PEOPLE vs. CONCEPCION, 44 Phil. 126FACTS:Venancio Concepcion,
President of the Philippine National Bank and a member of theBoard
thereof, authorized an extension of credit in favor of"Puno y
Concepcion, S. en C. to themanager 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 andfound guilty in the Court of First
Instance of Cagayan with violation of section 35 of Act
No.2747.Section35ofActNo.2747providesthattheNationalBankshallnot,directlyorindirectly,
grant loans to any of the members of the board of directors of the
bank nor to agentsof the branchbanks. Counsel for the defense argue
that the documents of record do not provethat authority to make a
loan was given, but only show the concession of a credit. They
averredthat the granting of a credit to the co-partnership "Puno y
Concepcion, S. en C."by VenancioConcepcion, 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 yConcepcion, 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 hisability to borrow money by virtue of the
confidence or trust reposed by a lender that he will paywhat 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. Theconcession of a "credit" necessarily involves the
granting of "loans"up to the limit of the amountfixed in the
"credit,"
Central Bank of the Philippines v. CA, 139 SCRA 46 (1985)
Tolentino made a loan from Island Savings Bank secured by a
mortgage. The Bank did not release the whole amount but only a
portion thereof. Later, the Bank experienced liquidity problems and
the Monetary Board of Central Bank prohibited it from making new
loans and much later, from doing business in the Philippines.
Thereafter, the Acting Superintendent of Central Bank took charge
of its assets. Upon expiration of the loan term, the Bank filed
extrajudicial foreclosure of the mortgage. Was there a perfected
contract of loan when only a portion of the amount was
delivered?
TheSupreme Court held that there was only partial delivery. As
such, the contract is deemed perfect only in so far as what has
been delivered. The mortgage cannot be entirely foreclosed, except
for up to the amount of the actual amount released, but the Bankcan
recover the interest of the partial loan. Tolentino cannot anymore
demand the remaining amount of the loan from the Bank because he
defaulted on his payment. His liability offsets the liability of
the Bank to him.
Mina v. 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. Minaopposed 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. 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 thelot 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 willif the contract does not stipulate a
period or use to which the thing is devoted.
Republic v. Bagtas, 6 SCRA 262 (1962)
Bagtas borrowed three bulls from the Bureau of Animal Industry for
a period of one year with breeding charge at 10% of book
value.After one year, the contract was renewed only for one bull
but Bagtas did not return the two, one of which died because of
gunshot wound during the Huk raid. Is Bagtas liable for the loss of
the bull?
Supreme Court held that Bagtas was liable for the lossof the bull
even though it was caused by a fortuitous event. If the contract
was one of lease, then the 10% breeding charge is compensation
(rent) for the use of the bull and Bagtas, as lessee, is subject to
the responsibilities of a possessor. He is alsoin bad faith because
he continued to possess the bull even though the term of the
contract has already expired. If the contract was one of
commodatum, he is still liable because: (1) he kept the bull longer
than the period stipulated; and (2) the thing loaned has been
delivered with appraisal of its value (10%).
Quintos'v.'Beck The! bailee! is! bound! to! return! all! the!
things! subject! of! the! commodatum! upon! demand! of! the!
bailor.! He! is! not! deemed! to!
have!complied!with!his!obligation!if!he!retains! for!himself!some!
of! the! things! loaned! or! when! he! merely! placed! them! at!
the! disposal!of! the!bailor,!when! the!agreement!between! them!is!
for! him! to! return! them! at! the! bailors! residence.! The!
bailee! is! not! entitled! to!place! the! thing! on! deposit,! and!
the! bailor! cannot! be! compelled! to! accept! the! offer! to!
return! only! some! of! things! loaned.
A!bailee!who!breached!the!contract!of!commodatum!and!without! any!
reason! refused! to! return!and! deliver! all!the! things! loaned!
upon!the!bailors!demand!is!bound!to!pay!the!legal!expenses!and!
judicial! costs! which! the! bailor! would! not! have! otherwise!
defrayed.!
Consolidated Bank vs CAGR No. 114286, 19 April 2001356 SCRA
671
FACTSContinental Cement Corp obtained from Consolidated Bank
letter of credit used to purchased 500,000 liters of bunker fuel
oil. Respondent Corporation made a marginal deposit to petitioner.
A trust receipt was executed by respondent corporation, with
respondent Gregory Lim as signatory. Claiming that respondents
failed to turn over the goods or proceeds, petitioner filed a
complaint for sum of money before the RTC of Manila. In their
answer, respondents aver that the transaction was a simple loan and
not a trust receipt one, and tht the amount claimed by petitioner
did not take into account payments already made by them. The court
dismissed the complaint, CA affirmed the same.
ISSUEWhether or not the marginal deposit should not be deducted
outrightfrom the amount of the letter of credit.
HELDNo. petitioner argues that the marginal deposit should be
considered only after computing the principal plus accrued interest
and other charges. It could be onerous to compute interest and
other charges on the face value of the letter of credit which a
bank issued, without first crediting or setting off the marginal
deposit which the borrower paid to it-compensation is proper and
should take effect by operation of law because the requisited in
Art.1279 are present and should extinguish both debts to the
concurrent amount.Unjust enrichment.
Colinares V. Court of Appeals, 339 SCRA 609; (Consolidated Bank
and Trust Company v. Court ofAppeals, 356 SCRA 671
(2001)FACTS:Colinares et al., applied for a commercial letter of
credit with the Philippine Banking Corporation (PBC) in favor ofCM
builders for the purchased of various construction supplies. PBC
approved the letter of credit to cover the fullinvoice value of the
goods and subsequently signeda prom-forma trust receipt as
security.-PBC wrote a demand letter to petitioner demanding the
amount be paid within seven days but instance ofcomplying they
confessed that they cant pay and requested a grace period to settle
the account.-Colinares et al., proposed to modify the payment of
the loan.-Colinares et al., were charged with estafa.-During trial,
petitioner Veloso insisted that the transaction was a cleanloan. He
and petitioner Colinares signedthe documents without reading the
fine print, andlearning that the trust receipt was merely a
formality.TC:Rendered adecision convicting theColinares etal
withestafa. The trialcourt considered thetransaction betweenPBC and
Petitioners as a trust receipt transaction under Section 4, P.D.
No. 115.CA:Modified the judgment of the trial court by increasing
the penalty.ISSUE:Whether the transaction is a simple loan or a
trust receipt agreement.HELD:-A thorough examination of the facts
obtaining in the case at bar reveals that the transactionintended
by the partieswas a simple loan, not a trust receipt agreement. The
Trust Receipts Law does not seek to enforce payment of theloan,
rather it punishes the dishonesty and abuse of confidence in the
handling of money or goods to the prejudiceof anotherregardless of
whether the latter is the owner. Here, it is crystal clear that on
the part of Colinares et althere was neither dishonesty nor abuse
of confidence in the handling of money to the prejudice of PBC.
