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Contract stipulates that if Domel fails to deliver, 2000 pesos per day of delay shall be the penalty. Domel defaults. Courts fault Domel. Domel argues that it defaulted because NNMRC failed to perform the promised inspection of the goods to be delivered, a measure intended to protect Domel from the costs associated with shipping forth and back merchandise not acceptable to NNMRC. Court gives the argument no credence. Lower court awards 900K in damages. CA lowers amount, since the damages awarded were merely projected profits which had no basis other than pure conjecture. CA further reduces stipulated penalty to 1000 per day of delay instead of 2000, exercising the discretion granted to it by Article 1229. Was it right? Held: Yes, CA was right in lowering the damages. Actual and compensatory damages must be substantiated. In the case at bar, NNMRC failed to do so, merely providing projected figures. The only amounts it managed to substantiate were those involved in the purchase of the Letters of Credit. CA was also correct in reducing the penalty as the penalty of 2000 per day of delay is in fact iniquitous and excessive. Pryce Corp v Pagcor Facts: Pagcor leases some hotel space from PPC in Cagayan for the purpose of establishing a Casino. The venture is fraught with problems from the start as near incessant protests and rallies by locals plagues the Casino. Pagcor is subsequently advised to stop operations by no less than the president of the RP. Pagcor stops paying the rent after stopping operations despite the fact that the lease contract had no yet expired. PPC sends several letters demanding the unpaid balance to no avail. Finally, PPC decides to exercise its contractual right to terminate the lease contract and to claim the forfeiture of the future rentals deposited with it by Pagcor. This right to forfeiture was stipulated in the contract as a penalty. May it be exercised? Held: Although the contract falls under one of those exceptions where both the actual damages and the penalty may be claimed by virtue of the provision which states that “aside from the payment of the rentals corresponding to the remaining term of the lease, the lessee shall also be liable 'for any and all damages, actual or consequential, resulting from such default and termination of this contract. “ the right to claim the forfeiture of the future rentals may not be exercised by PPC, as such penalty would be unconscionable and iniquitous. The question of whether a penalty is reasonable or iniquitous is addressed to the sound discretion of the courts. To be considered in fixing the amount of penalty are factors such as -- but not limited to -- the type, extent and purpose of the penalty; the nature of the obligation; the mode of the breach and its consequences; the supervening realities; the standing and relationship of the parties; and the like. In this case, PAGCOR's breach was occasioned by events that, although not fortuitous in law, were in fact real and pressing. From the CA's factual findings, which are not contested by either party, we find that PAGCOR conducted a series of negotiations and consultations before entering into the Contract. It did so not only with the PPC, but also with local government officials, who assured it that the problems were surmountable. Likewise, PAGCOR took pains to contest the ordinances before the courts, which consequently declared them unconstitutional. On top of these developments, the gaming corporation was advised by the Office of the President to stop the games in Cagayan de Oro City, prompting the former to cease operations prior to September 1993.Also worth mentioning is the CA's finding that PAGCOR's casino operations had to be suspended for days on end since their start in December 1992; and indefinitely from July 15, 1993, upon the advice of the Office of President, until the formal cessation of operations in September 1993. Needless to say, these interruptions and stoppages meant that PAGCOR suffered a tremendous loss of expected revenues, not to mention the fact that it had fully operated under the Contract only for a limited time. While petitioner's right to a stipulated penalty is affirmed, we consider the claim for future rentals to the tune ofP7,037,835.40 to be highly iniquitous. The amount should be equitably reduced. Article 1229 Suatengco v. Reyes. Facts: Congressman Carmencita Reyes lends the Suatengco couple roughly 1.3 million. In the loan contract, it is stipulated that in the event of default, Suatengco must pay the balance plus 12% interest per annum plus 5% atty fee's for the total award. Atty. Ed Reyes (Son), appears as the atty in fact of Rep. Reyes, and files a case for collecting the sum of money plus the 12% interest, plus 20% atty's fees. The RTC and C A award the same. Suatengco counters by stating that the stipulated Atty. Fee is only 5%. Are they right? Held: Suatengco is right. The stipulated atty's fee, which is in the nature of a penalty made in favor of the the litigant and not the litigant's counsel, must supercede any oral claims for a different amount made by Atty. Reyes. Written documentary evidence have greater probative value than oral claims. (Article 1226 – atty's fees in contracts is a penalty, not an actual sum of money awarded to counsel) Florentino v. Supervalue Facts: Petitioner rents a stall inside SM mall from Supervalue Inc. Petitioner commits several breaches of the contract it entered into with SM, among them violating the requirement to be open on certain days of the year and also for introducing a new product (mini-embutido) without the consent of Supervalue. Supervalue decides not to renew the lease contract after its expiration. Supervalue also retains the deposit of Florentino in the amount of 192,000. Florentino files a case to recover the deposit, as well as the value of the improvements made upon the property. RTC awards, CA reverses. In the lease contract, 3 months deposit of rentals was provided as a penalty to ensure full compliance with each and every term, provision and covenant, which would be subject to forfeiture in case of breach and which was not advance rental. Was the award of the CA proper? Held: Although the penal clause is valid and unequivocal, still the amount is unconscionable. The SC exercises its discretion under article 1229 and reduces the penalty to 50% of the value of 192,000. Stronghold Insurance v Republic Asahi Facts: Republic Asahi Glass contracts with JDS for the contruction of roadways and drainage systems in RAG's compound. JDS does so and files the required compliance bond with Stronghold Insurance acting as surety. The contract is 5.3M the bond is 795k. JDS falls woefully behind schedule, prompting RAG to rescind the contract and demand the compliance bond. The owner of JDS dies and JDS disappears. SHI refuses to pay the bond claiming that the death