CATHOLIC VICAR APOSTOLIC V CA 165SCRA 515 (1988)The whole
controversy started when Catholic Vicar of the Mountain Province
(Vicar for brevity)filed with theCFI ofBaguio, Benguetan
application forregistration of title forLots 1,2,3 and4of
Psu-194357 situated at Poblacion Central, La Trinidad, Benguet.
Said lots being the sitesof theCatholic Church building, convents,
school, etc., Upon learning of theapplication, the HeirsofJuan
Valdez and the Heirs ofEmigdio Octaviano filed an Answer/Opposition
thereto on Lots 2and3,respectively,assertingownershipand title
thereto.The land registrationcourt promulgatedits decision
confirming the registrable title toVicar. Both heirs of Valdez and
Octaviano appealedto the Court ofAppeals. The CA modified the
decision of theland registration court and foundthat Lots 2 and
3were possessed by the predecessors-in-interest of private
respondents underclaim of ownership in good faith from 1906 to1951;
that Vicar has beenin possession of thesame lots as bailee in
commodatum up to1951, when Vicar repudiated the trust and when
itapplied for registration in1962; that Vicar had just been in
possession as owner for11years,hence there isno possibility of
acquisitive prescription which requires 10 yearspossession withjust
title and30 years possession without.ISSUE:WON the failure of Vicar
to return the subject property to private respondents
wouldconstitute an adverse possession that would entitle Vicar to
have ajust title in order forordinaryacquisitive prescription toset
in.RULING:
Private respondents were able to prove that their predecessors'
house was borrowedby petitioner Vicar after the church and the
convent were destroyed. They neverasked for the return of the
house, but when they allowed its free use, they becamebailors
incommodatumand the petitioner the bailee. The bailees' failure
toreturn thesubject matter ofcommodatumto the bailordid not mean
adverse possession on thepart of the borrower. Thebailee held in
trust theproperty subject matter ofcommodatum. The adverse claim of
petitioner came only in 1951 when it declared thelots for taxation
purposes. The action ofpetitioner Vicar by such adverse claim
couldnot ripen into titleby way ofordinary acquisitive prescription
because of the absenceof just title.TheCourt ofAppeals found that
thepredecessors-in-interest andprivate respondentswere possessors
under claim of ownership in good faith from 1906; that
petitionerVicar was only a bailee incommodatum; and thatthe adverse
claim and repudiationof trust came only in 1951
CATHOLIC VICAR APOSTOLIC V CA 165SCRA 515 (1988)The whole
controversy started when Catholic Vicar of the Mountain Province
(Vicar for brevity)filed with theCFI ofBaguio, Benguetan
application forregistration of title forLots 1,2,3 and4of
Psu-194357 situated at Poblacion Central, La Trinidad, Benguet.
Said lots being the sitesof theCatholic Church building, convents,
school, etc., Upon learning of theapplication, the HeirsofJuan
Valdez and the Heirs ofEmigdio Octaviano filed an Answer/Opposition
thereto on Lots 2and3,respectively,assertingownershipand title
thereto.The land registrationcourt promulgatedits decision
confirming the registrable title toVicar. Both heirs of Valdez and
Octaviano appealedto the Court ofAppeals. The CA modified the
decision of theland registration court and foundthat Lots 2 and
3were possessed by the predecessors-in-interest of private
respondents underclaim of ownership in good faith from 1906 to1951;
that Vicar has beenin possession of thesame lots as bailee in
commodatum up to1951, when Vicar repudiated the trust and when
itapplied for registration in1962; that Vicar had just been in
possession as owner for11years,hence there isno possibility of
acquisitive prescription which requires 10 yearspossession withjust
title and30 years possession without.ISSUE:WON the failure of Vicar
to return the subject property to private respondents
wouldconstitute an adverse possession that would entitle Vicar to
have ajust title in order forordinaryacquisitive prescription toset
in.RULING:
Private respondents were able to prove that their predecessors'
house was borrowedby petitioner Vicar after the church and the
convent were destroyed. They neverasked for the return of the
house, but when they allowed its free use, they becamebailors
incommodatumand the petitioner the bailee. The bailees' failure
toreturn thesubject matter ofcommodatumto the bailordid not mean
adverse possession on thepart of the borrower. Thebailee held in
trust theproperty subject matter ofcommodatum. The adverse claim of
petitioner came only in 1951 when it declared thelots for taxation
purposes. The action ofpetitioner Vicar by such adverse claim
couldnot ripen into titleby way ofordinary acquisitive prescription
because of the absenceof just title.TheCourt ofAppeals found that
thepredecessors-in-interest andprivate respondentswere possessors
under claim of ownership in good faith from 1906; that
petitionerVicar was only a bailee incommodatum; and thatthe adverse
claim and repudiationof trust came only in 1951
CATHOLIC VICAR APOSTOLIC V CA 165SCRA 515 (1988)The whole
controversy started when Catholic Vicar of the Mountain Province
(Vicar for brevity)filed with theCFI ofBaguio, Benguetan
application forregistration of title forLots 1,2,3 and4of
Psu-194357 situated at Poblacion Central, La Trinidad, Benguet.
