Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
4. Prior to the first six months, the The SC opined that if the terms of an
Petitioner may still offer the cited land agreement are clear and leave no doubt as to
to other persons provided that the P3 the intention of the contracting parties, the
million downpayment shall be returned literal meaning of its stipulations shall prevail.
to the Respondent including interest
based on prevailing compounded bank It is further required that the various
interest. stipulations of a contract shall be interpreted
together.
5. Nevertheless, in case there are no
other buyers within the first 6 months,
A significant development of the case, the 1) Whether or not the Purchase Agreement
Government Service Insurance System (GSIS) has entered into by the Parties is a debt
acquired ownership of 99.93% of the outstanding instrument?
capital stock of COMBANK. The Court's Resolution 2) If so, Is Basilio liable as surety?
manifestly redounds to the benefit of another 3) Whether or not Lirag is liable for the
government institution, the GSIS, and to the interest as liquidated damages?
preservation of the banking system.
USURY LAW
Topic: Simple Loan or Mutuum; Article 1960 G.R. No. 128990 September 21, 2000
Velez v. Balzarra
FNCB argued that the contracts dated 9 February The three (3) contracts were executed to conceal
1981 were not executed to hide a usurious loan. a usurious loan.
Instead, the parties entered into a legitimate
Installment Paper Purchase ("IPP") transaction, or Generally, the courts only need to rely on the
purchase of receivables at a discount, which face of written contracts to determine the
FNCB could legally engage in as a financing intention of the parties. "However, the law will
company. With regard to the second transaction, not permit a usurious loan to hide itself behind a
the existence of a usurious interest rate had no legal form. Parol evidence is admissible to show
bearing on the P3,000,000.00 loan since at the that a written document though legal in form was
time it was perfected on 18 January 1982 Central in fact a device to cover usury. If from a
Bank Circular No. 871 dated 21 July 1981 had construction of the whole transaction it becomes
effectively lifted the ceiling rates for loans having apparent that there exists a corrupt intention to
a period of more than three hundred sixty-five violate the Usury Law, the courts should and will
(365) days. permit no scheme, however ingenious, to becloud
the crime of usury." The following circumstances
On 11 July 1988 the Regional Trial Court of Makati show that such scheme was indeed employed:
ruled in favor of FNCB declaring that the parties
voluntarily and knowingly executed a legitimate First, petitioner claims that it was never a party
"IPP" transaction or the discounting of to the Contract to Sell between AUTOWORLD and
receivables. AUTOWORLD was not entitled to any BARRETTO. As far as it was concerned, it merely
purchased receivables at a discount from
SECTRANS 2010/ ATTY. AGUINALDO 9
BARRETTO as evidenced by the Deed of not have been obliged to follow the "Application
Assignment dated 9 February 1981. Whether of Proceeds" stated in petitioner's letter.
the Contract to Sell was fictitious or not would
have no effect on its right to claim the Third, in its 17 November 1980 letter to
receivables of BARRETTO from AUTOWORLD since BARRETTO, petitioner itself designated the
the two contracts were entirely separate and proceeds of the "IPP" transaction as a "loan." In
distinct from each other. that letter, petitioner stated that the "loan
proceeds" amounting to P6,980,000.00 would be
Curiously however, petitioner admitted that its released to BARRETTO only upon submission of
lawyers were the ones who drafted all the three the documents it required. And as previously
(3) contracts involved which were executed on mentioned, one of the required documents was a
the same day. Also, petitioner was the one who letter agreement between BARRETTO and
procured the services of the Asian Appraisal AUTOWORLD stipulating that the P6,980,000.00
Company to determine the fair market value of should be "flowed back" to AUTOWORLD. If it
the land to be sold way back in September of were a genuine "IPP" transaction then petitioner
1980 or six (6) months prior to the sale. If it were would not have designated the money to be
true that petitioner was never privy to released as "loan proceeds" and BARRETTO would
the Contract to Sell, then why was it interested in have been the end recipient of such proceeds
appraising the lot six (6) months prior to the sale? with no obligation to turn them over to
And why did petitioner's own lawyers prepare the AUTOWORLD.
Contract to Sell? Obviously, petitioner actively
participated in the sale to ensure that the Fourth, after the interest rate ceilings were lifted
appraised lot would serve as adequate collateral on 21 July 1981 petitioner extended on 18 June
for the usurious loan it gave to AUTOWORLD. 1982 a direct loan of P3,000,000.00 to
AUTOWORLD. This time however, with no more
Second, petitioner insists that the 9 February ceiling rates to hinder it, petitioner imposed a
1981 transaction was a legitimate "IPP" 28% effective interest rate on the loan. And no
transaction where it only bought the receivables longer having a need to cloak the exorbitant
of BARRETTO from AUTOWORLD amounting to interest rate, the promissory note evidencing the
P12,999,999.60 at a discounted price of second transaction glaringly bore the 28%
P6,980,000.00. However, per instruction of interest rate on its face. We are therefore of the
petitioner in its letter to BARRETTO dated 17 impression that had there been no interest rate
November 1980 the whole purchase price of the ceilings in 1981, petitioner would not have
receivables was to be "flowed back" to resorted to the fictitious "IPP" transaction;
AUTOWORLD. And in its subsequent letter of 24 instead, it would have directly loaned the money
February 1981 petitioner also gave instructions to AUTOWORLD with an interest rate higher than
on how BARRETTO should apply the proceeds 12%.
worth P6,980,000.00.
Thus, although the three (3) contracts seemingly
It can be seen that out of the nine (9) items of show at face value that petitioner only entered
appropriation stated (in the letter), Item Nos. 2-8 into a legitimate discounting of receivables, the
had to be returned to petitioner. Thus, in circumstances cited prove that the P6,980,000.00
compliance with the aforesaid letter, BARRETTO was really a usurious loan extended to
had to yield P4,058,468.47 of the P6,980,000.00 AUTOWORLD.
to petitioner to settle some of AUTOWORLD's
previous debts to it. Any remaining amount after Petitioner anchors its defense on Sec. 7 of the
the application of the proceeds would then be Usury Law which states
surrendered to AUTOWORLD in compliance with
the letter of 17 November 1980; none went to Provided, finally, That nothing herein
BARRETTO. contained shall be construed to prevent
the purchase by an innocent purchaser of
The foregoing circumstances confirm that the a negotiable mercantile paper, usurious or
P6,980,000.00 was really an indirect loan otherwise, for valuable consideration
extended to AUTOWORLD so that it could settle before maturity, when there has been no
its previous debts to petitioner. Had petitioner intention on the part of said purchaser to
entered into a legitimate purchase of receivables, evade the provisions of the Act and said
then BARRETTO, as seller, would have received purchase was not a part of the original
the whole purchase price, and free to dispose of usurious transaction. In any case however,
such proceeds in any manner it wanted. It would the maker of said note shall have the right
to recover from said original holder the
Indeed, the Usury Law recognizes the legitimate In the instant case, AUTOWORLD obtained a loan
purchase of negotiable mercantile paper by of P6,980,000.00. Thereafter, it paid nineteen
innocent purchasers. But even the law has (19) consecutive installments of P216,666.66
anticipated the potential abuse of such amounting to a total of P4,116,666.54, and
transactions to conceal usurious loans. Thus, the further paid a balance of P6,784,551.24 to settle
law itself made a qualification. It would recognize it. All in all, it paid the aggregate amount of
legitimate purchase of negotiable mercantile P10,901,217.78 for a debt of P6,980,000.00. For
paper, whether usurious or otherwise, only if the the 23-month period of the existence of the loan
purchaser had no intention of evading the covering the period February 1981 to January
provisions of the Usury Law and that the 1982, AUTOWORLD paid a total of P3,921,217.78
purchase was not a part of the original usurious in interests. Applying the 12% interest ceiling rate
transaction. Otherwise, the law would not mandated by the Usury Law, AUTOWORLD should
hesitate to annul such contracts. Thus, Art. 1957 have only paid a total of P1,605,400.00 in
of the Civil Code provides interests. Hence, AUTOWORLD is entitled to
recover the whole usurious interest amounting to
Contracts and stipulations, under any P3,921,217.78.
cloak or device whatever, intended to
circumvent the laws on usury shall be
void. The borrower may recover in
accordance with the laws on usury. Solangon vs Salazar
In the case at bar, the attending factors G.R. No. 125944 June 29, 2001
surrounding the execution of the three (3)
contracts on 9 February 1981 clearly establish Facts:
that the parties intended to transact a usurious
loan. These contracts should therefore be
declared void. Having declared the transaction Petitioner-spouses executed 3 real estate
between the parties as void, we are now tasked mortgages on a parcel of land situated in
to determine how much reimbursement Bulacan, in favor of the same Respondent
AUTOWORLD is entitled to. The Court of Appeals, Salazar to secure payment of loans of P60 K,
adopting the computation of AUTOWORLD in its P136 K and P230 K payable within 4 months,
plaintiff-appellant's brief, ruled 1 year, and 4 months in that order, with 6%
monthly interest on the first loan, and legal
interests on the others.
According to plaintiff-appellant, defendant-
appellee was able to collect
P3,921,217.78 in interests from appellant. This action was initiated by the Petitioner-
This is not denied by the appellee. spouses to prevent the foreclosure of the
Computed at 12% the effective interest mortgaged property.
should have been P1,545,400.00. Hence,
appellant may recover They alleged that they obtained only one loan
P2,586,035.44, representing overpayment from the Respondent which was the P60 K
arising from usurious interest rate charged secured by the first mortgage. Also, Petitioner-
by appellee. spouses opined that the 6% monthly interest
was unconscionable.