of JDS owner extinguishes the obligation. Is SHI right? Held:As a general rule, the death of either the creditor or the debtor does not extinguish the obligation. Obligations are transmissible to the heirs, except when the transmission is prevented by the law, the stipulations of the parties, or the nature of the obligation. Only obligations that are personal or are identified with the persons themselves are extinguished by death. Furthermore, The liability of petitioner is contractual in nature, because it executed a performance bond, As a surety, petitioner is solidarily liable with Santos in accordance with the Civil Code Culaba vs CA Facts: Culaba sells SMB. One day, an agent from SMB driving an SMB van drops by to collect Culaba's balance, issuing SMB receipts for the payment. Susbequently, Culaba receives demand letters from SMB for not paying his balance. The agent turns out to be a spurious agent, and the receipts lost receipts which had been published in the papers as lost after the payment. Culaba invokes articles 1240 and 1242 in his defense. SMB's counsel invokes 1233, that the burden of proof of payment is on the debtor and that Culaba failed to exercise due diligence when he failed to question the irregular nature of the invoices as well as the authority of the purported agent. Was Culaba excused by his mistaken payment?
Held: Culaba failed to observe the due diligence required in parting with such a valuable consideration. He should have verified the identity of the agent and his authority to receive. He did not, thus he was guilty of negligence, the effects of which not even his claims of good faith can shield him from. Culaba is liable to pay SMB.
brokerage fees. On appeal with the CA. Lim Sio Wan subsequently discovers the fraud and files a case against Allied Bank. or dispose of them. Any stipulation to the contrary is null and void. the following requisites are required: . DFS counters by showing 28 original invoices in its possession which it claims serves as evidence that it has already paid its obligations. This Court finds that the Memorandum of Agreement and Dacion in Payment constitute pactum commissorium. The agreement is signed by Estanislao. Is this contention valid? Held: The agreement clearly stated that the delivery of the mortgaged vehicles would extinguish the full obligation. are: (1) there should be a property mortgaged by way of security for the payment of the principal obligation.50 which they were to pay within one year. it does not mean that possession by a debtor of an invoice raises the presumption that it has already paid its obligation. which results to the total extinguishment of the debt. The Dacion in Payment did not extinguish petitioners' obligation to respondent. A few months after the delivery. Robal Lending alleges not pactum commmisorium. the fact that its representative did not sign the agreement will not discount the fact that the agreement had already been ratified by EWB's own actions. Is this claim valid? Held: The burden of proof of proving payment lies with debtor. DFS counterfiles. and so does CA. second chattel mortgage for the amount of 1. RTC upholds the validity of the documents. the Memorandum of Agreement and the Dacion in Payment contain no provisions for foreclosure proceedings nor redemption. The words paid and audited found on the invoice were stamped by employees of DFS and not those of RCC. Such not being the case. An invoice is simply a list sent to a purchaser. an invoice.375m covering 2 dumptrucks and one bulldozer.) Reduce the penalties and the interest as they are unconscionable (5% penalty on unpaid balance/month 3. In a true dacion en pago. Even good faith will not excuse the debtor who makes a mistaken payment to a 3rd person unless such payment falls within the purview of article 1241 (2) of the new civil code.. penalty charges. someeone claiming to be her calls up Allied Bank requesting the bank to preterminate her deposit and to turn over the proceeds too a certain Deborah Lee Santos.) Annul the Dacion in Pago for being Pactum Commisorium 2. may not be considered evidence of payment. Ong defaults and agrees with Roban to restructure the debt by consolidating it and by entering into a Dacion in Pago Agreement whereby WO promises to deliver to RL the mortgaged land if it fails to pay the newly consolidated promissory note amounting to 5. Allied Bank had not discharged its obligation to deliver the money to Lim Sio Wan as it had delivered the money to an unauthorized 3rd person. May increase interest rate). including 10%vat insurance premiums. mortgaging a piece of land as security. Allied Bank issues a crossed checked payable to Lim Sio Wan. Held: The factual findings of the RTC and CA which concur will be not be disturbed. the obligation subsists. On the contrary.Allied Banking v Lim Sio Wan Facts: Lim Sio Wan has a time deposit with Allied Bank.. Estanislao vs EWB Facts: Estanislao takes out 1 loans from EWB. vs DFS Sports Unlimited Facts: DFS sports unlimited engages the services of Royal Cargo Corp to undertake its trucking and to act as its importation broker. together with the prices and charges. of which Deborah Lee is an employee of. usually specifying the price and terms of a sale. petitioners had to execute a promissory note for P5. Sometime in 2002.were they right? Held: No. Facts: William Ong borrows 4 million from Roban Lending.9m. Was it in fact proper? Held: No. This case is later withdrawn by EWB on account of a compromise whereby Estanislao surrenders the vehicles in the first chattel mortgage to satisfy the entire loan obligation which now stands at 7 million. claiming that EPCI induced them to avail of their low interest dollar loans which also contained escalation clauses which they were not made aware of (cr. Allied Bank files a cross claim against metrobank and also alleges the defense that it was in fact Lim Sio Wan who authorized the payment. Metrobank is also partly liable for making the negligent endorsement of the check without verifying the indorsement found on the back of the check. but merely DIP as contemplated under artcile 1245. In order to apply article 1250. consignee. the assignment of the property extinguishes the monetary debt. Royal Cargo Corp. Royal Cargo files a case for collection against DFS. Respecting the charges on the loans. Ong vs Roban Lending. automatically acquires ownership of the properties upon petitioners' failure to pay their debt within the stipulated period. the check is deposited by Deborah Lee in Filipinas Cement Corporation purportedly as the proceeds from the termination of FCC's TD with Producers Bank." The elements of pactum commissorium. the RTC orders respondents to pay the principal plus interest. It only filed the amended complaint after several months had elapsed since the delivery. (1229) Equitable Bank v Ng Sheung Ngor Facts: Ng Sheung Ngor and Ken Appliance