Said lots being the sitesof theCatholic Church building, convents,
school, etc., Upon learning of theapplication, the HeirsofJuan
Valdez and the Heirs ofEmigdio Octaviano filed an Answer/Opposition
thereto on Lots 2and3,respectively,assertingownershipand title
thereto.The land registrationcourt promulgatedits decision
confirming the registrable title toVicar. Both heirs of Valdez and
Octaviano appealedto the Court ofAppeals. The CA modified the
decision of theland registration court and foundthat Lots 2 and
3were possessed by the predecessors-in-interest of private
respondents underclaim of ownership in good faith from 1906 to1951;
that Vicar has beenin possession of thesame lots as bailee in
commodatum up to1951, when Vicar repudiated the trust and when
itapplied for registration in1962; that Vicar had just been in
possession as owner for11years,hence there isno possibility of
acquisitive prescription which requires 10 yearspossession withjust
title and30 years possession without.ISSUE:WON the failure of Vicar
to return the subject property to private respondents
wouldconstitute an adverse possession that would entitle Vicar to
have ajust title in order forordinaryacquisitive prescription toset
in.RULING:
Private respondents were able to prove that their predecessors'
house was borrowedby petitioner Vicar after the church and the
convent were destroyed. They neverasked for the return of the
house, but when they allowed its free use, they becamebailors
incommodatumand the petitioner the bailee. The bailees' failure
toreturn thesubject matter ofcommodatumto the bailordid not mean
adverse possession on thepart of the borrower. Thebailee held in
trust theproperty subject matter ofcommodatum. The adverse claim of
petitioner came only in 1951 when it declared thelots for taxation
purposes. The action ofpetitioner Vicar by such adverse claim
couldnot ripen into titleby way ofordinary acquisitive prescription
because of the absenceof just title.TheCourt ofAppeals found that
thepredecessors-in-interest andprivate respondentswere possessors
under claim of ownership in good faith from 1906; that
petitionerVicar was only a bailee incommodatum; and thatthe adverse
claim and repudiationof trust came only in 1951
Introduction cases
Acme Shoe Rubber & Plastic Corp. vs. Court of Appeals,
260SCRA 714 [1996]Navoa vs. Court of Appeals, 251 SCRA 545
[1995].
Loan cases
Republic vs. First National City Bank of New York, 3 SCRA 851
[1961].People vs. Concepcion,44 Phil. 126 [1922].Herrera vs.
Petrophil Corporation, 146 SCRA 385 [1986].Saura Import and Export
Co., Inc. vs.Development Bank of the Phils., 44 SCRA 445 [1972];BPI
Investment Corp. vs. Court of Appeals, 377 SCRA 117 [2002].Bonnevie
vs. Court of Appeals, 125 SCRA 122[1983].Central Bank of the Phils.
vs. Court of Appeals, 139 SCRA 46 [1985].
Commodatum cases
Republic vs. Bagtas, 6 SCRA 262 [1962].Mina vs. Pascual,25 Phil.
540 [1913].Mercado vs. Aguilar, [C.A.] 45 O.G. Sup. 5,p.
118.Catholic Vicar Apostolic of the Mt. Province vs. Court of
Appeals, 165 SCRA 515 [1988].Pajuyo vs. Court of Appeals, 430 SCRA
492 [2004].Quintos and Ansaldo vs. Beck, 69 Phil. 108 [1939].
Acme Shoe Rubber & Plastic Corporation v. Court of Appeals,
260 SCRA 714 (1996)
FACTS:
- Chua Pac, the president and general manager of co-petitioner
"Acme Shoe, Rubber & Plastic Corporation," executed, for and in
behalf of the company, a chattel mortgage in favor of Producers
Bank of the Philippines. A provision in the chattel mortgage
agreement was to this effect -"In case the MORTGAGOR executes
subsequent promissory note or notes either as a renewal of the
former note, as an extension thereof, or as a new loan, or is given
any other kind of accommodations such as overdrafts, letters of
credit, acceptances and bills of exchange, releases of import
shipments on Trust Receipts, etc., this mortgage shall also stand
as security for the payment of the said promissory note or notes
and/or accommodations without the necessity of executing a new
contract and this mortgage shall have the same force and effect as
if the said promissory note or notes and/or accommodations were
existing on the date thereof. This mortgage shall also stand as
security for said obligations and any and all other obligations of
the MORTGAGOR to the MORTGAGEE of whatever kind and nature, whether
such obligations have been contracted before, during or after the
constitution of this mortgage.