While we do not dispute the appellate court's
finding that the first transaction was a usurious The subsequent mortgages were merely
loan, we do not agree with the amount of continuations of the first one, which is null
reimbursement awarded to AUTOWORLD. Indeed, and void.
it erred in awarding only the interest paid in
excess of the 12% ceiling. In usurious loans, the
Moreover, the Respondent assured them that
creditor can always recover the principal
debt. However, the stipulation on the interest is he will not foreclose the mortgage as long as
considered void thus allowing the debtor to claim they pay the stipulated interest upon maturity
the whole interest paid. In a loan of P1,000.00 or within a reasonable time thereafter.
with interest at 20% per annum or P200.00 per Petitioner-spouses substantially paid the loans
with interest but were unable to pay it in full.
SECTRANS 2010/ ATTY. AGUINALDO 11
On the other hand, the Respondent claimed aver that what was really executed between them
that the mortgages were executed to secure 3 and the respondent is a real estate mortgage and
separate loans of and that the first two loans that there was no agreement limiting the period
were paid, but the last one was not. within which to exercise the right to repurchase
and that they have even overpaid respondent.
He denied having represented that he will not
foreclose the mortgage as long as the Respondent offered in evidence a document
Petitioner-spouses pay interest. denominated as Sinumpaang Salaysay which had
a provision of an interest of 7% per month on the
principal loan of Php 150,000. RTC ruled that the
Lower courts ruled in favour of Respondent. transaction was actually a loan and the payment
Thus, this petition. was secured by a mortgage of the property, and
that the petitioners had made payments which
Issue: resulted in overpayment as the interest was at
7% per annum. Respondent filed an MR alleging
Whether or not the 6% monthly interest is that the interest stipulated in the Sinumpaang
unconscionable? Salaysay was 7% per month. The RTC ruled in
favor of the respondent acknowledging that the
Ruling: correct interest rate stipulated was 7% per
month. However, the RTC declared that the 7%
per month interest is too burdensome and
Yes. The SC ruled that this is unconscionable.
onerous and so the court unilaterally reduced the
interest rate from 7% per month to 5% per
While the Usury Law ceiling on interest rates month. Petitioners filed an MR alleging that either
was lifted by C.B. Circular No. 905, nothing in 5% or 7% per month is exorbitant,
the said circular grants lenders carte blanche unconscionable, unreasonable, usurious and
authority to raise interest rates to levels inequitable.
which will either enslave their borrowers or
lead to a hemorrhaging of their assets. ISSUE: WON the interest of 5% month is
exorbitant, unconscionable, unreasonable,
In Medel v. Court of Appeals, the Court usurious and inequitable.
decreed that the 5.5% interest or 66% per
annum was not usurious but held that the HELD: NO. It is a basic principle in civil law that
same must be equitably reduced for being parties are bound by the stipulations in the
iniquitous, unconscionable and exorbitant , contracts voluntarily entered into by them.
and hence, contrary to morals (contra bonos Parties are free to stipulate terms and conditions
mores), if not against the law. which they deem convenient provided they are
not contrary to law, morals, good customs, public
In the case at bench, Petitioner-spouses stand order, or public policy.
on a worse situation. They are required to pay
the stipulated interest rate of 6% per month The interest rate of 7% per month was voluntarily
or 72% per annum which is definitely agreed upon by RAMOS and the PASCUALs. There
outrageous and inordinate. is nothing from the records and, in fact, there is
no allegation showing that petitioners were
victims of fraud when they entered into the
Hence, the interest rate must be reduced agreement with RAMOS. Neither is there a
equitably. An interest of 12% per annum is showing that in their contractual relations with
deemed fair and reasonable. RAMOS, the PASCUALs were at a disadvantage on
account of their moral dependence, ignorance,
mental weakness, tender age or other handicap,
which would entitle them to the vigilant
protection of the courts as mandated by Article
SPOUSES PASCUAL VS. RAMOS 24 of the Civil Code.
FACTS: Petitioners executed a Deed of Absolute With the suspension of the Usury Law and the
Sale with Right to Repurchase with respondent, in removal of interest ceiling, the parties are free to
consideration of Php 150,000. The petitioners did stipulate the interest to be imposed on loans.
not exercise their right to repurchase the property Absent any evidence of fraud, undue influence, or
within the stipulated one-year period; hence, any vice of consent exercised by RAMOS on the
respondent prayed that the title over the parcels PASCUALs, the interest agreed upon is binding
of land be consolidated in his favor. Petitioners upon them. This Court is not in a position to
SECTRANS 2010/ ATTY. AGUINALDO 12
impose upon parties contractual stipulations o Interest on amount of damages =
different from what they have agreed upon imposed by discretion of court at
6%
REFORMINA V. TOMOL o No interest shall be ordered on
unliquidated claims/damages until
EASTERN SHIPPING v CA demand can be established with
reasonable certainty
FACTS: o When demand is established with
reasonable certainty, interest shall
- 2 Fiber drums of Riboflavin were shipped begin to run from the time the
from Japan for delivery vessel owned by claim is made
Eastern Shipping (P) and that the (judicially/extrajudicially)
shipment was insured by Mercantile o But if it cannot be reasonably
Insurance (R) established at the time demand
- Upon arrival in Manila, it was discharged was made = interest to run from
unto the custody of Metro Port, which it date of judgment of the court
stated in its survey that 1 drum was in bad - If judgment becomes Final and Executory
order. o Rate of legal interest = 12%
- It was then received by Allied Brokerage o From finality to satisfaction
wherein it stated in its survey that one o Why? It is already considered as
drum was opened and without seal forbearance
- Allied then delivered it to the consignees
W/H, which it excepted that 1 drum
contained spillages while the rest was EASTERN ASSURANCE AND SURETY
adulterated/fake CORPORATION (EASCO), vs. Court of
- R then filed claims against P for the losses Appeals
sustained by the consignee (which R
subrogated).
- LC ruled in favor of R and ordered P to pay Facts:
damages, however, it failed to state when
the interest rate should commence from 1) On April 9, 1981, private respondent
date of filing of complaint at 12% or from Vicente Tan insured his building in
date of judgment of TC at 6% Dumaguete City against fire with
petitioner Eastern Assurance and Surety
ISSUE: When should the interest rate commence
Corporation (EASCO) for P250,000.00.
and at what rate
SC: 6% from the date of decision and 12% from 2) On June 26, 1981, the building was
date of finality of judgment until payment destroyed by fire. As his claim for
indemnity was refused, private respondent
- This case laid down the rules on the filed a complaint for breach of contract
interest rates: with damages against petitioner. The RTC
- A) when an obligation regardless of its Court, decided in favour of Vicente Tan. In
source, is breached, the contravenor can its ruling, the RTC court imposed the rate
be held liable for damages of interest at 12% per annum, and
- B) with regard particularly to an award of decided that EASCO to pay immediately to
interest in the concept of actual and Vicente Tan the unpaid balance of interest
compensatory damages, the rate of of the principal amount of P250,000.00
interest, as well as the accrual thereof, equivalent to 6% per annum from June 26,
shall be as follows: 1981 to September 30,1994.
- If it consists of payment of money
(loan/forbearance) 3) Petitioner EASCO appealed to the Court of
o Interest due imposed = as Appeals, which, on July 30, 1993, affirmed
stipulated in writing and the the decision of the trial court. The CA, on
o Interest due = earn legal interest the authority of prior case, Eastern
from the time it is judicially Shipping Lines, Inc. v. Court of Appeals,
demanded that the interest rate on the amount due
o No stipulation = 12% per annum should be 6% per annum from June 26,
from date of default (judicial/extra 1981 to August 24, 1993, and 12% per
judicial) annum beginning August 25, 1993 until
- If it is not loan/forbearance the money judgment is paid.
SECTRANS 2010/ ATTY. AGUINALDO 13
4) Thereafter, petitioner EASCO tendered Par. 3: When the judgment of the court awarding
payment of the money judgment in the a sum of money becomes final and executory,
amount of P250,000.00 plus interest of 6% the rate of legal interest, whether the case falls
per annum from June 26, 1981 to July 30, under paragraph 1 or paragraph 2, above, shall
1993. be 12% per annum from such finality until its
satisfaction, this interim period being deemed to
5) However, private respondent refused to be by then an equivalent to a forbearance of
accept payment on the ground that the credit.
applicable legal rate of interest was 12%
per annum. Subsequently, private Unquestionably, this case falls under the rule
respondent brought the matter to the stated in paragraph 3. The question is whether
Insurance Commission. this rule can be applied to this case.
6) Then in, 1995, the parties agreed before The prior Eastern Shipping Lines, case. did not lay
the hearing officer of the commission that down any new rules because it was just a a
the interest should be computed from June comprehensive summary of existing rules on the
26, 1981 to September 30, 1994. computation of legal interest.
Petitioner would file with the trial court a
motion to fix the legal rate of interest As to the "cut-off date" for the payment of legal
attaching thereto a check in the amount of interest:
P250,000.00 with 6% interest per annum.
The trial court's finding on this point is binding.
7) In its appeal EASCO to the SC, it Hence, the payment of 12% legal interest per
contended that the CA wrongfully applied annum should commence from August 25, 1993,
the aforecited paragraph 3 of the the date the decision of the trial court became
suggested rules of thumb for future final, up to September 30, 1994, the agreed "cut-
guidance [as formulated in Eastern off-date" for the payment of legal interest. The
Shipping Lines, Inc. v. Court of Appeals, decision of the CA is affirmed.
and unlawfully ignored or disregarded the
agreed cut-off date for the payment of the
legal rate.
PILIPINAS BANK, petitioner,
Issue: When the judgment of the court vs.
awarding a sum of money becomes final THE HONORABLE COURT OF APPEALS, and
and executory what is the rate to be LILIA R. ECHAUS, respondents.
imposed?
