REGFRA(1)
REGFRA(1)
REGFRA(1)
Facts:
On 1974, Private respondent Overland Express Lines, Inc (lessee) entered into a Contract
of Lease with Option to Buy with petitioners (lessors) involving a land situated at Quezon
City for one (1) year. During that period the respondent was granted an option topurchase
the land. 1976, for failure of lessee to pay the rentals the petitioners filed an action for
ejectment. The City Court rendered judgment ordering lessee to vacate the leased
premises and to pay the rentals in arrears and damages with interests. Lessee filed a
petition enjoining the enforcement of said judgment and dismissal of the case for lack of
jurisdiction. Such petition was denied. Thereafter, lessee filed for an action for specific
performance to compel the execution of a deed of sale pursuant to the option to purchase
and the receipt of the partial consideration given to Alice Dizon and for the fixing of
period to pay the balance. Respondent Court of Appeals rendered a decision upholding
the jurisdiction of City Court and concluding that there was a perfected contract of sale
between the parties due to the said partial payment. Petitioner’s motion
forreconsideration was denied by the respondent Court.
Issues:
Whether the Quezon City court has jurisdiction over the ejectment case?
Whether the money given constitutes partial consideration to the option to purchase the
land?
Whether or not there is a perfected contract of sale?
Ruling:
1. The petitioneres had a cause of action to institute an ejectment suit against the lessee
with the City Court thus the city court (now MTC) has jurisdiction over it. The filing of
lessor of a suit with the RTC did not dives the City Court of its jurisdiction to take
cognizance over the ejectment case.
2. The term stipulated in the contract of lease with option to buy is just one (1) year.
Having failed to exercise the option within that period, the lessee cannot enforce its
option to purchase anymore. Even assuming that such option still subsists, when the
lessee tendered the amount on 1975, the suit for specific performance to enforce the
option to purchase was filed only on 1985 ore more than ten (10) years after accrual of
the cause of action. Since the lessee did not purchase within the stipulated one (1) year
and afterwhich still kept possession thereof, there was an implicit renewal of the contract
reviving all the terms in the original contract which are only germane to the lessee’s
rights of continued enjoyment of the property leased. The option to purchase is not
deemed
incorporated.
3. There was no perfected contract of sale between the parties. In herein case, the lessee
gave the money to Alice Dizon in an attempt to resurrect the lapsed option.The basis for
agency is representation and a person dealing with an agent is put upon inquiry and must
discover upon his peril the authority of the agent. Here, there was no showing that
petitioners consented to the act of Alice Dizon nor authorized her to act on their behalf
with regard to her transaction with the lessee. Therefore, one of the essential elements for
a contract of sale to be perfected is lacking: consent.
CASE 2
FACTS:
Petitioners spouses Dinoare engaged in the business of manufacturing and selling shirts.1
Respondent Sio is part owner and general manager of a manufacturing corporation doing
business under the trade name "Universal Toy Master Manufacturing." Petitioners and
respondent Sio entered into a contract whereby the latter would manufacture for the
petitioners 20,000 pieces of vinyl frogs and 20,000 pieces of vinyl mooseheads at P7.00
per piece in accordance with the sample approved by the petitioners. These frogs and
mooseheads were to be attached to the shirts petitioners would manufacture and sell.
Respondent Sio delivered in several installments the 40,000 pieces of frogs and
mooseheads. Petitioner fully paid the agreed price. Subsequently, petitioners returned to
respondent 29,772 pieces of frogs and mooseheads for failing to comply with the
approved sample. Petitioners then demanded from the respondent a refund of the
purchase price of the returned goods in the amount of P208,404.00. As respondent Sio
refused to pay. Petitioners filed action for collection of a sum of money.
