Bar Subjects

Welcome to Law Discourse!

I know for a fact that the life of a law student is difficult, to say the least. I'd like to say... "We're all on the same boat!" This is the reason why I felt compelled to create this blog. It is precisely to help people like me have easy access to information, particularly case digests.

I would appreciate any comments, suggestions and contributions, which could help in making this site more useful. So, if you happen to visit this blog, kindly post a comment to help me improve this site.

Please take the time to read the cases in its full text. Just click on the links below to go to the Supreme Court archive or Lawphil archive.

Special thanks is accorded to Arellano Law Foundation for coming up with "The LawPhil Project" and Chan Robles with their "Virtual Law Library" for generously sharing it to everyone. Kudos to all the people who made this possible!

26 September 2011

DEVELOPMENT BANK OF THE PHILIPPINES vs. COURT OF APPEALS G.R. No. 118367. January 5, 1998


FACTS:
Plaintiff Lydia P. Cuba is a grantee of a Fishpond Lease Agreement No. 2083 (new) dated May 13, 1974 from the Government; Cuba obtained loans from the Development Bank of the Philippines in the amounts of P109,000.00; P109,000.00; and P98,700.00 under the terms stated in the Promissory Notes dated September 6, 1974; August 11, 1975; and April 4, 1977; As security for said loans, plaintiff Lydia P. Cuba executed two Deeds of Assignment of her Leasehold Rights; Plaintiff failed to pay her loan on the scheduled dates thereof in accordance with the terms of the Promissory Notes; Without foreclosure proceedings, whether judicial or extra-judicial, defendant DBP appropriated the leasehold Rights of plaintiff Lydia Cuba over the fishpond in question; After defendant DBP has appropriated the Leasehold Rights of plaintiff Lydia Cuba over the fishpond in question, defendant DBP, in turn, executed a Deed of Conditional Sale of the Leasehold Rights in favor of plaintiff Lydia Cuba over the same fishpond in question; In the negotiation for repurchase, plaintiff Lydia Cuba addressed two letters to the Manager DBP, Dagupan City dated November 6, 1979 and December 20, 1979. DBP thereafter accepted the offer to repurchase in a letter addressed to plaintiff dated February 1, 1982; After the Deed of Conditional Sale was executed in favor of plaintiff Lydia Cuba, a new Fishpond Lease Agreement No. 2083-A dated March 24, 1980 was issued by the Ministry of Agriculture and Food in favor of plaintiff Lydia Cuba only, excluding her husband; Plaintiff Lydia Cuba failed to pay the amortizations stipulated in the Deed of Conditional Sale; After plaintiff Lydia Cuba failed to pay the amortization as stated in Deed of Conditional Sale, she entered with the DBP a temporary arrangement whereby in consideration for the deferment of the Notarial Rescission of Deed of Conditional Sale, plaintiff Lydia Cuba promised to make certain payments as stated in temporary Arrangement dated February 23, 1982; Defendant DBP thereafter sent a Notice of Rescission thru Notarial Act dated March 13, 1984, and which was received by plaintiff Lydia Cuba; After the Notice of Rescission, defendant DBP took possession of the Leasehold Rights of the fishpond in question; That after defendant DBP took possession of the Leasehold Rights over the fishpond in question, DBP advertised in the SUNDAY PUNCH the public bidding dated June 24, 1984, to dispose of the property; That the DBP thereafter executed a Deed of Conditional Sale in favor of defendant Agripina Caperal on August 6, 1984; Thereafter, defendant Caperal was awarded Fishpond Lease Agreement No. 2083-A on December 28, 1984 by the Ministry of Agriculture and Food.

ISSUE: Whether the act of DBP in appropriating to itself CUBA's leasehold rights over the fishpond in question without foreclosure proceedings was contrary to Article 2088 of the Civil Code and, therefore, invalid.
AN ASSIGNMENT TO GUARANTEE AN OBLIGATION IS VIRTUALLY A MORTGAGE;

HELD: We agree with CUBA that the assignment of leasehold rights was a mortgage contract. Simultaneous with the execution of the notes was the execution "Assignments of Leasehold Rights" where CUBA assigned her leasehold rights and interest on a 44-hectare fishpond, together with the improvements thereon. As pointed out by CUBA, the deeds of assignment constantly referred to the assignor (CUBA) as "borrower"; the assigned rights, as mortgaged properties; and the instrument itself, as mortgage contract. Moreover, under condition No. 22 of the deed, it was provided that "failure to comply with the terms and condition of any of the loans shall cause all other loans to become due and demandable and all mortgages shall be foreclosed." And, condition No. 33 provided that if "foreclosure is actually accomplished, the usual 10% attorney's fees and 10% liquidated damages of the total obligation shall be imposed." There is, therefore, no shred of doubt that a mortgage was intended. In People's Bank & Trust Co. vs. Odom, this Court had the occasion to rule that an assignment to guarantee an obligation is in effect as mortgage.