Division file an action to annul/reform contracts entered into with Equitable Bank. being a bank. which enables the mortgagee to acquire ownership of the mortgaged property without the need of any foreclosure proceedings. From the foregoing definitions. as its actions were inconsistent with the claim of having made a mistake (it failed to protest the delivery). courts may reduce interest rates. in and by itself. in effect. containing the items. under the Memorandum of Agreement executed on the same day as the Dacion in Payment. factor. EWB's claims that it had made an honest mistake cannot excuse it. a bill of costs. but not by the representative from EWB. Invoices are merely documents that evidence the existence of an obligation as well as showing the details of the transaction by reason of which the obligation was formed. and (2) there should be a stipulation for automatic appropriation by the creditor of the thing mortgaged in case of non-payment of the principal obligation within the stipulated period. Black's Law Dictionary defines an invoice as an itemized list of goods or services furnished by a seller to a buyer. the alienation of the properties was by way of security.5. the failure by the petitioners to pay their debt within the one-year period gives respondent the right to enforce the Dacion in Payment transferring to it ownership of the properties covered by TCT No. Mere possession of Original Invoice does not raise the presumption of payment.916.. and not by way of satisfying the debt. Subsequently. and attorney's fees if they are iniquitous or unconscionable. In the case at bar. claiming that the latter owes RCC roughly 248K worth of various expences associated with its services. the rate which existed at the time of the constitution of the obligation since the RTC deemed it proper to apply article 1250. Both banks are liable in the ratio of 60/40. and as opposed to a receipt. Estanislao defaults and a case is subsequently filed by EWB to foreclose on the mortgages.. This is tantamount to Dacion in Pago. 297840. Receipt is an evidence of payment. One day. of merchandise sent or to be sent to him.55m covering 1 bulldozer and a wheel loader. but also awards damages to Respondent by reason of the purported damage which their business reputation incurred as a result of EPCI's freezing of their bank account. Furthermore. which is prohibited under Article 2088 of the Civil Code which provides: The creditor cannot appropriate the things given by way of pledge or mortgage. The chattel mortgages are delivered too EWB without any protest from the latter. RCC adduces evidence in the form of invoices showing DFS debt. The RTC dismisses the case.. but shall be rei mbursed by Producers Bank who was unjustly enriched by the convoluted chain of events. should have been more circumspect iin drafting the contract. In the same judgment. Under the Memorandum of Agreement. This alleged failure as well as the falsification of import documents resulted in the seizure of DFS goods resulting in damages worth 200k. In the case at bar. and to pay the dollar loan at the old exchange rate of 26.In addition. petitioners file a case seeking to 1.117. The first chattel mortgage is for the amount of 2. etc. RTC agrees. secured by two different chattel mortgages. EWB files a writ of replevin for the objects of the 2 nd chattel mortgage claiming that the compromise agreement had been an honest mistake on its part. as attested to by Adorica Co. claiming that it only transacted with RCC once and that RCC owes it 40k worth of taxes that it had not paid to customs. Furthermore. EWB. Respondent.5% monthly int/25% atty fee of total balance).
may no longer withdraw. Benos v Lawilao Facts: The Benos's sell their house to the Lawilao's requiring 150k as payment and another 150k to be paid directly to the bank whom the Benos's owe. De venecia.)lack of demand thus no default and that only 4/8 debts had matured 2. Diaz spouses default sometime in 1986. Is this valid? Held: The Diaz spouses are entitled to withdraw the consigned item. the buyer will have the right to reclaim the dp plus 18% interest per annum.also. claiming that they had already accepted the consignation as they only agreed to the settlement of the 28M account with a payment of 25. the prayer of SJ in his reply to be awarded the sum of money consigned signified an acceptance of the consignation on the part of the creditor. Pabugais pays with a check but the check is subsequently dishonored. mtr piece of land after the same had been sold to Fernandez. The consignation is not accepted by BF's liquidator on the ground that the amount did not include the interests and surcharges due. The alleged consignation of the P20. 600K is to be paid as dp. Consignation deemed invalid. There was also a valid consignation as the requisites for a valid consignation were present in the case. prompting petitioner bank to foreclose. it was expressly stipulated in the promissory note that PDB reserved the right to apply the payments made by the debtor in any manner it saw fit. that there was an official declaration of extraordinary inflation or deflation from the Bangko Sentral ng Pilipinas (BSP). In the case at bar. The 6m was supposed to satisfy the 6m loan. In the present case.00 monthly rental payment is concerned. Pabugais v Sahijwani Facts: Pabugais sells a 15m property to Sahijwani. In the case. The .. Thus. we must apply article 1260 which states in part that the debtor has the right to withdraw the consigned item prior to acceptance or a judicial declaration of validity. Was this application valid? Held: Notwithstanding the fact that 1252 of the Civil Code provides that the debtor shall have the right to chose how the debt is applied. (They did not have a least contract) Article 1256 pertinently provides: If the creditor to whom tender of payment has been made refuses without just cause to accept it.Moreover. Central surety tenders 6m in check. Was this consignation valid? Held: The judgment favoring the ejectment of petitioners being consistent with law and jurisprudence can only be affirmed. the debtor shall be released from responsibility by the consignation of the thing or sum due. the possession of the property by the petitioners being by mere tolerance as they failed to establish through competent evidence the existence of any contractual relations between them and the respondent. the amount was consigned with the judicial authorities and there was notice given after the consignation. the fact that the obligation had already ballooned to 28. the Diaz spouses file a case with the concerned RTC to withdraw the consigned money. Pabugais fails to deliver the documents. as EPCI was not in bad faith when it froze the accounts but rather merely exercising its right to offset. secured by a deed of assignment and pledge on some Central Surety membership share in Wack Wack Golf Club. that the parties expressly agreed to consider the effects of the extraordinary inflation or deflation. Unless there is an unjust refusal by a creditor to accept payment from a debtor.1. 