Facts: private respondent filed a complaint
Held: Petitioner's contentions are without against petitioner and its president, Constantino
merit. Bautista, for collection of a sum of money. The
complaint alleged: (1) that petitioner and
The prior Eastern Shipping Lines, Inc. v. Court of Greatland executed a "Dacion en Pago," wherein
Appeals, was held: Greatland conveyed to petitioner several parcels
of land in consideration of the sum of
I. When an obligation, regardless of its P7,776,335.69; (2) that Greatland assigned
source, i.e., law, contracts, quasi- P2,300,000.00 out of the total consideration in
contracts, delicts or quasi-delicts, is favor of private respondent; and (3) that
breached, the contravener can be held notwithstanding her demand for payment,
liable for damages. The provisions under petitioner refused and failed to pay the said
"Damages" of the Civil Code govern in amount assigned to her.
determining the measure of recoverable
damages. Petitioner claimed: (1) that its former president
had no authority (2) that it never ratified the
II. With regard particularly to an award of same; and (3) that assuming arguendo that the
interest in the concept of actual and agreement was binding, the conditions stipulated
compensatory damages, the rate of therein were never fulfilled.
interest, as well as the accrual thereof, is
imposed, as follows: The trial court ruled in favor of private
respondent.
Facts
2. Whether or not the provisions of the cited
contract are valid?
Petitioner (through its President) purchased 2
parcels of land from spouses Pugao for P350 K 3. Whether or not Respondent Bank is liable for
with a downpayment of P75 K. damages?
Said provisions are inconsistent with the G.R. Nos. L-26948 and L-26949
Respondent Bank's responsibility as a October 8, 1927
depositary under Section 72(a) of the
General Banking Act. SILVESTRA BARON, plaintiff-appellant,
vs.
3. NO. SC ruled that: PABLO DAVID, defendant-appellant.
ISSUE: WoN there was deposit Igpuara contended that the amount was not
deposit for there was no certificate of deposit,
SC: NO
there was no transfer or delivery of the P2,498
and what transpired was a loan. If assuming that
- Art. 1978. When the depositary has it was deposit, this is negotiable.
permission to use the thing deposited, the
contract loses the concept of a deposit Issues: Whether or not it is necessary that there
and becomes a loan or commodatum, be transfer or delivery in order to constitute a
except where safekeeping is still the deposit.
principal purpose of the contract. The
permission shall not be presumed, and its Held: No.
existence must be proved.
A deposit is constituted from the time a
- The case does not depend precisely upon person receives a thing belonging to
this explicit alternative; for even another with the obligation of keeping and
supposing that the palay may have been returning it. (Art. 1758, Civil Code.)
delivered in the character of deposit,
subject to future sale or withdrawal at His contention is without merit because firstly,
plaintiffs' election, nevertheless if it was the defendant drew up a document declaring that
understood that the defendant might mill they remained in his possession. With the
the palay and he has in fact appropriated understanding that he would, for it has no other
it to his own use, he is of course bound to purpose.
account for its value.
The certificate of deposit in question is not
- In this connection we wholly reject the negotiable because only instruments payable to
defendant's pretense that the palay order are negotiable. Hence, this instrument not
delivered by the plaintiffs or any part of it being to order but to bearer, it is not negotiable.
was actually consumed in the fire of
January, 1921. Nor is the liability of the
defendant in any wise affected by the As for the argument that the depositary may use
circumstance that, by a custom prevailing or dispose oft he things deposited, the depositor's
among rice millers in this country, persons consent is required thus, the rights and
placing palay with them without special obligations of the depositary and of the depositor
agreement as to price are at liberty to shall cease and the rules and provisions
withdraw it later, proper allowance being applicable to commercial loans, commission, or
made for storage and shrinkage, a thing contract which took the place of the deposit shall
that is sometimes done, though rarely. be observed. Igpuara however has shown no
authorization whatsoever or the consent of the
depositary for using or disposing of the P2,498.
Ruling: Assignable is different from tranferrability. The Court ruled that the hotel owner
Negotiable instruments can be indorsed. Non should be liable for the loss of the revolver, pants
negotiable instrumets can be assigned. and bag of the guest.
Therefore, non negotiable instrument can be
assigned. Deposit
It is clear from the facts of the case that, after After he was licensed as a bonded
manufacturing the sugar of its planters, warehouseman, Go Tiong again received
respondent stores it in its warehouses and issues various deliveries of palay from Plaintiff,
the corresponding "quedans" to the planters who totaling 492 sacks, for which he issued the
own the sugar; that while the sugar is stored free corresponding receipts, all the grand total of
during the first ninety days from the date the it 860 sacks, valued at P8,600 at the rate of P10
"quedans" are issued, the undisputed fact is that, per sack.
upon the expiration of said period, respondent
charger, and collects storage fees; that for the
period beginning 1949 to 1957, respondent's Noteworthy is that the receipts issued by Go
total gross receipts from this particular enterprise Tiong to the Plaintiff were ordinary receipts,
amounted to P212,853.00. not the "warehouse receipts" defined by the
Warehouse Receipts Act (Act No. 2137).
A warehouseman has been defined as one who
receives and stores goods of another for On or about March 15, 1953, Plaintiff
compensation (44 Words and Phrases, p. 635). demanded from Go Tiong the value of his
For one to be considered engaged in the deposits in the amount of P8,600, but he was
warehousing business, therefore, it is sufficient told to return after two days, which he did, but
that he receives goods owned by another for Go Tiong again told him to come back.
storage, and collects fees in connection with the
same. In fact, Section 2 of the General Bonded A few days later, the warehouse burned to the
Warehouse Act, as amended, defines a ground.
warehouseman as "a person engaged in the
business of receiving commodity for storage." Before the fire, Go Tiong had been accepting
deliveries of palay from other depositors and
That respondent stores its planters' sugar free of at the time of the fire, there were 5,847 sacks
charge for the first ninety days does not exempt of palay in the warehouse, in excess of the
it from liability under the legal provisions under 5,000 sacks authorized under his license.
consideration. Were such fact sufficient for that
purpose, the law imposing the tax would be
After the burning of the warehouse, the
rendered ineffectual.
depositors of palay, including Plaintiff, filed
their claims with the Bureau of Commerce.
Gonzalez vs Go Tiong
However, according to the decision of the trial
Facts: court, nothing came from Plaintiff's efforts to
have his claim paid.
Go Tiong (respondent) owned a rice mill and
warehouse, located in Pangasinan. Thereafter, Thereafter, Gonzales filed the present action
he obtained a license to engage in the against Go Tiong and the Luzon Surety for the
business of a bonded warehouseman. sum of P8,600, the value of his palay, with
legal interest, damages in the sum of P5,000
and P1,500 as attorney's fees.
Subsequently, respondent Tiong executed a
Guaranty Bond with the Luzon Surety Co to
secure the performance of his obligations as While the case was pending in court, Gonzales
such bonded warehouseman, in the sum of and Go Tiong entered into a contract of
P18,334, in case he was unable to return the amicable settlement to the effect that upon
same. the settlement of all accounts due to him by
YES. SC ruled in favor Plaintiff. The quedan was marked as Exhibit D which is a
warehouse receipt issued by the warehouse of U.
Act No. 3893 provides that any deposit made de Poli for 576 bultos of tobacco. In the left
with Respondent Tiong as a bonded margin of the face of the receipt, U. de Poli
warehouseman must necessarily be governed certifies that he is the sole owner of the
by the provisions of Act No. 3893. merchandise therein described. The receipt is
endorsed in blank; it is not markednon-
negotiable or not negotiable.
The kind or nature of the receipts issued by
him for the deposits is not very material much
Since a sale was consummated between Roman
less decisive since said provisions are not
and U. de Poli, Romans claim is a vendors lien.
mandatory and indispensable
The lower court ruled in favor of Roman on the
theory that since the transfer to Asia Banking
Under Section 1 of the Warehouse Receipts Corp. (ASIA) was neither a pledge nor a
Act, the issuance of a warehouse receipt in mortgage, but a security for a loan, the vendors
the form provided by it is merely permissive lien of Roman should be accorded preference
and directory and not obligatory. . "Receipt", over it.
under this section, can be construed as any
receipt issued by a warehouseman for However, if the warehouse receipt issued was
commodity delivered to him non-negotiable, the vendors lien of Roman
cannot prevail against the rights of ASIA as
As the trial court well observed, as far as Go indorsee of the receipt.
Tiong was concerned, the fact that the
receipts issued by him were not "quedans" is ISSUE: WON the quedan issued by U. de Poli in
no valid ground for defense because he was favor of ASIA. is negotiable, despite failure to
the principal obligor. mark it as not negotiable?
Furthermore, as found by the trial court, Go HELD: YES. The warehouse receipt in question is
Tiong had repeatedly promised Plaintiff to negotiable. It recited that certain merchandise
issue to him "quedans" and had assured him deposited in the ware house por orden of the
that he should not worry; and that Go Tiong depositor instead of a la orden, there was no
was in the habit of issuing ordinary receipts other direct statement showing whether the
(not "quedans") to his depositors. goods received are to be delivered to the bearer,
to a specified person, or to a specified order or
his order. However, the use of por orden was
Furthermore, Section 7 of said law provides merely a clerical or grammatical error and that
that as long as the depositor is injured by a the receipt was negotiable.
breach of any obligation of the
warehouseman, which obligation is secured As provided by the Warehouse Receipts Act, in
by a bond, said depositor may sue on said case the warehouse man fails to mark it as non-
bond. negotiable, a holder of the receipt who purchase
if for value supposing it to be negotiable may, at
In other words, the surety cannot avoid his option, treat such receipt as imposing upon
liability from the mere failure of the the warehouseman the same liabilities he would
SECTRANS 2010/ ATTY. AGUINALDO 26
have incurred had the receipt been negotiable. De Poli was declared insolvent by the Court of
This appears to have given any warehouse First Instance of Manila with liabilities to the
receipt not marked non-negotiable practically amount of several million pesos over and above
the same effect as a receipt which, by its terms, his assets. An assignee was elected by the
is negotiable provided the holder of such creditors and the election was confirmed by the
unmarked receipt acquired it for value supposing court
it to be negotiable, circumstances which
admittedly exist in the present case. Hence, the Among the property taken over the assignee was
rights of the indorsee, ASIA, are superior to the the merchandise stored in the various
vendors lien. warehouses of the insolvent. This merchandise
consisted principally of hemp, maguey and
tobacco.
