G.R. No.

3019 February 9, 1907

LA COMPAIA GENERAL DE TABACOS DE FILIPINA,PlaintiffAppellee, vs. VICENTE ARAZA,DefendantAppellant.
T. L. McGirr for appellant.
Domingo Franco for appellee.
WILLARD, J.:
The plaintiff brought this action in the court below to foreclose a
mortgage for 8,000 pesos upon certain land in the Province of Leyte. A
demurrer to the complaint was overruled, but to the order overruling it
the defendant did not except. The defendant answered, alleging that the
document, the basis of the plaintiff's claim, was executed through error
on his part and through fraud on the part of the plaintiff. A trial was had
and judgment was entered for the plaintiff as prayed for in its complaint.
The defendant moved for a new trial on the ground that the decision was
not justified by the evidence, this motion was denied, to its denial the
defendant excepted, and he has brought the case here for
review.chanroblesvirtualawlibrary chanrobles virtual law library
Upon the questions of fact raised by the answer, the findings of the court
below are sustained by the evidence, in no event they can be said to be
plainly and manifestly against the weight of the evidence. Those findings
include a finding that there was no fraud on the part of the plaintiff, no
mistake on the part of the defendant, and that there was a sufficient
consideration for the contract, As has been said, there was in the case to
support all of these conclusions.chanroblesvirtualawlibrary chanrobles
virtual law library
Upon one point, however, we think that the judgment was erroneous. The
contract send upon was executed on the 11th day of June, 1901. By
terms thereof the defendant promised to pay the plaintiff 8,000 pesos as
follows: 500 pesos on the 30th of June, 1901, and the remainder at the
rate of 100 pesos a month, payable on the 30th day of each month, until
the entire 8,000 pesos was paid. The defendant paid 400 pesos and no
more.chanroblesvirtualawlibrary chanrobles virtual law library
This suit was commenced on the 12th day of June, 1903. There was no
provision in the contract by which, upon failure to pay one installment of
the debt, the whole debt should thereupon become at once payable. We
are of the opinion that the obligation can be enforced in this action for
only the amount due and payable on the 12th day of June,
1903.chanroblesvirtualawlibrary chanrobles virtual law library

The court below gave no credit for the payment of 400 pesos admitted by
the complaint to have been received by the plaintiff. It is allowed interest
upon the entire debt from the 1st day of July, 1901. The contract does not
provide for the payment of any interest. There is no

provision in it declaring expressly that the failure to pay when due should
put the debtor in default. There was therefore no default which would
make him liable for interest until a demand was made. (Civil Code, art.
1100; Manresa, Com. on Civil Code, vol 8, p. 56.) The transaction did not
constitute a mercantile loan and article 316 of the Code of Commerce is
not applicable. There was no evidence any demand prior to the
presentation of the complaint. The plaintiff is therefore entitled to
interest only from the commencement of the
action.chanroblesvirtualawlibrary chanrobles virtual law library
The judgment is set aside and the case is remanded to the court below
with directions to determine the amount due in accordance with the
views hereinbefore expressed and to enter judgment for such amount.
No costs will be allowed to either party in this court. So
ordered.chanroblesvirtualawlibrary chanrobles virtual law library

G.R. No. L-22359 November 28, 1924

JULIO DE LA ROSA, plaintiffappellant, vs.
THE BANK OF THE PHILIPPINE ISLANDS, defendant-appellant.
Ramon Sotelo for plaintiff-appellant.
Araneta and Zaragoza for defendant-appellant.

ROMUALDEZ, J.:
This action was instituted on June 11, 1923, by means of a complaint on
the ground that the defendant bank started a contest of designs and
plans for the construction of a building, announcing that the prizes
would be awarded not later that on November 30, 1921; that the
plaintiff took part in said contest, having performed work and incurred
expenses for that purpose; that said bank refrained from naming judges
and awarding the prizes in accordance with the conditions stipulated.

The plaintiff prays that judgment be rendered in his favor for the sum of
P30,000 as damages, with interest and the costs.

The defendant bank answered denying the facts contained in the

second and following paragraphs of the complaint.
After the trial, the court rendered judgment ordering the defendant
bank to pay the plaintiff an indemnity of P4,000 and the costs.
Both parties appealed from this judgment, the plaintiff assigning the
following errors as committed by the trial court:
1. In holding that the sum of P4,000 was a just and reasonable

indemnity to the plaintiff.

2. In not ordering the defendant bank to pay the P30,000 prayed for

in the complaint. The defendant bank, in turn, assigned the following

errors as committed by the trial court:
1.

In holding that the date set for the award of prizes is essential in
the contract.

2.

In ordering that the sum of P4,000 be paid to the plaintiff.

The fundamental question on which the plaintiff's action depends is raised

in the first assignment of error made by the defendant bank, or, whether
or not the date set for the award of the prizes was essential in the contract
and, therefore, whether or not the failure to award the prizes on said date
was breach of contract on the part of the defendant.

First of all, we find that due to the fact that the bank started and
advertised the said contest, offering prizes under certain conditions, and
the plaintiff prepared, by labor and expense, and took part in said
contest, the bank is bound to comply with the promise made in the rules
and conditions prepared and advertised by it.
A binding obligation may even originate in advertisements
addressed to the general public. (6 R. C. L., 600.)
It is an elementary principle that where a party publishes an offer to
the world, and before it is withdrawn another acts upon it, the party
making the offer is bound to perform his promise. This principle is
frequently applied in cases of the offer of rewards,
. . . (6 R. C. L., 607.)

What is to be determined is whether or not the defendant bank was in

default in not awarding the prizes on November, 30, 1921.

The plaintiff contends that it was, according to paragraph 2 of article
1100 of the Civil Code, the complete text of which is as follows:

Persons obliged to deliver or to do something are in default from the

moment the creditor demands of them judicially or extrajudicially the
fulfillment of their obligation.

Nevertheless, the demand of the creditor shall not be

necessary in order that the default may arise
1.

When the obligator or the law expressly so provides;

When by reason of the nature and circumstances of the

obligation it shall appear that the designation of the time at
which the thing was to be delivered or the service rendered
was the principal inducement to the creation of the obligation.
2.

In reciprocal obligations neither of the obligators shall be in default if

the other does not fulfill or does not submit to the fulfillment of that
which is incumbent upon him. From the time on the obliges performs
his obligation the default begins for the other party.