-In due time, the loan was paid by petitioner corporation.
Subsequently, in 1981, it obtained from Producers Bank additional
financial accommodations These borrowings were on due date also
fully paid.
-The bank yet again extended to ACME a covered by four
promissory notes. Due to financial constraints, the loan was not
settled at maturity.-The bank thereupon applied for an
extrajudicial foreclosure of the chattel mortgage, prompting ACME
to forthwith file an action for injunction, with damages and a
prayer for a writ of preliminary injunction.
TC and CA:
-Dismissed the complaint and ordered the foreclosure of the
chattel mortgage. ACME is bound by the stipulations, aforequoted,
of the chattel mortgage.
ISSUE:
-Whether or not chattel mortgage may secure after incurred
obligations.
HELD:
-Contracts of security are either personal or real. In contracts
of personal security, such as a guaranty or a suretyship, the
faithful performance of the obligation by the principal debtor is
secured by the personal commitment of another (the guarantor or
surety). In contracts of real security, such as a pledge, a
mortgage or an antichresis, that fulfillment is secured by an
encumbrance of property - in pledge, the placing of movable
property in the possession of the creditor; in chattel mortgage, by
the execution of the corresponding deed substantially in the form
prescribed by law; in real estate mortgage, by the execution of a
public instrument encumbering the real property covered thereby;
and in antichresis, by a written instrument granting to the
creditor the right to receive the fruits of an immovable property
with the obligation to apply such fruits to the payment of
interest, if owing, and thereafter to the principal of his credit -
upon the essential condition that if the principal obligation
becomes due and the debtor defaults, then the property encumbered
can be alienated for the payment of the obligation, but that should
the obligation be duly paid, then the contract is automatically
extinguished proceeding from the accessory character of the
agreement. As the law so puts it, once the obligation is complied
with, then the contract of security becomes, ipso facto, null and
void.
-While a pledge, real estate mortgage, or antichresis may
exceptionally secure after-incurred obligations so long as these
future debts are accurately described, a chattel mortgage, however,
can only cover obligations existing at the time the mortgage is
constituted. Although a promise expressed in a chattel mortgage to
include debts that are yet to be contracted can be a binding
commitment that can be compelled upon, the security itself,
however, does not come into existence or arise until after a
chattel mortgage agreement covering the newly contracted debt is
executed either by concluding a fresh chattel mortgage or by
amending the old contract conformably with the form prescribed by
the Chattel Mortgage Law. Refusal on the part of the borrower to
execute the agreement so as to cover the after-incurred obligation
can constitute an act of default on the part of the borrower of the
financing agreement whereon the promise is written but, of course,
the remedy of foreclosure can only cover the debts extant at the
time of constitution and during the life of the chattel mortgage
sought to be foreclosed.
REPUBLIC V PHIL. NATL BANKL-No. 16106, Dec. 30, 1961; 3 SCRA
851~kiyo~
FACTS-RP filed a complaint for escheat of certain unclaimed bank
deposit balances against several banks under Act. 3936 which
provides that unclaimed balances (w/c includes credits or deposits
of money, bullion, security and other evidence of indebtedness of
any kind + interest) in favor of persons not heard from for 10
years or more, with the increase and proceeds thereof, shall be
deposited with the Insular Treasurer to the credit of the Phil.
Government. Among these banks was the First National City Bank of
New York who argued that some of its credits didnt fall within the
purview of the Act. The court held that cashiers checks and demand
drafts fall under the Act but upon MFR changed its view and
excluded drafts, hence this appeal.
ISSUEWON demand drafts create a creditor-debtor relationship
between drawee and payee, thus falling within the meaning of
credits in Act. 3969
HELD: NO-A demand draft is not of the same category as a
cashiers check which should fall under the Act. In banking
terminology, the term bank draft is used interchangeably with a
bill of exchange. A bill of exchange under the NIL (sec. 127) does
not operate as an assignment of funds in the hands of the drawee
who is not liable on the instrument until he accepts. In fact, the
law requires presentment w/in a reasonable time or else the drawer
is discharged from liability. Since it is admitted in this case
that the drafts in question were never presented either for
acceptance or payment, appellee bank never became a debtor of the
payees, hence the drafts never became credits under the Act.-Drafts
must however be distinguished from cashiers checks, which is simply
a bill of exchange drawn by the bank on itself; it is equivalent to
a certified check and its deposit passes to the credit of the
holder who then becomes a depositor of that amount. Disposition TC
decision modified; telegraphic transfer payment orders should be
escheated to RP (see case for telegraphic orders)
PEOPLE vs. CONCEPCION, 44 Phil. 126
FACTS:
Venancio Concepcion, President of the Philippine National Bank
and a member of the Board thereof, authorized an extension of
credit in favor of "Puno y Concepcion, S. en C. to the manager of
the Aparri branch of the Philippine National Bank. "Puno y
Concepcion, S. en C."was a co-partnership where Concepcion is a
partner. Subsequently, Concepcion was charged and found guilty in
the Court of First Instance of Cagayan with violation of section 35
of Act No.2747.Section35 of Act No. 2747 provides that the National
Bank shall not,directly or indirectly, grant loans to any of the
members of the board of directors of the bank nor to agents of the
branch banks. Counsel for the defense argue that the documents of
record do not prove that authority to make a loan was given, but
only show the concession of a credit. They averred that the
granting of a credit to the co-partnership "Puno y Concepcion, S.