RTC ruled in favor of the petioners. Respondent Sio sought recourse in the Court of
Appeals. The appellate court affirmed the trial court decision. Respondent then filed a
Motion for Reconsideration and a Supplemental Motion for Reconsideration alleging
therein that the petitioners' action for collection of sum of money based on a breach of
warranty had already prescribed. On January 24, 1994, the respondent court reversed its
decision and dismissed petitioners' Complaint for having been filed beyond the
prescriptive period. Hence, this petition
ISSUE:
Whether the contract between the contracting parties is a contract of sale or a contract for
a piece of work
Whether the respondent is responsible for the warranty against hidden defects
RULING:
Petition is DENIED
The contract between the petitioners and respondent stipulated that respondent would
manufacture upon order of the petitioners 20,000 pieces of vinyl frogs and 20,000 pieces
of vinyl mooseheads according to the samples specified and approved by the petitioners.
Respondent Sio did not ordinarily manufacture these products, but only upon order of the
petitioners and at the price agreed upon. Clearly, the contract executed by and between
the petitioners and the respondent was a contract for a piece of work. At any rate, whether
the agreement between the parties was one of a contract of sale or a piece of work, the
provisions on warranty of title against hidden defects in a contract of sale apply to the
case at bar.
A hidden defect is one which is unknown or could not have been known to the vendee.
CASE 3
FACTS:
ONAPAL Phils. Commodities, Inc. is a commission merchant/broker licensed by SEC,
engaged in commodity futures trading.
As stipulated in the trading contract, Susan may withdraw anytime and she did. From P
800,000 Susan invested, she was able to get only P 470,000. Hence, complaint was filed
with the trial court. The trial court found and rendered the trading contract a specie of
gambling and therefore null and void. CA upheld the judgment.
Hence, petition for certiorari with SC.
ISSUE
W/N THE TRADING CONTRACT IS NULL AND VOID AS IT APPEARS TO BE A
SPECIE OF GAMBLING
RULING
Petition Dismissed. The trading contract signed by the parties, is a contract for the sale of
products for future delivery, in which either seller or buyer may elect to make or demand
delivery of goods agreed to be bought and sold, but where no such delivery is actually
made. By delivery is meant the act by which the res or
subject is placed in the actual or constructive possession or control of another. ONAPAL
received the customer's orders and private respondent's money. As per terms of the
trading contract, customer's orders shall be directly transmitted by the petitioner as broker
to its principal, Frankwell Enterprises Ltd. of
Hongkong , which in turn must place the customer's orders with the Tokyo Exchange.
There is no evidence that the orders and money were transmitted to its principal
Frankwell Enterprises Ltd. in Hongkong nor were the orders forwarded to the Tokyo
Exchange. We draw the conclusion that no actual delivery of goods and commodity was
intended and ever made by the parties. In the realities of the transaction, the parties
merely speculated on the
rise and fall in the price of the goods/commodity subject matter of the transaction. If
private respondent's speculation was correct, she would be the winner and the petitioner,
the loser, so petitioner would have to pay private respondent the "margin". But if private
respondent was wrong in her speculation then she would emerge as the loser and the
petitioner, the winner. The petitioner would keep the money or collect the difference
from the private respondent. This is clearly a form of gambling provided for with
unmistakeable certainty under Article 2018
LOAN
CASE 1
Producers Bank of the Philippines (First International Bank) vs. Court of Appeals,
et al.,
G.R. No. 115324. February 19, 2003
FACTS:
In 1979, respondent Vives was invited Angeles Sanchez to help one Doronilla, in
incorporating his business, Sterela Marketing and Services. Sanchez asked private
respondent to deposit in a bank a certain amount of money in the bank account of Sterela
for purposes of its incorporation. She assured private respondent that he could withdraw
his money from said account within a month’s time. Respondent asked Sanchez to bring
Doronilla to their house so that they could discuss Sanchez’s request.
On 9th of May of the same year, respondent, issued a check in the amount of Two
Hundred Thousand Pesos (P200,000.00) in favor of Sterela after. Respondent instructed
his wife, Mrs. Inocencia Vives, to accompany Doronilla and Sanchez in opening a
savings account in the name of Sterela in the Buendia, Makati branch of Producers Bank
of the Philippines. However, only Sanchez, Mrs. Vives and Dumagpi went to the bank to
deposit the check. They had with them an authorization letter from Doronilla authorizing
Sanchez and her companions, "in coordination with Mr. Rufo Atienza," to open an
account for Sterela Marketing Services in the amount of P200,000.00. In opening the
account, the authorized signatories were Inocencia Vives and/or Angeles Sanchez. A
passbook for Savings Account No. 10-1567 was thereafter issued to Mrs.