Colinares etal continually endeavored to meet their obligations, as
shown by several receipts issued by PBC acknowledgingpayment of the
loan.-There are two possible situations in a trust receipt
transaction. The first is covered by the provision which refers
tomoneyreceived under the obligation involving the duty to deliver
it (entregarla) to the owner of the merchandisesold. The second is
covered by the provision which refers to merchandise received under
the obligation to return it(devolvera) to the owner.-Failure of the
entrustee to turn overthe proceeds of the sale of the goods,
covered by the trust receipt to theentruster or to return said
goods if they were not disposed of in accordance with the terms of
the trust receipt shallbe punishable as estafa under Article 315
(1) of the Revised Penal Code, without need of proving intent to
defraud.Colinares et al received the merchandise from CM Builders
Centre on 30 October 1979. On that day, ownershipover the
merchandise was already transferred to Colinares et al who were to
use the materials fortheir constructionproject. It was only a day
later, 31 October 1979, that they went to the bank to apply for a
loan to pay for themerchandise.-This situation belies what normally
obtains in a pure trust receipt transaction where goods are owned
by the bankand only released to the importer in trust subsequent to
the grant of the loan. The bank acquires a security interest
in the goods as holder of a security title for the advances it
had made to the entrustee. The ownership of themerchandisecontinues
to be vested in the person who had advanced payment until he has
been paid in full, or ifthe merchandise has already been sold, the
proceeds of the sale should be turned over to him by the importer
or byhis representative or successor in interest. To secure that
the bank shall be paid, it takes full title to the goods at thevery
beginning and continues to hold that title as his indispensable
security until the goods are sold and the vendeeis called upon to
pay for them; hence, the importer has never owned the goods and is
not able to deliverpossession. In a certain manner, trust receipts
partake of the nature of a conditional sale where the
importerbecomes absolute owner of the imported merchandise as soon
as he has paid its price
CASA FILIPINA DEVELOPMENT CORPORATION VS. DEPUTY EXECUTIVE
SECRETARY (209 SCRA 399[1992]) - Jose Valenzuela, Jr. filed a
complaint against petitioner for its failure to execute and deliver
the deed of sale and TCT. He alleged therein that he entered into a
contractto sell with petitioner for the purchase of a lot valued at
P68,400 with P16,416.00 as downpayment and the balance to be paid
in 12 monthly installments of P4,915.16 with 24% interest p.a.;
that despite full payment, petitioner refused to execute the deedof
absolute sale and deliver the corresponding TCT to him. Judgment
was rendered in favor of PR. Petitioner then filed an appeal.
ISSUE: WON the amount of 24% interest imposed is high and without
basis? HELD: NO. The interest rate of 24% p.a. was mutuallyagreed
upon by petitioner and PR in their contract to sell this was the
interest rate imposed on PR for the payment of the installments on
the contract price and there is no reason why this same interest
rate should not be equally applied to petitioner which is guilty of
violating the reciprocal obligation. It is, thus, evident that if a
particular rate of interest has been expressly stipulated by the
parties, that interest, not the legal rate of interest, shall be
applied.
Security Bank and Trust Company v RTC (Credit
Transactions)SECURITY BANK AND TRUST COMPANY v RTC-MAKATIG.R. No.
113926October 23, 1996
FACTS:
In 1983, Eusebio acquired 3 separate loans from Security Bank
amounting to P265k. The agreed interest rate was 23% per annum.
Thepromissory note was freely and voluntarily signed by both
parties. Leia Ventura was the co-maker. Eusebio defaulted from
paying. Security Bank sued for collection.
DECISION OF LOWER COURTS:* RTC: Judge Gorospe of the Makati RTC
ordered Eusebio to paybut he lowered the interest rate to 12% per
annum.* directly to SC in petition for certiorari.
ISSUES & RULING:1. Should the rate of interest on a loan or
forbearance of money, goods or credits, as stipulated in a
contract, far in excess of the ceiling prescribed under or pursuant
to the Usury Law, prevail over Section 2 of Central Bank Circular
No. 905 which prescribes that the rate of interest thereof shall
continue to be 12% per annum? or whether or not the 23% rate of
interest per annum agreed upon by petitioner bank and respondents
is allowable and not against the Usury Law?
Yes, the rate per contract prevails.
From the examination of the records, it appears that indeed the
agreed rate of interest as stipulated on the three (3) promissory
notes is 23% per annum. The applicable provision of law is the
Central Bank Circular No. 905 which took effect on December 22,
1982:
Sec. 1. The rate of interest, including commissions, premiums,
fees and other charges, on a loan or forbearance of anymoney, goods
or credits, regardless of maturity and whether secured or
unsecured, that may be charged or collected by any person, whether
natural orjudicial, shall not be subject to any ceiling prescribed
under or pursuant to the Usury Law, as amended.
Only in the absence of stipulations will the 12% rate be applied
or if the stipulated rate is grossly excessive.
Further, Eusebio never questioned the rate. He merely expressed
to negotiate the terms and conditions. The promissory notes were
signed byboth parties voluntarily. Therefore, stipulations therein
are binding between them.
2. Do the Courts have the discretion to arbitrarily override
stipulated interest rates of promissory notes and stipulated
interest rates of promissory notes and therebyimpose a 12% interest
on the loans, in the absence of evidence justifying the imposition
of a higher rate?
NO. The rate of interest was agreed upon by the parties freely.
Significantly, respondent did not question that rate. It is not for
respondent court a quo to change the stipulations in the contract
where it is not illegal. Furthermore, Article 1306 of the New Civil
Code provides that contracting parties may establish such
stipulations, clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, morals, good
customs, public order, or public policy. We find no valid reason
for the respondent court a quo to impose a 12% rate of interest on
the principal balance owing to petitioner by respondent in the
presence of avalid stipulation. In a loan or forbearance of money,
the interest due should be that stipulated in writing, and in the
absence thereof, the rate shall be 12% per annum. Hence, only in
the absence of a stipulation can the court impose the 12% rate of
interest.
APPLICABLE PROVISION OF LAW:Central Bank Circular No. 905 which
took effect on December 22, 1982, particularly Sections 1 and 2
which state:
Sec. 1. The rate of interest, including commissions, premiums,
fees and other charges, on a loan orforbearance of any money, goods
or credits, regardless of maturity and whether secured or
unsecured, that may be charged or collected by any person, whether
natural or judicial, shall not be subject to any ceiling prescribed
under or pursuant to the UsuryLaw, as amended.
