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Cecilleville Realty and Service Corp.

vs Spouses Acuña


On September 1981, Acuña Spouses requested Cecilleville thru its President, Jose A.
Resurreccion, to lend to them for one (1) year, two (2) parcels of land owned by the plaintiff as collaterals
to secure a credit line from the Prudential Bank and Trust Company. On September 21, 1981, thru a
secretary’s certificate and by virtue of a board resolution, the plaintiff lent to defendants the said owner’s
copies of certificate of title. However, on September 28, 1991, defendant Ofelia B. Acuña forged the
signature of Lucia R. Reyes as corporate secretary. By virtue of the fake secretary’s certificate, the
defendants were able to obtain a personal loan from "Prudential" in the sum of P610,000.00 with said
certificates as collaterals and upon signing a Real Estate Mortgage dated September 30, 1981 and two
Promissory Notes dated October 7, 1981 and October 15, 1981. Due to the defendants’ default in the
payment of their indebtedness, "Prudential" threatened to extra judicially foreclose the real estate
mortgage on plaintiff’s properties thru a notice of auction sale. To avoid foreclosure proceedings on its
properties, the plaintiff was forced to settle defendants’ obligations to "Prudential" in the amount
of P3,367,474.42. Subsequently, several written demands for reimbursement were sent by the plaintiff to
the defendants. Nevertheless, the defendants failed to pay their obligation.

Defendants contend that the instant complaint should be dismissed on the grounds of
prescription, laches and res judicata. The defendants insist that the action of the plaintiff is based on fraud
or forgery of a secretary’s certificate which happened on September 28, 1981 or 15 years ago. Therefore,
the plaintiff should have brought the instant action within the period provided for in Article 1146 of the Civil
Code. Moreover, the defendants argue that the plaintiff’s inordinate delay in the filing of the instant suit
clearly shows that it has abandoned its claim against the defendants and therefore guilty of laches.
Consequently, the defendants aver that the forgery issue has been passed upon in CA and same was
litigated by the RTC of Quezon City "where the plaintiff tried unsuccessfully to have the contract of real
estate mortgage involving the same properties, between defendant Ofelia Acuña and the Prudential Bank
and Trust Company, annulled on the same ground raised here." Hence, the principle of res judicata

Cecilleville appealed in CA and the appellate court reversed and set aside the trial court’s ruling
and decided in favor of Cecilleville. The appellate court stated that Cecilleville has two causes of action
against the Acuña spouses: reimbursement of a sum of money and damages arising from fraud.
Cecilleville’s action for reimbursement was filed on 20 June 1996, barely two months after 23 April 1996,
when Cecilleville made an extrajudicial demand to pay. Two months is well within the five-year
prescriptive period prescribed in Article 1149 of the Civil Code. On the other hand, the appellate court
declared that the complaint did not mention the date of Cecilleville’s discovery of Ofelia Acuña’s forgery of
Lucia Reyes’ signature. The appellate court concluded that the trial court erred in declaring Cecilleville’s
claim for damages barred by prescription and laches.

On motion for reconsideration filed by the Acuña spouses, the appellate court ruled that
Cecilleville’s claim for reimbursement of its payment to Prudential is predicated on the fraud allegedly
committed by the Acuña spouses. Without the alleged personal loan of the Acuña spouses, there would
be no foreclosure to forestall and no basis for Cecilleville’s claim for reimbursement. Actions for relief on
the ground of fraud may be brought within four years from discovery of the fraud. In its brief filed before
the appellate court, Cecilleville stated that it learned of the existence of the falsified Secretary’s Certificate
on 20 January 1987. Cecilleville filed the present case on 20 June 1996, or more than nine years after the
discovery of the fraud. Thus, Cecilleville’s action is barred by prescription. Therefore, affirming the
decision of the RTC.
Issue: Whether or not Cecilleville’s claim for reimbursement is based on ratified real estate mortgage and
not on fraud.


Yes. Cecilleville’s claim for reimbursement is based on ratified real estate mortgage. Cecilleville
tried to annul the real estate mortgage but failed when the Court ruled that Cecilleville had ratified the real
estate mortgage. In effect, Cecilleville became a third-party accommodation mortgagor. Cecilleville paid
the debt of the Acuña spouses to Prudential as an interested third party which is based on Article 1236 of
the Civil Code. Even if the Acuña spouses insist that Cecilleville’s payment to Prudential was without their
knowledge or against their will, Article 1302(3) of the Civil Code states that Cecilleville still has a right to
reimbursement, thus:

When, even without the knowledge of the debtor, a person interested in the fulfillment of the obligation
pays, without prejudice to the effects of confusion as to the latter’s share.

Cecilleville clearly has an interest in the fulfillment of the obligation because it owns the properties
mortgaged to secure the Acuña spouses’ loan. When an interested party pays the obligation, he is
subrogated in the rights of the creditor. Because of its payment of the Acuña spouses’ loan, Cecilleville
actually steps into the shoes of Prudential and becomes entitled, not only to recover what it has paid, but
also to exercise all the rights which Prudential could have exercised.

