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BAUTISTA 6 SCRA 946 (1962)

FACTS: Spouses Bautista are the absolute and registered owners of a parcel of land.
In May 30, 1956, the said spouses entered into an agreement entitled Kasulatan ng
Sanglaan (mortgage) in favor of spouses Soriano for the amount of P1,800.
Simultaneously with the signing of the deed, the spouses Bautista transferred the
possession of the subject property to spouses Soriano. The spouses Soriano have,
since that date, been in possession of the property and are still enjoying the
produce thereof to the exclusion of all other persons
1. Sometime after May 1956, the spouses Bautista received from spouses Soriano
the sum of P450 pursuant to the conditions agreed upon in the document. However,
no receipt was issued. The said amount was returned by the spouses Bautista
2. In May 13, 1958, a certain Atty. Ver informed the spouses Bautista that the
spouses Soriano have decided to purchase the subject property pursuant to par. 5 of
the document which states that the mortgagees may purchase the said land
absolutely within the 2-year term of the mortgage for P3,900.
3. Despite the receipt of the letter, the spouses Bautista refused to comply with
Sorianos demand
4. As such, spouses Soriano filed a case, praying that they be allowed to consign
or deposit with the Clerk of Court the sum of P1,650 as the balance of the purchase
price of the land in question
5. The trial court held in favor of Soriano and ordered Bautista to execute a deed
of absolute sale over the said property in favor of Soriano.
6. Subsequently spouses Bautista filed a case against Soriano, asking the court to
order Soriano to accept the payment of the principal obligation and release the
mortgage and to make an accounting the harvest for the 2 harvest seasons (1956-
7. CFI held in Sorianos favor and ordered the execution of the deed of sale in their
8. Bautista argued that as mortgagors, they cannot be deprived of the right to
redeem the mortgaged property, as such right is inherent in and inseparable from a

ISSUE: WON spouses Bautista are entitled to redemption of subject property

HELD: No. While the transaction is undoubtedly a mortgage and contains the
customary stipulation concerning redemption, it carries the added special provision
which renders the mortgagors right to redeem defeasible at the election of the
mortgagees. There is nothing illegal or immoral in this as this is allowed under Art
1479 NCC which states: A promise to buy and sell a determinate thing for a price
certain is reciprocally demandable. An accepted unilateral promise to buy or to sell
a determinate thing for a price certain is binding upon the promissor if the promise
supported by a consideration apart from the price.

In the case at bar, the mortgagors promise is supported by the same consideration
as that of the mortgage itself, which is distinct from the consideration in sale should
the option be exercised. The mortgagors promise was in the nature of a continuing
offer, non-withdrawable during a period of 2 years, which upon acceptance by the
mortgagees gave rise to a perfected contract of sale.
The tender of P1,800 to redeem the mortgage by spouses Bautista was ineffective
for the purpose intended. Such tender must have been made after the option to
purchase had been exercised by spouses Soriano. Bautistas offer to redeem could
be defeated by Sorianos preemptive right to purchase within the period of 2 years
from May 30, 1956. Such right was availed of and spouses Bautista were
accordingly notified by Soriano. Offer and acceptance converged and gave rise to a
perfected and binding contract of purchase and sale.
RCBC v. CA - Insurance Proceeds

289 SCRA 292 (1998)


> GOYU applied for credit facilities and accommodations with RCBC. After due evaluation, a credit
facility in the amount of P30 million was initially granted. Upon GOYU's application increased
GOYU's credit facility to P50 million, then to P90 million, and finally to P117 million

> As security for its credit facilities with RCBC, GOYU executed two REM and two CM in favor of
RCBC, which were registered with the Registry of Deeds at. Under each of these four mortgage
contracts, GOYU committed itself to insure the mortgaged property with an insurance company
approved by RCBC, and subsequently, to endorse and deliver the insurance policies to RCBC.

> GOYU obtained in its name a total of 10 insurance policies from MICO. In February 1992,
Alchester Insurance Agency, Inc., the insurance agent where GOYU obtained the Malayan insurance
policies, issued nine endorsements in favor of RCBC seemingly upon instructions of GOYU

> On April 27, 1992, one of GOYU's factory buildings in Valenzuela was gutted by fire.
Consequently, GOYU submitted its claim for indemnity.