And the party plaintiff contends that the said date was the principal
inducement because the current cost of concrete buildings at the time
was fixed. The fixation of said price cannot be considered as the
principal inducement of the contract, but undoubtedly only for the
uniformity of the designs to be presented and to secure greater justice
in the appreciation of the relative merits of each work submitted.
Such fixation of price, naturally, was not the principal inducement for the
contestants. Neither was it for the bank which could not certain that said
price would continue to be current price when it desired to construct the
building designed.
We do not find sufficient reason for considering that the date set for the
reward of the prizes was the principal inducement to the creation of the
obligation. And, taking into consideration the criterion that must be
followed in order to judge whether or not the time for the performance
of the obligation is the principal inducement in a given case, we hold
that it was not in the instant case.
The distinguished Manresa explains the matter in the following terms:
These words ("principal inducement" in paragraph 2 of article 1100 of
the Civil Code) whose special meaning in connection with this article
and the circumstances of each obligation does not permit of their
being confused with the permanent general idea, and the distinct
clearness of consideration of contracts, may give rise to serious doubts
by reason of the breadth of expression, and must be judged in each
particular case, it being impossible to give a general rule to explain

them. It will for instance, be unquestionable that the hypothesis

implied in this exception is affected when the matter, for instance, is
the delivery of things of the rendition of services to be employed

in agricultural work, and the time of said work has been designated
as the date for the fulfillment of the obligation; it will also exist
when, for instance, fruits or any objects are to be delivered which
might be used by the creditor in industrial operations having a
determinate period for carrying them out and designated for their
delivery; and, finally, it will also assist whenever, as in these cases,
it appears that the obligation would not have been created for a
date other than that fixed.
The defendant bank cannot be held to have been in default through the
mere lapse of time. For this judicial or extrajudicial demand was
necessary for the performance of the obligation, and it was not alleged
here, nor does it appear that before bringing this action the plaintiff had
ever demanded it from the defendant bank in any manner whatsoever.
The defendant bank, therefore, was not in default.
The plaintiff's allegation that the defendant bank abstained from
continuing the contest was not proven. On the contrary, it was proved,
and so stated in the decision appealed from, that during the trial of this
case in the Court of First Instance the designs were on the way to New
York where they were sent to a technical committee.
This committee, according to the new evidence before us presented by
the defendant bank and which we now hold admissibe and admit, was
appointed by the defendant bank for the study and determination of the
designs presented and entitled to the prizes advertised, and which
rendered its report and awarded the prizes in accordance with the rules
and conditions of the contract, except in regard to the date of such
award of prizes which, as we have found, is not essential to the contract
in question.
It appearing that the defendant bank was not in default it is needles
to discuss the other questions raised, all depending upon the
existence of said default.
We find the plaintiff has no cause of action in this case,
The judgment appealed from is reversed and the defendant is
entirely absolved from the complaint, without any express finding as
to costs. So ordered.

G.R. No. L-10801 February 28, 1961

MARIANO RODRIGUEZ and MARINA RODRIGUEZ,
plaintiffs-appellees, vs.
PORFIRIO BELGICA and EMMA BELGICA, defendants-appellants.
Ignacio M. Orendain for plaintiffs-appellees.
Arsenio M. Cabrera and Jose S. Fineza for defendants-appellants.
PAREDES, J.:
This was originally a partition case, instituted in the Court of First
Instance of Rizal, Quezon City Branch. After a series of pleadings filed
by the parties, and on one of the hearings held, the defendants made a
verbal offer to compromise. Pursuant to the said offer, the plaintiffs, on
August 27, 1955, filed a "Motion re Offer to Compromise." What
transpired afterwards is best depicted in the following judgment of the
lower court: .
"The above-entitled case was scheduled in the calendar of this
Court today to consider the "Motion re Offer of Compromise" as a
result of the pre-trial held by the parties and their respective
Attorneys in this case.
The parties have discussed and considered the terms and conditions
set forth in said Offer of Compromise submitted by the attorney for
the plaintiffs and as a result thereof they have arrived at an
amicable settlement, the terms of which were dictated in open court
by the attorneys of both parties in the presence of their clients, with
the exception of plaintiffs Mariano Rodriguez and his wife Marina
Rodriguez who were represented by their son, Atty. Jose Rodriguez.
The terms and conditions of said Compromise Agreement are as
follows: .
Atty. Fineza:
If your Honor please, as regards the Motion Re Offer of Compromise
presented by the plaintiffs dated August 26, 1955, we wish to
inform this Honorable Court that with regards to paragraph 1-A
wherein the length of time given to the defendants to pay the
plaintiffs of P35,000.00 is thirty (30) days, we request that said
period be seventy (70) days counted from today, August 30, 1955.
With regard to Paragraphs 1-B and 1-C, we are agreeable to the
terms and conditions therein stated: Court: .
Any objection to the said counter proposal of the defendants? .

Atty. Orendain: .
We have no objection, Your Honor.

Court: - (To defendant Mr. Porfirio Belgica).

Mr. Porfirio Belgica, have you heard what Atty. Fineza, your lawyer,
have proposed to the Court and are you agreeable to the same? .
Defendant Porfirio Belgica: .
Yes, Your Honor.
Atty. Fineza: .
Inasmuch as defendant Porfirio Belgica will have to negotiate a
portion of the part pertaining to him to raise the amount of
P35,000.00 with which he will pay the plaintiffs, we request that the
plaintiffs make new selection of the portion they desire as per plan
Exhibit E.
Atty. Orendain:.
According to my clients, Your Honor, I was instructed to choose the
portion which is nearest to Quezon City, in other words, the portion
in the bigger lot which is the Southern portion as appears in Exhibit
E and which is encircled in red pencil, subject to relocation or
readjustment after a survey is made.
That the plaintiffs will sign the necessary transfer of the 36% in
favor of the defendants upon payment of the P35,000.00.
That the plaintiffs agree to grant authority to defendant Porfirio
Belgica to negotiate the sale or mortgage of the 36% which is
proposed to be conveyed to him, for the purpose of raising the
P35,000.00 to be paid to the plaintiffs.
That the Motion re Offer of Compromise is hereby made a part
and parcel of the Compromise Agreement, as modified.
Parties agree that in the event the defendants fail to pay to the
plaintiffs said amount of P35,000.00 within the period above fixed or
stipulated, the plaintiffs will automatically be the owners of the 36%
of the two parcels of land, and that the 14% pertaining to the
defendants will be taken from the portion towards Caloocan, or
more particularly in the portion encircled in blue pencil, subject to
the survey and relocation of a surveyor. Court: .
Make of record that this Compromise Agreement was made in open
court in the presence of Atty. Jose Rodriguez, who is the son of the
plaintiff Mariano Rodriguez, their attorney Mr. Ignacio M. Orendain,
the defendant Mr. Porfirio Belgica and his counsel Atty. Jose S.