en C." by Venancio Concepcion, President of the Philippine National
Bank, is not a "loan" within the meaning ofsection 35 of Act No.
2747.
ISSUE:Whether or not the granting of a credit of P300,000 to the
co-partnership "Puno y Concepcion, S. en C." by Venancio
Concepcion, President of the Philippine National Bank, a"loan"
within the meaning of section 35 of Act No. 2747.
HELD:The Supreme Court ruled in the affirmative. The "credit" of
an individual means his ability to borrow money by virtue of the
confidence or trust reposed by a lender that he will pay what he
may promise. A "loan" means the delivery by one party and the
receipt by the otherparty of a given sum of money, upon an
agreement, express or implied, to repay the sum loaned,with or
without interest. The concession of a "credit" necessarily involves
the granting of "loans"up to the limit of the amountfixed in the
"credit,
HERRERA vs PETROPHIL CORP.[G.R. No. L-48349, December 29,
1986]CRUZ, J.
FACTS:On December 5, 1969, Herrera and ESSO Standard, (later
substituted by Petrophil Corp.,) entered into a lease agreement,
whereby the former leased to the latter a portion of his property
for a period of 20yrs. subject to the condition that monthly
rentals should be paid and there should be an advance payment of
rentals for the first eight years of the contract, to which ESSO
paid on December 31, 1969. However, ESSO deducted the amount of
101, 010.73 as interest or discount for the eight years advance
rental.
On August 20, 1970, ESSO informed Herrera that there had been a
mistake in the computation of the interest and paid an additional
sum of 2,182.70; thus, it was reduced to 98, 828.03.
As such, Herrera sued ESSO for the sum of 98, 828.03, with
interest, claimingthat this had been illegally deducted to him in
violation of the Usury Law.
ESSO argued that amount deducted was not usurious interest but
rather a discount given to it for paying the rentals in advance.
Judgment on the pleadings was rendered in favor of ESSO. Thus, the
matter was elevated to the SC for only questions of law was
involve.
ISSUE: W/N the contract between the parties is one of loan or
lease.
RULING:
Contract between the parties is one of lease and not of loan. It
is clearly denominated a "LEASE AGREEMENT." Nowhere in the contract
is there any showing that the parties intended a loan rather than a
lease. The provision for the payment of rentals in advance cannot
be construed as a repayment of a loan because there was no grant or
forbearance of money as to constitute an indebtedness on the part
of the lessor. On the contrary, the defendant-appellee was
discharging its obligation in advance by paying the eight years
rentals, and it was for this advance payment that it was getting a
rebate or discount.
There is no usury in this case because no money was given by the
defendant-appellee to the plaintiff-appellant, nor did it allow him
to use its money already in his possession.There was neither loan
nor forbearance but a mere discount which the plaintiff-appellant
allowed the defendant-appellee to deduct from the total payments
because they were being made in advance for eight years. The
discount was in effect a reduction of the rentals which the lessor
had the right to determine, and any reduction thereof, by any
amount, would not contravene the Usury Law.
The difference between a discount and a loan or forbearance is
that the former does not have to be repaid. The loan or forbearance
is subject to repayment and is therefore governed by the laws on
usury.
To constitute usury, "there must be loan or forbearance; the
loan must be of money or something circulating as money; it must be
repayable absolutely and in all events; and something must be
exacted for the use of the money in excess of and in addition to
interest allowed by law."
Saura Import &Export Co., Inc v. DBP
G.R. No. L-24968 April 27, 1972Facts: Saura Inc. applied to the
Rehabilitation Finance Corp (before its conversion to DBP) for a
loan of 500k secured by a first mortgage of the factory building to
finance for the construction of a jute mill factory and purchase of
factory implements. RFC accepted and approved the loan application
subject to some conditions which Saura admitted it could not comply
with. Without having received the amount being loaned, and sensing
that it could not at anyway obtain the full amount of loan, Saura
Inc. then asked for cancellation of the mortgage which RFC also
approved. Nine years after the cancellation of the mortgage, Saura
sued RFC for damages for its non-fulfillment of obligations arguing
that there was indeed a perfected consensual contract between
them.