Sec. 2. The rate of interest for the loan or forbearance of any
money, goods or credits and the rate allowed in judgments, in the
absence of express contract as to such rate of interest, shall
continue to be twelve per cent (12%) per annum.
All the promissory notes were signed in 1983 and, therefore,
were already covered by CB Circular No. 905. Contrary to the claim
of respondent court, this circular did not repeal nor in anyway
amend the Usury Law but simply suspended the latter's
effectivity.
JOSUE SONCUYA,plaintiff-appellant,
vs.
JUAN AZARRAGA, ET AL.,defendants-appellants.Gervasio Diaz, Joaquin
Azarraga, Sumulong Lavidez and Sumulong, and Laurel,
Del Rosario and Sabido for defendants and appellants.
Joseu Soncuya in his own behalf.DIAZ,J.:This case is now before us
on appeal from the Court of First Instance of Capiz. After trial,
the plaintiff filed a second amended complaint, which the lower
court at first refused to consider, but later on admitted after it
was convinced that the allowance thereof was proper in order to
make the allegations conform to the established facts. This was
done without the defendants interposing any exception,
notwithstanding that they had previously opposed the admission of
the amendment. They not afterwards and not now, in their brief on
appeal, question the aforesaid amendment.It appears from the
allegations of the complaint thus amended that the plaintiff has
four causes of action. Under the first cause he seeks to recover
from the defendants the sum of P118,635.68 as damages, which he
alleges to have been caused by the defendants in fraudulently
depriving him of the possession of four parcels of land with a
total area of 296 hectares, 58 ares and 92 centares, which they,
with knowledge that said real properties belonged to him
exclusively, registered in their names in the registry of property
and mortgaged in favor of "Hijos de I. de la Rama" to pay a certain
obligation which they had contracted with the Panay Municipal
Cadastre. Under the second cause, plaintiff seeks to recover P6,080
as the supposed value of the heads of cattle belonging to him,
which the tenants of the defendants had slaughtered. Under the
third cause, he seeks payment of the sum of P5,575 as the supposed
value of 1,115 coconut trees which he had planted on the four
parcels of land in question. Under the fourth and last cause of
action, plaintiff prays that the defendants surnamed Azarraga, with
the exception of Joaquin Azarraga, be ordered to make up to 123
hectares, 13 ares and 99 centares the land which the latter had
sold to him, because plaintiff did not take possession of the land,
except a portion thereof, having an area of 72 hectares, 83 ares
and 5 centares. In other words, the defendants should deliver to
the plaintiff an additional 50 hectares , 30 ares and 94 centares
inasmuch as the participation of said Joaquin Azarraga in the
estate left to him and his brothers, his co-defendants herein, by
their common grandfather, Juan Azarraga y Galvez, which Joaquin
Azarraga sold to plaintiff, had that area according to the deed of
partition, executed by all of them, and the plan of said estate
which was subsequently drawn up.In their answer of February 26,
1931, the defendants Azarraga interposed a general denial of each
and all the allegations of the plaintiff's complaint, excepting
those relating the following special defenses; First, that the
complaint does not allege facts constituting causes of action;
second, that the plaintiff and his predecessor in interest were
negligent in failing to inscribe in the office of the register of
deeds the supposed encumbrances in their favor over the lands in
question, granting that said encumbrances had ever existed; third,
that the plaintiff knew and was personally informed that the lands
aforesaid would be surveyed at their instance and inscribed in
their names as their own property, but that he did nothing to
defend or protect his rights either during the pendency of the
proceedings for the registration of the lands in question or during
the period prescribed by law after the issuance of a decree and
title, within which the validity of the same may be assailed;
fourth, that at the time of filing their application for
registration as well as of the issuance of the decree ordering the
inscription in their names in the registry of property of the lands
in question, they were the sole owners of the same, and that
admitting for the sake of argument the theory of the plaintiff that
he had a right to said lands, it was nothing more than an
expectation that he would be someday their owner; fifth, that the
plaintiff had no right to apply for or obtain from the court a writ
of preliminary injunction, wherefore, that obtained was illegal;
and sixth, that the right of action of the plaintiff, if any, had
prescribed.The defendants Azarraga further alleged the following
counterclaims:(a) That plaintiff is liable to them in damages in
the sum of P100,000 because while the contract which the defendants
had entered into with Leodegario Azarraga was still in force, the
plaintiff took possession of their lands not covered by the said
contract; that he set loose therein his cattle, utilizing the same
as grazing ground in a negligent manner and without taking the
necessary steps to avoid damages to their plantations; that
notwithstanding repeated requests, the plaintiff refused to fence
the lands in which he had set loose his animals, thereby causing
damages and destruction to their plantations; that the animals
belonging to the plaintiff not only destroyed and damaged the
coconut, palay and corn plantation existing already on the lands
before said animals were brought thereto, but also destroyed their
farms and plantations on their enclosed lands; that all this was
due to the neglect and carelessness of the plaintiff; that by
reason of his refusal to enclosed the lands converted into grazing
grounds, the defendants were unable to derive any benefits from
their lands or to sell or rent them to those who desire to do
so.(b) That the plaintiff is further liable and should be sentenced
to pay them in damages the sum of P 15,000 for having caused the
annotation in the corresponding registry of the book of the office
of the register of deeds of the Province of Capiz of a notice oflis
pendensnot only with regard to the 150 hectares, 48 ares and 50
centares which he claims in his complaint, but also with regard to
the whole area of 246 hectares, 27 ares and 98 centares, described
in the original certificate of title No. 9785 issued in the name of
the defendants; that as a result of this act of the plaintiff, they
could not enter into any transactions over that unquestioned
portion of the land to which said title relates.(c) That the
plaintiff is likewise liable and the defendants pray that he should
be sentenced to pay them the sum of P30,000 also in damages, for
having sought and secured the issuance of an order of preliminary
attachment of their properties described in certificates of title
No. 9804 and 10361.(d) That the plaintiff is liable and should be
sentenced to pay them in damages the sum of P10,000 for having
asked and secured from the court on February 7, 1931 a writ of
preliminary injunction in the same case, thereby preventing the
defendants from exercising acts of ownership not only on the four
parcels in questions, but also on all the other lands belonging to
them.(e) That in case it is adjudged that the lands in controversy
had been improperly inscribed by the defendants in their names in
the registry of property, they pray that the plaintiff be ordered
to reimburse them in the sum of P5,000 which represent the taxes
paid by them on said lands, plus interest from the dates said taxes
were paid;(f) The defendants lastly pray that upon the dissolution
of the writ of preliminary injunction issued against them on the
date above-stated and the cancellation of the annotation of said
writ in the corresponding book of the office of the register of
deeds of Capiz, the plaintiff be sentenced to pay the costs of the
suit."Hijos de I. de la Rama" and Panay Municipal Cadastre were
included in the complaint only for the purpose of enjoining the
former from increasing to P25,000 the credit it had extend to the