Fineza.

Parties respectfully pray this Honorable Court to render

judgment in accordance therewith without costs.
The transcript of the notes taken by the Stenographer of the
proceedings taken by the parties before they arrived at an amicable
settlement was signed by the parties and their respective attorneys
and submitted to this Court for corresponding decision.

IN VIEW OF THE FOREGOING, judgment is hereby rendered

approving en toto the foregoing Compromise Agreement and the
parties are hereby ordered to abide by and comply with the terms
and conditions contained in said Compromise Agreement, without
pronouncement as to costs.
On September 3, 1955, the defendants filed a Motion for Withdrawal of
Exhibits, particularly the Certificates of Titles covering the lands, subject
matter of the present controversy. Among the reasons given in the
motion was "the defendants have already taken steps to effect that
partition of the property for the purpose of delimiting the respectively
portion which would appertain to each, which delimitation has to be
effected in order that defendants may have the opportunity of
negotiating their half or any portion thereof to raise the P35,000.00
which he undertook to pay to plaintiffs. The above motion bore the
conformity of counsel for the plaintiffs.
On November 19, 1955, after the lapse of the seventy (70) day period
stipulated in the compromise agreement, and upon the failure of the
defendants to pay, the plaintiffs presented a motion praying that the
defendants be ordered to deliver to the plaintiffs the Certificates of the
Titles so that 14% of the property pertaining to the defendant could be
segregated. An opposition was registered by the defendants, contending
that the inability to meet the obligation to pay the P35,000.00 was due to
the deliberate refusal of the plaintiffs to grant the authority to defendant
Porfirio Belgica to negotiate the sale or mortgage of the 36%; and that since
the decision had created reciprocal obligations, the refusal or failure on the
part of one to comply did not make the other in default. In the opposition,
the defendants prayed that the plaintiffs be ordered to grant defendant
Porfirio Belgica the authority to negotiate the sale or mortgage of the 36%.
the lower court, On November 26, 1955, ordered the defendants to
surrender to the Court the TCT's they withdrew, not latter than December 1,
1955. On this date the defendants filed a "Motion to Compel Plaintiffs to
Comply with the Conditions of the Judgment", reiterating in substance, the
reason they invoked in their previous oppositions. On December 15, 1955,
the trial court acting on the motion of the defendants, handed down the
following order, to wit:
"defendant Belgica's contention is that the plaintiffs Mariano

Rodriguez has refused to grant the authority adverted to. Said

defendant, however, has not done anything, nor has filed any
petition with the Court regarding the alleged refusal of the plaintiff
Rodriguez to grant such authority before the expiration of the 70-day
period fixed by the parties within which to pay the said amount of
P35,000.00. The petition to compel

the plaintiffs to comply with the conditions of the judgment,

namely to command said plaintiffs to grant the authority above
referred to was only filed on December 1, 1955, or after the
expiration of 90 days. In the opinion of the Court, the decision
rendered in this case has already become final and executory
under the terms and conditions stipulated by the parties and upon
which said decision was based.
IN VIEW OF THE FOREGOING, the said motion to compel the
plaintiffs to comply with the condition embodied in the judgment
is hereby DENIED.".
The above ordered is now the subject to the present appeal, appellants
contending in their lone assignment of error that the lower court erred "in
denying the motion of December 1, 1955 (to compel the plaintiffs to
grant the authority), on the ground that because of the failure of
defendants-appelants to pay the plaintiffs-appelees the amount
P35,000.00 within the period of seventy days, the judgment of August
30,1955, has already become due and executory.".
Whether the denial of the motion of compel the plaintiffs to grant the
authority is proper and legal, would seem to be the dominant issue..
On the plaintiffs-appellees was impose the obligation of granting to
defendants-appellants the requisite authority to negotiate either the sale or
mortgage of the 36% interest in the property. This is understandable,
because on the face of the two certificates of the title covering the
properties, defendants owned only 14%, while plaintiffs owned 86%.
Without such authority executed by plaintiffs in favor of the defendants, it
was difficult, not to say impossible for the latter to affect a negotiation. This
the plaintiffs the fully knew, because in the compromise, they
acknowledged that the amount of P35,000.00 due to them would be paid
within 70 days from the August 30, 1953, with money to be delivered from
the sale of mortgage of the property. It was, therefore, incumbent upon the
plaintiffs "to grant authority" to defendants to negotiate the sale or
mortgage of the 36% of the property. Considering that the reciprocal
obligation has been established by the compromise agreement, the
sequence in which the reciprocal obligations of the parties are to be
performed, is quite clear. The giving of the authority to sell or mortgage
precedes the obligation of the defendants to pay P35,000.00(Martinez vs.
Cavives, 25 Phil. 581). Until this authority is granted by the plaintiff, the 70
day period for payment will not commence to run. The plaintiffs insinuated
that defendant did not ask for the authority. There was, however the
statement or allegation by the defendants to the effects that they made
verbal request for such authority but plaintiffs refused to give, a statement
or allegation discredited by the lower court. But even without a request,
from the very nature of the obligation assumed by plaintiffs, demand by

defendants that it be performed, was not necessary (Article 1169, par. 2,

Civil Code).
It is true that defendants' petition to compel the plaintiffs to grant the
authority repeatedly mentioned, was only filed on December 1, 1955, after
the expiration of the 70-day period. It should, however, be observed that
the actuations or acts of the defendants have always been

lulled by a sense of an honest but insecure misunderstanding, as to the

scope and extent of the terms and conditions of the compromise. To show
that defendants had not abandoned their obligation to pay the sum of
P35,000.00, on September 3, 1955, within the 70-day period which
expired on November 8, 1955, they filed a motion to withdraw
documents and certificates of title to delimit the respective portions, in
order that they (defendants) might have an opportunity of negotiating
one-half or any portion to raise P35,000.00 to which motion the plaintiffs
agreed. While waiting for the grant of authority to descend, like manna
from Heaven, the defendants were surprised to receive, on November 19,
1955, plaintiffs' motion to have the titles returned so that the defendants'
14% could be segregated, as they (plaintiffs) wanted to remain with the
86% of the properties.
The lower court and with it, the plaintiffs-appellees had indulged in fine
technicalities which in this particular case, would work injustice to the
defendants-appellants, more than anything else. The compromise
agreement being onerous the doubt should be settled in favor of the
greatest reciprocity of interests. Without the authority in question the
obligation of the defendants to pay the plaintiffs the sum of P35,000.00
cannot be considered as having matured, and the lapse of the 70-day
period fixed in the decision can not be adjudged as having resulted in the
forfeiture of their right to repurchase their 36% interest in the properties
(Price, Inc. v. Rilloraza, et al.. No. L-8253, May 25, 1955).
The claim of the appellees that the appellants failed to comply with
their initial obligation to delimit the property, as stated by them in their
motion to withdraw, is not supported by the evidence. The delimitation
or segregation of the property to be sold or mortgaged which appellants
should have done first so that the authority could have been granted,
had long been accomplished. This is clear from the words of appellees'
counsel when he said, "According to my clients, Your Honor, I was
instructed to choose the portion which is nearest to Quezon City . . .".
In view hereof, the resolution of the lower court dated December 15,
1955, is reversed, and another entered, ordering the plaintiffs-appellees
to execute in favor of the defendants-appellants the proper authority to
sell or mortgage 36% of the properties in litigation within 30 days from
notice of this decision and further directing the defendants-appellants to
pay unto the plaintiffs-appellees the sum of P35,000.00 within 30 days
from the date such authority is granted. Without special pronouncement
as to costs.