2. Incidentally. Pabugais consigns the check with the RTC. The action is dismissed by the RTC. respondents should pay their dollardenominated loans at the exchange rate fixed by the BSP on the date of maturity. The Lawilao's try to do the same but the bank does not accept their payment. The borrower defaults. thus Dr. previous notice had been given. Banco Filipino v Diaz Facts: Diaz spouses borrow money from BF sometime in 1979. Diaz spouses attempt to pay off the loan by consigning 1M to the courts. The sale is written out as a pacto de retro giving the benos spouses the right to repurchase the entire property within 18 months. none was made. but PDB applied it to other loans. Upon finality of the CA decision. The bank deposit made by the petitioners intended as consignation has no legal effect insofar as the respondent is concerned. Petitioner prays for a TRO. Subsequently. the latter has no obligation to receive any payment from them. whatever damages were awarded were baseless. Therefore. Furthermore.) Novation by virtue of the withholding of the payments. that the obligation was contractual in nature. Central Surety Facts: Central Surety and the owners of the same borrow 6M from PDB. While the case was on going.1M from a mere 400K amounts to an unconscionable penalty which this court believes makes it necessary to exercise the discretion afforded to it by article 1229 of the civil code. Also. There was also no novation as what BPI did in holding on to the monthly rent was not novation. Since respondent is not a creditor to petitioners as far as the alleged P20. an agreement was included whereby if the seller fails to deliver the documents. (Paying 25. the debtor refused to accept the payment unjustly. also an acceleration clause provided for the immediate maturation of all debts if the borrower defaulted on any. Although the general rule is that paying a manager's check is not tender of payment (coz manager' checks are not legal tender). The loan needed no demand as it was already expressly provided for in the agreement that respondent waived the need for demand. all secured by a mortgaged property. including 40m to central surety maturing in 2001. although the obligation in this instance arose out of a contract. the loan which had then grown to 3M was consolidated under 1 loan secured by mortgages. Such was the contract between the parties and thus this must be respected.1M) Petitioner Bank opposes the spouses motion to withdraw. New counsel invokes article 1260. Furthermore. Llobera v Fernandez Facts: Spouses Llobera refuse to vacate a 1800 sq. in the case at bar. It was merely applying the rules on legal compensation. consigned the monthly rentals to a bank account made out in the name of Mr. Alleging that they had been staying on the land since 1945 as lessees to the tune of Php 20/month paid to a certain Mr. Whatever damages the debtor might have suffered was but a result of its own failure to comply with the obligation Premiere Development Bank v. the parties did not agree to recognize the effects of extraordinary inflation (or deflation). De Venecia. the Diaz spouses allege that the Gaisano Bros had already settled the entire obligation on their behalf. prompting bank to write a collection letter. The petitioner had not accepted. BF goes under and is placed under the management of BSP liquidators. and the CA had already dealed the consignation invalid. What was merely made was a denial of the actual receipt of the check. The Lawilao's nevertheless manage to consolidate ownership over the purchased property. the BSP never declared a situation of extraordinary inflation. The Lawilao's pay the 150k to the spouses but do not pay the 150k to the bank. the son of Benos pays the entire 159k to the bank. Is this contention correct? Was there not in fact a valid consignation? Was there a valid tender? Held: There was a valid tender of payment. gets one by virtue of the twin defences of 1. The RTC never mentioned that there was a such stipulation either in the promissory note or loan agreement. Central Surety defaults. in the absence of which. BPI vs CA Facts: BPI makes out 8 loans to Noah's Ark Merchandising. A few months later. Central Surety also had other loans outstanding. while the balance will be delivered after the documents are handed over to the buyer. BPI is also leasing its office from the borrower. CA also says that the consignation is invalid.00 monthly rental to a bank account in respondent’s name cannot save the day for the petitioners simply because of the absence of any contractual basis for their claim to rightful possession of the subject property. respondent cannot be compelled to receive such payment even through consignation under Article 1256.1m from the G brothers since they already counted the prior payments as well as the consignation in computing the settlement account. In 1982. Consignation based on Article 1256 of the Civil Code indispensably requires a creditor-debtor relationship between the parties. the respondents decide to consign the thing with court and file an action for consignation against the bank w/out however informing the Benos spouses. which is at first declined but subsequently accepted upon the second tender. a claim which was contradicted by petitioners own claims. instead opting to restructure. prompting BPI to foreclose on the mortgaged property and also to withhold the rental payments it had been making on a monthly basis to petitioner. despite its self serving statement of account purporting otherwise. Pabugais new counsel (who assumed the role by virtue of the death of the old one)tries to withdraw the consigned money but is prevented from doing so by the CA. Sahijwani demands the return of his dp plus the interest.. There was a debt owing.1m payment made by the atty's in fact is substantial compliance as to warrant the exitinguishment of the oblig. The SC decides that the 25. Were the lower courts right? Held: They were wrong. which occurs by operation of law and which was applicable in the case at bar since all the requisites set forth for legal compensation under article 1278 and 1279 of the code were present. Pabugais issues a second check and mails it to Sj's counsel who alleges that she did not receive the thing.and 3. the legal effects thereof cannot be availed of. the spouses refused to leave and instead. Despite the devaluation of the peso.. claiming that they still have the right to withdraw the consigned money as the same had not yet been accepted by the creditor or deemed as valid by the judge. As petitioner had not in fact accepted the consignation. Article 1256 cannot apply. payment in check by the debtor may be valid if no prompt objection to the same is made.