defendants Azarraga, who had already obtained P16,000 on a mortgage
of the lands in questions executed by them in its favor; and of
restraining the latter from collecting from said loan of P25,000,
extended by "Hijos de I. de la Rama" to the defendants, the credit
which it claims to have against them under a contract whereby they
bound themselves to provide it with funds to carry on the
enterprise for which it has been organized."Hijos de I. de la Rama"
showed very little interest in the case, for, according to the
lower court, it merely filed an answer with a general denial.Panay
Municipal Cadastre, in its answer, denied all the allegations of
the complaint in so far as it might be affected thereby, and
alleged as special defense that the plaintiff had no right to ask
for, and much less obtain, a writ of preliminary injunction against
it. It further alleged as a counterclaim that the said plaintiff
has become liable to it in damages in the sum of P15,000, plus
P5,000, plus P5,000 every month, beginning February 7, 1931,
because the plaintiff prevented if from receiving from the
defendants Azarraga or from "Hijos de I. de la Rama" the sums which
they had bound themselves to deliver under a contract which they
had executed on September 20, 1929. After trial, the court rendered
judgment as follows:Wherefore, the defendants Juan, Jose, Salvador,
Joaquin, Emilio, Luis, Rosario, Julio, all surnamed Azarraga, are
hereby sentenced to pay the plaintiff, jointly and severally, the
sum of P24,627.98, with legal interest from November 10, 1926, as
damages because they fraudulently deprived the plaintiff of his
lands in Bay-ang, and likewise to pay the plaintiff, jointly and
severally, the sum of P5,575 with legal interest from November 10,
1926, representing the value of 1,115 coconut trees as improvements
on said lands, and, with the exception of Joaquin Azarraga, to pay
the plaintiff, jointly and severally, the sum of P5,030.94 with
interest at the legal rate from November 10, 1926 for eviction and
warranty.In case the defendants Azarraga have no unencumbered
properties or can not redeem the mortgage over their properties,
with which to satisfy the indemnity for damages, the payment of
said indemnity shall be charged against the bond of the sureties,
who secured the lifting of the attachment on the properties of the
defendants.The writ of preliminary injunction issued in this case
on February 7, 1931 against the defendants Azarraga, Hijos de I. de
la Rama and Panay Municipal Cadastre is hereby made final, with the
exception of that portion which enjoins Hijos de I. de la Rama from
delivering to the defendants surnamed Azarraga and Panay Municipal
Cadastre more than the sum of P16,000, which had already been
delivered, and which likewise enjoins the latter from demanding
from said entity more than the above-mentioned sum of P16,000,
which portion is hereby declared dissolved.The plaintiff is
absolved from the counterclaims interposed by the defendants
Azarraga and by the Panay Municipal Cadastre. The defendants
Azarraga and by the Panay Municipal Cadastre. The defendants
Azarraga shall pay the costs.From the foregoing judgment the
defendants as well as the plaintiff appealed, and in their
respective briefs they assign the following errors;ASSIGNMENTS OF
ERROR OF THE DEFENDANTSI. The trial court erred in holding that the
true nature of the stipulation between Attorney Leodegario Azarraga
and the heirs of Don Juan and the heirs of Don Juan Azarraga y
Galvez as contained in the plan of partition Exhibit "A" is one of
cession of property in payment of a debt known in Spanish law as
"dacion en pago."II. the trial court erred in not holding that the
stipulation between Attorney Leodegario Azarraga and the heirs of
the deceased Juan Azarraga y Galvez to the effect that the lands
were to become the property of Attorney Leodegario Azarraga in case
the defendants failed to pay his fees within five years and that
during this period the said attorney had the usufructand possession
of the lands, as contained in Exhibit "A", is one ofpacto
comisorio, which is prohibited by article 1884 of the Civil
Code.III. The trial court erred in finding that the three parcels
of land in question, lots Nos. 81, 82, and 83, were sold by
Attorney Leodegario Azarraga to the plaintiff herein.IV. The trial
court erred in not holding that the right established by Attorney
Leodegario Azarraga by virtue of Exhibit "A" and transferred to the
plaintiff is at most an attorney's lien over the properties in
question and that the action of the plaintiff as transferee of this
lien should be to compel the defendants to recognize it as a
lien.V. The trial court erred in holding that the defendants
procured the registration of the lands in question by fraudulent
means.VI. The trial court erred in not holding that the plaintiff,
having no real right over the lands in question, the omission of
his name from the application is not fraudulent and not fatal to
the registration of the lands.VII. The trial court erred in not
holding that the plaintiff, being a mere usufructuary of the lands
in question for a limited period of time by grace of the owners,
was not entitled to be mentioned in the application for
registration and to be notified personally of its proceedings.VIII.
The trial court erred in not holding that the plaintiff had been
negligent in not asking for the review of the decree within one
year, and in not holding that the plaintiff purposely allowed the
one-year period, within which he could petition for review of the
decree, to elapse in order that he might have a cause of action for
damages against the defendants.IX. The trial court erred in
permitting the plaintiff to prove the market value of the lands in
question although there was absolutely no allegation to that effect
in the complaint notwithstanding the objection thereto and the
exception taken by the defendants.X. The trial court erred in not
holding that Joaquin Azarraga has not intervened in the
registration of the lands in question, he being only a coownerpro
indivisoand as such has not been guilty of fraud in connection with
the registration of the lands.XI. The trial court erred in not
holding that the plaintiff had no real right over the land referred
to in Exhibit 'E' in view of the fact that the said document had
not been registered.XII. The trial court erred in holding that the
land referred to in Exhibit "E" contains an area of 164 hectares
instead of 63 hectares only.XIII. the trial court erred in finding
that the total area of lots 81, 82, and 83, which are the subject
matter of the "pactum commissorium" between Attorney Leodegario
Azarraga and the defendants, is 243 hectares instead of 87 hectares
only.XIV. The trial court erred in sentencing the defendants to pay
to the plaintiff the sum of P35,233.92 and in not absolving them
from the complaint.XV. The trial court erred in disallowing all the
five counterclaims of the defendants amounting to
P58,000.ASSIGNMENTS OF ERROR OF THE PLAINTIFF(a) The lower court
erred in not finding that the market value of the lands in
litigation in 1926 was P118,635.68;(b) The lower court erred in not
sentencing the defendants to pay the plaintiff the sum of P6,080 as
indemnity for the wrongful slaughter of his animals; and(c) The
lower court erred in not sentencing the defendants to pay the
plaintiff, jointly and severally, the sum of P13,290.68 as
indemnity, plus legal interest from November 10, 1926.The salient
facts established at the trial which may serve as a basis for an
intelligent discussion of the questions raised by the parties and
for a proper decision of the same, may be briefly stated as
follows:By reason of the proceedings had in case No. 11489 of the
Court of First Instance of Manila, entitled "Testate Estate of the
Deceased Juan Azarraga y Galvez", the defendants surnamed Azarraga
became indebted to Attorney Leodegario Azarraga, who represented
them in said case, for attorney's fees, which on October 21, 1919
the court, which took cognizance of the case, fixed at P3,000
(Exhibit B).The defendants Azarraga had previously agreed among
themselves to pay Attorney Leodegario Azarraga attorney's fees in
the manner set out in Exhibit A, which they executed on January 20,
1919 and approved by the court on August 29, of the same year.