Issue: Was there a perfected consensual contract? Was there a real
contract of loan which would warrant recovery of damages arising
out of breach of such contract?
Held: On the first issue, yes, there was indeed a perfected
consensual contract, as recognized in Article 1934 of the Civil
Code. There was undoubtedly offer and acceptance in this case: the
application of Saura, Inc. for a loan of P500,000.00 was approved
by resolution of the defendant, and the corresponding mortgage was
executed and registered. But this fact alone falls short of
resolving the second issue and the basic claim that the defendant
failed to fulfill its obligation and the plaintiff is therefore
entitled to recover damages. The action thus taken by both
partiesSaura's request for cancellation and RFC's subsequent
approval of such cancellationwas in the nature of mutual desistance
what Manresa terms "mutuo disenso" which is a mode of extinguishing
obligations. It is a concept derived from the principle that since
mutual agreement can create a contract, mutual disagreement by the
parties can cause its extinguishment. In view of such
extinguishment, said perfected consensual contract to deliver did
not constitute a real contract of loan.
Central Bank of the Philippines v. CA (1985)Ponente: Makasiar,
C.J.Topic: Delay (Art. 1169)
Facts:April 28, 1965 - Island Savings Bank (ISB) approved the
loan application for P80,000 of Sulpicio Tolentino, who, as a
security for the loan, also executed a real estate mortgage over
his 100-ha land. The approved loan application called for P80,000
loan, repayable in semi-annual installments for a period of 3
years, with 12% interest.
May 22, 1965 a mere P17,000 partial release of the loan was made
by ISB, and Tolentino and his wife Edita signed a promissory note
for P17,000 at 12% annual interest, payable within 3 years from the
date of execution of the contract at semi-annual installments of
P3,459.
An advance interest for the P80,000 loan covering a 6-mo period
amounting to P4,800was deducted from the partial release of
P17,000, but this was refunded to Tolentino on July 23, 1965, after
being informed by ISB that there was no fund yet available for the
release of the P63,000 balance.
Aug. 13, 1965 the Monetary Board of the Central Bank issued
Resolution No. 1049, which prohibited ISB from making new loans and
investments, after finding that it was suffering liquidity
problems.
June 14, 1968 the Monetary Board issued Resolution No. 967,
which prohibited ISB from doing business in the Philippines, after
finding that it failed to put up the required capital to restore
its solvency.
Aug. 1, 1968 ISB, in view of non-payment of the P17,000 covered
by the promissory note, filed an application for the extra-judicial
foreclosure of the real estate mortgage covering the 100-ha land;
and the sheriff scheduled auction.
Tolentino filed a petition with the CFI for injunction, specific
performance or rescission and damages with preliminary injunction,
alleging that since ISB failed to deliver the P63,000 remaining
balance of the loan, he is entitled to specific performance by
ordering ISB to deliver it with interest of 12% per annum from
April 28, 1965, and if said balance cannot be delivered, to rescind
the real estate mortgage.
CFI issued a TRO enjoining ISB from continuing with the
foreclosure of the mortgage, however, after finding Tolentinos
petition unmeritorious, ordered the latter to pay ISB P17,000 plus
legal interest and legal charges and lifting the TRO so the sheriff
may proceed with the foreclosure.
CA, on appeal by Tolentino, modified CFIs decision by affirming
dismissal of Tolentinos petition for specific performance, but
ruled that ISB can neither foreclose the mortgage nor collect the
P17,000 loan.
SC: The parties, in the P80,000 loan agreement, undertook
reciprocal obligations, wherein the obligation/promise of each
party is the consideration for that of the other; and when one
party has performed or is ready and willing to perform his part of
the contract, the other party who has not performed or is not ready
and willing to perform incurs in delay (Art. 1169, CC).
When Tolentino executed a real estate mortgage, he signified his
willingness to pay the P80,000 loan, and from such date, the
obligation of ISB to furnish the loan accrued. Thus, ISBs delay
started on April 28, 1965 and lasted 3 years or when Resolution No.
967 was issued prohibiting ISB from doing further business, which
made it legally impossible from ISB to furnish the P63,000 of the
loan.
Resolution No. 1049 cannot interrupt the default of ISB in
complying with its obligation to release the P63,000 balance
because it merely prohibited ISB from making new loans and
investments, not from releasing the balance of loan agreements
previously contracted.
