SEC TRANS Case Digests

Topic: Simple Loan or Mutuum; Article 1960

Velez v. Balzarra
FACTS:
Plaintiff Velez filed a complaint for the return of parcels of land sold by Defendant to Plaintiffs
husband. She further alleged that defendants had remained in possession of said land under
Contract of Lease but for over 2 years defendants had not paid the agreed rentals.
Defendant alleged that the real agreement was a loan secured by a mortgage of those lands.
Trial court found that the payments made by defendants were not made by way of interest but
as payments for the principal. Defendant overpaid therefore Plaintiff should return excess.

ISSUE: Whether payments were intended to be applied to the principal OR were considered as rents,
interests?

HELD:
Payments were NOT rents, interests
Neri took possession of land and collected fruits. The creditor having enjoyed the beneficial use
of the lands delivered as security for the loan, it appears to have been the intention of the
parties that the creditor should be compensated thereby.
Though receipts, payments are called rents, they were prepared by Neri (Ps husband) and
Plaintiff, and defendants in their ignorance did not look into the wording, being merely satisfied
that they were proofs of payment.
The liability of plaintiff to return the excess payments is in keeping with Article 1895 (Old Civil
Code) which provides that, when something is received which there is no right to collect, and
which by mistake has been unduly delivered, the obligation to restore it arises.
The 2 requisites are present: 1) There is no right to collect these excess sums; and 2) the
amounts have been paid through mistake by defendants. Such mistake is shown by the fact that
their contracts never intended that either rents or interest should be paid, and by the further
fact that when these payments were made, they were intended by defendants to be applied to
the principal, but they overpaid the amounts loaned to them.
Topic: Deposit; Article 1962
Calibo v. CA
FACTS:
Respondent Abellas son Mike rented for residential purposes the house of Petitioner Calibo.
Respondent left a tractor in his sons garage for safekeeping
Petitioner Mike had not paid rentals, electric and water bills
Mike reassured Calibo that the tractor would stand as guarantee for its payment
Respondent wanted to take possession of his tractor but Petitioner said that the Mike had left
the tractor with him as security for the payment of Mikes obligation to him.
Respondent issued postdated checks but Petitioner will only accept check if Respondent
executes Promissory Note to cover payment for unpaid electric and water bills.
Petitioner instituted an action for replevin claiming ownership of the tractor and seeking to
recover possession thereof from petitioner. Likewise, he asserts that the tractor was left with
him, in the concept of an innkeeper, on deposit and that he may validly hold on thereto until
Mike Abella pays his obligations.
TC and CA Mike could not have validly pledged the tractor because he was not the owner. NO
DEPOSIT

ISSUE: WON there was a valid deposit?

HELD: NO
In a contract of deposit, a person receives an object belonging to another with the obligation of
safely keeping it and of returning the same. Petitioner himself stated that he received the
tractor not to safely keep it but as a form of security for the payment of Mike Abellas
obligations. There is no deposit where the principal purpose for receiving the object is not
safekeeping.
Consequently, petitioner had no right to refuse delivery of the tractor to its lawful owner. On
the other hand, private respondent, as owner, had every right to seek to repossess the tractor
including the institution of the instant action for replevin.
Topic: Deposit; Article 2003
YHT Realty v. CA
FACTS:
Respondent McLoughlin would stay at Tropicana Hotel every time he is here in the Philippines
and would rent a safety deposit box.
The safety deposit box could only be opened through the use of 2 keys, one of which is given to
the registered guest, and the other remaining in the possession of the management of the hotel.
McLoughlin allegedly placed the following in his safety deposit box 2 envelopes containing US
Dollars, one envelope containing Australian Dollars, Letters, credit cards, bankbooks and a
checkbook.
When he went abroad, a few dollars were missing and the jewelry he bought was likewise
missing.
Eventually, he confronted Lainez and Paiyam who admitted that Tan opened the safety deposit
box with the key assigned to him. McLoughlin went up to his room where Tan was staying and
confronted her. Tan admitted that she had stolen McLouglins key and was able to open the
safety deposit box with the assistance of Lopez, Paiyam and Lainez. Lopez alsto told McLoughlin
that Tan stole the key assigned to McLouglin while the latter was asleep.
McLoughlin insisted that it must be the hotel who must assume responsibility for the loss he
suffered.
Lopez refused to accept responsibility relying on the conditions for renting the safety deposit
box entitled Undertaking For the Use of Safety Deposit Box

ISSUE: Whether the hotels Undertaking is valid?