(Exhibit C.) The pertinent part of the aforesaid Exhibit A reads as
follows:The parties also agree that the parcels of land located in
Bay-ang, New Washington, Capiz, P. I., which are enumerated in the
inventory of this partition as Nos. 81, 82 and 83, are specially
mortgaged and subject to the payment of the fees of said attorney
of the testate estate, which fees shall be fixed by the court, and
said attorney may hold said lands under no obligation to pay any
rent until his fees shall have been fully paid:Provided, however,
that if, at the end of the period of five years from the date of
the approval of this project of partition, said parties shall not
have been able to pay in full the fees of said attorney, then said
parcels of land, Nos. 81, 82 and 83, located in Bay-ang, shall be
definitely adjudicated to said attorney, Mr. Leodegario Azarraga,
as his property, in payment of his fees, and all sums which he may
have received from time to time from the interested parties in
these testate proceedings, within the said period, shall be
returned to said parties:Provided, further, that in case said
interested parties in the testate proceedings shall be able to pay
in full the fees of the attorney for the estate before the
expiration of said period of five years, then said parcels of land
situated in Bay-ang shall continue in the possession of said
attorney for an additional period of three years from the date of
the last payment in the event that said attorney may have kept
livestock in said lands.About nine months after the court approved
Exhibit A, or to be exact, on June 9, 1920, which was long before
the expiration of the period of five years within which the
defendants Azarraga were bound to pay Attorney Leodegario Azarraga
his fees, which had been fixed at P3,000, said attorney decided to
sell and did sell to the plaintiff his credit against the
defendants for the sum of P2,500 with all the rights inherent
therein in accordance with the agreements and stipulations
appearing in said document (Exhibit C). One of said agreement was
that Attorney Leodegario Azarraga would take possession of the said
parcels of land and, occupy the same, if he so desired, without
paying any rent or annuity, until fees shall have been fully paid.
Said parcels were identical with lots Nos. 81, 82 and 83 described
in paragraph II of the plaintiff's second amended complaint.When
the plaintiff became the creditor of the defendants Azarraga by
virtue of the sale and cession which Attorney Azarraga had made in
his favor of the rights which said attorney had under Exhibit A, he
allowed the defendants an extension of a few years over the five
years with in which they would have to pay him his credit, or up to
February 16, 1926, but with the express condition that they would
pay him interest at the rate of 12 per cent per annum, from August
30, 1924 (Exhibit 5). This term was later extended to April 26,
1926 on the request of the defendants, but also with the condition
that they would pay the plaintiff the same interest of 12 per cent.
(Exhibits l and M.) The plaintiff granted another extension to
expire on October 31, 1928, but subject to the condition that
instead of seven thousand and odd pesos, which undoubtedly referred
to the interest of 12 per cent per annum charged the defendants,
they should pay him P12,000 (Exhibit 2). In said two amounts of
P7,000 and P12,000 the sum of P4,000 which the plaintiff had given
to the defendant Joaquin Azarraga and which will be dealt with
further in detail, was included.Aside from the above transactions
between the plaintiff and the defendants Azarraga, one of the
latter, Joaquin Azarraga, executed in favor of the former, the deed
known as Exhibit E of the record and dated October 14, 1922, by
which he sold to the plaintiff, for the sum of P4,000, his portion
of the inheritance in the testate estate of the late Juan Azarraga
y Galvez, consisting of an undivided tract of land containing an
estimated area of 63 hectares and located in Bay-ang Chico, New
Washington, Capiz. It is further stated therein that the period of
redemption would be five years to be counted from February 16,
1921, which was later extended to April 26, 1926. In granting him
this extension, the plaintiff imposed on Joaquin Azarraga the
condition that he should pay him interest at the rate of 12 per
cent from the expiration of the first term (Exhibit M; par. III of
the second amended complaint of plaintiff; and page 5 of the brief
of the plaintiff as appellant). A second extension was further
granted, but under the condition that he should, together with his
brothers, pay the plaintiff instead of seven thousand and odd
pesos, representing the interest referred to in the preceding
paragraph, in which the P3,000 mentioned in Exhibit A were
included, P12,000 (Exhibit 20. The deed referred to was never
annotated or inscribed in any register in the office of the
register of deeds of said province.By virtue of the transfer made
to him by Joaquin Azarraga and also of the terms conditions
enumerated in said Exhibit A, the plaintiff took possession of
practically the whole land of the defendants Azarraga, located in
Bay-ang, placing therein livestock from the month of August, 1920
and in the same year built sheepfolds therein, besides erecting
some wire fences. When the plaintiff took possession of part of the
land in question in August, 1920 and another part thereof in
February, 1922, after the execution in his favor of the deed of
transfer, which is a clarification of Exhibit E, he found
fruit-bearing and young coconut trees, the latter being more
numerous. In 1925, 1926 and 1927, Joaquin Azarraga, either by
himself or his laborers, planted therein hundreds of coconut trees
of which but a few hundreds, as we the case with the old ones,
remained on account of the long droughts or other causes. There is
nothing definite in the record to show the exact number of animals
which the plaintiff had brought to Bay-ang or the cause of the
death of some of them. It seems that some had been wounded, by whom
it is not known, much less it is known whether they were wounded by
men of the defendants Azarraga. The plaintiff himself has not
spoken with certainly; his statements on this point are mere
conjectures uncorroborated by anybody or anything (transcript of
stenographic notes, pages 145-147). There have been also no exact
accounts as to whether the animals of the plaintiff where those
which destroyed the coconut trees planted on the land by Joaquin
Azarraga during the years 1925, 1926 and 1927 above-mentioned, or
were the animals of other persons.Sometimes in May, 1928, the
plaintiff went to the house of the defendants Joaquin Azarraga to
collect not only his credit against all the defendants Azarraga,
but also the special credit which, according to him, he had against
Joaquin Azarraga. And on October 9, 1928, he addressed a letter to
each and every one of the defendants including Joaquin Azarraga
whom he expressly mentioned therein, and, among other things, told
them that:Last May, Messrs. Salvador and Joaquin came to an
agreement with me whereby they were to redeem the land in Bay-ang
for seven thousand and odd pesos las September, and in default
thereof to transfer in my name the Torrens title of the portion
belonging to me; but until now neither of these has been done.For