G.R. No. L-4874

March 2, 1909

MARIANO VELOSO, ET AL.,

plaintiffs-appellees, vs.
ANICETA FONTANOSA, ET AL., defendants-appellants.
Martin M. Levering for appellants.
Rodriguez and Del Rosario for appellees.
ARELLANO, C.J.:
This case was brought by means of a bill of exceptions to this court for
a revision of the facts and evidence. The appeal being heard it appears:
That a complaint was filed with the Court of First Instance of Cebu as
follows: (1) That Mariano Veloso, Damiana Veloso, and Melchor Veloso are
the sole lawful heirs of Gavino Veloso and Buenaventura Veloso, their father
and brother respectively; (2) that the defendants are Aniceta Fontanosa, as
widow of Roberto Ancajas, and Florentina, Leona, Maria, Juan, Romualda,
Vicenta, and Felix, all of the surname of Ancajas, the lawful children of the
deceased Roberto, and Estefania Fontanosa, mother and legal guardian of
the minor Jose Ancajas; (3) that at he death of Gavino Veloso, Roberto
Ancajas owed him the sum of 5,065 pesos which he had borrowed prior to
the year 1881; (4) that in the apportionment of the estate, this debt of
5,065 pesos went to Buenaventura Veloso as his portion; (5) that in the year
1882, Roberto Ancajas, after having acknowledged the transfer of his
indebtedness by inheritance to Buenaventura Veloso, continued to receive
sums of money from the latter on the same conditions, that is, as loans, and
bound himself to make annual payments in sugar;
(6) that on the 11th of October, 1883, the debt of Roberto Ancajas
amounted to 10,449.18 pesos, as shown by a liquidation of accounts made
between them and ratified by Roberto Ancajas in the said month on
October, 1883; (7) that on August 4, 1884, this balance amounted to
12,199.65 pesos; (8) that on May 31, 1887, it rose to 14,439.40 pesos,
which sum, however, was reduced to 12,365.20 pesos by the payment of
2,074.20 pesos on account;
(9) that up to the year 1893 the defendants made payments amounting
to 642.27 pesos which reduced the amount owing to 11,722.43 pesos;
(10) that on the death of Buenaventura Veloso, the defendants, as his
sole and lawful heirs, inherited, and that same year divided between
them all his property with the exception of the above-mentioned credit,
which is at present held pro indiviso between them, and they, as the
lawful heirs of Buenaventura Veloso, the creditor, have repeatedly called
upon the defendants to pay the said credit, but the latter have constantly
refused to do so, thus having rise to the filing of the complaint; (11) that
on account of their delinquency in payment they have caused the

plaintiffs damages to the value of 14,068.48 pesos; they therefore asked

the court below to sentence the defendants to pay both sums, with legal
interest thereon from the time they ceased to make payments, and the
costs.

That the attorneys who answered the complaint, subscribed their answer:
"Attorneys for Aniceta Fontanosa, Maria, Juana, Romualda, Vicenta, and
Felix, all surnamed Ancajas, and for Estefania Fontanosa," having
previously signed the receipt for the complaint in this manner: "Attorneys
for the defendants, with the exception of Florentina and Leona Ancajas."

That in the answer, in addition to the general of all the allegations in the
complaint, there was put forward as special defense: (1) That this
supposed right of action had prescribed before the action was instituted;
(2) that Romualda Ancajas and some of the other general heirs of
Roberto Ancajas were not of age, at the time of the death of Roberto
Ancajas, nor at the time of the supposed acceptance of the inheritance,
and that there was no judicial intervention in said acceptance.
The trial judge in his findings of fact considers that, among other
allegations of the complaint, the following have been proven:
That Aniceta Ancajas is the wife of the said deceased and that with
the exception of the minor Jose Ancajas, who is represented in
these proceedings by his legal guardian, Estefania Fontanosa, and
is the grandchild of the said deceased Roberto Ancajas, most of the
defendants are his children; that as heirs the said defendants took
possession of all the property of the said deceased after his death,
and at the present time are in possession as the undivided owners
thereof. (B. of E., 12.)
And as conclusions of law he says:
That the defendants being the heirs of Roberto Ancajas, deceased, and
having taken possession of the latter's property from the time of his
death to the present time, as heirs of the said deceased, and
exercising over the same all those acts which show ownership, which,
if they were not the heirs, they could not exercised, they have purely
and simply accepted the inheritance from their principal, and
consequently, under article 1003 of the Civil Code, they are liable for
the encumbrances with which the heritage is charged, not only with
the property of their principal but also with their own; that the
defendants, as heirs of the late Roberto Ancajas, having acknowledged
and admitted the latter's debt to Buenaventura Veloso, the principal of
the plaintiffs, which acknowledgment was made expressly and by
means of the payments made by them to the creditor, have contracted
the express obligation to pay it under the same terms as their
aforesaid principal; that the defendants are liable for the payment of
the sum of P11,722.43 to the plaintiffs, in their capacity of heirs, to
Buenaventura Veloso, for the debt contracted in his favor by their late
principal Roberto Ancajas, and which debt was acknowledged and
admitted by them; that as the defendants have acknowledged and

admitted the said debt, toward the settlement of which they made the
last payment in the year 1893, the right of action for its recovery, by
article 1964 of the Civil Code, and in accordance with article 943 of the
Code of Commerce, prescribes after the lapse of fifteen years, and
inasmuch as the period fifteen years from said date until the time the

complaint herein was presented, has not expired, the conclusion is

that the said action is enforceable and should be made effective;
that, it being proven that Buenaventura Veloso, the plaintiffs'
principal, had brought suit against the defendants in the year 1896
for the payment of said debt, it must be concluded that the
prescription of the action for recovery has been legally interrupted,
in conformity with the provisions of article 1973 of the Civil Code;
that the debt of P11,722.43 is a credit which originated from a
mercantile contract, and as the interest due the plaintiffs can not be
determined, they are entitled to recover the legal interest on said
amount from the defendants at the rate of 6 per cent per annum
from the month of September, 1893, until the full payment thereof.
The defendants appealed from this judgment of the lower court, alleging the
following errors:
1. The admission of the books marked as Exhibits A, B, and C as evidence,
and the overruling of the motion for their exclusion.
2.