in the amount of $2. The Tonda's execute 11 trust receipts in favor of MBTC to facilitate the release of the raw materials. His attempt to apply for a permit to import was also rejected by the Radio control board. requesting petitioner bank for a refund. Hence Laserna must pay. the Benos spouses got their land back but were also ordered to return the 150k (payment made to them) to the lawilao spouses. The 1st by NCB. a principal debtor-creditor relationship was established). As for the issue that the wife who was also an account holder in the case was not a principal creditor or debtor. Under 1291. Despite the condonation on Aug 27. Thus. The decision of the HLURB is that 1. SH must deliver. secured by mortgages on its assets. Nat Construct v CA Facts: Phil Nat Construct is awarded damages by the RTC against Mr.6k. It could not compensate since it was merely an agent and not a principal creditor in the loan. Dr. Calupitan is required by the court to pay SIC for whatever SIC might be forced to pay Phil.6K. Is PNB right? Held: The supreme court held that PNB did not have a right to offset.1B as take-off loans from PNB. at least with regard to the amount that was supposed to be coursed thru to citibank. PNB vs CA Facts: Two remittances from abroad were made thru Petitioner Bank. respondent closes granny' account and transfers the fund to his joint account with his wife. Petitioner bank. legal compensation occurs by operation of law even absent the knowledge of the parties. Upon the maturity of the debt. the banks role was merely that of a trustee and its obligation was to deliver the amount of behalf of NCB to petitioner's citibank account and not as a debtor to petitioner (which was the case in re the 34K which was directly deposited in respondents account with PNB.) The debt had not yet been condoned since it was only the take off loans and not the operational loans (which were allegedly not assigned to APT) which had been condoned in the agreement. (thus. G attempts to get a letter of credit from the bank to pay for the goods. since the bank and dr. Held: There was no valid consignation as the Lawilao's did not inform the Benos spouses (parties interested in the fulfillment of the obligation) of the consignation. Was this right? Held: The bank was correct in offsetting the obligation of Dr. which involved a debtor creditor relationship. to purchase radios from a japanese firm. His Grandma is a Us pensioner who receives 10. Reyes files a case with the RTC demanding the return of the same alleging that he did not in fact consent.6k was intended for clients (pvt. the Tonda's propose a compromise payment to the offering to pay the 2. Respondent did not object to the witholding of the 2nd remittance. PNB holds on to both payments. RTC awards. the Benos spouses had already exercised their right to rescind the contract. who still sends the pension check to granny. Solid Homes V Laserna Facts: Solid Homes enters into a contract to sell with the buyers Laserna. It is admitted without contention that the solutio indebitii committed by the bank gave rise to an obligation on the part of the client to return the same. Furthermore. being jointly and solidarily liable. allegedly with the verbal consent of Dr. Nat Construct. and another and/or account with his Grandma.) After the full payment. The conditions in Artcile 1279 of the civil code were all present. BPI vs CA Facts: Dr. for which it was duly issued a receipt. Does it have the right to rescind? Is the contract still subsisting? Held: It does not have the right to rescind unless it follows the provisions of the law for how to properly rescind contracts to sell involving real property sold on installment. On 12/28/89. thus discharging the defendant of his obligation to do.8M principal .000 php per month from the US embassy. Subsequently. On the part of the bank however. the lower court erred in consolidating the ownership as by their reply. Also. United Planter vs CA Facts: Upsumco borrows 2. amounting to roughly 90m. On September 25 of that same year. Victorino dies and his heirs. (1278. About a year later.87K. On the same day. suddenly demand that Solid Homes execute the deed of sale and the title in their favor. SH should deliver the title to Laserna. Thus Upsumco must be refunded for the mistakenly offset money. extinguishing the concurrent amounts of the obligation. It did not do so thus the rescission was invalid for not being compliant with the law. claiming compensation foroutstanding obligations the client has with the bank as a result of two instances of double creditting by the bank amounting to roughly Php. the bank still had the legal right to compensation since all the requisites for a legal compensation were present. PNB proceeds to offset the funds of Upsumco. the facts being as they are. Respondent) Citibank account and the second. A case is filed by respondents for the deilvery of the title with HLURB. Reyes for the amount refunded. Laserna profers the payment to SH which SH unjustifiably refuses to accept. The buyers. It must return the $2.45B leaving a balance of 1. Mr. Thus G cancels the contract and forfeits his deposit. APT forecloses on the mortgaged assets which are sold for . Even the latter did not in fact consent. (Surety is converted into a creditor of the principal debtor) Held: The rest of the case is prodecural and has nothing to do with oblicon Magat Jr. the US treasury department realizes its mistake and disallows the check.) Thus the bank had no right to compensate. Stronghold Insurance Co. Solid Homes extradjudicially rescinds the contract pursuant to its contract to sell. G enters into a contract with Victorino Magat (petitioner). vs CA Facts: In 1972. Upsumco holds that this is invalid.) Laserna should pay the full balance 2. CA reverses and dismisses the complaint of V' heirs. Pvt Respondent Guerrero won the bid to provide taxi services to Subic Airbase. Two months after.case goes up to the CA. which affirms the adverse decision of the RTC hence the present case. Reyes. SH prays for the reversal of the decision and for a granting of its right to rescind. Phil. A few months later. which is required for compensation. Solid Homes refuses to as their contract provided that these would only be done upn full payment. Laserna failed to consign the payment in court which would have discharged it of the obligation of paying. In the meantime. the SC held that article 1267 was applicable to the case at bar. Edvin receives the check and deposits it on1/4/1990. Calupitan and his surety. Was PNB right in claiming compensation? Held: Although all of the other requisites for a legal compensation was present (art 1279) the first requirement was not fully complied with for withholding the $2. MBTC v Tonda Facts: Tonda applies for commercial LC's with MBTC to import raw materials (cloth mainly) for HTAC. As for the controversy regarding the take off loan