this reason and in view of the fact that you have not stated in the
Torrens title of the land in Bay-ang when you applied for the same,
the two encumbrances thereon in my favor, I am compelled by this
omission, which is a clear disregard of my rights, to seek redress
therefor in the courts, if you refuse the same to me. Therefore, if
you desire to redeem the land, you may do so for the sum of twelve
thousand pesos (P12,000) until the 31st of this month of October;
but should you not wish to redeem it, then in order to avoid the
inconvenience of a law suit, I would request that on the same day
or prior thereto that you shall have at least submitted to the
court your motion praying for an order approving the segregation
and transfer of the portion of said land which belongs to me,
together with the corresponding plan, namely, that corresponding to
the land which shall be in my name in the Torrens title. In the
understanding that if said date, October 31st, arrives, and you
have not done anything either one way or the other, then through
your own fault, I would be compelled to resort to the courts to ask
protection of my rights before I lose them, urging the court to
order you to pay me by reason of such fraudulent omission a sum
more than double the amount above-mentioned. (Exhibit 2.)The land
in Bay-ang to which the above-transcribed letters refers is the
same land made up by the four parcels mentioned in paragraph II of
the second amended complaint of the plaintiff, as parcels 81, 82,
83 and that having an area of 63 hectares.Between the date of the
execution of the document Exhibit A (January 20, 1919) and the date
of said letter Exhibit 2 (October 9, 1928), the defendants secured
the inscription in the registry of property and the issuance in
their favor of the corresponding certificate of title of the lands
described in original certificate of title No. 9785, by virtue of
the decree of registration of October 27, 1925 (Exhibit Q). Of this
fact the plaintiff had full knowledge by reason of the letter dated
July 9, 1924, which was sent to him by the defendant Juan Azarraga,
wherein the latter, besides asking for an extension of three years,
informed him (plaintiff) of the registration proceedings which were
then going on. (Exhibit 1.) The plaintiff did not then nor
thereafter take any step to oppose the same, or to ask at least for
the revision of the decree of registration, which was issued later,
within the period of one year prescribed by law. To this letter,
the plaintiff replied on the 30th of the same month and year,
stating, among other things:Now that I am somewhat relieved from
the pressure of work, I am writing to inform you that, although I
need cash to meet my pressing financial obligations, your requests
have compelled me to grant you, as administrator the undivided
properties of the Azarraga brothers, an extension of the term for
the payment of the credit which encumbers the land in Bay-ang, and,
consequently, of the redemption of the same, up to February 16,
1926. Said land and its encumbrances are described in the deed of
sale of the said credit with all the rights inherent therein,
executed by Mr. Leodegario Azarraga in favor of the undersigned on
July 9, 1920.As the granting of this extension is causing me a real
sacrifice and a great financial strain, in justice and equity, I
also ask from you, as administrator of the undivided properties of
the Azarraga brothers, thelucrum cessansso that from August 30,
1924 the aforesaid credit of P3,000 shall earn 12 per cent annual
interest.This letter will serve you as evidence of the granting of
the extension of the term for redemption of the said land in
Bay-ang and, therefore, there is no necessity for executing another
document to that effect. (Exhibit 5.)At the time of the filing of
the original complaint, plaintiff simultaneously asked for and
obtained on February 7, 1931, upon posting a bond in the amount of
P2,000, a writ of preliminary injunction against the defendants
(Exh. 15), and in due time caused the annotation in the office of
the register of deeds of the Province of Capiz of a notice oflis
pendensnot only with regard to the portion having an area of 150
hectares, 48 ares and 50 centares of the lands of the defendants
Azarraga, but also with regard to the whole area of 246 hectares,
27 ares and 98 centares described in original certificate of title
No. 9785.The plaintiff also secured from the Court of First
Instance a preliminary attachment of the properties of the
defendants, described in certificates of title No. 9804 and 10351,
on February 5, 1929 (Exhibit R); and the same was annotated in the
registry of property in the same month. Seven months after, or on
September 9, of said year, the aforementioned attachment was lifted
by order of September 7, 1929 (Exhibit X) upon the filing of a bond
required by the court in the sum of P12,500 by the interested
parties. Said bond having been filed by the defendants, the court,
on the same day, ordered the cancellation of the notice oflis
pendensannotated in the office of the register of deeds and the
inscription of all the necessary annotations. (Exhibit Y.)As
clearly proven as the foregoing are the facts that the defendant
"Hijos de I. de la Rama" entered into a contract with its
co-defendants Azarraga for the purpose of granting them a credit of
P25,000, having delivered to them on different occasions after the
execution by said defendants of a deed of mortgage Exhibit 16 in
its favor on September 20, 1929, as part of the aforementioned sum,
the total amount of P16,000. The Azarragas needed said amount for
carrying on the business for which the defendant Panay Municipal
Cadastre, Inc., had been organized, as set forth in said Exhibit 16
and clarified in Exhibit 17.By virtue of the writ of injunction
issued by the lower court on February 7, 1931, enjoining the
defendants Azarraga and the Panay Municipal Cadastre from obtaining
from their co-defendant "Hijos de I. de la Rama" another loan,
arise from the P16,000 which they had previously obtained (Exhibit
14), said defendant "Hijos de I. de la Rama" did not extend the
credit, which it had opened to its co-defendants, to P25,000 as
required by the contracts Exhibits 16 and 17 above-referred to. In
connection with the issuance of the writ of preliminary injunction,
the following facts must be mentioned: After the plaintiff
commenced the present case against the defendants Azarraga on
January 28, 1929 by means of his original complaint, he instituted
another action against them, which was civil case No. 2643, for the
purpose of obtaining a writ of injunction to prevent them from
securing the aforementioned loan of P25,000 from "Hijos de I. de la
Rama". This latter case reached this court on certiorari filed on
March 22, 1930. As its sole object was the issuance of a writ of
preliminary injunction, this court, reiterating once more the
ruling that said remedy is purely subsidiary available only in aid
of the right sought to be enforced in the action wherein the same
is issued, and that a separate action to secure the same does not
lie as it would permit of multiplicity of suits with the consequent
needless expenses (Panay Municipal Cadastre vs. Garduo and Soncuya,
55 Phil., 574, 578), granted thecertiorariprayed for on January 22,
1931, thus setting aside the writ of preliminary injunction issued