The mere pecuniary inability to fulfill an engagement does not
discharge the obligation of the contract, nor does it constitute
any defense to a decree of specific performance; and the mere fact
of insolvency of a debtor is never an excuse for the nonfulfillment
of an obligation, but instead, is taken as a breach of
contract.
The fact that Tolentino demanded and accepted the refund of the
pre-deducted interest cannot be taken as a waiver of his right to
collect the P63,000 balance. The act of ISB in asking for the
advance interest was improper considering that only P17,000 out of
the P80,000 loan was released.
The alleged discovery by ISB of the overvaluation of the loan
collateral cannot exempt it from complying with its obligation to
furnish the entire P80,000 loan because bank officials/employees
have the obligation to investigate the existence and valuation of
the properties being offered as a loan security before approving
the loan application.
Issues/Held/RatioWON the action of Tolenitno for specific
performance can prosper. NO.
Since ISB was in default under the agreement, Tolentino may
choose between specific performance or rescission, but since ISB is
now prohibited from doing further business, the only remedy left is
Rescission only for the P63,000 balance of the loan.
WON Tolentino is liable to pay the P17,000 debt covered by the
promissory note. YES.
The bank was deemed to have complied with its reciprocal
obligation to furnish a P17,000 loan. The promissory note gave rise
to Tolentinos reciprocal obligation to pay such loan when it falls
due and his failure to pay the overdue amortizations under the
promissory note made him a party in default, hence not entitled to
rescission (Art. 1191, CC). ISB has the right to rescind the
promissory note, being the aggrieved party.
Since both parties were in default in the performance of their
reciprocal obligations, both are liable for damages. In case both
parties have committed a breach of their reciprocal obligations,
the liability of the first infractor shall be equirably tempered by
the courts (Art. 1192, CC). The liability of ISB for damages in not
furnishing the entire loan is offset by the liability of Tolentino
for damages (penalties and surcharges) for not paying his overdue
P17,000 debt. Since Tolentino derived some benefit for his use of
the P17,000, he should account for the interest thereon (interest
was not included in the offsetting).
WON Tolentinos real estate mortgage can be foreclosed to satisfy
the P17,000 if his liability to pay therefor subsists. NO.
The fact that when Tolentino executed his real estate mortgage,
no consideration was then in existence, as there was no debt yet
because ISB had not made any release on the loan, does not make the
real estate mortgage void for lack of consideration. It is not
necessary that any consideration should pass at the time of the
execution of the contract of real mortgage. When the consideration
is subsequent to the mortgage, the latter can take effect only when
the debt secured by it is created as a binding contract to pay. And
when there is partial failure of consideration, the mortgage
becomes unenforceable to the extent of such failure. Where the
indebtedness actually owing to the holder of the mortgage is less
than the sum named in the mortgage, the mortgage cannot be enforced
for more than the actual sum due.Since ISB failed to furnish the
P63,000 balance, the real estate mortgage of Tolentino became
unenforceable to such extent. P63,000 is 78.75% of P80,000, hence
the mortgage covering 100 ha is unenforceable to the extent of
78.75 ha. The mortgage covering the remainder of 21.25 ha subsists
as a security for the P17,000 debt.
Judgment: Tolentino is ordered to pay ISB P17,000 plus P41, 210
(12% interest per annum)
In case Tolentino fails to pay, his real estate mortgage
covering 21.25 ha shall be foreclosed to satisfy his total
indebtedness
The real estate mortgage covering 78.75 ha is unenforceable and
ordered released in favor of Tolentino
Credit Transactions Case Digest: Republic V. Bagtas
(1962)FACTS:May 8, 1948:Jose V. Bagtas borrowed from the Republic
of the Philippines through the Bureau of Animal Industry three
bulls: a Red Sindhi with a book value of P1,176.46, a Bhagnari, of
P1,320.56 and a Sahiniwal, of P744.46, for a period of 1 year for
breeding purposes subject to a breeding fee of 10% of the book
value of the bulls
May 7, 1949: Jose requested for arenewalfor another year forthe
threebulls but only one bull was approved while the others are to
be returned
March 25, 1950: He wrote to theDirector of Animal Industry that
he would pay the value of the 3 bulls
October 17, 1950: he reiterated his desire to buy them at a
value with a deduction of yearly depreciation to be approved by the
Auditor General.
October 19, 1950: Director of Animal Industry advised him that
either the 3 bulls are to be returned or their book value without
deductions should be paid not later than October 31, 1950 which he
was not able to do
December 20, 1950: An action at the CFI was commenced against
Jose praying that he be ordered to return the 3 bulls or to pay
their book value of P3,241.45 and the unpaid breeding fee of
P199.62, both with interests, and costs
July 5, 1951: Jose V. Bagtas, through counsel Navarro, Rosete
and Manalo, answered that because of the bad peace and order
situation in Cagayan Valley, particularly in the barrio of Baggao,
and of the pending appeal he had taken to the Secretary of
Agriculture and Natural Resources and the President of the
Philippines, he could not return the animals nor pay their value
and prayed for the dismissal of the complaint.