SC: YES! Issue: Whether or not the LSC still has the
obligation to deliver the same amount and kind of
- The quedans have legal force and effect sugar stored in its warehouse.
o They were duly executed by Wicks,
as treasurer and Torres as HELD: Since there was enough sugar to cover
warehouseman, for and in behalf of and deliver 1,081.79 piculs of domestic, reserve
D. and additional sugar belonging to the Cruz who,
o The said quedans were endorsed in according to the milling contract, was in duty
blank and physical possession was bound to take delivery thereof at the warehouse,
delivered to P as collateral security since it was established that the LSC compound
for the overdraft of Fiber Company was bombed on December 1941 by the Japanese
and who also occupied it from 1 January to 20
o That the quedans were in February 1942, the loss was due to the war or to
negotiable form. a fortuitous event and therefore, the obligation of
- D cannot now deny the existence of the the depositary to deliver what has been
quedans deposited in him has been extinguished by the
SECTRANS 2010/ ATTY. AGUINALDO 28
happening of a fortuitous event, which in this Consolidated becomes liable under Section 10 of
case, is the pacific war. The judgment appealed the WRL for misdelivery. On the contention that
from is affirmed. DMG was negligent for allowing such permits to
fall into the hands of unauthorized persons,
This is an appeal from a decision of the Court of contributory negligence is not one of the
First Instance of Nueva Ecija which orders the defenses specified in its answer. In order to for it
defendant to pay to the plaintiff the sum of to be a defense, it must previously show to have
P3,000, with interest thereon at the rate of 6% been committed. The burden of proof is in himself
per annum from June 26, 1940, and the costs of who alleges it as a defense. It cannot be inferred
action. from the fact that persons other than the
consignee or owner were able to take possession
ESTRADA V. CAR of the shipping documents or the permit papers
which were supposed to be in the latters custody.
DMG INC. vs CONSOLIDATED TERMINALS
INC.
63 OG 10
CONSOLIDATED vs ARTEX
Facts:
Facts: Consolidated Terminals Inc (CTI)
operated a customs warehouse in Manila. It
DMG ordered replacement parts for diesel
received 193 bales of high density compressed
conversion engine from Germany.
raw cotton worth P99k. It was understood that CTI
Upon arrival in Manila, the shipment was
would keep the cotton on behalf of Luzon
placed in the warehouse of Consolidated Brokerage until the consignee Paramount Textile
Terminals. had opened the corresponding letter of credit in
When DMG demanded for the delivery of the favor of Adolph Hanslik Cotton. By virtue of
goods, Consolidated stated that it was already forged permits, Artex was able to obtain the bales
released and delivered to DMG through a of cotton and paid P15k.
delivery permit which was presented by a
certain Sandoval authorized by Alteza. Issue: W/N CTI as warehouseman was
DMG contends that it has no such employees. entitled to the possession of the bales of cotton?
It demanded for the payment of such goods.
Ruling: No. CTI had no cause of action. It was not
the owner of the cotton. It was not a real party of
Issue: interest in the case. CTI was not sued for
damages by the real party in interest.
Whether or not Consolidated is liable to DMG?
Consolidated did not faithfully comply with its Facts: Manila Railroad received into its custody a
duties and obligations. Section 9 of the shipment of cases of milk, of which 3.171 wwere
Warehouse Receipts Law does not deem it marked for Cebu and 1,829 for Lua Kia but
sufficient as prerequisite for delivery the mere according to the bills of lading in Manila Railroad's
presentment of the receipt. It further requires possession, Lua Kia was entitled to 2000 cases
that the person to whom the goods should be and Cebu was entitled to 3000 cases. Manila
delivered is one who is either himself entitled to Railroad delivered 1,913 cases to Lua Kia, which
the propertyor who has written authority from is 87 cases short in the bill of lading.
the person so entitled. Presentment of the
receipt must be couple with ascertainment that Issue: WoN manila RailRoad is liable to Lua Kia for
the person so presenting it is rightfully entitled to the underlivered cases of milk
take delivery of the goods covered by the receipt.
Ruling. Yes. The legal relationship between an
Consolidated did not ascertain the identity of arrastre operator and the consignee is akin to
Sandoval and Alteza. They have not called up that of a depositor and warehouseman. As
DMG first and ascertained the genuineness of the custodian of the goods discharged from the
authority in writing before delivering the articles vessel, it was A's duty like that of nay other
considering that they did not know either depositary to take good care of the goods and
Sandoval or Alteza. turn them over to the party entitled to their
SECTRANS 2010/ ATTY. AGUINALDO 29
possession. Under this particular set of The intention of the parties to the
circumstances, A should have held delivery transaction must prevail against such a technical
because of the discrepancy between the bill of objection to the sufficiency of the description of
lading and the markings and conducted its own the tobacco. It might be different if there had
investigation not unlike that under Sectopm 18 of been Cagayan tobacco in the warehouse at the
the Warehouse Receipts law, or called upon the time of the issuance of the quedan, or if there
parties to interplead such ias in case under were any doubt as to the identity of the tobacco
Section 17 of the same law, in order to determint intended to be covered by the quedan.
the rightful owner of the goods.
The quedan was a negotiable warehouse
receipt which was duly issued and delivered by
the debtor U. de Poli to American Foreign Banking
AMERICAN FOREIGN BANKING Corporation and it divested him of his title to said
CORPORATION vs HERRIDGE tobacco and transferred the position and the title
G.R.No.21005, December 20, 1924 thereof the American Foreign Banking
Corporation.
Facts:
Issue: Whether the use of the word Cagayan ISSUE: Whether the surrender of the warehouse
instead of Isabela in describing the tobacco in receipt covering 2000 cavans of palay given as
the quedan renders the quedan null and void as security, endorsed in blank, to PNB, has the effect
negotiable warehouse receipt for the tobacco of transferring their title or ownership OR it
intended to be covered by it. should be considered merely as a guarantee to
secure the payment of the obligation of
Ruling: Defendant?
o third, that such of the quedans as were WAREHOUSE RECEIPT: Who may negotiate a
issued in the name of the Plaintiff were receipt?
duly endorsed in blank by the Plaintiff
and by Otto Ranft; PNB v. NOAHS ARK SUGAR REFINERY
o and fourth, that the two remaining FACTS: Defendant issued on several dates
quedans which were duly endorsed in warehouse receipts, which were substantial in
blank by him. form and contained the terms prescribed by law,
to Rosa Sy and Teresita Ng. Subsequently, some
The bank had a perfect right to act as it did, of the warehouse receipts were negotiated and
and its action is in accordance with sections indorsed to Luis Ramos and Cresencia Zoleta.
47, 38, and 40 of the Warehouse Receipts Act Ramos and Zoleta then used the quedans as
security for loans obtained by them from PNB.
Upon maturity, both failed to pay, prompting PNB
However, the pertinent provision regarding to demand the delivery of the sugar covered by
the rights the Defendant bank acquired over the quedans indorsed to it by Ramos and Zoleta.
the aforesaid quedans after indorsement and Noahs refused to comply with the demand, PNB
delivery to it by Ranft, is found in section 41 filed a case for Specific Performance.
of the Warehouse Receipts Act (Act No. 2137):
The main contention of Noahs was that it was
still the owner of the subject quedans and the
quantity of sugar represented thereon because
o SEC. 41. Rights of person to whom a the corresponding payment of Sy and Ng through
receipt has been negotiated. A checks were dishonoured and so they did not
SECTRANS 2010/ ATTY. AGUINALDO 32
acquire ownership. The it follows that the of RNS Merchandising and St. Therese
subsequent indorsers and plaintiff itself did not Merchandising, in breach of trust, fraud or
acquire a better right of ownership than the conversion against Noah's Ark.
original vendees or first indorsers.
PNB v SAYO, JR.
In the answer of Sy and Ng, they alleged that the
transaction between them and Noahs, FACTS
concerning the quedans, was bogus and
simulated. It was part of a complex banking - Noahs Ark Sugar Refinery (Noahs) issued
scheme and financial maneuvers to avoid VAT several warehouse receipts (quedans),
payment and other BIR assessments. which were negotiated to Rosa, RNS and
St. Therese (vendees), which were again
ISSUES: negotiated to Luis and Cresencia, which
1. WON the non-payment of the purchase price they (Luis and Cresencia) endorsed to PNB
for the sugar stock evidenced by the quedans, as security for 2 loan agreements.
rendered invalid the negotiation of said quedans o Transfer of quedans Noahs
by Sy and Ng to indorsers Ramos and Zoleta and Rosa, RNS and St. Therese Luis
the subsequent negotiation of Ramos and Zoleat and Cresencia PNB
to PNB? - Luis and Cresencia failed to pay their loans
2. WON PNB as indorsee of quedans was entitled hence PNB demanded delivery of sugar
to delivery of sugar stocks from the stocks, however, Noahs Ark refused,
warehouseman, Noahs Ark? alleging ownership thereof.
- Noahs Ark contended that the agreement
HELD: The validity of the negotiation by RNS made by them with the vendees was
Merchandising and St. Therese Merchandising to stopped since the bank dishonored the
Ramos and Zoleta, and by the latter to PNB to payments made by the vendees to Noahs
secure a loan cannot be impaired by the fact that Ark. As such, the vendees and the
the negotiation between Noah's Ark and RNS endorsers of the quedans never acquired
Merchandising and St. Therese Merchandising ownership thereof.
was in breach of faith on the part of the - Noahs Ark claimed for warehousemans
merchandising firms or by the fact that the owner lien for the storage of the goods.