by the court of Capiz on October 21, 1929, hence, it was in being
for not more than one year, three months and one day.The writ of
preliminary injunction subsequently issued on February 7, 1931, has
remained in force up to the present, as the lower court declared in
its judgment that it shall be final with respect to the P9,000
still owing from "Hijos de I, de la Rama" on account of the loan
which it had agreed to extend to the other defendants.The works for
which the Panay Municipal Cadastre had been organized were begun in
October, 1929. According to the testimony of Gaspar Ferraren, for
all the work which they intended of Gaspar Ferraren, for all the
work which they intended to undertake, they needed a capital of not
more than P40,000 to make a gross profit of P100,000. Of this
estimated capital they invested the P16,000, obtained from "Hijos
de I. de la Rama", which immediately yielded a return of P6,000. He
also stated that the Panay Municipal Cadastre completed half of its
works with only the capital obtained from "Hijos de I. de la Rama"
(P16,000), plus its first profit of P6,000 and that it made a
profit of P24,277.15 meaning thereby that with the aforemention
P16,000 it obtained P30,277. 15, or a net profit of
P14,277.15.Another fact which has been clearly established by the
testimony of the plaintiff himself is that he decided to sell all
the animals which he had placed on the land in question because he
became discouraged by the destruction of said animals by the
tenants of the defendants Azarraga. This fact, however, has been
established not by competent evidence, but by hearsay testimony,
which was of course timely objected to; and, although he testified
in the same breath that he had still some cattle there, he could
not state their exact number, but limited himself to saying "I
cannot tell whether there were fifty of them." (Transcript, page
14.)In his subsequent dealings with the defendants Azarraga,
including Joaquin Azarraga, as in his pleadings and testimony, the
plaintiff, in referring to the amount of P2,700 or P3,000, the
value of the credit which he had purchased from Attorney Leodegario
Azarraga, and to that of P4,000 which he gave to Joaquin Azarraga
on the date and under the circumstances stated in Exhibit E, he
alluded to, and considered them as his "credit". Thus, on page 176
of the transcript of the stenographic notes, he said: ". . . land
mortgaged to me . . .;" and on pages 192 and 194 of said
transcript, he also said: "Now I am not collecting the credit; I am
collecting the damages. Although they may have sold that property
to me for P1, if its commercial value has increased after they have
deprive me of the same, I should collect from them such value;" and
". . . I want so say again that what I am collecting now is not the
credit which I have against them, but the damages they have caused
me by depriving me of the property."The facts of the case being as
above set out, the questions raised by the parties in their
respective assignments of error, should now be considered. In fact,
the most important or those discussed in the first fourteen errors
attributed by the defendants to the lower court, and in the first
and last errors, which plaintiff, in turn, assigned, may be reduced
to the following:I. Was the contract entered into by-the Azarraga
brothers, the defendants herein, with Attorney Leodegario Azarraga
from whom the plaintiff derived his right, a sale withpacto de
retro, or an assignment in payment of a debt, or was it an
antichresis partaking of the nature of what was anciently known
aspacto comisorio, or a mortgage, or was it merely a loan with real
estate security?II. Was the contract executed by the defendant
Joaquin Azarraga, on the one hand, and the plaintiff, on the other,
embodied in Exhibit E, a sale withpacto de retroor simply a loan
with real estate security?The first question offers no difficulty
if account is taken of the established facts and the conduct of the
interested parties after the expiration of the term of five years
fixed in Exhibit A. When the plaintiff extended the period to
February 16, 1926 within which the defendants Azarraga could pay
him his credit, but imposed on them the condition that they pay him
12 per cent annual interest from August 30, 1924 on the principal
of P3,000 (Exh. 5) and gave them another extension up to April 26,
1926, under the same conditions as regard interest (Exh. M), what
perhaps could have been considered as a antichresis orpacto
comisorio not an assignment in payment of a debt, or a sale
withpacto de retrobecause there is nothing in Exhibit A to indicate
that such was the intention of thedefendants Azarraga or, at least,
that they bound themselves to deliver the land in question to the
plaintiff and that the latter should pay them the value thereof;
and because there was what may be considered the resolutory
condition of five years was converted into a simple loan by the
decisive circumstance that plaintiff chose to collect thereafter,
and the obligors agreed to pay him, 12 per cent annual interest. It
is only in contracts of loan, with or without guaranty, that
interest may be demanded (articles 1108, 1740, 1755, 1868, 1876,
and 1881 of the Civil Code. As a matter of fact, the contract
embodied in Exhibit A was novated by Exhibits 5 and M, and the
plaintiff wanted to have it novated for the third time by means of
Exhibit 2. It does not appear of record, however, that the
defendants Azarraga ever assented to the latter novation. Perhaps,
their refusal to agree to the same was due to the fact that the
plaintiff wanted to raise their old obligation (P3,000 or P2,700 of
all the Azarraga brothers, plus P4,000 which Joaquin Azarraga alone
owed, which two accounts both the plaintiff and the defendants
considered as amounting to P7,000, exclusive of the annual interest
of 12 per cent) to the round sum of P12,000. From all this it may
easily be inferred that the obligation which the defendants had
imposed upon themselves by Exhibit A had ceased to exist and became
a simple loan with security, if so desired, of the lands in
question, but without prejudice to third parties as neither Exhibit
A nor the deed of assignment Exhibit C, executed by Leodegario
Azarraga in favor of the plaintiff, was inscribed in the registry
of deeds.There is also no difficulty in disposing of the second
question, considering the various novations which, as has been
said, had taken place and had been extended not only to the
Azarraga brothers with respect to their obligation of P3,000 or
P2,700, but also to the defendant Joaquin Azarraga as regard his
personal debt of P4,000. We must not lose sight of the fact that
the plaintiff never considered the contract entered into by him
with Joaquin Azarraga as, strictly speaking, a sale withpacto de
retro. And if he had ever considered it as such, it is,
nevertheless, true that he novated it on February 16, 1926,
considering it from the time on as a simple loan, inasmuch as on
that date he began to charge the said defendant 12 per cent annual
interest with the latter's assent and confirmity. This clearly
appears in Exhibit M which must be considered together with
paragraphs 7 and 8 of Exhibit E, as the plaintiff himself does in
his brief (brief for the plaintiff as appellant, pages 4 and 5),
because the term of five years to which said Exhibit E refers and