and the operational loan. she did not object to the compensation. Reyes claim for the amount. Hence the present case. PNB assigns the credit to APT. represented by a certain Aligada (an engineer who played a role in the earlier part of this story as an import broker) sues for damages arising from the alleged breach of contract. Held: The contract was valid as Radios were not made contraband by the presidential act but merely turned into regulated goods. amounting to Php34K for the clients bank account with PNB. Edvin reyes opens 2 bank accounts with BPI. after having paid 90% of the balance due. RTC dismisses the claim. as APT had already condoned the debt. but fails too procure it. it defaults.) It was exercising its right as a 3rd party who was paying on behalf of the debtor (that is to be reimbursed in so far as the payment has redounded to the benefit of the debtorr) 2. The balance is condoned on Aug 27 1987 by APT upon Upsumco's agreement to abandon its right to redeem the mortgaged assets. granny dies without the knowledge of the US treasury. the Benos spouses had the right to rescind the contract on account of the failure of the lawilao spouses to comply with the contractual stipulations. Article 1271 was not complied with. debits the account of Dr. The obligation still subsists since despite Lasernas tender of payment and unjust refusal on the part of Sh. but CA grants Dr. the Tonda's fail to pay of the obligation. The term of the letters was 8 months. 1279) Also. the fact that PNB did not mention these and did not even show any proof to bolster its claims that the operational loans were still outstanding and that it was only the takeoff loans that had been condoned convinces the SC that these had already been also included in the condonation. Marcos issues a ban on the issuance of licenses for radios. and afterwards. it could not claim the compensation as reimbursement for the payments it made to APT. Dr. However. PNB claims it was proper because 1.6B. reyes were mutually principal creditor and debtor of each other. and article 1290 of the same code provides that when all the conditions in article 1279 are present. since it did not have the consent of Upsumco and since the payments did not redound to the benefit of Umpsumco as the debt to which these were applied had already been previously remitted by APT. Issues raised were the validity of the contract and whether or not there was a breach. One and/or account with his wife. such was glossed over by the supreme court in the interest of promoting equity and preventing unjust enrichment. Reyes. Among the requirements of the contract was that the taxi fleet be radio equipped.
in fine. FEBTC does no accept the check but instead asks Diaz to deposit it as a money market instrument in its Davao Branch (Formerly PABC) pending the approval of the Liquidator. A assigns the credit to MB. PABC goes under and is placed under receivership by the CB. a careful reading of the restructuring agreement gives us the impression that the new agreement merely ratifies the old obligations Food for Thought: There are two ways which could indicate. they are incompatible and the latter obligation novates the first. the parties did not expressly declare the novation. Anent the interest rate. the CA is affirmed. Is this valid? Held: There was no novation as it was not expressly stipulated by the parties in the restructuring agreement and the restructuring waas not incompatible on all points with the existence of the promissory notes. Transbuilders co defaults. such as its object. CBLI also defaults but agrees to restructure with SIHI.) concerned parties must agree to a new contract 3.novation takes place only when the old and the new obligations are incompatible on every point. Sometime in December of 1986.8m which was received by a teller thru written acknowledgement (such acknowledgement however..1985 to Nov 14. being a solidary debtor. an amount sufficient to convince Kwong to execute a deed of absolute sale over 11/15 properties. such deposit to be placed at the disposal of Metrobank upon the reaching of a compromise. one who in fact accepted a fully funded check after the debtors manifestation that it had been given to settle an obligation is estopped from later on denouncing the efficacy of such tender of payment. Respondents and was furthermore. not in any way referrgin to the trust receipts). The sims claim that the insurance on the car novates the obligation. now wish to cancel the mortgage. SIHI seeks to collect on the notes but CBLI won't pay. the intention of the new agreement was precisely to revive the old obligation after the original period expired and the loan remained unpaid. In case it is implied the new obligation must be incompatible with the old obligation on all aspects.and finally files a criminal case against the Tonda's. Held: Deed of absolute sale executed over the same property after a deed of conditional sale is considered a novation as the two are absolutely incompatible with each other. Meanwhile. which must be absolute and must cover the amount due. The CA was wrong.is the CA correct? Held: No. the CA upholds that Diaz did in fact make a valid tender of payment. The old obligation was also not extinguished since the check bounced. The payment of interest does not count as novation either as such was expressly provided for in the note.45m. but makes the mistake of imposing a different rate of interest than that which was stipulated working on the mistaken premise that such would be warranted because Diaz was not informed about the sale of his credit to FEBTC. For novation to occur. Is this valid? Was there in fact a novation? Held: No novation. On appeal to the CA.) valid old obligation 2. In the absence of an agreement. It may be express or implied. Anent the other issues. Furthermore. Diaz subsequent withdrawal of the amount does not extinguish the fact that he did in fact pay and that in fact the payment had been accepted (albeit converted into a deposit). each one having its independent existence. cause or principal conditions thereof. Delta defaults and assigns its credit in favor of SIHI. Diaz wastes no time in asking about his balance. Novation may be made without the knowledge of the debtor. In the absence of an express agreement. G pays the downpayment but fails to pay the balance. FEBTC v Diaz Realty gFor a valid tender of payment. or where the new contract merely supplements the old one –sc discourse on novation Reyes v BPI Facts: In the case at bar. it is necessary that there be a fusion of intent. Kwong v Gargantos Facts: Kwong sells some lands to G.. claiming that they were not informed about the novation. The Sims have the car insured by C. Thr RTC orders Diaz to pay the principal plus the loan but at the reduced interest rate of 12% to be computed from April 18. the mere fact that [respondent] is entitled to the proceeds of the