Vives.Consequently respondent learned that Sterela was no longer holding office in the
address previously given to him. He and his wife went to the Bank to check if their
money was still compact. Mr. Rufo Atienza, the assistant manager, who informed them
that part of the money in Savings Account No. 10-1567 had been withdrawn by
Doronilla, and that only P90,000.00 remained therein. Respondent tried to get in touch
with Doronilla through Sanchez. On June 29, 1979, he received a letter from Doronilla,
assuring him that his money was intact and would be returned to him. On August 13,
1979, Doronilla issued a postdated check for Two Hundred Twelve Thousand Pesos
(P212,000.00) in favor of respondent. However the check was dishonored. Doronilla
requested private respondent to present the same check on September 15, 1979 but when
the latter presented the check, it was again dishonored.
After written demand upon Doronilla for the return of the money. Doronilla issued
another check for P212,000.00 in private respondent’s favor but the check was again
dishonored for insufficiency of funds.Private respondent instituted an action for recovery
of sum of money in the Regional Trial Court (RTC) in Pasig, Metro Manila against
Doronilla, Sanchez, Dumagpi and petitioner.Judgment was rendered sentencing
defendants Arturo J. Doronila, Estrella Dumagpi and Producers Bank of the Philippines
to pay plaintiff Franklin Vives jointly and severally.
ISSUE:
Whether or not the transaction was one of mutuum or commodatum
RULING:
Petitioner contends that the transaction between private respondent and Doronilla is a
simple loan (mutuum) since all the elements of a mutuum are present: first, what was
delivered by private respondent to Doronilla was money, a consumable thing; and
second, the transaction was onerous as Doronilla was obliged to pay interest, as
evidenced by the check issued by Doronilla in the amount of P212,000.00, or P12,000
more than what private respondent deposited in Sterela’s bank account. Private
respondent, on the other hand, argues that the transaction between him and Doronilla is
not a mutuum but an accommodation, since he did not actually part with the ownership of
his P200,000.00 and in fact asked his wife to deposit said amount in the account of
Sterela so that a certification can be issued to the effect that Sterela had sufficient funds
for purposes of its incorporation but at the same time, he retained some degree of control
over his money through his wife who was made a signatory to
the savings account and in whose possession the savings account passbook was given.
No error was committed by the Court of Appeals when it ruled that the transaction
between private respondent and Doronilla was a commodatum and not a mutuum. A
circumspect examination of the records reveals that the transaction between them was a
commodatum. Article 1933 of the Civil Code distinguishes between the two kinds of
loans in this wise:By the contract of loan, one of the parties delivers to another, either
something not consumable so that the latter may use the same for a certain time and
return it, in which case the contract is called a commodatum; or money or other
consumable thing, upon the condition that the same amount of the same kind and quality
shall be paid, in which case the contract is simply called a loan or mutuum.
CASE 2
FACTS
Respondent Yolanda G. David, doing business under the trade name David Poultry Farm
with obtained a P1,100,000 loan from petitioner, Land Bank of the Philippines (Land
Bank), to bear interest “based on the prevailing lender’s rates/special financing
rate” and penalty charge of 12% per annum in case of default in the settlement thereof.
To secure the payment of the loan, respondent mortgaged a parcel of land.
However, due to serious business reverses suffered by respondent, she and petitioner
executed a Restructuring Agreement. Respondent defaulted in the payment of monthly
amortizations of the loan; hence, the entire balance of the loan became due and
demandable which, as of March 31, 1997, stood at P971,324.89. Despite demand,
respondent failed to settle her obligation, prompting petitioner to initiate foreclosure
proceedings
On appeal, the Court of Appeals, noting that the loan extended to respondent was part of
the social assistance program to improve the plight of farmers, found the interest rate of
17% per annum and the penalty charge of 12% per annum exorbitant and thus reduced
them to 12% per annum and 5% per annum, respectively. And it nullified the sale at
public auction of the mortgaged property.