which should have expired on February 16, 1926 was extended by the
said plaintiff, by Exhibit M, up to April 26, 1926 under the
aforementioned condition that he should be paid 12 per cent annual
interest.Consequently, the contention of the defendants that the
plaintiff did not and could never receive the lands in question as
an assignment in payment of a debt, and much less did he acquire
them by purchase with pacto de retro, is well taken. It must also
be noted that at no time did the plaintiff claim any rights of
dominion over the lands since he did not even intimate to the
defendants, either directly or indirectly, that for their failure
to pay him his credit within the time provided therefor, he become
the absolute owner thereof. Notwithstanding the fact that all the
extensions he had given defendants had expired, he did not, even
only for tax declaration purposes, declare the lands as his
property. Having reached this conclusion, it is needless to state
that the plaintiff has no right to the various sums which he seeks
in his complaint and to which he refers in the first and last
errors assigned by him. If, as has been shown, he never became the
owner of the lands in question, he can neither claim payment of the
value of the same nor ask to be indemnified for the deprivation of
their possession. The plaintiff, moreover, has no reason to
complain that his lien, if his right over said lands could be
termed as such, was not annotated in the certificate of title which
the defendants Azarraga had obtained, or that the latter did not
ask that it be stated therein that the lands to which it refers are
charged with his credit against them; inasmuch as he was himself
negligent in that he did not ask the court, while the registration
case relating to said lands was being heard, for the annotation of
what he considered necessary to protect his rights, and in not
seeking the revision of modification of the decree of registration
within the period of one year provided for the purpose.As to the
fifteenth error attributed to the lower court by the defendants
Azarraga, we hold that, in view of the established facts
above-related, they have failed to show satisfactorily that they
have anyright under all or any of their several counterclaims. If
the coconut trees planted by Joaquin Azarraga on a portion of the
land in question were indeed lost or destroyed, it was due more to
his own negligence than to the of the plaintiff; for he well knew
on planting them in 1925, 1926 and 1927 that the plaintiff
maintained therein, with his (Joaquin Azarraga's) approval,
livestock which might destroy them, and he did not take the
necessary precautions against such occurrence. This is, of course,
upon the supposition that his coconut plantations died by reason of
the devastation caused by the animals of the plaintiff. The
preponderance of the evidence, however, has shown that they died on
account of the drought alone.We likewise hold that the issuance of
the writs of preliminary injunction and attachment at the instance
of the plaintiff did not prejudice the defendants, inasmuch as
there is no competent evidence of record to the contrary. On the
other hand, there is evidence to show that from the loan which the
defendants Azarraga had obtained from "Hijos de I. de la Rama" they
derived a net profit of P14,277.15 within the short period of one
year and a few months.There is no support for the contention of the
defendants that they suffered damages by reason of the preliminary
attachment ordered by the lower court because they were unable to
sell one of their houses to the Calibo Institute for the price
agreed upon by them and said entity. The record shows that they
lost nothing because the Calibo Institute is at present occupying a
portion of said house and they may, if they so desire, sell it even
now to the occupant. It does not appear, on the other hand, that
the latter desisted from buying it on finding a better building.As
to the second error assigned by the plaintiff, it suffices to
recall that the established facts do not show that the tenants of
the defendants were responsible for the killing and wounding of the
animals belonging to him or that said tenants acted upon the
instigation of the defendants. Consequently, the plaintiff's claim
to this effect is entirely without merit.In view of all the
foregoing and in resume, we hold that the plaintiff alone has the
right (1) to recover from the defendants Azarraga, by virtue of the
assignment and sale made to him by Attorney Leodegario Azarraga of
the latters' credit of P2,700 against the said defendants, the
aforesaid sum plus interest at the rate of 12 per cent per annum
from August 30, 1924; (2) to recover from the defendant Joaquin
Azarraga, in particular, the sum of P4,000 plus interest at the
rate of 12 per cent per annum from April 26, 1926. We also hold
that the defendants are not entitled to anything under their
counterclaims.Wherefore, reversing the appealed judgment,(a) All
the defendants are hereby sentenced to pay jointly the sum of
P2,700 to the plaintiff, with 12 per cent annual interest from
August 30, 1924 until said sum is fully paid; ;and(b) The defendant
Joaquin Azarraga is sentenced to pay the plaintiff the sum of
P4,000 plus interest at the rate of 12 per cent per annum from
April 26, 1926, until fully paid.The plaintiff is absolved from
defendants' counterclaims and the writ of preliminary injunction
issued by the lower court on February 7, 1931, is hereby dissolved.
There is no special pronouncement as to costs. So ordered.Avancea,
C.J., Villa-Real, Abad Santos, Imperial and Concepcion, JJ.,
concur.
BONNEVIE VS. CA (GR No. L-49101; Oct. 24, 1983) - Spouses Lozano
mortgaged their property to secure the payment of a loan amounting
to P75,000 with private respondent Philippine Bank of Communication
(PBCom). The deed of mortgage was executed on Dec. 6, 1966, but the
loan proceeds were received only on Dec. 12, 1966. Two days after
the execution of the deed of mortgage, the spouses sold the
property to the petitioner Bonnevie for and in consideration of
100,000 25,000 of which payable to the spouses and 75,000 as
payment to PBCom. Afterwhich, Bonnevie defaulted payments to PBCom
prompting the latter to auction the property after Bonnivie failed
to settle despite subsequent demands, in order to recover the
amount loaned. The latter now assails the validity of the mortgage
between Lozano and Pbcom arguing that on the day the deed was
executed there was yet no principal obligation to secure as the
loan of P75,000.00 was not received by the Lozano spouses, so that
in the absence of a principal obligation, there is want of
consideration in the accessory contract, which consequently impairs
its validity and fatally affects its very existence.ISSUE: WON
there is a perfected contract of loan?HELD: Yes. From the recitals
of the mortgage deed itself, it is clearly seen that the mortgage
deed was executed for and on condition of the loan granted to the
Lozano spouses. The fact that the latter did not collect from the
respondent Bank the consideration of the mortgage on the date it
was executed is immaterial. A contract of loan being a consensual
contract, the herein contract of loan was perfected at the same
time the contract of mortgage was executed. The promissory note
executed on December 12, 1966 is only an evidence of indebtedness
and does not indicate