RTC: granted the action
December 1958: granted an ex-parte motionfor the appointment of
a special sheriff to serve the writ outside Manila
December 6, 1958: Felicidad M. Bagtas, the surviving spouse of
Jose who died on October 23, 1951 and administratrix of his estate,
was notified
January 7, 1959: she file a motion that the 2 bulls where
returned by his son on June 26, 1952 evidenced by recipt and the
3rd bull died from gunshot wound inflicted during a Huk raid and
prayed that thewrit of executionbe quashed and that a writ of
preliminary injunction be issued.
ISSUE: W/N the contract is commodatum and NOT a lease and the
estate should be liable for the loss due to force majeure due to
delay.
HELD: YES.writ of executionappealed from is set aside, without
pronouncement as to costsIf contract was commodatum then Bureau of
Animal Industryretained ownership or title to the bull it should
suffer its loss due to force majeure. A contract of commodatum is
essentially gratuitous. If the breeding fee be considered a
compensation, then the contract would be a lease of the bull. Under
article 1671 of the Civil Code the lessee would be subject to the
responsibilities of a possessor in bad faith, because she had
continued possession of the bull after the expiry of the contract.
And even if the contract be commodatum, still the appellant is
liable if he keeps it longer than the period stipulated
the estate of the late defendant is only liable for the sum of
P859.63, the value of the bull which has not been returned because
it was killed while in the custody of the administratrix of his
estate
Special proceedings for the administration andsettlementof the
estate of the deceased Jose V. Bagtas having been instituted in the
CFI,the moneyjudgment rendered in favor of the appellee cannot be
enforced by means of awrit of executionbut must be presented to the
probate court for payment by the appellant, the administratrix
appointed by the court.
Mina vs Pascual 25 Phil 540
Francisco is the owner of land and he allowed his brother,
Andres, to erect a warehouse in that lot. Both Francisco and Andres
died and their children became their respective heirs: Mina for
Francisco and Pascual for Andres. Pascual sold his share of the
warehouse and lot. Mina opposed because the lot is hers because her
predecessor (Francisco) never parted with its ownership when he let
Andres construct a warehouse, hence, it was a contract of
commodatum. Issue: What is the nature of the contract between
Francisco and Andres?
The Supreme Court held that it was not a commodatum. It is an
essential feature of commodatum that the use of the thing belonging
to another shall be for a certain period. The parties never fixed a
definite period during which Andres could use the lot and
afterwards return it.
NOTA BENE: It would seem that the Supreme Court failed to consider
the possibility of a contract of precardium between Francisco and
Andres. Precardium is a kind of commodatum wherein the bailor may
demand the object at will if the contract does not stipulate a
period or use to which the thing is devoted.
CATHOLIC VICAR APOSTOLIC V CA 165 SCRA 515 (1988)
The whole controversy started when Catholic Vicar of the
Mountain Province (Vicar for brevity) filed with the CFI of Baguio,
Benguet an application for registration of title for Lots 1,2,3 and
4 of Psu-194357 situated at Poblacion Central, La Trinidad,
Benguet. Said lots being the sites of the Catholic Church building,
convents, school, etc., Upon learning of the application, the Heirs
of Juan Valdez and the Heirs of Emigdio Octaviano filed an
Answer/Opposition thereto on Lots 2 and 3,respectively, asserting
ownership and title thereto. The land registration court
promulgated its decision confirming the registrable title to Vicar.
Both heirs of Valdez and Octaviano appealed to the Court of
Appeals. The CA modified the decision of the land registration
court and found that Lots 2 and 3 were possessed by the
predecessors-in-interest of private respondents under claim of
ownership in good faith from 1906 to 1951; that Vicar has been in
possession of the same lots as bailee in commodatum up to 1951,
when Vicar repudiated the trust and when it applied for
registration in1962; that Vicar had just been in possession as
owner for 11years, hence there is no possibility of acquisitive
prescription which requires 10 years possession with just title and
30 years possession without.
ISSUE: WON the failure of Vicar to return the subject property
to private respondents would constitute an adverse possession that
would entitle Vicar to have a just title in order for ordinary
acquisitive prescription to set in.
RULING:Private respondents were able to prove that their
predecessors' house was borrowed by petitioner Vicar after the
church and the convent were destroyed. They never asked for the
return of the house, but when they allowed its free use, they
became bailors incommodatumand the petitioner the bailee. The
bailees' failure to return the subject matter ofcommodatumto the
bailor did not mean adverse possession on the part of the borrower.