ISSUE
Whether or not the interest rate of 17% per annum, as provided in the restructuring
agreement, as well as the penalty charges of 12% per annum can be considered as
exorbitant and unconscionable.
RULING
Yes, Jurisprudence empowers courts to equitably reduce interest rates. And the law
empowers them to reduce penalty charges.
Thus, Article 1229 of the Civil Code provides
The judge shall equitably reduce the penalty when the principal obligation has been
partly or irregularly complied with by the debtor. Even if there has been no partial
performance, the penalty may also be reduced by the courts if it is iniquitous or
unconscionable.
Section 24 of R.A. No. 8435 (The Agriculture and Fisheries Modernization Act of 1997)
provides that “[t]he Land Bank of the Philippines shall, in accordance with its original
mandate, focus primarily on plans and programs in relation to the financing of agrarian
reform and the delivery of credit services to the agriculture and fisheries sectors,
especially to small farmers and fisherfolk.” In the case at bar, the purpose of the loan was
to finance the construction of two broiler houses and a feeds warehouse. The observation
by the Court of Appeals that the loan extended to respondent was part of the social
assistance program to improve the plight of farmers is thus well-taken.
Given the business losses that respondent suffered, coupled with the fact that she had
made partial payments on both the original loan and the restructured loan, the reduction
by the appellate court of the interest rate and penalty charge is justified.
While, as petitioner argues, the nullity of the interest rate and penalty charge does not
affect its right to recover the principal amount of the loan, the public auction of the
mortgaged property is nevertheless void, the amount indicated as mortgage indebtedness
having included excessive, iniquitous, and exorbitant interest rate and penalty charge.
The nullity of the stipulation on the usurious interest does not affect the lender's right to
recover the principal of the loan. Nor would it affect the terms of the real estate mortgage.
The right to foreclose the mortgage remains with the creditors, and said
right can be exercised upon the failure of the debtors to pay the debt due. The debt due is
to be considered without the stipulation of
the excessive interest
PLEDGE
CASE 1
El Banco Espanol-Filipino v. Peterson (G.R. No. 3088)
Facts:
Plaintiff alleges in its complaint that under the contract entered into on the 4th of
March, 1905, by and between the Spanish-Filipino Bank and Francisco Reyes, the
former, loaned to the latter total sum of P226,117.38, Philippine currency;
That to secure the payment of these two sums and the interest thereon, the debtor,
Francisco Reyes, by a public instrument executed before a notary on the aforesaid date
mortgaged in favor of the plaintiff bank several pieces of property belonging to him, and
pledged to the said bank part of his personal property, specifying the proportion on
which the said real and personal property thus mortgaged and pledged in favor of the
plaintiff corporation would be respectively liable for the payment of the debt;
That the property pledged by the debtor to the bank included a stock or merchandise,
consisting of wines, liquors, canned goods, and other similar articles valued at
P90,591.75, then stored in the warehouses of the debtor, Reyes, No. 12 Plaza Moraga,
in the city of Manila, which said goods and merchandise were liable for the payment of
the said sum of P90,591.75, Philippine currency;
that in the aforesaid deed of pledge it was agreed by and between the bank and the
debtor, Reyes, that the goods should be delivered to Ramon Garcia y Planas for safe-
keeping, the debtor having actually turned over to the said Garcia y Planas the goods in
question by delivering to him the keys of the warehouse in which they were kept;
that in a subsequent contract entered into by and between the debtor, Reyes, and the
plaintiff bank, was modified so as to provide that the goods then (September 29) in
possession the depositary should only be liable for the sum of P40,000, Philippine
currency, Luis M.a Sierra having been subsequently appointed by agreement between
the bank and the debtor as depositary of the goods thus pledged in substitution for the
said Ramon Garcia y Planas.