insurance policy issued by . but only uptil the time when valid tender of payment was made. G raises the fact that it had already been novated and thus could no longer be invoked. MB Finance: Facts: The Sims buy a car on installments from A executing PN's. The legal rate of interest (12%) shall apply from that point onwards. Diaz Realty assigns the rent it collects from ABC to PABC as payment for its monthly amortizations. The Sims default on the payment. Diaz tenders the full payment in the form of a fully funded check. Until the full and final settlement of the obligation. Diaz however only learns about it on March 23 1988. the placement expired and with still no reply from FEBTC re the rate adjustment request. FEBTC buys the credit of PABC against Diaz. Nor was there an incompatibility between the old and the new.There was absolutely no intention by the parties to supersede or abrogate the old loan contract secured by the real estate mortgage executed by petitioners in favor of BPI-FSB.44M. Furthermore. MB files a collection case against the sims. Was there novation? Held: No novation in the case at bar since some essential elements of novation were not present. de Jesus could not be considered as a substitute debtor such as would effect novation as he was in fact a principal debtor. Sim vs. Reyes executes a mortgage in favor of BPI to secure a 15m loan for Transbuilders Co. Diaz must pay the 1m principal plus interest of 20% p/a from 4/18/85-11/14/88 and 12% afterwards. Furthermore. The test of incompatibility is whether the two obligations can stand together. The insurance contract with CIC was a contract distinct from that of the PN contract between the sims and A that was not incompatible. Metrobank makes repeated demands for payment. If they cannot. changes that breed incompatibility must be essential in nature and not merely accidental. Kwong refuses to deliver the 11 titles until he is fully paid. the following facts must be present 1. As for the mortgage. and a creditor may validly refuse to accept it if tendered as payment. and adds other obligations not incompatible with the old ones. The incompatibility must take place in any of the essential elements of the obligation. In fact. ability and capability to make good such offer. The CA sides with the Tonda's holding that the Tonda's had already placed the payment at the disposal of the bank which the bank should have offset against the old oblig. BPI-FSB and Transbuilders only extended the repayment term of the loan from one year to twenty quarterly installments at 18% interest per annum.9m). The first is when novation has been explicitly stated and declared in unequivocal terms. but subsequently enters into a restructuring with BPI. The novation of a contract cannot be presumed. Also.. alleging that his role in the matter was merely that of an accomodation as he merely cosigned the debt. Delta motors sells several buses to the present private respondent. With respect to obligations to pay a sum of money. Held: The SC agrees with the lower court that their was in fact a valid tender of payment as Diaz had tendered a fully funded check which had been accepted by FEBTC but subsequently converted into a deposit.)There must be a valid new contract. the mortgage should subsist until the full and final settlement of the oblig. Garcia refuses to pay. Article 1288 provides that obligations arising from criminal offences cannot be offset. The lower court may proceed with the criminal case. the change would be merely modificatory in nature and insufficient to extinguish the original obligation.1988 and then to either be reimbursed the excess over 1. Sometime in 1985.immediately and to restructure the rest of the balance (which had then grown to 4. the sale is conditional. In the case at bar. but must always have the consent of the creditor. Valid? Held: No.45m or to pay the difference if the result be lower than 1. G's brother steps in and pays on behalf of G. claiming that the restructuring had already novated the entire obligation and had thus extinguished its obligation to pay the notes. the presence of novation and thereby produce the effect of extinguishing an obligation by another which substitutes the same. Corollarily. diaz goes to court. changes only the terms of payment. The second is when the old and the new obligations are incompatible on every point.)the old contract must be extinguished 4. Meanwhile Delta had already assigned a further five promissory notes to SIHI. Metrobank does not agree but the Tonda's nevertheless open a bank account in Metrobank (jointly with a certain Wang Tien En) in the amount of 2. otherwise. the deposit cannot be presumed to be a payment since it was not made out in the name of petitioner but rather deposited into the account of Wang Tien En and Pvt. this Court has consistently applied the well-settled rule that the obligation is not novated by an instrument that expressly recognizes the old. Garcia contends that the obligation had already been novated by virtue of the acceptance of Llamas of Ed de Jesus's (a solidary debtor) check. In fact. Kwong subsequently tries to rescind the conditional sale. the cancellation of the mortgage is ordered. Petitioners. respondent is entitled to the 20% rate stipulated in the contract which was assigned to it by PABC. On April 14 1989. which incidentally bounced. CBLI vs SIHI Facts: Delta Motors takes an operational loan from CBLI. Though a check is not legal tender. subject to the condition that it would only be at the disposal of the bank upon the reaching of a compromise which did not in fact occur. “ -sc food for thought Facts: Diaz Realty borrows 720K from PABC at 20%. The car is also carnapped.. Garcia v Llamas Facts: Respondent Llamas files a case for collection of sum of money against Garcia and Llamas for the sum of 400k. FEBTC is ordered to pay 300k as damages. which had by 3/23/1988 grown to 1.