(Noah's Ark) was deprived of the possession of - LC granted lien
the same by fraud, mistake or conversion of the - PNB appealed
person to whom the warehouse receipt/quedan
was subsequently negotiated if (PNB) paid value ISSUE: WoN PNB is entitled to the stocks of sugar
therefor in good faith without notice of such as the endorsee of the quedans, without paying
breach of duty, fraud, mistake or conversion. (See the lien
Article 1518, New Civil Code). And the creditor
(PNB) whose debtor was the owner of the SC: YES
negotiable document of title (warehouse receipt)
shall be entitled to such aid from the court of - While PNB is entitled to the stocks of
appropriate jurisdiction attaching such document sugar as the endorsee of the quedans,
or in satisfying the claim by means as is allowed delivery to it shall be effected only upon
by law or in equity in regard to property which payment of the storage fees.
cannot be readily attached or levied upon by - The warehouseman is entitled to the
ordinary process. (See Art. 1520, New Civil Code). warehousemans lien that attaches to the
If the quedans were negotiable in form and duly goods invokable against anyone who
indorsed to PNB (the creditor), the delivery of the claims a right of possession thereon.
quedans to PNB makes the PNB the owner of the - However, in this case, the lien was lost
property covered by said quedans and on deposit when R refused to deliver the goods,
with Noah's Ark, the warehouseman. (See Sy which were not anchored to a valid excuse
Cong Bieng & Co. vs. Hongkong & Shanghai Bank (i.e. non satisfaction of W/Hman Lien) but
Corp., 56 Phil. 598). on an adverse claim of ownership.
- The loss of W/H Mans lien does not
In the case at bar, PNB's right to enforce the necessarily mean the extinguishment of
obligation of Noah's Ark as a warehouseman, to the obligation to pay the W/H fees and
deliver the sugar stock to PNB as holder of the charges which continues to be a personal
quedans, does not depend on the outcome of the liability of the owners, PNB in this case.
third-party complaint because the validity of the However, such fees and charges have
negotiation transferring title to the goods to PNB ceased to accrue from the date of the
as holder of the quedans is not affected by an act
SECTRANS 2010/ ATTY. AGUINALDO 33
rejection by Noahs Ark to heed the lawful For value received we hereby guarantee
demand for the release of the goods. compliance with the terms and conditions
as outlined in the above contract.
HELD:
1) In 1916, Romulo Machetti, agreed to construct B) On the other hand, a surety undertakes to pay
a building in Manila for the Hospicio de San Jose, if the principal does not pay, the guarantor only
for P64,000. One of the conditions of the binds himself to pay if the principal cannot pay.
agreement was that the contractor should obtain The one is the insurer of the debt, the other an
the "guarantee" of the Fidelity and Surety insurer of the solvency of the debtor. This latter
Company of the Philippine Islands to the amount liability is what the Fidelity Company assumed in
of P128,800. Said contract read: this case. Thus, Fidelity having bound itself to pay
only the event its principal, cannot pay it follows
that it cannot be compelled to pay until it is
SECTRANS 2010/ ATTY. AGUINALDO 34
shown that Machetti is unable to pay. The We, MRC et. al, as principal and the Standard
judgment appealed from is therefore reversed. Insurance Co. Inc xxx as surety does not suffice
to make contract binding on the MRC unless it is
shown that the same was authorized by it.
PHIL EXPORT v VP EUSEBIO Neither the signature nor the acknowledgment
indicates that the act of that of the MRC or that
FACTS: Respondent entered into contract with the latter had empowered MPS to execute the
SOB for construction of Therapy Bldg. SOB bond in its behalf. The result would be that the
demanded bonds to secure performance. Project appeal bond is void and unenforceable for lack of
was delayed principal debtor or obligation.
DOCTRINE: By guaranty a person, called the While the surety bound itself to pay jointly and
guarantor, binds himself to the creditor to fulfill severally, such an undertaking presupposes that
the obligation of the principal debtor in case the the obligation is to be enforceable against
latter should fail to do so; if the person binds someone else besides the surety and the latter
himself solidarily with the principal debtor, the could always claim that it was never its intention
contract is called suretyship. to be the sole person obliged thereby.
The council of the plaintiff-appellee municipality, One day later plaintiff-appellee municipality sent
in its resolution No. 161 (Exhibit 1) of December the letter Exhibit 21 to Miguel Marasigan
11, 1930 rejected Graciano Napa's bid and informing him that the contract between them
accepted that of the appellant Miguel Marasigan. becomes effective on January 14, 1931.
To secure his compliance with the terms of the Prior to this, plaintiff informed Marasigan that the
contract which was immediately formalized by contract granting Marasigan the privilege is
him and the plaintiff, and pursuant to the suspended & considered ineffective while the
provisions of section 8 of resolution No. 128, protest is pending.
ISSUE: w/n respondents are liable Shortly thereafter Harden, having examined
the machinery in the Plaintiff's bodega,
HELD: advised the Bank that the expellers were not
as ordered.
No. The contract was not only considered not
consummated but cancelled.
Consequently, the Bank naturally refused to
It ceased to be valid when it was cancelled accept and pay for the machinery, and the
Plaintiff disposed of them to the best
Neither the appellant nor his sureties were bound advantage in the Manila market at a price
to comply with the terms of their respective which was below the price at which Harden
contracts of fishing privilege and suretyship. had agreed to take them.
This is so particularly with respect to the sureties, The ground upon which the defense is chiefly
because suretyship cannot exist without a valid rested is that the expellers tendered by the
obligation. Plaintiff were "side-drive" instead of "end-
drive" expellers, and in support of this
Guaranty is not presumed. contention Harden was produced by the
Defendant as a witness, and he denied that
The elimination of the obligation for which said the order for expellers had been changed
sureties desired to answer with their bond also upon his instructions.
rendered the bond also eliminated.
Issue:
SMITH BELL v PNB
FACTS Whether or not PNB is subsidiary liable?
FACTS:
2) On the same date, by Eng Giok, as principal,
- Inter Resin opened a Letter of Credit with
with Pedro Lopez Dee and Pedro Dy-Liacco, as
Manila Banking Corp. with security of
counterboundsmen, subscribed an indemnity
Continuing Surety Agreement signed by
agreement in favor of appellant Surety Company,
Inter Resin and Investment and
where, in consideration of its surety bond, the
Underwriting Corp (IUCP) wherein they
three agreed to be obligated to the surety
bound themselves solidarily for the.
company. Thereafter, Dy contracted obligations in
- Later Inter Resin together with Willex (P)
favor of the Destilleria in the amount of
executed a continuing guaranty in favor of
P41,449.93; and Dy made remittances of the
IUCP, stating that Inter Resin and P are
same amount
solidarily liable. Due to this, IUCP paid
Manila Bank P4M (Letter of Credit)
- IUCP then demanded payment of the 3) The distillary, however, applied said
amount, however, Inter Resin and P failed remittances first to Dy Eng Giok's outstanding
to do so. Hence, this case balance prior to August 4, 1951, before the
- P contends that it should not be liable suretyship agreement was executed, in the sum
since P is merely a guarantor of P12,898.61; and the balance of P28,965.88 to
Dy's obligations between August 4, 1951 and
ISSUE: WoN P ma be held jointly and severally August 3, 1952.
liable with Inter Resin for the amount paid by
Interbank to Manila Bank 4) Then demanded payment of the remainder
from Dy, and later, from the appellant Surety
SC: YES Company. The latter paid P10,000.00 (the
- The amount had been paid by InterBank to maximum of its bond) on July 17, 1953,
Manila bank apparently, without questioning the demand; and
SECTRANS 2010/ ATTY. AGUINALDO 41
then sought reimbursement from Dy Eng Giok C) Thus, payment voluntarily made by appellant
and his counter guarantors, who however failed was improper since it was not liable under its
to pay. Because of this the company brought an bond; consequently, it can not demand
action to enforce collection. reimbursement from the counterbondsmen but
only from Dy.
5) The CFI absolved the counter-guarantors on
the theory that in so far as they are concerned, D) Ultimately, the application by a creditor
the payments made by Dy from August 4, 1951 depends upon the debtor acquiescence thereto.
to August 3, 1952, should have been applied to In the present case, as already noted, there is no
his obligations during that period, which were the evidence that the receipts for payment expressed
ones covered by the surety bond and the counter- any imputation, or that the debtor agreed to the
guaranty; and since these obligations only same. Judgment is affirmed.
amounted to P41,449.93, the payments
exceeding the obligations, the CFI concluded that
the Surety Company incurred no liability and the SOCONY v CHO SIONG
counterbondsmen in turn had nothing to answer
for. FACTS: Cho Siong entered into contract of agency
for distribution of petroleum products, assumed
HELD: liability of former agent Tong Kuan. His agency
bond was secured by Ong Guan Can. Defaulted in
A) The CFI is correct. There are two reasons why the amount of P64.00
the remittances by Dy Eng Giok in the sum of
P41,864.49 should be applied to the obligation of DOCTRINE: Under the terms of the bond signed
P41,449.93 contracted by him during the period by the surety, he did not answer for the principal
covered by the suretyship agreement: obligor save for the Latters acts by virtue of the
contract of agency. He cannot be held liable for
a.. In the absence of express stipulation, a the debt of a former agent, which the principal
guaranty or suretyship operates obligor assumed by virtue of another contract, of
prospectively and not retroactively; that is which said surety was not even aware. A contract
to say, it secures only the debts of suretyship is to be strictly interpreted and is
contracted after the guaranty takes effect not to be extended beyond its terms.
because a guaranty is not presumed, but
must be express, and can not extend to
more than what is stipulated.