> MICO denied the claim on the ground that the insurance policies were either attached pursuant to
writs of attachments/garnishments issued by various courts or that the insurance proceeds were also
claimed by other creditors of GOYU alleging better rights to the proceeds than the insured.

> GOYU filed a complaint for specific performance and damages. RCBC, one of GOYU's creditors,
also filed with MICO its formal claim over the proceeds of the insurance policies, but said claims
were also denied for the same reasons that AGCO denied GOYU's claims.

> However, because the endorsements do not bear the signature of any officer of GOYU, the trial
court, as well as the Court of Appeals, concluded that the endorsements are defective and held that
RCBC has no right over the insurance proceeds.

Whether or not RCBC has a right over the insurance proceeds.


RCBC has a right over the insurance proceeds.

It is settled that a mortgagor and a mortgagee have separate and distinct insurable interests in the
same mortgaged property, such that each one of them may insure the same property for his own
sole benefit. There is no question that GOYU could insure the mortgaged property for its own
exclusive benefit. In the present case, although it appears that GOYU obtained the subject insurance
policies naming itself as the sole payee, the intentions of the parties as shown by their
contemporaneous acts, must be given due consideration in order to better serve the interest of
justice and equity.

It is to be noted that 9 endorsement documents were prepared by Alchester in favor of RCBC. The
Court is in a quandary how Alchester could arrive at the idea of endorsing any specific insurance
policy in favor of any particular beneficiary or payee other than the insured had not such named
payee or beneficiary been specifically disclosed by the insured itself. It is also significant that GOYU
voluntarily and purposely took the insurance policies from MICO, a sister company of RCBC, and not
just from any other insurance company. Alchester would not have found out that the subject pieces of
property were mortgaged to RCBC had not such information been voluntarily disclosed by GOYU
itself. Had it not been for GOYU, Alchester would not have known of GOYU's intention of obtaining
insurance coverage in compliance with its undertaking in the mortgage contracts with RCBC, and
verify, Alchester would not have endorsed the policies to RCBC had it not been so directed by

On equitable principles, particularly on the ground of estoppel, the Court is constrained to rule in
favor of mortgagor RCBC. RCBC, in good faith, relied upon the endorsement documents sent to it as
this was only pursuant to the stipulation in the mortgage contracts. We find such reliance to be
justified under the circumstances of the case. GOYU failed to seasonably repudiate the authority of
the person or persons who prepared such endorsements. Over and above this, GOYU continued, in
the meantime, to enjoy the benefits of the credit facilities extended to it by RCBC. After the
occurrence of the loss insured against, it was too late for GOYU to disown the endorsements for any
imagined or contrived lack of authority of Alchester to prepare and issue said endorsements. If there
had not been actually an implied ratification of said endorsements by virtue of GOYU's inaction in
this case, GOYU is at the very least estopped from assailing their operative effects.

To permit GOYU to capitalize on its non-confirmation of these endorsements while it continued to

enjoy the benefits of the credit facilities of RCBC which believed in good faith that there was due
endorsement pursuant to their mortgage contracts, is to countenance grave contravention of public
policy, fair dealing, good faith, and justice. Such an unjust situation, the Court cannot sanction.
Under the peculiar circumstances obtaining in this case, the Court is bound to recognize RCBC's
right to the proceeds of the insurance policies if not for the actual endorsement of the policies, at
least on the basis of the equitable principle of estoppel.

GOYU cannot seek relief under Section 53 of the Insurance Code which provides that the proceeds
of insurance shall exclusively apply to the interest of the person in whose name or for whose benefit
it is made. The peculiarity of the circumstances obtaining in the instant case presents a justification
to take exception to the strict application of said provision, it having been sufficiently established that
it was the intention of the parties to designate RCBC as the party for whose benefit the insurance
policies were taken out. Consider thus the following:

1. It is undisputed that the insured pieces of property were the subject of mortgage contracts
entered into between RCBC and GOYU in consideration of and for securing GOYU's credit facilities
from RCBC. The mortgage contracts contained common provisions whereby GOYU, as mortgagor,
undertook to have the mortgaged property properly covered against any loss by an insurance
company acceptable to RCBC.