The admission of Exhibits D, E, F, and G as evidence.

3. The finding that the defendants are the heirs of the late Roberto
Ancajas, and that they purely and simply accepted the inheritance
from the said deceased.
4.

The overruling of the motion for a new trial.

With regard to the first and second errors, charged against the admission
of the documentary evidence of the appellees, the rulings of the court
below are in accordance with the law. The books marked as Exhibits A
and B simply serve to show the origin and progress of the debt, and they
may be ignored from the moment there was entered on folio 88 of the
book marked Exhibit C a debit and credit account, of which Exhibit E is
an exact copy, and which shows the account maintained between
Buenaventura Veloso and Roberto Ancajas as accepted by the latter and
signed by him in proof of his conformity with the balance of P10,449.18
appearing therein. This acknowledgment by their principal must be
decisive as to the heirs, and it must be held to be proven that at least
they are indebted in said sum of P10,449.18, since against the admission
and validity of Exhibit E nothing has been alleged by the appellants in
this instance.
As the successive liquidations which the trial court took into
consideration until reaching the one at bar are not specifically
impugned, either in this instance or in the court below, they are not now,
therefore, subject to revision by this court.

As to the prescription of the right of action which is subsidiarily alleged in

order to impugn the obligation which, according to the judgment appealed
from still exists, the appellants say that "the debt had prescribed so far as
the defendants are concerned, with the questionable exception of the
defendant Aniceta Fontanosa, widow of Roberto Ancajas, because it
appears

that said Aniceta Fontanosa was the only person who made any payment,
and it is not possible that an act performed by one of the defendants can
prejudice the legal rights of the others." (Brief, 5.)
The court below considered as proven: (1) The payments made by the
heirs after the death of Roberto Ancajas, the last of which was in 1893;
(2) a judicial complaint filed against these same defendants in 1896.
From these facts the court below makes the following deductions: First,
that the right of action that existed in 1893 to demand the settlement of
the debt which, by article 1964 of the Civil Code should prescribe at the
expiration of fifteen years, had not prescribed in 1906, the time of filing
the present complaint. Second, that in consequence of the filing of the
said complaint in 1896, the running of the statute was interrupted, as
prescribed by article 1973 of the Civil Code.
It has been proven that on the 11th of October, 1883, Roberto Ancajas
acknowledged that a balance of 10,449.18 pesos was standing against him;
that since that time he has received and paid amounts in connection with
said obligation, the last payment being made "shortly before his death in
1888," as stated by the appellants in their brief on page 5, that is, on May
5, 1888, as appears at folio 223 of the book offered in evidence by the
appellees as Exhibit C. It therefore follows that in computing the time for
prescription from said date it would be necessary to take into consideration
the fact that the Civil Code was not yet in force, as it did not become
effective until December 8, 1889, and that, at that time, the period for the
prescription of personal actions, such as the one at issue, by law 5, title 8,
book 11, of
the Novisima Recopilacion, was twenty years, which period should expire
in 1908, so that when the complaint herein was presented in 1906, the
term had not expired; therefore, we have not to consider the legal
interruption of a term which has not yet expired, as in the present case
the question is one of a period of prescription that commenced before
the enforcement of the Civil Code, which period, by the terms of the
article 1939 of the said code, must be governed by the laws then in
force.
The Civil Code would only be applicable, if the whole period required
thereby for prescription had transpired after it was put in force,
notwithstanding the fact that, under the old laws, a longer lapse of time
was necessary (art. 1939, Civil Code). And since the 8th of December,
1889, when the Civil Code went into effect, the fifteen years required by the
provisions thereof for the prescription of the right of personal actions have
certainly elapsed. But in the present case the court below has considered
two forms of interruption of prescription of the right, namely, the exercise
thereof before the courts, and the act of the acknowledgment of the debt
by the debtor. The said court found that payments were made in the years

1891, 1892, and 1893 by the widow of the late Roberto Ancajas, and the
period for the prescription must be counted from the last-mentioned date,
because the action could only have been exercised thereafter. It is evident
that since then the term required by article 1964 of the Civil Code has not
expired, and supposing that such payments had not been made, the court
below considered as proven that in 1896, an action was brought for the
recovery of this debt, and

against this consideration no error of law or fact has been assigned. No

judgment was rendered by reason of the revolution that took place in
1898, and the record of the case was lost through the same cause;
facts which were agreed to between the contending parties at this trial.
And in conformity with the decision of the supreme court of Spain of
July 5, 1904, which interprets the right sense of the aforesaid article
1973, the action then instituted and that now brought are one and the
same.
Against the finding of the court below as to the first method of
interruption of the prescription, in so far as it considered that the
payments made after the death of Roberto Ancajas by his widow, Aniceta
Fontanosa, were an acknowledgment of the debt, the appellants allege
"that an act performed by one of the defendants can not prejudice the
legal rights of the others." But, in accordance with article 1974,
interruption of prescription of rights of action in all kind of obligations of
the heirs of the debtor, benefits or prejudices them all alike, inasmuch as
each and all of them represent the principal, and they jointly succeed him
in his rights and obligations.
For all the above reasons the judgment entered by the trial court "That
payment shall be made to plaintiffs of the sum of P11,722.43 with costs,"
is proper, for the reason that it is in accordance with the law and the
merits of the case.
But that the above-stated amount shall be in the Philippine pesos
"(P11,722.43)," as determined in the judgment, is not in accordance with
the law or the merits. Even the latest sum loaned on the 31st of May,
1887, according to the last liquidation considered in point 8 of the
complaint, was that current at the time, and certainly the unit was not
then the Philippine peso.
Neither is the sentence contained in the judgment appealed from, that
"Legal interest on the said sum at the rate of 6 per cent per annum shall
be payable from the month of September, 1893," in accordance with the
law. It is proper to sentence the defendants to pay the legal interest of 6
per cent per annum by reason of the default incurred by the heirs of
Ancajas (art. 1108, Civil Code), but such default can not date back of
September, 1893, that is, from the time of the last payment made by
them or by Aniceta Fontanosa. Article 1100 of the Civil Code reads:
Persons obliged . . . are in default from the moment when the
creditor demands the fulfillment of their obligation, judicially or
extrajudicially,
And the judicial demand for the fulfillment of said obligation was only
made in 1896; hence, as the date of the complaint interposed in that

year has not been fixed, the next amount claimed therein should only
commence to bear legal interest from the latter part of 1896, or rather
from the beginning of 1897. In a decision of December 3, 1902, the
supreme court of Spain held:

That it is a principle of law, acknowledged and sanctioned by article

1100, in relation to article 1108 of the Civil Code, that interest upon
default only becomes due from the time of the judicial or
extrajudicial notice by the creditor to the debtor, unless otherwise
expressly provided by law, or by virtue of a contract, or on account
of special circumstances depending upon the nature of the
obligation.
As to the third and fourth errors, it is true that, in view of the evidence
submitted with the bill of exceptions, and because all the facts of the
complaint have been generally denied by the defendants, the following
facts, which are stated in the judgment as resulting from the record,
have not been proven:
That the other defendants, apart from the widow of Ancajas, are the
children of the latter, and that Jose Ancajas is his grandchild, all of
them being his only heirs; that Estefania Fontanosa is the legal
guardian of the minor Jose Ancajas; that as such heirs they took
possession of all the property of the deceased and hold the same pro
indiviso.

And as a natural consequence, there is no ground for the most

important conclusion of law in the decision:
That, inasmuch as they took possession of the property of the late
Roberto Ancajas, and performed all those acts of ownership thereof
which, without being heirs they could not have performed, they
purely and simply accepted the inheritance from their principal, and
have ever since become liable for his debt, not only with the
property they received from him, but also with their own property.
Florentina Ancajas is the only person who appeared as the daughter of
Roberto Ancajas and testified as a witness for the plaintiffs, but it does not
appear that she, or another of the name of Leona (often called Len), have
ever been summoned and cited to appear or that they failed to answer the
complaint. It is certain that they have not answered it. From the testimony
of this witness it appears that it was Aniceta Fontanosa who, after the death
of her husband, Roberto Ancajas, made the three last payments on account
of the latter's debt.

Thus, it is not proper that a sentence, rightly entered against the heirs
or successors of Roberto Ancajas, should particularly fall upon the
persons named in the complaint, and to whom the judgment refers, for
no other reason than that they were designated as such heirs in the
complaint.
For the reasons above set forth we hold that the net amount due to the

plaintiffs by such persons as may turn out to be the lawful heirs of Roberto
Ancajas, in addition to those who, apart from the minor Jose Ancajas,
appeared in this suit, has been rightly determined, that is, the sum of
11,722.43 pesos, with legal interest thereon at the rate of 6 per cent, from
the time the suit was filed in 1896, with the costs of the first instance
against the defendants who answered the complaint. The judgment
appealed from is hereby set aside in order that a new

trial may he held for the purpose of properly determining who are the heirs
against whom should be directed the order of payment, and what were the
acts and form of acceptance of the inheritance, and of the possession and
method of possession of the property remaining at the death of Roberto
Ancajas; after which let a new judgment be rendered which shall include a
finding of the equivalent of the amount owing in Philippine currency at the
time of such decision. No special ruling is made as to the costs in this
instance. So ordered.

G.R. No. L-45710 October 3, 1985

CENTRAL BANK OF THE PHILIPPINES and ACTING DIRECTOR
ANTONIO T. CASTRO, JR. OF THE DEPARTMENT OF COMMERCIAL
AND SAVINGS BANK, in his capacity as statutory receiver of
Island Savings Bank, petitioners,
vs.
THE HONORABLE COURT OF APPEALS and SULPICIO M.
TOLENTINO, respondents.
I.B. Regalado, Jr., Fabian S. Lombos and Marino E. Eslao for petitioners.
Antonio R. Tupaz for private respondent.
MAKASIAR, CJ.:
This is a petition for review on certiorari to set aside as null and void the
decision of the Court of Appeals, in C.A.-G.R. No. 52253-R dated
February 11, 1977, modifying the decision dated February 15, 1972 of
the Court of First Instance of Agusan, which dismissed the petition of
respondent Sulpicio M. Tolentino for injunction, specific performance or
rescission, and damages with preliminary injunction.
On April 28, 1965, Island Savings Bank, upon favorable recommendation of
its legal department, approved the loan application for P80,000.00 of
Sulpicio M. Tolentino, who, as a security for the loan, executed on the same
day a real estate mortgage over his 100-hectare land located in Cubo, Las
Nieves, Agusan, and covered by TCT No. T-305, and which mortgage was
annotated on the said title the next day. The approved loan application

called for a lump sum P80,000.00 loan, repayable in semi-annual

installments for a period of 3 years, with 12% annual interest. It was
required that Sulpicio M. Tolentino shall use the loan proceeds solely as an
additional capital to develop his other property into a subdivision.

On May 22, 1965, a mere P17,000.00 partial release of the P80,000.00

loan was made by the Bank; and Sulpicio M. Tolentino and his wife Edita
Tolentino signed a promissory note for P17,000.00 at 12% annual
interest, payable within 3 years from the date of execution of the
contract at semi-annual installments of P3,459.00 (p. 64, rec.). An
advance interest for the P80,000.00 loan covering a 6-month period
amounting to P4,800.00 was deducted from the partial release of
P17,000.00. But this pre-deducted interest was refunded to Sulpicio M.
Tolentino on July 23, 1965, after being informed by the Bank that there
was no fund yet available for the release of the P63,000.00 balance (p.
47, rec.). The Bank, thru its vice-president and treasurer, promised
repeatedly the release of the P63,000.00 balance (p. 113, rec.).
On August 13, 1965, the Monetary Board of the Central Bank, after
finding Island Savings Bank was suffering liquidity problems, issued
Resolution No. 1049, which provides:
In view of the chronic reserve deficiencies of the Island
Savings Bank against its deposit liabilities, the Board, by
unanimous vote, decided as follows:
1) To prohibit the bank from making new loans and
investments [except investments in government securities]
excluding extensions or renewals of already approved loans,
provided that such extensions or renewals shall be subject to
review by the Superintendent of Banks, who may impose
such limitations as may be necessary to insure correction of
the bank's deficiency as soon as possible;
xxx xxx xxx
(p. 46, rec.).
On June 14, 1968, the Monetary Board, after finding thatIsland Savings
Bank failed to put up the required capital to restore its solvency, issued
Resolution No. 967 which prohibited Island Savings Bank from doing
business in the Philippines and instructed the Acting Superintendent of
Banks to take charge of the assets of Island Savings Bank (pp. 48-49, rec).