GARON v PROJECT MOVERS
Facts:
b.. Since the obligations of Dy between
August 4, 1951 to August 4, 1952, were
Project Movers Realty and Devt Corp (PMRDC)
guaranteed, while his indebtedness prior
to that period was not secured, then in the obtained a loan from Garon. The loan was
absence of express application by the covered by a Promissory note to mature on
debtor, any partial payments made by him December 19. The stipulated interest rate was
should be imputed or applied to the debts 36% per annum.
that were guaranteed, since they are To secure the payment of the loan, PMRDC
regarded as the more onerous debts from undertook to assign to Garon its leasehold
the standpoint of the debtor. rights over a space at the Monumento Plaza
Commercial Complex.
B) In essence therefore debts covered by a The parties stipulated that failure to pay the
guaranty are deemed more onerous to the debtor note or any portion thereof, or any interest
than the simple obligations because, in their thereon, shall constitute as default and the
case, the debtor may be subjected to action not entire obligation shall become due and
only by the creditor, but also by the guarantor, demandable without need of demand.
and this even before the guaranteed debt is paid PMRDC obtained another loan from Garon at
by the guarantor; hence, the payment of the 17% per annum to mature on December 31. It
guaranteed debt liberates the debtor from is covered by another promissory note and
liability to the creditor as well as to the guarantor, secure a leasehold rights over another space
while payment of the unsecured obligation only in Monumento Plaza.
discharges him from possible action by only one To secure its obligations to assign the
party, the unsecured creditor. leasehold rights to Garon, PMRDC procured a
surety bond from Stronghold Insurance, which
Yes, the surety is liable in general. The principal If it (the guaranty) be simple or indefinite, it shall
obligation guaranteed by the surety bond is the comprise not only the principal obligation but
assignment of leasehold rights of PMRDC to also all its accessories, including judicial costs.
Garon over the subject spaces. Garon made a
formal demand but PMRDC defaulted. As such,
PMRDCs liability arose. Consequently, the COMMONWEALTH v CA
suretys liability likewise arose.
This case is about SIGS and ELBA borrowing
Suretyship arises upon the solidary binding of a money from RCBC worth P4m. Commonwealth
person with the principal debtor, for the purpose being the surety. SIGS and ELBA defaulted so
of fulfilling an obligation. A surety is considered in RCBC went after Commonwealth. Commonwealth
law as being the same party as the debtor in insists on not paying. Lower Court ruled in favor
relation to whatever is adjudged as touching the of RCBC and ordered Commonwealth to pay the
obligation of the latter and their liabilities are principal debt plus interest. Commonwealth
interwoven as to be inseparable. Although a refused. Commonwealth appealed to CA and
surety contract is secondary to the principal questions the ruling of the lower court awarding
obligation, the liability of the surety is interest. (focus on interest)
direct, primary and absolute or equivalent Issue: WoN Commonwealth whould pay principal
to that of a regular party to the and interest
undertaking.
Ruling: Obviously, Commonwealth is obliged to
Note: pay the principal being the surety. Regarding the
interest, generally no. However because
Surety in this case was not held liable since its Commonwealth refused to pay the principal when
undertaking under the surety bond was merely to the lower court ordered it to do so, it is now
guarantee the assignment of PMRDCs leasehold bound to pay the interest.
rights and not the payment of the entire
obligation and Garon is seeking to enforce her NAMARCO v MARQUEZ
We are of the opinion that this last 1) On March 26 1997, Pyramid entered into an
contention is likewise unfounded and agreement with Macrogen Realty, of which
untenable. Bitanga is the President, to construct for the
o In the first place, this alleged defense latter a building, located in Sucat, Paraaque.
should have been interposed before Pyramid then commenced civil, structural, and
the judgment was rendered in this architectural works on the construction project.
case and it is too late to raise it for the However, Macrogen Realty failed to settle
first time as a ground for opposing the respondents progress billings. Bitanga, assured
motion to sell the real property in Pyramid that the outstanding account of
question. Macrogen Realty would be paid.Thus, Pyramid
o In the second place, the contention continued the construction project.
that the mortgaged real property
belonging to the petitioner cannot be 2) In August 1998, Pyramid suspended work on
sold to pay the debt for the reason that the construction project since the conditions that
she is a mere surety of Rafael it imposed for the continuation thereof, including
Martinez, finds no support in the law. payment of unsettled accounts, had not been
complied with by Macrogen Realty and
eventually, on 1 September 1999, respondent
It is true that the petitioner is a surety instituted with the Construction Industry
with regard to Rafael Martinez and as such Arbitration Commission (CIAC) a case for
surety she is entitled to resort to the arbitration against Macrogen Realty seeking
actions and remedies against him which payment by the latter of its unpaid billings and
the law affords her, but we should not lose project costs. Macrogen, chose to amicably settle
sight of the fact that she was sued not as the arbitration case and both parties entered into
a surety but as a mortgage debtor for a Compromise Agreement, with Bitanga acting as
being the owner of the mortgaged signatory for and in behalf of Macrogen Realty.
property
3) Under the Agreement, Macrogen Realty agreed
ARROYO v JUNGSAY to pay Pyramid the total amount in six equal
monthly installments, that if it would default in
FACTS: the payment of two successive monthly
installments, immediate execution could issue
SECTRANS 2010/ ATTY. AGUINALDO 48
against it for the unpaid balance, without need of (2) whether defendant wife Marilyn Bitanga is
judgment from any court or tribunal. Bitanga liable in this action;
guaranteed the obligations of Macrogen Realty
under the Compromise Agreement by executing a HELD:
Contract of Guaranty in favor of respondent, by
virtue of which he irrevocably and unconditionally A) Under a contract of guarantee, the guarantor
guaranteed the full and complete payment of the binds himself to the creditor to fulfill the
principal amount of liability of Macrogen Realty. obligation of the principal debtor in case the
latter should fail to do so. The guarantor who
4) However, despite this, Macrogen Realty failed pays for a debtor, in turn, must be indemnified by
and refused to pay all the monthly installments the latter. However, the guarantor cannot be
agreed upon in the Compromise Agreement. compelled to pay the creditor unless the latter
Thus, on 7 September 2000, respondent moved has exhausted all the property of the debtor and
for the issuance of a writ of execution against resorted to all the legal remedies against the
Macrogen Realty, which was granted. debtor. This is what is otherwise known as the
benefit of excussion.
5) The sheriff however filed a return stating that
he was unable to locate any property of Article 2060 of the Civil Code reads:
Macrogen Realty, except its bank deposit of
P20,242.33, with the Planters Bank, Buendia In order that the guarantor may make use
Branch. Respondent then made, on January 3, of the benefit of excussion, he must set it
2001, a written demand on petitioner, as up against the creditor upon the latters
guarantor of Macrogen Realty, to pay the demand for payment from him, and point
P6,000,000.00, or to have properties of the out to the creditor available property of
Macrogen Realty sufficient to cover the obligation the debtor within Philippine territory,
guaranteed. Said demands met no reply. sufficient to cover the amount of the debt.
6) As to Marilyns (bitangas wife) liability, B) Said provision imposes a condition for the
Pyramid contended that Macrogen Realty was invocation of the defense of excussion. Article
owned and controlled by bitanga and Marilyn 2060 of the Civil Code clearly requires that in
and/or by corporations owned and controlled by order for the guarantor to make use of the benefit
them. On the theory that since the completion of of excussion, he must set it up against the
the construction project would have redounded to creditor upon the latters demand for payment
the benefit of both petitioner and Marilyn and/or and point out to the creditor available property of
their corporations; and considering, Marilyns the debtor within the Philippines sufficient to
interest in a corporation which controls Macrogen cover the amount of the debt.
Realty, Marilyn cannot be unaware of the
obligations incurred by Macrogen Realty and/or
petitioner in the course of the business C) In this case, despite having been served a
operations of the said corporation. demand letter at his office, petitioner still failed
to point out to the respondent properties of
Macrogen Realty sufficient to cover its debt. Such
7) Pyramid filed suit that a judgment be rendered failure on petitioners part forecloses his right to
ordering petitioner and Marilyn to comply with set up the defense of excussion.
their obligation under the Contract of Guaranty
by paying respondent the amount of
P6,000,000.000. D) Article 2059(5) of the Civil Code thus finds
application and precludes petitioner from
interposing the defense of excussion. We quote:
8) Marilyn contended that, since she did not co-
sign the Contract of Guaranty with her husband;
nor was she a party to the Compromise (5) If it may be presumed that an
Agreement between respondent and Macrogen execution on the property of the principal
Realty. She had no part at all in the execution of debtor would not result in the satisfaction
the said contracts. This was denied of the obligation.
(1) whether the defendants were liable under the ONG v PCIB
contract of guarantee dated April 17, 2000
entered into between Benjamin Bitanga and the FACTS: Cho Siong entered into contract of agency
plaintiff; for distribution of petroleum products, assumed
Issue: Whether or not MCS should be held liable F: Universal Trading Company was going to
for the remaining 40% of the balance due? withdraw goods from the Bureau of Customs to
be delivered to BPI. To withdraw, they gave a
Held: bond executed by Manila Compania de Seguros.
That bond was secured solidarily by Tuason Co.
No, the bond of 3,000 filed by PI responded for and Machuca of Universal Trading. It was to be
the obligation of MT up to the some of 3,000, paid whether or not Manila Compania already
inasmuch as the bond of 2,000 filed by MCS paid CIR. Manila Compania demanded payment
responded for the obligation of MT only insofar as from Tuason. Manila Compania filed a case
it might exceed 3,000 and up to 5,000. against tuason. Tuason later payed but incurred
litigation expenses. Tuason now demands
The provision in the NCC with regard to several payment from Machuca. Tuason filed a case for
sureties of only one debtor for the same debt collection of money from Machuca. The lower
does not apply in this case. Although the two court ruled that Machuca should pay the debt and
bonds on their face appear to guarantee the
Petitioner cannot be considered an innocent ISSUE: WON Mortgage allowing R to mortgage the
purchaser for value, relying on the Torrents title. property was valid
While a Torrens title serves as evidence of an
indefeasible title to the property in favor of the SC: YES
person whose name appears therein, when the - It has long been settled that it is valid so
instrument presented for registration is forged, long as valid consent was given. In
even if accompanied by the owners duplicate consenting thereto even granting that
certificate of title, the registered owner does not petitioner may not be assuming personal
thereby lose his title, and neither does the liability for the debt, her property shall
assignee of the mortgagee, for that matter, nevertheless secure and respond for the
acquire any right or title to the property. In such a performance of the principal obligation
case, the transferee or the mortgagee, based on - The law recognizes instances when
a forged instrument, is not even a purchaser or a persons not directly parties to a loan
mortgagee for value protected by law. agreement may give as security their own
properties for the principal transaction.