2. GOYU voluntarily procured insurance policies to cover the mortgaged property from MICO, no
less than a sister company of RCBC and definitely an acceptable insurance company to RCBC.

3. Endorsement documents were prepared by MICO's underwriter, Alchester Insurance Agency,

Inc., and copies thereof were sent to GOYU, MICO and RCBC. GOYU did not assail, until of late, the
validity of said endorsements.
4. GOYU continued until the occurrence of the fire, to enjoy the benefits of the credit facilities
extended by RCBC which was conditioned upon the endorsement of the insurance policies to be
taken by GOYU to cover the mortgaged properties.

This Court can not over stress the fact that upon receiving its copies of the endorsement documents
prepared by Alchester, GOYU, despite the absence written conformity thereto, obviously considered
said endorsement to be sufficient compliance with its obligation under the mortgage contracts since
RCBC accordingly continued to extend the benefits of its credit facilities and GOYU continued to
benefit therefrom. Just as plain too is the intention of the parties to constitute RCBC as the
beneficiary of the various insurance policies obtained by GOYU. The intention of the parties will have
to be given full force and effect in this particular case. The insurance proceeds may, therefore, be
exclusively applied to RCBC, which under the factual circumstances of the case, is truly the person
or entity for whose benefit the policies were clearly intended.
Special Preferred Credits
(Important: See full text of the Resolution)

Facts: Rosario Cruzado sold all her right, title, and interest and that of her children in the house and lot herein
involved to Villanueva for P19K. The purchaser paid P1,500 in advance, and executed a promissory note for the
balance. However, the buyer could only pay P5,500 On account of the note, for which reason the vendor obtained
judgment for the unpaid balance. In the meantime, the buyer Villanueva was able to secure a clean certificate of title
and mortgaged the property to appellant Barretto to secure a loan of P30K, said mortgage having been duly recorded.

Villanueva defaulted on the mortgage loan in favor of Barretto. The latter foreclosed the mortgage in her favor,
obtained judgment, and upon its becoming final asked for execution. Cruzado filed a motion for recognition for her
"vendor's lien" invoking Articles 2242, 2243, and 2249 of the new Civil Code. After hearing, the court below
ordered the "lien" annotated on the back of the title, with the proviso that in case of sale under the foreclosure decree
the vendor's lien and the mortgage credit of appellant Barretto should be paid pro rata from the proceeds.

Appellants insist that:

1. The vendor's lien, under Articles 2242 and 2243 of the new, Civil Code of the Philippines, can only become effective
in the event of insolvency of the vendee, which has not been proved to exist in the instant case; and .
2. That the Cruzado is not a true vendor of the foreclosed property.

Article 2242 of the new Civil Code enumerates the claims, mortgage and liens that constitute an encumbrance on
specific immovable property, and among them are: .
(2) For the unpaid price of real property sold, upon the immovable sold; and
(5) Mortgage credits recorded in the Registry of Property."

Article 2249 of the same Code provides that "if there are two or more credits with respect to the same specific real
property or real rights, they shall be satisfied pro-rata after the payment of the taxes and assessment upon the
immovable property or real rights.

Held: Application of the above-quoted provisions to the case at bar would mean that the herein appellee Rosario
Cruzado as an unpaid vendor of the property in question has the right to share pro-rata with the appellants the
proceeds of the foreclosure sale.

Issue: Appellants argument: inasmuch as the unpaid vendor's lien in this case was not registered, it should not
prejudice the said appellants' registered rights over the property.

Held: There is nothing to this argument. Note must be taken of the fact that article 2242 of the new Civil Code
enumerating the preferred claims, mortgages and liens on immovables, specifically requires that. Unlike the unpaid
price of real property sold. mortgage credits, in order to be given preference, should be recorded in the Registry of
Property. If the legislative intent was to impose the same requirement in the case of the vendor's lien, or the unpaid
price of real property sold, the lawmakers could have easily inserted the same qualification which now modifies the
mortgage credits. The law, however, does not make any distinction between registered and unregistered vendor's lien,
which only goes to show that any lien of that kind enjoys the preferred credit status.