Cecilleville’s cause of action against the Acuña spouses is one created by law; hence, the action
prescribes in ten years. Prescription accrues from the date of payment by Cecilleville to Prudential of the
Acuña spouses’ debt on 5 April 1994. Cecilleville’s present complaint against the Acuña spouses was
filed on 20 June 1996, which was almost two months from the extrajudicial demands to pay on 9 and 23
April 1996. Whether we use the date of payment, the date of the last written demand for payment, or the
date of judicial demand, it is clear that Cecilleville’s cause of action has not yet prescribed.

The Court Granted the Petition and Set Aside the decision of the CA. Respondent spouses Tito
Acuña and Ofelia B. Acuña shall pay petitioner Cecilleville Realty and Service Corporation the
following: P3,367,474.42, representing the amount paid by Cecilleville Realty and Service Corporation to
Prudential Bank and Trust Company; and interest on the P3,367,474.42 at 16% per annum. Interest shall
be calculated from 9 April 1996 until full payment. Spouses Tito Acuña and Ofelia B. Acuña shall also pay
attorney’s fees to Cecilleville Realty and Service Corporation equivalent to 5% of the total award.
Food Terminal Inc vs. Daway


On 1984, Food Terminal Inc, a government-owned corporation engaged in the business of

providing warehousing and storage services to the public for a fee, and private respondent Tao
Development, Inc., entered into a contract of storage where TAO deposited at FTI’s cold storage export
quality onions consisting of 22,716 bags (approximately 567,900 kilos) of yellow granex onions and 2,853
bags (approximately 71,300 kilos) of red creole onions. Unfortunately, an ammonia leak penetrated
through FTI’s storage facilities and caused damage to TAO’s goods, rendering the deposited onions unfit
for export. On November 3, 1998,TAO filed a complaint against FTI at the RTC. The trial court, finding FTI
negligent in the performance of its duties, rendered judgment in favor of TAO. Therefrom, FTI went on
appeal to the CA where the appellate court affirmed the trial court’s decision with modifications rendering
the FTI to pay TAO the following:

a. The amount of P2,400,168.00 as actual damages representing the loss sustained by the appellee
b. The amount of P1,534,005.00 as unearned profits; and
c. The amount of P100,000.00 as attorney's fees.

The above amounts shall earn interest at the rate of 12% per annum from May 15, 1984 until fully

FTI appealed the CA decision and was again affirmed with modifications where the amounts are
sustained and the amounts shall earn interest at the rate of SIX PER CENT (6%) per annum from May
15, 1984 until fully satisfied, but before judgment becomes final. From the date of finality of the judgment
until the obligation is totally paid, A TWELVE PER CENT (12%) interest, in lieu of the SIX PER CENT
(6%) interest, shall be imposed.

The decision of the Court became final and executory on January 6, 1997. In a letter of February
12, 1997, TAO demanded from FTI payment in satisfaction of the judgment in the amount
of P7,194,453.60. In a reply letter of March 7, 1997, FTI disagrees with the computation of TAO, claiming
that their liability is only for P7,148,433.72

On May 5, 1997, TAO filed with the trial court a motion for execution, praying for the issuance of a
writ of execution against FTI for the total amount of P7,440,729.48. The trial court, noting the absence of
any opposition from FTI, granted TAO’s motion and accordingly ordered the issuance of the desired writ.
FTI filed a motion for reconsideration, contending that it was denied due process because it allegedly did
not receive any notice of hearing. In its subsequent Order of 12 August 1997, the trial court denied the

On August 22, 1997, FTI delivered to TAO a check for P7,148,433.72, which check was
admittedly encashed by TAO. Thereafter, FTI filed with the Court of Appeals a petition for certiorari to
nullify the trial court’s aforesaid orders. FTI maintained that TAO had acceded to its computation, and
presented, in support thereof, an alleged letter dated March 13, 1997 of Alberto Malvar, president of TAO,
demanding payment for only P7,148,433.72. On the basis of said letter and the fact that TAO had
encashed the FTI check for the same amount, FTI argued that it has satisfied the judgment. So it
concludes, the writ of execution issued against it by the trial court should be annulled and set aside.

The Court of Appeals respectively dismissed FTI’s petition and denied its motion for
reconsideration, ruling, inter alia, that petitioner FTI failed to establish the supposed accession of TAO to
its computation, and holding that the letter dated March 13, 1997 of Alberto Malvar is a forgery.

Whether or not, petitioner’s payment of P7,148,433.72 had resulted into the extinguishment of its
obligation to respondent.


No. Under 1248 of the Civil Code, it provides:

"ART. 1248. Unless there is an express stipulation to that effect, the creditor cannot be compelled
partially to receive the prestations in which the obligation consists. Neither may the debtor be
required to make partial payments.

However, when the debt is in part liquidated and in part unliquidated, the creditor may demand
and the debtor may effect the payment of the former without waiting for the liquidation of the

Petitioner FTI knew very well that respondent TAO was demanding the sum of P7,194,453.60 as
payment for its liability under this Court’s Resolution. Yet, despite such knowledge, petitioner proceeded
to offer a lesser amount. Under the aforequoted provision of the Civil Code, respondent TAO is thus
justified in its initial refusal to accept petitioner’s offer of only P7,148,433.72. As it were, FTI’s offer
of P7,148,433.72 opened an opportunity for TAO to receive a huge portion of FTI’s obligation to it. In any
event, there was no showing that respondent TAO has ever freed FTI from its obligation after receiving
the partial payment.