Held:
Yes, the court has held that the contract in question was a perfect contract of pledge, it
having been conclusively shown that the pledgee took charge and possession of the
goods pledged through a depository and a special agent appointed by it, each of whom
had a duplicate key to the warehouse wherein the said goods were stored, and that the
pledgee, itself, received and collected the proceeds of the goods as they were sold.
The fact that the said goods continued in the warehouse which was formerly rented by
the pledgor, Reyes, does not affect the validity and legality of the pledge, it having been
demonstrated that after the pledge had been agreed upon, and after the depository
appointed with the common consent of the parties had taken possession of the said
property, the owner, the pledgor, could no longer dispose of the same, the pledgee
being the only one authorized to do so through the depositary and special agent who
represented it, the symbolical transfer of the goods by means of the delivery of the keys
to the warehouse where the goods were stored being sufficient to show that the
depositary appointed by the common consent of the parties was legally placed in
possession of the goods.
CASE 2
Ong v. IAC (G.R. No. 74073)
Facts:
Madrigal Shipping Co., Inc. applied for and was granted a loan by the Consolidated Bank
and Trust Corporation (Solidbank for short) in the amount of P2,094,000.00. To secure
the fulfillment of the obligations of Madrigal Shipping Co., Inc. to the Solidbank, and
credit accommodations which the former may from time to time obtain from the latter
both parties executed a Pledge Agreement wherein Madrigal Shipping, Co., Inc. gave
additional securities or collaterals in the form of a pledge in favor of the bank, its barge
and tugboat. Madrigal Shipping Co., Inc. failed to pay its obligation to the Solidbank. The
creditor bank had to sell the pledged properties. Nevertheless, when the pledgee bank
was to sell the pledged properties, it found out that the tugboat and the barge had
surreptitiously been taken from the Tanque Bodega, Pasig River, Manila, without the
knowledge and consent of the Solidbank. Petitioner Honesto Ong, a successful bidder in
a public auction by virtue of a writ of execution issued by the National Labor Relations
Commission (NLRC), bought one barge which was subject of the pledge. Private
respondent (Solidbank) filed a complaint against Honesto Ong, et al. for Replevin with
Damages.
Issue: whether or not the contract of pledge entered into by and between Solidbank
and Madrigal Shipping Co., Inc. is binding on the petitioners Ong
Held:
Yes, the court has held that under Article 2096 of the Civil Code that for a pledge to take
effect against third persons, it should be in a public instrument which must contain the
description of the thing pledged and the date of the pledge. Petitioner’s contention that
the contract of pledge by and between Solidbank and Madrigal Shipping Co., Inc. was
not recorded under Sections 804 and 809 of the Tariff and Customs Code and argue that
it is not binding on third persons like the petitioners is untenable. Art. 2096 has been
interpreted in the sense that for the contract to affect third persons, apart from being in
a public instrument, possession of the thing pledged must in addition be delivered to
the pledgee. All these requirements have been complied with, in the case at bar. The
pledge agreement is a public instrument, the same having been notarized. Subject of
the pledge (MSC Barge No. 601) was delivered to the Solidbank which had it moored at
Tanque Bodega, Pasig River, Manila, where it was guarded by a security guard.
Therefore the Solidbank has the light of retention of the barge in question pledged to it
until it is paid. The Civil Code expressly provides;
Art. 2090. The contract of pledge gives right to the creditor to retain the thing in his
possession or in that of a third person to whom it has been delivered, until the debt is
paid.
Applying these concepts in the case at bar, the pledgee is obviously a lawful and rightful
possessor of the personal property pledged.
MORTGAGE
CASE 1
Perfecto Dy , Jr. vs. Court of Appeals
July 8, 1991
Third Division
Justice Gutierrez, Jr.
FACTS
Perfecto Dy and Wilfredo Dy are brothers. Wilfredo Dy purchased a truck and a farm
tractor through financing extended by Libra Finance and Investment Corporation. Both
truck and tractor were mortgaged to Libra as a security for the loan.