HELD: NO
Article 2003 was incorporated in the New Civil Code as an expression of public policy precisely to
apply to situations such as that presented in this case. The hotel business like the common
carriers business is imbued with public interest. Catering to the public, hotelkeepers are bound
to provide not only lodging for hotel guests and security to their persons and belongings. The
twin duty constitutes the essence of the business. The law in turn does not allow such duty to
the public to be negated or diluted by any contrary stipulation in so-called undertakings that
ordinarily appear in prepared forms imposed by hotel keepers on guests for their signature.
In an early case (De Los Santos v. Tan Khey), CA ruled that to hold hotelkeepers or innkeeper
liable for the effects of their guests, it is not necessary that they be actually delivered to the
innkeepers or their employees. It is enough that such effects are within the hotel or inn. With
greater reason should the liability of the hotelkeeper be enforced when the missing items are
taken without the guests knowledge and consent from a safety deposit box provided by the
hotel itself, as in this case.
Paragraphs (2) and (4) of the undertaking manifestly contravene Article 2003, CC for they
allow Tropicana to be released from liability arising from any loss in the contents and/or use of
the safety deposit box for any cause whatsoever. Evidently, the undertaking was intended to bar
any claim against Tropicana for any loss of the contents of the safety deposit box whether or not
negligence was incurred by Tropicana or its employees.
Topic: Warehouse Receipts Law; sec. 38
PNB v. Atendido
FACTS:
Laureano Atendido obtained from PNB a loan of P3k and pledged 2000 cavans of palay to
guarantee payment which were then deposited in the warehouse of Cheng Siong Lam & Co and
to that effect the borrower endorsed in favour of the bank the corresponding warehouse
receipt.
Before the maturity of the loan, the 2000 cavans of palay disappeared for unknown reasons in
the warehouse. When the loan matured, the borrower failed to pay obligation
Defendant claimed that the warehouse receipt covering the palay which was given as security
having been endorsed in blank in favour of the bank and the palay having been lost or
disappeared, he thereby became relieved of liability.

ISSUE: Whether the surrender of the warehouse receipt covering 2000 cavans of palay given as security,
endorsed in blank, to PNB, has the effect of transferring their title or ownership OR it should be
considered merely as a guarantee to secure the payment of the obligation of Defendant?

HELD:
Nature of contract is Pledge supported by the stipulations embodied in the contract signed by
Defendant when he secured the loan from PNB.
The 2000 cavans of palay covered by the warehouse receipt were given to PNB only as a
guarantee to secure the fulfilment by Defendant in his obligation. This clearly appears in the
contract wherein it is expressly stated that said 2000 cavanes of palay were given as collateral
security.
It follows that by the very nature of the transaction its ownership remains with the pledgor
subject only to foreclosure in case of non-fulfillment of the obligation.
By this we mean that if the obligation is not paid upon maturity the most that the pledge can do
is to sell the property and apply the proceeds to the payment of the obligation and to return the
balance, if any, to the pledgor. This is the essence of the contract, for, according to law, a pledge
cannot become the owner of, nor appropriate to himself the thing given in pledge.
If by the contract of pledge, the pledgor continues to be the owner of the thing pledged during
the pendency of the obligation, it stands to reason that in case of loss of the property, the loss
should be borne by the pledgor.
The fact that the warehouse receipt covering the palay was delivered, endorsed in blank, to the
bank does not alter the situation, the purpose of such endorsement being merely to transfer the
juridical possession of the property to the pledge and to forestall any possible disposition
thereof on the part of the pledgor.
Where a warehouse receipt or quedan is transferred or endorsed to a creditor only to secure
the payment of a loan or debt, the transferee or endorsee does not automatically become the
owner of the goods covered by the warehouse receipt or quedan but he merely retains the
right to keep and with the consent of the owner to sell them so as to satisfy the obligation
from the proceeds of the sale. This is for the simple reason that the transaction involved is not a
sale but only a mortgage or pledge, and that if the property covered by the quedans or
warehouse receipts is lost without fault or negligence of the mortgagee or pledge or the
transferee or endorsee of the warehouse receipt or quedan, then said goods are to be regarded
as lost on account of the real owner, mortgagor or pledgor.
Topic: Guaranty and Suretyship; Article 2050
De Guzman v. Santos
FACTS:
Jerry O. Toole, Antonio Abad and Anastacio Santos formed a general mercantile partnership
Philippine American Construction Company with a capital of P14k.
P10k of which were taken by way of loan from Paulino Candelaria. The partnership and the co-
partners undertook and bound themselves to pay jointly and severally the indebtedness.
Upon default, Paulino filed civil case against Phil-Am Construction Company and co-partners for
the recovery of loan
TC ordered all Defendants to pay jointly and severally; CA affirmed
Upon filing of complaint, Paulino obtained a writ of attachment against Defendants. The Sheriff
attached properties of 3 partners. Partnership offered to post a bond of P10k.
Phil-Am Construction Company as principal then represented by the partner Antonio Abad,
Santiago Lucero and Meliton Carlos as guarantors executed a bond of P10k in favour of Paulino
for the lifting of the attachment.
After issuance of writ of execution, Sheriff found no property of the judgment debtors. Paulino
moved for the issuance of writ of execution against the guarantors of Defendants.
Guarantor-Plaintiff and co-guarantor Meliton Carlos later paid the creditor and were able to
recover from Antonio Abad a sum of P3800, which they divided equally.
It appeared that the payment made by the plaintiff to Paulino was reduced to the sum of P3665.
Plaintiff now demands from Anastacio Santos the return of the aforesaid sum but Anastacio
refused.