On August 1, 1968, Island Savings Bank, in view of non-payment of the

P17,000.00 covered by the promissory note, filed an application for the
extra-judicial foreclosure of the real estate mortgage covering the 100hectare land of Sulpicio M. Tolentino; and the sheriff scheduled the
auction for January 22, 1969.
On January 20, 1969, Sulpicio M. Tolentino filed a petition with the Court of
First Instance of Agusan for injunction, specific performance or rescission

and damages with preliminary injunction, alleging that since Island

Savings Bank failed to deliver the P63,000.00 balance of the P80,000.00
loan, he is entitled to specific performance by ordering Island Savings
Bank to

deliver the P63,000.00 with interest of 12% per annum from April 28,
1965, and if said balance cannot be delivered, to rescind the real estate
mortgage (pp. 32-43, rec.).
On January 21, 1969, the trial court, upon the filing of a P5,000.00
surety bond, issued a temporary restraining order enjoining the
Island Savings Bank from continuing with the foreclosure of the
mortgage (pp. 86-87, rec.).
On January 29, 1969, the trial court admitted the answer in intervention
praying for the dismissal of the petition of Sulpicio M. Tolentino and the
setting aside of the restraining order, filed by the Central Bank and by the
Acting Superintendent of Banks (pp. 65-76, rec.).
On February 15, 1972, the trial court, after trial on the merits rendered its
decision, finding unmeritorious the petition of Sulpicio M. Tolentino,
ordering him to pay Island Savings Bank the amount of PI 7 000.00 plus
legal interest and legal charges due thereon, and lifting the restraining
order so that the sheriff may proceed with the foreclosure (pp. 135-136.
rec.

On February 11, 1977, the Court of Appeals, on appeal by Sulpicio M.

Tolentino, modified the Court of First Instance decision by affirming the
dismissal of Sulpicio M. Tolentino's petition for specific performance, but
it ruled that Island Savings Bank can neither foreclose the real estate
mortgage nor collect the P17,000.00 loan pp. 30-:31. rec.).
Hence, this instant petition by the central Bank.
The issues are:
1.

Can the action of Sulpicio

performance prosper?

M.

Tolentino

for

specific

2. Is Sulpicio M. Tolentino liable to pay the P17,000.00 debt

covered by the promissory note?
3. If Sulpicio M. Tolentino's liability to pay the P17,000.00
subsists, can his real estate mortgage be foreclosed to
satisfy said amount?

When Island Savings Bank and Sulpicio M. Tolentino entered into an

P80,000.00 loan agreement on April 28, 1965, they undertook reciprocal
obligations. In reciprocal obligations, the obligation or promise of each party is
the consideration for that of the other (Penaco vs. Ruaya, 110 SCRA 46 [1981];
Vda. de Quirino vs, Pelarca 29 SCRA 1 [1969]); 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 of the Civil Code). The promise of Sulpicio M. Tolentino to pay
was the consideration for the obligation of Island Savings Bank to furnish the
P80,000.00 loan. When Sulpicio M. Tolentino executed a real estate mortgage
on April 28, 1965, he signified his willingness to pay the P80,000.00 loan. From
such date, the obligation of Island Savings Bank to furnish the P80,000.00 loan
accrued.

Thus, the Bank's delay in furnishing the entire loan started on April 28,
1965, and lasted for a period of 3 years or when the Monetary Board of
the Central Bank issued Resolution No. 967 on June 14, 1968, which
prohibited Island Savings Bank from doing further business. Such
prohibition made it legally impossible for Island Savings Bank to furnish
the P63,000.00 balance of the P80,000.00 loan. The power of the
Monetary Board to take over insolvent banks for the protection of the
public is recognized by Section 29 of R.A. No. 265, which took effect on
June 15, 1948, the validity of which is not in question.
The Board Resolution No. 1049 issued on August 13,1965 cannot interrupt
the default of Island Savings Bank in complying with its obligation of
releasing the P63,000.00 balance because said resolution merely prohibited
the Bank from making new loans and investments, and nowhere did it
prohibit island Savings Bank from releasing the balance of loan agreements
previously contracted. Besides, 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 (Gutierrez
Repide vs. Afzelius and Afzelius, 39 Phil. 190 [1918]). And, the mere fact of
insolvency of a debtor is never an excuse for the non-fulfillment of an
obligation but 'instead it is taken as a breach of the contract by him (vol.
17A, 1974 ed., CJS p. 650)
The fact that Sulpicio M. Tolentino demanded and accepted the refund of
the pre-deducted interest amounting to P4,800.00 for the supposed
P80,000.00 loan covering a 6-month period cannot be taken as a waiver of
his right to collect the P63,000.00 balance. The act of Island Savings Bank,
in asking the advance interest for 6 months on the supposed P80,000.00
loan, was improper considering that only P17,000.00 out of the P80,000.00
loan was released. A person cannot be legally charged interest for a nonexisting debt. Thus, the receipt by Sulpicio M. 'Tolentino of the prededucted interest was an exercise of his right to it, which right exist
independently of his right to demand the completion of the P80,000.00
loan. The exercise of one right does not affect, much less neutralize, the
exercise of the other.
The alleged discovery by Island Savings Bank of the over-valuation of the
loan collateral cannot exempt it from complying with its reciprocal obligation
to furnish the entire P80,000.00 loan. 'This Court previously ruled that bank
officials and employees are expected to exercise caution and prudence in
the discharge of their functions (Rural Bank of Caloocan, Inc. vs. C.A., 104
SCRA 151 [1981]). It is the obligation of the bank's officials and employees
that before they approve the loan application of their customers, they must
investigate the existence and evaluation of the properties being offered as a
loan security. The recent rush of events where collaterals for bank loans turn
out to be non-existent or grossly over-valued underscore the importance of

this responsibility. The mere reliance by bank officials and employees on

their customer's representation regarding the loan collateral being offered
as loan security is a patent non-performance of this responsibility. If ever
bank officials and employees totally reIy on the representation of their
customers as to the valuation of the loan collateral, the bank shall bear the
risk in case the collateral turn out to be over-valued. The representation
made by the customer is immaterial to the bank's responsibility to conduct
its own investigation.