The petitioner, Perfecto Dy, wanted to buy the tractor from his brother, therefore he
wrote a letter to Libra requesting that he be allowed to purchase from Wilfredo Dy the
said tractor and assume the mortgage debt from the latter. Libra, thru its manager,
approved the petitioner’s request. Wilfredo executed a deed of absolute sale in favor of
Perfecto.
A PNB check was issued in favor of Libra, thus the indebtedness of Wilfredo with the
financing firm has bee settled. Libra insisted, however that it be cleared first before Libra
could release the tractor in question.
Meanwhile a civil case entitled ‘”Gelac Trading, Inc v. Wilfredo Dy was pending in
another court in Cebu regarding a collection case to recover a sum. Through an alias writ
of execution, the sheriff was able to seize and levy on the tractor which was in the
premises of Libra in Carmen, Cebu. The tractor was subsequently sold at public auction.
The property was sold to Antonio Gonzales. It was only when the check was
cleared that Perfecto learned about Gelac having already taken custody of the subject
tractor.
Perfecto Dy filed and action to recover the subject tractor against “Gelac Trading “ with
the RTC in Cebu City. RTC rendered judgment in favor of Perfecto, pronouncing that
Perfecto is the owner of the tractor and directing Gelac Trading Corporation and Antonio
Gonzales to return the same to Perfecto. On appeal, the Court of Appeals reversed the
decision of the RTC and dismissed the complaint. It held that the tractor in question still
belonged to Wilfredo Dy when it was seized and
levied by the sheriff by virtue of the alias writ of execution.
Issue:
Whether or not the property(tractor) in question belongs to the mortgagor upon the
execution of the chattel mortgage.
Ruling:
Petition granted. The decision of the Court of Appeals was set aside. The decision of the
trial court was reinstated.
Ratio: (Dy, Jr. vs. Court of Appeals) The mortgagor who gave the property as
security under a chattel mortgage did not part with the ownership over the same. He had
the right to sell it although he was under obligation to secure the written contract of the
mortgagee. And even if no consent was obtained from the mortgagee, the validity of the
sale would still not be affected.
Article 1496 of the civil code states that the ownership of the thing sold is acquired by the
vendee from the moment it is delivered to him in any of the ways specified in Articles
1497 to 1501 or in any manner signifying an agreement that the possession is transferred
from the vendor to the vendee. The sale of the object tractor was consummated upon the
execution of the public instrument. At this time constructive delivery was already
effected. Hence, the subject tractor was no longer owned by Wilfredo Dy when it was
levied upon by the sheriff(Dy, Jr. vs. Court of Appeals).
CASE 2
SPOUSES JAYME C. UY and EVELYN UY,
petitioners,
vs.
THE HONORABLE COURT OF APPEALS and
SPS. NICANOR G. DE GUZMAN and ESTER
DE GUZMAN, respondents.
G.R. No. 109197 June 21, 2001
MELO, J.:
FACTS
Private respondents Nicanor de Guzman, Jr. and Ester de Guzman were the owners of
three lots located in Greenhills Subdivision, San Juan, Metro Manila. In 1971, they
constructed, at a cost of P3 million, a 1,200 square meter residential house on two of the
lots. In 1987, the market value of the lots already ranged from P4,000 to P5,000 per
square meter while the house was worth about P10 million. Sometime in 1987, Nicanor
de Guzman,Jr. decided to run for the position of Representative of the Fourth District of
NuevaEcija. Sometime in April 1987, however, deGuzman’s campaign fund began to run
dry andhe was compelled to borrow P2.5 Million fromMario Siochi. The de Guzman
spouses wererequired to sign, as a sort of collateral, a deed ofsale dated April 10, 1987
whereby theypurportedly sold 2 of the 3 lots along with theimprovements thereon, to
Siochi. De Guzmanwas able to obtain two more loans of
P500,000.00 each from Siochi. No additionalcollateral was required, the "deed of sale"
beingmore than sufficient to cover the original P2.5million loan and the additional P1
million loan.Despite the "deed of sale," however, the deGuzmans remained in possession
of theproperty. Aside from these loans, de Guzmanalso owed Siochi several debts, to
repay theseother loans, the de Guzmans agreed with Siochito have their 1,411 square
meter vacant lot,which had already been "sold" to Siochi underthe April 10, 1987 deed of
sale, sold. The sale ofthe same amounted to P4.8 Million, theproceeds of which were all
retained by Siochi. Inthe meantime and without the knowledge of thede Guzman spouses,
Siochi had the spouses TCT cancelled on the basis of the deed of saleexecuted by the
spouses on April 10, 1987, and had new Torrens titles issued in his name.