ISSUE: Whether or not Defendant is bound to pay Plaintiff what he had advanced to Paulino?

HELD: YES
Article 1838 provides that any guarantor who pays for the debtor shall be indemnified by the
latter even should the guaranty have been undertaken without the knowledge of the debtor.
IN THIS CASE: The guarantor was the deceased Santiago Lucero, now represented by the
plaintiff in her capacity as judicial administratrix, and the debtor is the defendant-appellant.
Applying the provision cited, it is obvious that the Defendant is legally bound to pay what the
Plaintiff had advanced to the creditor upon the judgment, notwithstanding the fact that the
bond had been given without his knowledge.
Any person who makes a payment for the account of another may recover from the debtor
the amount of the payment, unless it was made against the express will of the latter. In the
latter case, he can only recover from the debtor in so far as the payment has been beneficial
to the latter.
It is evident that Defendant is bound to pay to the plaintiff what the latter had advanced to the
creditor upon the judgment, and this is more so because it appears that although Lucero
executed the bond without his knowledge, nevertheless he did not object thereto or repudiate
the same at any time.
Topic: Guaranty and Suretyship; Article 2055
Vizconde v. IAC
FACTS:
Perlas called Vizconde and asked her to sell an 8 carat diamond ring on a commission for P85k
Vizconde later returned the ring. Afterwards, Vizconde called on Perlas and claimed that there
was a sure buyer for the ring, Pilar Pagulayan
Pagulayan gave a post-dated check; Perlas and Vizconde signed a receipt (Exh. A)
The check was dishonoured. After 9 days, Pagulayan paid Perlas P5k against the value of the ring
and gave 3 Certificates of Title to guarantee delivery of the balance of such value (Exh D)
Perlas filed a complaint against Pagulayan and Vizconde for estafa.
TC and CA Vizconde and Pagulayan had assumed a joint agency in favour of Perlas for the sale
of the latters ring, which rendered them criminally liable, upon failure to return the ring or
deliver its agreed value, under Art 315, par 1(b) of the Revised Penal Code
SOL GEN disagreed; Vizconde cant be convicted of estafa based on the Exhibits presented

ISSUE: Whether Vizconde was considered as agent of Perlas or mere guarantor of obligation of
Pagulayan?