The bailee held in trust the property subject matter of commodatum.
The adverse claim of petitioner came only in 1951 when it declared
the lots for taxation purposes. The action of petitioner Vicar by
such adverse claim could not ripen into title by way of ordinary
acquisitive prescription because of the absence of just title.The
Court of Appeals found that the predecessors-in-interest and
private respondents were possessors under claim of ownership in
good faith from 1906; that petitioner Vicar was only a bailee
incommodatum; and that the adverse claim and repudiation of trust
came only in 1951.Pajuyo v. CA
GR No. 146364 June 3, 2004 Facts: Pajuyo entrusted a house to
Guevara for the latter's use provided he should return the same
upon demand and with the condition that Guevara should be
responsible of the maintenance of the property. Upon demand Guevara
refused to return the property to Pajuyo. The petitioner then filed
an ejectment case against Guevara with the MTC who ruled in favor
of the petitioner. On appeal with the CA, the appellate court
reversed the judgment of the lower court on the ground that both
parties are illegal settlers on the property thus have no legal
right so that the Court should leave the present situation with
respect to possession of the property as it is, and ruling further
that the contractual relationship of Pajuyo and Guevara was that of
a commodatum.
Issue: Is the contractual relationship of Pajuyo and Guevara that
of a commodatum?
Held: No. The Court of Appeals theory that the Kasunduan is one of
commodatum is devoid of merit. In a contract of commodatum, one of
the parties delivers to another something not consumable so that
the latter may use the same for a certain time and return it. An
essential feature of commodatum is that it is gratuitous. Another
feature of commodatum is that the use of the thing belonging to
another is for a certain period. Thus, the bailor cannot demand the
return of the thing loaned until after expiration of the period
stipulated, or after accomplishment of the use for which the
commodatum is constituted. If the bailor should have urgent need of
the thing, he may demand its return for temporary use. If the use
of the thing is merely tolerated by the bailor, he can demand the
return of the thing at will, in which case the contractual relation
is called a precarium. Under the Civil Code, precarium is a kind of
commodatum. The Kasunduan reveals that the accommodation accorded
by Pajuyo to Guevarra was not essentially gratuitous. While the
Kasunduan did not require Guevarra to pay rent, it obligated him to
maintain the property in good condition. The imposition of this
obligation makes the Kasunduan a contract different from a
commodatum. The effects of the Kasunduan are also different from
that of a commodatum. Case law on ejectment has treated
relationship based on tolerance as one that is akin to a
landlord-tenant relationship where the withdrawal of permission
would result in the termination of the lease. The tenants
withholding of the property would then be unlawful.
QUINTOS vs. BECK, 69 Phil 108FACTS: Beck is a tenant of
defendant Margarita Quintos. As such, Beck occupied Quintos house.
Quintos granted Beck the use of the furniture found on the leased
house, among these were three gas heaters and 4 electric lamps,
subject to the condition that the defendant would return them to
the plaintiff upon the latter's demand. Quintos sold the pieces of
furniture to Maria Lopez and Rosario Lopez and thereafter notified
Beck of the conveyance. Beck informed Quintos that the latter can
get the furniture at the ground floor of the house, however, at a
later date, Beck told Quintos that he will return only the other
furniture but not the gas heaters and the electric lamps as he is
to return them only after the expiration of the lease contract.
When the lease contract expires, Beck deposited the furniture to
the sheriffs warehouse. Quintos refused to get the furniture in
view of the fact that the defendant had declined to make delivery
of all of them. Consequently, Quintos brought an action to compel
Beck to return her certain furniture which she lent him for his
use. The trial court ruled in favour of Beck holding that Quintos
failed to comply with her obligation to get the furniture when they
were offered to her. On appeal of the case, the Court of First
Instance of Manila affirmed the lower courts decision. Hence, this
petition.
ISSUE: Whether or not the trial court erred in ruling that
Quintos failed to comply with her obligation to get the furniture
when they were offered to her.
HELD: The contract entered into between the parties is one
ofcommadatum. Under it the plaintiff gratuitously granted the use
of the furniture to the defendant, reserving for herself the
ownership thereof. By this contract the defendant bound himself to
return the furniture to the plaintiff, upon the latters demand. The
obligation voluntarily assumed by the defendant to return the
furniture upon the plaintiff's demand, means that he should return
all of them to the plaintiff at the latter's residence or house.
The defendant did not comply with this obligation when he merely
placed them at the disposal of the plaintiff, retaining for his
benefit the three gas heaters and the four electric lamps. The
trial court, therefore, erred when it came to the legal conclusion
that the plaintiff failed to comply with her obligation to get the
furniture when they were offered to her.