- In this case, the spouses should not be
allowed to disclaim the validity of a
Petitioner cannot also invoke the doctrine of a transaction they voluntarily and knowingly
mortgagee on good faith. Said doctrine speaks of entered into for the simple reason that
a situation where, despite the fact that the such transaction turned out prejudicial to
mortgagor is not the owner of the mortgaged them later on.
SECTRANS 2010/ ATTY. AGUINALDO 60
- Records show that P voluntarily agreed to PNB in the extrajudicial foreclosure. The RTC ruled
use their property as collateral for Rs in favour of the spouses belo.
loan, hence, no fraud
- The undertaking made by R and its 6) On appeal, the CA ruled that the petitioners
officers are valid, hence they are liable to spouses Belo should pay the entire amount due
reimburse P for the damages they suffered to PNB under the mortgage deed at the time of
by reason of the mortgage the foreclosure sale plus interest, costs and
expenses.
SPOUSES BELO v PNB
ISSUE: whether or not the SPA the real estate
FACTS: mortgage contract, the foreclosure proceedings
and the subsequent auction sale involving
1) Eduarda Belo owned an agricultural land with Eduarda Belo's property are valid. And assuming
an area of 661,288 square meters in Panitan, they are valid, whether or not the petitioners are
Capiz, which she leased a portion to respondents required to pay, as redemption price, the entire
spouses Eslabon, for a period of 7 years at the claim of respondent PNB in the amount of
rate of P7,000.00 per year. P2,779,978.72 as of the date of the public auction
sale on June 10, 1991.
2) Respondents spouses Eslabon obtained a loan
from PNB secured by a real estate mortgage on HELD:
their own 4 residential houses located in Roxas
City, as well as on the agricultural land owned by A) The validity of the SPA and the mortgage
Eduarda Belo. The assent of Eduarda Belo to the contract cannot anymore be assailed due to
mortgage was acquired through a special power petitioners Belo failure to appeal the same after
of attorney which was executed in favor of the trial court rendered its decision affirming their
respondent Marcos Eslabon on June 15, 1982. validity.
3) The spouses Eslabon failed to pay their loan B) Also, the SPA executed by Eduarda Belo in
obligation, and so extrajudicial foreclosure favor of the respondents spouses Eslabon and the
proceedings against the mortgaged properties Real Estate Mortgage executed by the
were instituted by PNB and was the highest respondents spouses in favor of respondent PNB
bidder of the foreclosed properties at are valid. It is stipulated in paragraph three (3) of
P447,632.00. the SPA that Eduarda Belo appointed the Eslabon
spouses "to make, sign, execute and deliver any
4) Meanwhile, Eduarda Belo sold her right of contract of mortgage or any other documents of
redemption to petitioners spouses Enrique and whatever nature or kind . . . which may be
Florencia Belo under a deed of absolute sale of necessary or proper in connection with the loan
proprietary and redemption rights. Before the herein mentioned, or with any loan which my
expiration of the redemption period, petitioners attorney-in-fact may contract personally in his
spouses Belo tendered payment for the own name
redemption of the agricultural land which
includes the bid price of respondent PNB, plus C) ThisSPA was not meant to make her a co-
interest and expenses. obligor to the principal contract of loan between
respondent PNB, as lender, and the spouses
5) However, PNB rejected the tender of payment Eslabon, as borrowers. Eduarda Belo consented to
of petitioners spouses Belo contending that the be an accommodation mortgagor in the sense
redemption price should be the total claim of the that she signed the SPA to authorize respondents
bank on the date of the auction sale and custody spouses Eslabons to execute a mortgage on her
of property plus charges accrued and interests land.
amounting to P2,779,978.72 to which the
spouses disagreed and refused to pay the said D) An accommodation mortgage isnt void simply
total claim of respondent PNB. Thereafter the\ because the accommodation mortgagor did not
spouses Belo filed in the RTC an action for benefit from the same. The validity of an
declaration of nullity of mortgage, with an accommodation mortgage is allowed under
alternative cause of action, in the event that the Article 2085 of the New Civil Code which provides
accommodation mortgage be held to be valid, to that "(t)hird persons who are not parties to the
compel respondent PNB to accept the redemption principal obligation may secure the latter by
price tendered by petitioners spouses Belo which pledging or mortgaging their own property."
is based on the winning bid price of respondent
Ruling: No. Tuason is entitled to retain and Mobil filed for the execution of the judgment.
appropriate to himself the merchandise received Dayrit opposed alleging that they had an
in pledge is null and indefensible, because he can agreement with Mobil, that he would not appeal
only recover his credit, according to law, from the anymore but Mobil would release the mortgage
proceeds of the sale of the same. Art. 2088. upon payment of his 1/3 share.
3. Petitioner is NOT A MORTGAGEE IN GOOD 1) On March 23, 1920, the plaintiff McCullough &
FAITH. Petitioner knew that the loan it was Co., sold to Mariano Veloso the "McCullough
extending to Garcia/TransAmerican was for Building," and the land thereon, for the price of
the purpose of the development of the P700,000. Veloso paid P50,000 cash on account
eight-unit townhouses. Petitioners at the execution of the contract, leaving a
insistence that prior to the approval of the balance of P650,000 to be paid.
loan, it undertook a thorough check on the
property and found the titles free from 2) Veloso assumed also the obligation to insure
liens and encumbrances would not the property for not less than P500,000, as well
suffice. It was incumbent upon petitioner as to pay all legal taxes that might be imposed
to inquire into the status of the lots which upon the property, and in the event of his failure
includes verification on whether Garcia to do so, the plaintiff should pay said taxes at the
had secured the authority from the HLURB expense of Veloso, with the right to recover of
to mortgage the subject lots. Petitioner him the amounts thus paid, with interest at 7 per
failed to do so. We likewise find petitioner cent per year. To secure the payment of these
negligent in failing to even ascertain from amounts, Veloso mortgaged the property
Garcia if there are buyers of the lots who purchased
turned out to be private respondents.
Petitioners want of knowledge due to its
3) It was, also, stipulated that in case of failure on
negligence takes the place of registration -
the part of Veloso to comply with any of the
thus it is presumed to know the rights of
stipulations contained in the mortgage deed, all
respondents over the lot - and the
the installments with the interest thereon shall
conversion of its status as mortgagee to
become due, and the creditor shall then have the
buyer-owner will not lessen the
right to bring the proper action for the collection
importance of such knowledge.
of the unpaid part of the debt.
SAMANILLA v CAJUCOM
4) On August 21, 1920, Mariano Veloso, in turn,
MOBIL PHILIPPINES v DIOCARES sold the property, with the improvements thereon
FACTS: for P100,00 to Joaquin Serna, who agreed to
The parties Mobil and Diocares entered an respect the mortgage of the property in favor of
agreement wherein on cash basis, Mobil will the plaintiff and to assume Mariano Veloso's
deliver minimum of 50k liters of petroleum a obligation to pay the plaintiff the balance due of
BANTSA and BAIL on several occasions granted On the same date, DALCO executed a second
three major multi-million United States (US) mortgage on the same properties in favor of
Dollar loans to the following corporate borrowers ATLANTIC to secure payment of the unpaid
and which are foreign affiliates of private balance of the sale price of the lumber
respondent. 3 concession.
Due to the default in the payment of the loan Both deeds contained the following provision
amortizations, BANTSA and the corporate extending the mortgage lien to properties to be
borrowers signed and entered into restructuring subsequently acquired referred to hereafter as
agreements. As additional security for the "after acquired properties" by the mortgagor:
restructured loans, private respondent ARC
(American Realty) as third party mortgagor All property of every nature and
executed two real estate mortgages, over its description taken in exchange or
parcels of land including improvements thereon, replacement, and all buildings, machinery,
located at Bulacan. fixtures, tools equipment and other
property which the Mortgagor may
Eventually, the corporate borrowers defaulted in hereafter acquire, construct, install,
the payment of the restructured loans prompting attach, or use in, to, upon, or in
petitioner BANTSA to file civil actions before connection with the premises, shall
foreign courts for the collection. This includes the immediately be and become subject to the
property of American Realty. Petitioners already lien of this mortgage in the same manner
filed collection cases in foreign courts. It also filed and to the same extent as if now included
an extrajudicial foreclosure on the property in therein, and the Mortgagor shall from time
Bulacan in which American Realty question to time during the existence of this
because the petitioners cannot file a case for mortgage furnish the Mortgagee with an
collection and a case for extrajudicial foreclosure accurate inventory of such substituted and
at the same time. subsequently acquired property.
Issue: Won the contention of respondents are Both mortgages were registered in the Office of
valid the Register of Deeds. In addition thereto DALCO
and DAMCO pledged to the BANK 7,296 shares of
stock of DALCO and 9,286 shares of DAMCO to
Ruling: yes! The mortgagee cannot have both
secure the same obligations.
remedies. He has only one cause of action, i.e.,
non-payment of the mortgage debt; hence, he
Upon DALCO's and DAMCO's failure to pay the
cannot split up his cause of action by filing a
fifth promissory note upon its maturity, the BANK
compliant for payment of the and another
paid the same to the Export-Import Bank of
complaint for foreclosure.