On June 20, 1987, Siochi sold the two lots and the improvements thereon for P2.75
Million to herein petitioners Jayme and Evelyn Uy. Thereafter, petitioners had Siochi’s
titles over the lots cancelled and had new titles issued over the property. On July 1, 1988,
petitioners entered into a contract of lease with option to buy with Roberto Salapantan.
Salapantan was, however, unable to obtain possession of the lots
since the premises were occupied by the de Guzman spouses. Consequently, Salapantan
filed a complaint for ejectment on August 1, 1988 against the de Guzman spouses with
the Metropolitan Trial Court of San Juan, Metro Manila. On September 16, 1988, the de
Guzmans filed a complaint with the Regional Trial Court of Pasig against Siochi,
Salapantan, and herein petitioners, seeking the reformation of the April 10, 1987 Deed of
Absolute Sale to the end that the true intention of the parties therein be expressed. On
December 28, 1990, the trial court rendered its decision in favor of
the de Guzmans. Aggrieved, petitioners interposed an appeal with the Court of Appeals,
the latter affirmed the decision of the trial court holding that the sale disputed by the de
Guzmans to Siochi was an equitable mortgage.
ISSUE :
Whether or not the sale made by herein private respondents was indeed an equitable
mortgage as held by both the trial court and the appellate court
HELD: YES, the sale is an equitable mortgage. Art. 1602 of the New Civil Code
provides: The contract shall be presumed to be an equitable mortgage, in any of the
following cases:
(1) When the price of a sale with right to repurchase is unusually inadequate;(2) When
the vendor remains in possession as lessee or otherwise;(3) When upon or after the
expiration of the right to repurchase another instrument extending the period of
redemption or granting a new period is executed;(4) When the purchaser retains for
himself a part of the purchase price; (5) When the vendor binds himself to pay the taxes
on the thing sold;(6) In any other case where it may fairly be inferred that the real
intention of the parties is that the transaction shall secure the payment of a debt or the
performance of any other obligation.
The court was convinced and found that the questioned deed of sale is in reality a mere
equitable mortgage and not an absolute sale in view of the following circumstances:
First, the consideration of the sale of P2.5 Million is grossly and unusually
inadequate.Second, despite the alleged deed of sale, plaintiffs have remained in actual
and physical possession of the litigated property up to the present time.Third, the
uncontradicted evidence is that plaintiffs were driven to obtain the emergency loan due to
urgent necessity of obtaining funds and they signed the deed of sale knowing that it did
not express their real intention. In fact, additional loans in the total sum of P1 million
were extended to plaintiffs by Siochi even after the execution of said sale without Siochi
demanding for any additional security.Lastly, Siochi had retained for themselves the
entire proceeds of P4.8 million derived from the sale of plaintiffs’ vacant lot. In the
following circumstances, it indubitably shows that the alleged sale was indeed an
equitable mortgage. As found by both the trial court and appellate court, the April 10,
1987 deed of sale executed by the de Guzmans and Siochi was an equitable mortgage,
hence, the titles to the house and lots which were sold by Siochito petitioners actually
remained with the mortgagors, the de Guzmans. The circumstance that the original
transaction was subsequently declared to be an equitable mortgage
AGENCY
CASE 1
FACTS:
Concepcion and Gerundia Rallos were sisters and registered coowners of a parcel of land
in Cebu. They executed a SPA in favor of their brother, Simeon Rallos, authorizing him
to sell for and in behalf of them, the lot. After Concepcion died, Simeon sold the
undivided shares of his sisters to Felix Go Chan & Sons for Php10,686.90.