As to the point made that the articles of the Civil Code on concurrence and preference of credits are applicable only to
the insolvent debtor, suffice it to say that nothing in the law shows any such limitation. If we are to interpret this
portion of the Code as intended only for insolvency cases, then other creditor-debtor relationships where there are
concurrence of credits would be left without any rules to govern them, and it would render purposeless the special
laws on insolvency.

Resolution on Motion to Consider (1962)

Appellants, spouses Barretto, have filed a motion vigorously urging that our decision be reconsidered and set aside,
and a new one entered declaring that their right as mortgagees remain superior to the unrecorded claim of herein
appellee for the balance of the purchase price of her rights, title, and interests in the mortgaged property.

We have reached the conclusion that our original decision must be reconsidered and set aside:

Under the system of the Civil Code of the Philippines, only taxes enjoy a similar absolute preference. All the
remaining thirteen classes of preferred creditors under Article 2242 enjoy no priority among themselves, but must be
paid pro-rata i.e., in proportion to the amount of the respective credits. Thus, Article 2249 provides:
If there are two or more credits with respect to the same specific real property or real rights, they, shall be
satisfied pro-rata after the payment of the taxes and assessments upon the immovable property or real rights."

The full application of Articles 2249 and 2242 demands that there must be first some proceedings where the claims of
all the preferred creditors may be bindingly adjudicated, such as:
1. insolvency,
2. the settlement of decedents estate under Rule 87 of the Rules of Court, or
3. other liquidation proceedings of similar import.

This explains the rule of Article 2243 of the new Civil Code that
The claims or credits enumerated in the two preceding articles" shall be considered as mortgages or pledges of real or
personal property, or liens within the purview of legal provisions governing insolvency.

And the rule is further clarified in the Report of the Code Commission, as follows:
The question as to whether the Civil Code and the insolvency Law can be harmonized is settled by Article 2243. The
preferences named in Articles 2261 and 2262 (now 2241 and 2242) are to be enforced in accordance with the
Insolvency Law."

Thus, it becomes evident that one preferred creditor's third-party claim to the proceeds of a foreclosure sale (as in the
case now before us) is not the proceeding contemplated by law for the enforcement of preferences under Article 2242,
unless the claimant were enforcing a credit for taxes that enjoy absolute priority. If none of the claims is for taxes, a
dispute between two creditors will not enable the Court to ascertain the pro-rata dividend corresponding to each,
because the rights of the other creditors likewise" enjoying preference under Article 2242 can not be ascertained.

Held: There being no insolvency or liquidation, the claim of the appellee, as unpaid vendor, did not require the
character and rank of a statutory lien co-equal to the mortgagee's recorded encumbrance, and must remain
subordinate to the latter.

FACTS: First Mutual Savings and Loan Organization encourage savings among its members and extend
financial assistance thru loans. Central bank said that the Organization and others with similar nature
are banking institutions and that the Org have never been authorized. CB applied for SW because of
the Orgs illegal receipt of deposits of money for deposit, disbursementswithout compliance with RA
337. The SW includes articles such as book of original entryand others. They said that the SW is
general in its terms and that the use of the word and others permits the unreasonable search and
seizure of documents which have no relation to any specific criminal act.

HELD: SW is upheld.

Depending on the circumstances, while in one instance the particular wording of the warrant
may make it assume the character of a general warrant, in another context it may be considered
perfectly alright.

SW only for one offense, if issued for more than two, it is void. Scatter shot warrant.

In illegal possession of shabu, marijuana, paraphernalia- one SW ok!

SW may be partially void

Undetermined amount of marijuana ok!

Purpose of Particularity of Description:

1. Readily identify the items to be seized, thus prevent them from seizing the wrong items

2. Leave officers with no discretion regarding articles to be seized and thus prevent unreasonable
searches and seizure

Not required that technical precision of description be required

narcotics paraphernalia, any and all narcotics, and a quantity of loose heroin- ok!

and the like- not necessarily general warrant

Where should the requisite description appear- in the caption or body of the warrant? Body

What if theres discrepancy between the address in the caption and in the body? Not sufficient
to invalidate. It is sufficient as long as you can identify the place intended and distinguish it from other
places in the community.