Novation.cralaw CRALAW The grant by Betonval to FSI of a 45-day credit extension did not novate the contracts so as to extinguish the latter. V Insular Life Assurance Facts: ILA contracts with UCCP to have the latter build a 6 storey bldg w/in 1 year for the price of 30m. Cinco informs her that she may withdraw the proceeds from the bank law and apply the amount to pay the debt). Ricarze vs CA: Fact: Ricarze. PCI steps into the shoes of Caltex in pursuing the case against Ricarze.. when conventional.. Cinco vs CA Facts: The Cinco's take a loan from MTLC. Ester was exercising her right in bad faith and thus is guilty of abuse of rights as contemplated under article 19 of the civil code. Typingco $600k. In 1992. In short. the terms are clearly set out and the int rate of 30% p. The obligation to pay a sum of money is not novated by an instrument that expressly recognizes the old..a is stipulated. defaults after a while. as the creditor can still enforce the obligation of spouses Sim. In the contract. Were the contracts in fact novated by B's restructuring? Held: No. Thus Lim's still had the ownership over the said lot in spite of the lien and thus had the right to dispose of the lot in the manner that they did. There was no intention by the parties to supersede the obligations under the contracts. They are unable to pay and as a result. Mr. Consequently. Foundation Specialist Inc. execute a deed of absolute sale over their greenhills property.) foreclosure had not yet been instituted by BPI. interest likewise remained. Simangan wants to go to the US to give his kidney to his cousin as a gift. The folks at JAL suspect he is a possible TNT who is merely using this flight to the USA as a pretext to getting into Japan and working there (as the flight is to be routed thru Narita). such waiver must be express. damages are reduced by the SC in accordance with Article 1229 of the NCC . The grant of a 45-day credit period merely modified the contracts by extending the period within which FSI was allowed to settle its obligation. Such a situation does not constitute novation. PCI indemnifies Caltex for the loss. B proceeds to attach the assets as well as to garnish the accounts of F. as an act of Dation in Pago. He acquires a special travel permit from the US embassy and books a flight with JAL.Convoluted litigation occurs. Urban Consolidated Constructors Phils.. In the case at bar. Ricarze says that subrogation is not valid because he did not in anyway give his consent to it nor had any knowledge about it.. Simangan accedes as he has no choice since the plane was already about to depart and JAL had already made it quite clear that they were unwilling to wait for him. What were present were the elements of an equitable mortgage (informal mortgage of real property not contrary to law) consistent with the provisions of article 1602. F still fails to fullypay the obligation. why the valid tender could not be effected was also because of ester's bad faith in refusing to cancel the mortgage certificate which would suspend the banks issuance of the loan to the Cinco' which the Cinco's had already authorized Ester to withdraw (SPA) and to apply as payment (Verbally). Are they right Held: The facts of the case are consistent with those of an equitable mortgage and not with dation in pago as claimed by rockville. S misses the flight but allegedly agrees to fly the next day. PCI was legally subrogated in a manner consistent with article 1302 of the civil code. The lims. subsists and must be respected by Typingco.) Alienation of the property of debtor to creditor with the latters consent 3. Simangan is forced off the plane to await the verification of his travel permit. Held: What occurred in the case at bar was legal subrogation. Typingco v Lim Facts: The Lim's take a loan from J. subrogation occurs by operation of law thus no longer needing consent. Held: Considering the already near complete state of the building (97% complete) and the contributing fault on the part of ILA to deliver the balance. as debtors. Since the contracts remained the source of FSIs obligation to Betonval. Although what was tendered was not valid payment per se. Does this constitute a novation as would discharge JAL of its liability? Held: No. Despite this. Since  novation implies a waiver of the right the creditor had before the novation. The Culla's for there part claim that the transaction was in the Nature of an equitable mortgage. The tender of payment unjustly refused however did not extinguish the obligation as it was not followed by consignation as required by article 1256 of the civil code. must be consented to. Was the DIP valid? Held: DIP valid inspite of BPI's claim because 1.5M to Rockville. B's main issue is that the RTC lowered the int rate to 12% from the 24% stipulated. the president of MTLC. In legal subrogation. an employee of Caltex commits a clever fraud against the company by stealing checks and depositing them in PCI bank under a fictitious account. FSI. Mr. Rockville vs Culla Facts: The culla's borrow money (2m) from Rockville. The CA only takes notice of that of B.which BPI also has a claim (mortgage) on. 1992.a. Japan Airlines vs Simangan Facts: Mr.CIC does not release spouses Sim from their responsibility. upon learning about the subsequent mortgage (which happened because Mr. the stipulation to pay 30% p. Mr. Thus the lot should be transferred to Typingco's ownership. They default. provided that the 1st mortgage over the lots is cancelled and a second mortgage is constituted over the same lots to secure the bank loan. The loan grows due to the interest and charges and the Cinco's are forced to apply for a second loan from a bank.. he did not agree to the alleged novation. extending the credit terms as well as reducing the int rate from 24% to 30%. the RTC awards the case to B. She refuses to do so. but also requires B to pay steep damages to F. The mortgage over the lot however. and seek to rescind the contract by paying back the 2M payment made by rockville. is outraged and refuses to cancel the mortgage and to withdraw the loan proceeds from the bank. In fact. The bank agrees to give them a loan. Rockville files an action for specific performance. F claims that there should have been 6% interestas the original interest rates in the novated contracts no longer apply. the building is finally completed ILA refuses to accept the building. vs Betonval Facts: FSI contracts with Betonval for B to mix F's cement. Culla affixes her signature on the deed of absolute sale.) Satisfaction of the money obligation were not all present in the case at bar. In the ensuing legal Morass. he could not have freely consented to be rebooked the next day. changes only the terms of payment. and [respondent]. that respondent had willingly done away with his right to fly on July 29. agree to “sell” thru a deed of absolute sale. The fraud is discovered by Caltex. Ester. During the criminal trial. Several adjustments and delays are encountered. There was no incompatibility between them. the intention of the 45-day credit extension was precisely to revive the old obligation after the original period expired with the obligation unfulfilled. w/out prejudice to the subsisting mortgage the bank has over the said lot. It cannot be supposed. As a result of this. without clear proof. Both sides are unhappy and bring the case up to the CA. Was there an unjust refusal? Held: In this exceptional case the supreme court held that there was an unjsut refusal.) existence of money oblig 2. land worth 3. B agrees to let F restructure. Considering that respondent was forced to get out of the plane and left behind against his will. adds other obligations not incompatible with the old ones or the new contract merely supplements the old one. The elements of DIP 1. with the condition that Rockville pay the balance after Mrs. said loan is secured by a mortgage.