
88
ANTICHRESIS
BARRETTO v BARRETTO
Facts:
89
90
PERALTA v QUIMPO
51 OG No. 3 p. 1383, Sept 1954
NO COPY AVAILABLE
VILLANUEVA v IPONDO
CHATTEL MORTGAGE
ALEMAN v CATERA
ALLIED BANK v SALAS
FACTS: Petitioner-bank (through petitioners
predecessor) granted Gencor Marketing, Inc. a
time loan and was secured by a Deed of Chattel
Mortgage over certain printing machineries and
equipments; said deed was recorded in the
Chattel Mortgage Registry in Feb. 7, 1974. Gencor
failed to pay prompting petitioner to extra
judicially foreclose the mortgage and requested
the Sheriff of Quezon City to effect the said
foreclosure. Upon issuance of the Notice of
Sheriffs sale, private respondent filed a motion in
court to enjoin the public auction alleging that the
properties have been previously levied and
attached by the Sheriff of Rizal.
Metrobank is a creditor of Gencors president and
claims the properties as the exclusive property of
the president doing business under the firm name
of Gencor Printing and as such may not be
foreclosed and sold at auction. During the trial it
was admitted by petitioner that the properties
belonged to the president and not to Gencor.
ISSUE: WHO between the two claimants has a
better right over the property.
HELD: Petitioner has the better right. Even
though petitioner admitted that it was the
president and not gencor who owned the
91
FACTS:
- Ever Textile (R) obtained a P3M loan from
PBCOM (P), with Real Property and Chattel
Mortgage over the lot, where its factory
FACTS:
1) Petitioner Chua Pac, the president and general
manager of co-petitioner Acme Shoe, executed
on June 1978, for and in behalf of the company, a
chattel mortgage in favor of private respondent
Producers Bank of the Philippines as security for
92
93
CERNA v CA
MAGNA FINANCIAL v COLARINA
Facts:
Issue:
1) WON MFS can avail of the two remedies,
payment of unpaid balance and foreclosure of
chattel mortgage?
2) WON there was actual foreclosure?
Held:
BA FINANCE v CA
BICOL SAVINGS v GUINHAWA
F: Victorio Depositario together with private
respondent Jaime Guinhawa, acting as solidary
co-maker, took a loan from petitioner Bicol
94
95
96
BPI CREDIT v CA
SERVICEWIDE v CA
FACTS:
ISSUE:
1. WON the assignment of credit by
creditor-mortgagee quires the notice
consent of the debtor- mortgagor?
2. WON the assignment of credit by
debtor- mortgagor requires the notice
consent of the creditor-mortgagee?
the
and
the
and
HELD:
1. Only notice to the debtor-mortgagor of
the assignment of credit is required. His
consent is not required.
2. In contrast, consent of the creditormortgagee to the alienation of the
mortgaged property is necessary in order
to bind said creditor. Since the assignee of
the credit steps into the shoes of the
creditor-mortgagee to whom the chattel
was mortgaged, it follows that the
assignee's consent is necessary in order to
bind him of the alienation of the
mortgaged thing by the debtor-mortgagor.
This is tantamount to a novation. As the
new assignee, petitioner's consent is
necessary before respondent spouses'
DE BARRETTO v VILLANUEVA
SAMPAGUITA PICTURES v JALWINDOR
FACTS:
- Sampaguita (P) is the owner of a building
which its roofdeck was leased to Capitol
300 (Capitol), wherein it was agreed that
whatever
improvements
introduced
therein by Capitol will later be owned by P.
- Capitol purchased on credit from Jalwindor
(R) glass and wooden jalousies which were
DELIVERED and INSTALLED in the leased
premises by R, replacing the existing
windows of P.
- Capitol failed to pay and R filed an action
for collection of sum of money against
Capitol.
- R made a levy on the glass and wooden
jalousies in question, which P intervened
in the case alleging that it cannot be
levied upon since it is already the owner of
the subject jalousies.
ISSUE: WoN R may levy the jalousies
SC: NO!
- When the glass and wooden jalousies were
delivered and installed in the leased
premises, P became the owner thereof,
due to the contract between P and Capitol
in which it stated that all permanent
improvements made by lessee shall
belong to the lessor and that said
improvements hav been considered as
part of the monthly rentals.
- The fact that Capitol failed to pay R the
purchase price of the items levied upon
did not prevent the transfer of ownership
to Capitol and then to P.
UY v ZAMORA
FACTS:
1) At the instance of plaintiff Uy, the MTC ordered
the attachment of a vehicle belonging to Zamora.
The writ was levied on the vehicle on August 11,
97
CORDOVA v REYES
CENTRAL BANK v MORFE
Facts:
HELD:
A) Considering the fact that Allied Finance, Inc.
registered its mortgage only on August 24, 1960,
or subsequent to the date of the writ of
attachment obtained by plaintiff Uy on August 11,
1960, the credit of the intervenor cannot prevail
over that of the plaintiff.
B) The SC disagreed with the lower courts
decision upheld Allieds credit on the ground that,
being embodied in a public instrument of an
earlier date (June 20, 1960), it should take
precedence over plaintiff's lien by attachment
(August 11, 1960), pursuant to Article 2244 of the
Civil Code, for the reason that, as already stated,
the credit of the Allied cannot be considered as
preferred until the same has been recorded in the
Motor Vehicles Office.
C) A mortgage of motor vehicles, in order to
affect third persons, should not only be registered
in the Chattel Mortgage Registry, but the same
should also be recorded in the Motor Vehicles
98
99