ISSUE:
Is the sale of the undivided share of Concepcion valid although it
was executed by the agent after the death of his principal?
RULING:
Agency is basically personal, representative and derivative in nature. The authority of the
agent to act emanated from the powers granted to him by his principal; his act is the act
of the principal if done within the scope of authority. Qui facit per alium facit per se. “He
who acts through another acts himself.” By reason of the very nature of the relationship
between principal and agent, agency is extinguished by the death of the principal or the
agent. The death of the principal effects instantaneous and absolute revocation of the
authority of the agent unless the power be coupled with an interest
Article 1930 of the Civil Code is not involved because admittedly the SPA executed in
favor of Simeon was not coupled with an interest. Article 1931 is the applicable law.
Under this provision, an act done by the agent after the death of his principal is valid and
effective only under two conditions, viz: (1) that the agent acted without knowledge of
death of principal; and (2) that the third person who contracted with the agent himself
acted in good faith. These two requisites must concur, the absence of one will render the
act of the agent invalid and unenforceable.
In the instant case, it cannot be questioned that the agent, Simeon, knew of the death of
his principal at the time he sold the latter’s share to respondent corporation. On the basis
of the established knowledge of Simeon concerning the death of his principal, Article
1931 is inapplicable. The law expressly requires for its application lack of knowledge on
the part of the agent of the death of his principal; it is enough that the third person acted
in good faith. Thus in Buason & Reyes v. Panuyas, the Court applying Article 1738 of
old Civil Code now Article 1931 of NCC sustained the validity of a sale made after the
death of the principal because it was not shown that the agent knew of his principal’s
demise.
However, the principal rule explicitly states that death extinguished the agency. That
being the general rule, it follows a fortiori that any act of an agent after the death of his
principal is void ab initio unless the same falls under the exceptions provided in Articles
1930 and 1931.
CASE 2
FACTS: On January 10, 1966, the appellant, who is a businesswoman, went to the house
of Maria Ayroso and proposed to sell Ayroso's tobacco. Ayroso agreed to the proposition
of the appellant to sell her tobacco consisting of 615 kilos at P1.30 a kilo. The appellant
was to receive the overprice for which she could sell the tobacco. This agreement was
made in the presence of plaintiff's sister, Salud G. Bantug.
Of the total value of P799.50, the appellant had paid to Ayroso only P240.00, and this
was paid on three different times. Demands for the payment of the balance of the value of
the tobacco were made upon the appellant by Ayroso, and particularly by her sister, Salud
Bantug. Salud Bantug further testified that she had gone to the house of the appellant
several times, but the appellant often eluded her; and that the 'camarin' of the appellant
was empty. Although the appellant denied that demands for payment were made upon
her, it is a fact that on October 19, 1966, she wrote a letter to Salud Bantug.
Pursuant to this letter, the appellant sent a money order for P100.00 on October 24, 1967,
Exh. 4, and another for P50.00 on March 8, 1967; and she paid P90.00 on April 18, 1967
as evidenced by the receipt Exh. 2, dated April 18, 1967, or a total of P240.00. As no
further amount was paid, the complainant filed a complaint against the appellant for
estafa.
ISSUE:
WON petitioner was not an agent because Exhibit "A" does not say
that she would be paid the commission if the goods were sold
RULING:
It is clear in the agreement, Exhibit "A", that the proceeds of the sale of the tobacco
should be turned over to the complainant as soon as the same was sold, or, that the
obligation was immediately demandable as soon as the tobacco was disposed of Hence,
Article 1197 of the New Civil Code, which provides that the courts may fix the duration
of the obligation if it does not fix a period, does not apply. The fact that appellant
received the tobacco to be sold at P1.30 per kilo and the proceeds to be given to
complainant as soon as it was sold, strongly negates transfer of ownership of the goods to
the petitioner. The agreement (Exhibit "A") constituted her as an agent with the
obligation to return the tobacco if the same was not sold
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