Washington D.C., and the latter assigned to the
former its credit and the first mortgage securing
PEOPLES BANK v DAHICAN LUMBER
it. Subsequently, the BANK gave DALCO and
DAMCO up to April 1, 1953 to pay the overdue
FACTS: On September 8, 1948, Atlantic Gulf &
promissory note.
Pacific Company of Manila, a West Virginia
corporation licensed to do business in the
After July 13, 1950 the date of execution of the
Philippines hereinafter referred to as ATLANTIC
mortgages mentioned above DALCO purchased
sold and assigned all its rights in the Dahican
various machineries, equipment, spare parts and
Lumber concession to Dahican Lumber Company
supplies in addition to, or in replacement of some
hereinafter referred to as DALCO. Thereafter, to
of those already owned and used by it on the
develop the concession, DALCO obtained various
date aforesaid. Pursuant to the provision of the
loans from the People's Bank & Trust Company.
mortgage deeds quoted theretofore regarding
"after acquired properties," the BANK requested
As security for the payment of the
DALCO to submit complete lists of said properties
abovementioned loans, DALCO executed in favor
but the latter failed to do so.
of the BANK the latter acting for itself and as
trustee for the Export-Import Bank of Washington
The alleged sales of equipment, spare parts and
D.C. a deed of mortgage covering five parcels
supplies by CONNELL and DAMCO to It, was
of land together with all the buildings and other
subsequently rescinded by the parties.
SECTRANS 2010/ ATTY. AGUINALDO 77
The BANK, in its own behalf and that of ATLANTIC, to it that a similar provision is included in
demanded that said agreements be cancelled but the contract.
CONNELL and DAMCO refused to do so. As a 2. the chattels were placed in the real
result, ATLANTIC and the BANK commenced properties mortgaged to plaintiffs, they
foreclosure proceedings. came within the operation of Art. 415,
paragraph 5 and Art. 2127 of the New Civil
Main contentions of plaintiffs as appellants are
Code. It is not disputed in the case at bar
the following: that the "after acquired properties"
were subject to the deeds of mortgage mentioned that the "after acquired properties" were
heretofore; that said properties were acquired purchased by DALCO in connection with,
from suppliers other than DAMCO and CONNELL; and for use in the development of its
that even granting that DAMCO and CONNELL lumber concession and that they were
were the real suppliers, the rescission of the sales purchased in addition to, or in
to DALCO could not prejudice the mortgage lien replacement of those already existing in
in favor of plaintiffs.
the premises on July 13, 1950. In Law,
The defendants-appellants contend that the therefore, they must be deemed to have
mortgages aforesaid were null and void as been immobilized, with the result that the
regards the "after acquired properties" of DALCO real estate mortgages involved herein
because they were not registered in accordance which were registered as such did not
with the Chattel Mortgage Law. have to be registered a second time as
chattel mortgages in order to bind the
ISSUES:
"after acquired properties" .
1. are the so-called "after acquired
properties" covered by and subject to the
deeds of mortgage subject of foreclosure? PHIL SUGAR ESTATE v CAMPS
2. assuming that they are subject thereto, FACTS:
are the mortgages valid and binding on Defendant executed and delivered to
the properties aforesaid inspite of the fact Plaintiff a mortgage on certain real estate,
that they were not registered in which is particularly described therein,
accordance with the provisions of the including the building erected thereon,
Chattel Mortgage Law? in order to guarantee the payment of
certain sum of money; Another mortgage
RULING: upon the same property to secure the
payment of an additional sum of money
1. it is crystal clear that all property of every Plaintiff commenced an action to recover
said sums and to foreclose said mortgages
nature and description taken in exchange
when neither of said sums of money
or replacement, as well as all buildings, secured by said mortgages was fully paid
machineries, fixtures, tools, equipments, and satisfied
and other property that the mortgagor Def denied; alleged that the sum of P3k
may acquire, construct, install, attach; or included in said mortgages for the
use in, to upon, or in connection with the payment of expenses was excessive
premises that is, its lumber concession TC Judge Ostrand ordered foreclosure of
"shall immediately be and become said mortgages
subject to the lien" of both mortgages in While Sheriff tried to sell the property
the same manner and to the same extent included in said mortgages, Def
interposed an objection that a certain
as if already included therein at the time
cinematograph which had been
of their execution. constructed upon the property mortgaged
Such stipulation is neither unlawful nor was not included therein and that it should
immoral, its obvious purpose being to not, therefore, be sold under said
maintain, to the extent allowed by execution.
circumstances, the original value of the Despite objection, Sheriff sold the property
properties given as security. Indeed, if mortgaged together with the buildings
such properties were of the nature already erected thereon
referred to, it would be poor judgment on
Def objected to the confirmation of said
the part of the creditor who does not see
sale; said cinematograph in question was
created by simply reforming a building
SECTRANS 2010/ ATTY. AGUINALDO 78
located on the land at the time said July 7, 1900. But the hacienda was not able to
mortgage was executed and delivered; increase the sugar it yielded and defendant On
that it was not a new structure on said August 5, 1904, Grindrod who feared of not
land; that it was the result of changing getting paid obtained a preliminary attachment
and altering a building already upon the over all the property of Evaristo including the lien
land, for the purpose of making it into a that was assigned to appellant. The same was
cinematograph registered on August 12, 1904. A dispute arised
TC Judge Harvey confirmed said sale over the rightful owner of the lien, defendants
main contention is that since the assignment
ISSUE: WON the sale under execution by the made to Lopez was not registered it is not binding
sheriff of certain real property including the and has no effect.
buildings thereon should be confirmed?
ISSUE: WON THE ASSIGNMENT OF A MORTGAGE
HELD: YES CREDIT NEED TO BE REGISTERED FOR IT TO BE
Questions presented by Camps have been VALID AND EFFECTIVE?
discussed by this court and decided
against his contention in the case of HELD: NO. Although the Civil Code provides that
Bischoff v. Pomar and Compania General A mortgage credit may be alienated or assigned
de Tabacos. to a third person, wholly or partially, with the
In that case, this court discussed the very formalities required by law, the fact that
articles of the Mortgage Law upon which such assignment was not registered in the
Camps now seeks relief. In that case the property register is no obstacle to the transfer of
Court said: 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
So that even though no mention
by the owner thereof in favor of another, is prior
had been made of said machinery
to the act of its registration, and entirely
and tramway in the mortgage
independent of such formality to such an extent
instrument, the mortgage of the
that, if any question should arise over the
property whereon they are located
contract between the assignor and the assignee,
in understood by law to extend to
it would have to be decided according to common
them and they must be considered
law without need of previous registration of the
as included therein, as well as all
title, which shows that a credit secured by a
other improvements, unless there
mortgage may be assigned or alienated, and is a
was an express stipulation between
perfectly valid contract even if it were not
the parties that they should be
registered.
excluded.
Also, the registration of the assignment or
alienation of a credit secured by mortgage,
required, among others, of the Mortgage Law, is
IN THIS CASE: the buildings erected only necessary in order that it may be effectual
thereon" were expressly included in the as against third parties.
mortgage. Nothing in the form of buildings
was exclude. The buildings, therefore,
were manifestly included in the mortgage. BPI v CONCEPCION
BARRETTO v BARRETTO
Issue: WON there was a transfer of ownership to
Facts: Alberto?
LEGAZPI & SALCEDO v CELESTIAL The plaintiff denied that he had such obligation,
alleging that his duties were confined to the
ANGELES v SEC. OF JUSTICE collection of the rents of the house in order to
apply them to the payment of the interest on the
PANDO v GIMENEZ mortgage.
FACTS: This action was instituted for the purpose Such was in fact the original agreement; but the
of foreclosing a mortgage executed by defendant appellant asserts that it was modified by the
Antonio Gimenez. Massy Teague was also letter.
impleaded for having purchased at public auction
one of the mortgaged properties.
In order to secure the payment of P8,000 which ISSUE: Whether or not the the administration of
the defendant Gimenez owed the plaintiff, he the property in question assumed by the plaintiff
mortgaged the house at No. 655 Santa Mesa, toward the end of October, 1925 is antichretic in
Manila, and the leasehold right on the lot upon character.
which it stands (Exhibit A). This was payable on
October 27, 1925, but, in spite of nonpayment, RULING:
These obligations arise from the very nature of Finding the chattel mortgage to be valid, the
the covenant, and are correlated with the Court takes special note of the fact that said
plaintiff's acquired right to take charge of the chattel mortgage was registered and duly
property and collect the fruits for himself. recorded in the Chattel Mortgage Registry of
Quezon City on February 7, 1974, prior to April
22, 1977, the date the writ of attachment of the
properties in question was issued. This is a
PERALTA v QUIMPO significant factor in determining who of two
51 OG No. 3 p. 1383, Sept 1954 contending claimants should be given preference
NO COPY AVAILABLE over the same properties in question.
PHIL SAVINGS BANK v LANTIN Although the lower court found that there were
no known creditors other than c and psb, this
F: c built a duplex apartment house on a cannot be conclusive. It will not bar other
registered lot of spouses x and y, using his own creditors in the event they show up and present
money, P25k to finish the construction. their claims against psb, claiming they have also
Meanwhile, x and y obtained from psb a loan preferred claims against the property.
secured by a mortgage to complete construction. Consequently, the transfer certificate of title
At the time of the registration of the mortgage, issued to psb which is supposed to be
the transfer certificate of title over the property indefeasible would remain constantly unstable
was free from all liens and encumbrances. PSB and questionable. Such could not have been the
foreclosed the mortgage, and being the highest intention of article 2243 of the civil code although
bidder a new certificate of title was subsequently it considers claims and credits under article 2242
issued in its favor as statutory liens. Neither does the de barreto
caes sanction such instability.
C filed an action against the spouses to collect
the unpaid cost of construction. As x and y did
not have any properties to satisfy the judgment