Furthermore, the lower court, on objections of' Sulpicio M. Tolentino, had

enjoined petitioners from presenting proof on the alleged over-valuation
because of their failure to raise the same in their pleadings (pp. 198-199,
t.s.n. Sept. 15. 1971). The lower court's action is sanctioned by the Rules
of Court, Section 2, Rule 9, which states that "defenses and objections
not pleaded either in a motion to dismiss or in the answer are deemed
waived." Petitioners, thus, cannot raise the same issue before the
Supreme Court.
Since Island Savings Bank was in default in fulfilling its reciprocal
obligation under their loan agreement, Sulpicio M. Tolentino, under Article
1191 of the Civil Code, may choose between specific performance or
rescission with damages in either case. But since Island Savings Bank is
now prohibited from doing further business by Monetary Board Resolution
No. 967, WE cannot grant specific performance in favor of Sulpicio M,
Tolentino.
Rescission is the only alternative remedy left. WE rule, however, that
rescission is only for the P63,000.00 balance of the P80,000.00 loan,
because the bank is in default only insofar as such amount is concerned, as
there is no doubt that the bank failed to give the P63,000.00. As far as the
partial release of P17,000.00, which Sulpicio M. Tolentino accepted and
executed a promissory note to cover it, the bank was deemed to have
complied with its reciprocal obligation to furnish a P17,000.00 loan. The
promissory note gave rise to Sulpicio M. Tolentino's reciprocal obligation to
pay the P17,000.00 loan when it falls due. His failure to pay the overdue
amortizations under the promissory note made him a party in default, hence
not entitled to rescission (Article 1191 of the Civil Code). If there is a right to
rescind the promissory note, it shall belong to the aggrieved party, that is,
Island Savings Bank. If Tolentino had not signed a promissory note setting
the date for payment of P17,000.00 within 3 years, he would be entitled to
ask for rescission of the entire loan because he cannot possibly be in default
as there was no date for him to perform his reciprocal obligation to pay.

Since both parties were in default in the performance of their respective

reciprocal obligations, that is, Island Savings Bank failed to comply with
its obligation to furnish the entire loan and Sulpicio M. Tolentino failed to
comply with his obligation to pay his P17,000.00 debt within 3 years as
stipulated, they are both liable for damages.
Article 1192 of the Civil Code provides that in case both parties have
committed a breach of their reciprocal obligations, the liability of the first
infractor shall be equitably tempered by the courts. WE rule that the
liability of Island Savings Bank for damages in not furnishing the entire
loan is offset by the liability of Sulpicio M. Tolentino for damages, in the
form of penalties and surcharges, for not paying his overdue P17,000.00
debt. The liability of Sulpicio M. Tolentino for interest on his PI 7,000.00

debt shall not be included in offsetting the liabilities of both parties. Since
Sulpicio M. Tolentino derived some benefit for his use of the P17,000.00,
it is just that he should account for the interest thereon.
WE hold, however, that the real estate mortgage of Sulpicio M.
Tolentino cannot be entirely foreclosed to satisfy his P 17,000.00 debt.

The consideration of the accessory contract of real estate mortgage is the

same as that of the principal contract (Banco de Oro vs. Bayuga, 93 SCRA
443 [1979]). For the debtor, the consideration of his obligation to pay is
the existence of a debt. Thus, in the accessory contract of real estate
mortgage, the consideration of the debtor in furnishing the mortgage is
the existence of a valid, voidable, or unenforceable debt (Art. 2086, in
relation to Art, 2052, of the Civil Code).
The fact that when Sulpicio M. 'Tolentino executed his real estate
mortgage, no consideration was then in existence, as there was no debt
yet because Island Savings Bank 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 (Bonnevie vs. C.A., 125 SCRA
122 [1983]). lt may either be a prior or subsequent matter. But when the
consideration is subsequent to the mortgage, the mortgage can take
effect only when the debt secured by it is created as a binding contract to
pay (Parks vs, Sherman, Vol. 176 N.W. p. 583, cited in the 8th ed., Jones
on Mortgage, Vol. 2, pp. 5-6). And, when there is partial failure of
consideration, the mortgage becomes unenforceable to the extent of
such failure (Dow. et al. vs. Poore, Vol. 172 N.E. p. 82, cited in Vol. 59,
1974 ed. CJS, p. 138). 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
(Metropolitan Life Ins. Co. vs. Peterson, Vol. 19, F(2d) p. 88, cited in 5th
ed., Wiltsie on Mortgage, Vol. 1, P. 180).
Since Island Savings Bank failed to furnish the P63,000.00 balance of the
P8O,000.00 loan, the real estate mortgage of Sulpicio M. Tolentino
became unenforceable to such extent. P63,000.00 is 78.75% of
P80,000.00, hence the real estate mortgage covering 100 hectares is
unenforceable to the extent of 78.75 hectares. The mortgage covering
the remainder of 21.25 hectares subsists as a security for the P17,000.00
debt. 21.25 hectares is more than sufficient to secure a P17,000.00 debt.
The rule of indivisibility of a real estate mortgage provided for by Article
2089 of the Civil Code is inapplicable to the facts of this case.
Article 2089 provides:
A pledge or mortgage is indivisible even though the debt may
be divided among the successors in interest of the debtor or
creditor.
Therefore, the debtor's heirs who has paid a part of the debt

can not ask for the proportionate extinguishment of the

pledge or mortgage as long as the debt is not completely
satisfied.

Neither can the creditor's heir who have received his share of
the debt return the pledge or cancel the mortgage, to the
prejudice of other heirs who have not been paid.
The rule of indivisibility of the mortgage as outlined by Article 2089
above-quoted presupposes several heirs of the debtor or creditor which
does not obtain in this case. Hence, the rule of indivisibility of a
mortgage cannot apply
WHEREFORE, THE DECISION OF THE COURT OF APPEALS DATED
FEBRUARY 11, 1977 IS HEREBY MODIFIED, AND
SULPICIO M. TOLENTINO IS HEREBY ORDERED TO PAY IN FAVOR OF
HEREIN PETITIONERS THE SUM OF P17.000.00, PLUS P41,210.00
REPRESENTING 12% INTEREST PER ANNUM COVERING THE PERIOD
FROM MAY 22, 1965 TO AUGUST 22, 1985, AND 12% INTEREST ON THE
TOTAL AMOUNT COUNTED FROM AUGUST 22, 1985 UNTIL PAID;
1.

2. IN CASE SULPICIO M. TOLENTINO FAILS TO PAY, HIS REAL ESTATE

MORTGAGE COVERING 21.25 HECTARES SHALL BE FORECLOSED TO

SATISFY HIS TOTAL INDEBTEDNESS; AND
3. THE REAL ESTATE MORTGAGE COVERING 78.75 HECTARES IS HEREBY
DECLARED UNEN FORCEABLE AND IS HEREBY ORDERED RELEASED IN
FAVOR OF SULPICIO M. TOLENTINO.

NO COSTS. SO ORDERED.