HELD: Mere guarantor

Nothing in the language of the receipt, Exh A, or in the proven circumstances attending its
execution can logically be considered as evidencing the creation of an agency between Perlas, as
principal, and Vizconde as agent, for the sale of the formers ring.
If any agency was established, it was one between Perlas and Pagulayan only, this being the
logical conclusion from the use of the singular I in said clause, in conjunction with the fact that
the part of the receipt in which the clause appears bears only the signature of Pagulayan.
To warrant anything more than a mere conjecture that the receipt also constituted Vizconde the
agent of Perlas for the same purpose of selling the ring, the cited clause should at least have
used the plural we, or the text of the receipt containing that clause should also have carried
Vizcondes signature.
The joint and several undertaking assumed by Vizconde in a separate writing below the main
body of the receipt, Exhibit A, merely guaranteed the civil obligation Pagulayan to pay Perlas
the value of the ring in the event of her (Pagulayans) failure to return said article.
What is clear from Exh A is that the ring was entrusted to Pagulayan to be sold on commission;
there is no mention therein that it was simultaneously delivered to and received by Vizconde for
the same purpose or, therefore, that Vizconde was constituted, or agreed to act as, agent jointly
with Pagulayan for the sale of the ring.
What Vizconde solely undertook was to guarantee the obligation of Pagulayan to return the ring
or deliver its value; and that guarantee created only a civil obligation, without more, upon
default of the principal.
Upon the evidence, Vizconde was a mere guarantor, a solidary one to be sure, of the obligation
assumed by Pagulayan to complainant Perlas for the return of the latters ring or the delivery of
its value. Whatever liability was incurred by Pagulayan for defaulting on such obligation and
this is not inquired into that of Vizconde consequent upon such default was merely civil, not
criminal.
Topic: Guaranty and Suretyship; Article 2067
Saenz v. Yap Chuan
FACTS:
Engracio Palanca a judicial administrator gave bond to guarantee his administration of the
estate of Margarita Jose
The bond was executed by Engracio, Plaintiff Saenz and two others in favour of the government
for the sum of P60k
On the same date, Engracio and 5 others executed a bond in favour of Saenz; Yap Chuan P20k
and the other 4 P5k each
TC ordered Saenz, as surety in solidum of the ex-administrator Engracio to pay the estate the
sum of P41k
Saenz paid to the administrator of the estate P8k; He filed sut against 5 sureties who executed
the bond
TC acquitted Defendant from the P20k claim and ordered the other 4 to pay P2k each.
Both parties appealed. Defendants were claiming that they are only liable for P1k each only
according to the terms of the contract. Plaintiff was claiming that he is entitled to maximum sum
of P5k for which each one had bound himself in the contract.

ISSUE: Whether or not Vizmanos is entitled to P20k, a reimbursement of P5k each from the Defendants?

HELD: NO
The bond of a debtor to protect his surety is not a sub bond nor a second bond with respect to
the original creditor. It is nothing but a substitution of the obligation of the debtor with respect
to his surety, and is necessarily governed by the legal provisions which regulate the right of
action of the surety against the party for whom he gave the bond, that is, an action of
subrogation which lies with the surety to compel the debtor to comply with the obligation to
reimburse.
This action arising out of subrogation is the remedy for securing reimbursement of the amount
that another has paid, and cannot exceed, except there is an express agreement to the contrary,
the amount actually paid by the surety in place of the debtor.
IN THIS CASE: The following terms of an obligation cannot be considered as an express
agreement to the contrary: x x x bind themselves as such conjointly to reimburse or pay
whatever amounts the latter (the surety) may have to pay or shall have paid by reason of the
judicial bond, inasmuch as this manner of expressing the intention of the obligated parties does
not constitute a true disjunctive proposition, but is merely explanatory of the obligation as if
contracted by the debtor himself, the only natural and logical interpretation.
To ask an indemnity of P20k, when the loss to be indemnified is only P8k is contrary to law.
Vizmanos only entitled to an action against 4 Defendants for recovery of maximum P5k. He
cannot collect more than the sum which he himself was actually compelled to pay.
---To follow---

Topic: Provisions Common to Pledge and Mortgage

Cavite Development v. Spouses Lim
Yu v. PCIB

Topic: Real Mortgage; Article 2124

Dilag v. Heirs of Ressureccion

Topic: Real Mortgage; Article 2127

Phil. Sugar Estate v. Camps

Topic: Real Mortgage; Article 2131

First Marbella v. Gatmaytan
Landrito v. CA

Topic: Antichresis; Article 2137

Peralta v. Quimpo

Topic: Chattel Mortgage; Article 2141

Superlines v. ICC