08 October 2010

CALIFORNIA BUS LINES INC. vs STATE INVESTMENT HOUSE, INC. G.R. No. 147950. December 11, 2003

QUISUMBING, J:

Facts: 
Delta Motors Corporation  applied for financial assistance from respondent State Investment House, Inc., a domestic corporation engaged in the business of quasi-banking. SIHI agreed to extend a credit line to Delta which eventually became indebted to SIHI. Meanwhile, petitioner purchased on installment basis several buses to Delta. To secure the payment of the obligation petitioner executed promissory notes in favor of Delta. When petitioner defaulted on the payments of the debts, it entered into an agreement with delta to cover its due obligations. However, petitioner still had trouble meeting its obligations with delta. Pursuant to the memorandum of agreement delta executed a deed of sale assigning to respondent, the promissory notes from petitioner. Respondent subsequently sent a demand letter to petitioner requiring remitting payments due on the promissory notes. Petitioner replied informing respondent of the fact that delta had taken over its management and operations.   

Issue: 
Whether the Restructuring Agreement dated October 7, 1981, between petitioner CBLI and Delta Motors, Corp. novated the five promissory notes Delta Motors, Corp. assigned to respondent SIHI,

Held:  
The attendant facts do not make out a case of novation. The restructuring agreement between Delta and CBLI executed on October 7, 1981, shows that the parties did not expressly stipulate that the restructuring agreement novated the promissory notes. Absent an unequivocal declaration of extinguishment of the pre-existing obligation, only a showing of complete incompatibility between the old and the new obligation would sustain a finding of novation by implication. 59 However, our review of its terms yields no incompatibility between the promissory notes and the restructuring agreement.

CA Agro Industrial Development Corp., vs Court of Appeals GR# 90027 March 3, 193

DAVIDE, JR., J:

Facts:  
Petitioner and the spouses Ramon and Paula Pugao entered into an agreement whereby the former purchased from the latter two (2) parcels of land. Among the terms and conditions of the agreement were that the titles to the lots shall be transferred to the petitioner upon full payment of the purchase price and that the owner's copies of the certificates of titles thereto, and that title shall be deposited shall be deposited in a safety deposit box of any bank. Petitioner and the Pugaos then rented Safety Deposit Box of private respondent Security Bank and Trust Company.

Thereafter, a certain Mrs. Margarita Ramos offered to buy from the petitioner the two (2) lots. Mrs. Ramos demanded the execution of a deed of sale which necessarily entailed the production of the certificates of title. In view thereof, Aguirre, accompanied by the Pugaos, then proceeded to the respondent Bank to open the safety deposit box and get the certificates of title. However, when opened in the presence of the Bank's representative, the box yielded no such certificates.

Issue: 
 Is the contractual relation between a commercial bank and another party in a contract of rent of a safety deposit box with respect to its contents placed by the latter one of bailor and bailee or one of lessor and lessee?

Held: 
 The contract for the rent of the safety deposit box is not an ordinary contract of lease as defined in Article 1643 of the Civil Code. However, We do not fully subscribe to its view that the same is a contract of deposit that is to be strictly governed by the provisions in the Civil Code on deposit; the contract in the case at bar is a special kind of deposit. It cannot be characterized as an ordinary contract of lease under Article 1643 because the full and absolute possession and control of the safety deposit box was not given to the joint renters — the petitioner and the Pugaos. The guard key of the box remained with the respondent Bank; without this key, neither of the renters could open the box. On the other hand, the respondent Bank could not likewise open the box without the renter's key. In this case, the said key had a duplicate which was made so that both renters could have access to the box.

BPI vs. Intermediate Appellate Court GR# L-66826, August 19, 1988

CORTES, J:

Facts: 

Rizaldy T. Zshornack and his wife maintained in COMTRUST a dollar savings account and a peso current account. An application for a dollar drat was accomplished by Virgillo Garcia branch manager of COMTRUST payable to a certain Leovigilda Dizon. In the PPLICtion, Garcia indicated that the amount was to be charged to the dolar savings account of the Zshornacks. There wasa no indication of the name of the purchaser of the dollar draft. Comtrust issued a check payable to the order of Dizon. When Zshornack noticed the withdrawal from his account, he demanded an explainaiton from the bank. In its answer, Comtrust claimed that the peso value of the withdrawal was given to Atty. Ernesto Zshornack, brother of Rizaldy. When he encashed with COMTRUST a cashiers check for P8450 issued by the manila banking corporation payable to Ernesto. 

Issue: Whether the contract between petitioner and respondent bank is a deposit?

Held: The document which embodies the contract states that the US$3,000.00 was received by the bank for safekeeping. The subsequent acts of the parties also show that the intent of the parties was really for the bank to safely keep the dollars and to return it to Zshornack at a later time. Thus, Zshornack demanded the return of the money on May 10, 1976, or over five months later.

The above arrangement is that contract defined under Article 1962, New Civil Code, which reads:
Art. 1962. A deposit is constituted from the moment a person receives a thing belonging to another, with the obligation of safely keeping it and of returning the same. If the safekeeping of the thing delivered is not the principal purpose of the contract, there is no deposit but some other contract.

PEDRO ALCANTARA vs AMBROSIO ALINEA GR# L-3227 March 22, 1907


TORRES, J.:

FACTS:
            In 1905, the defendants borrowed from the plaintiff 480 pesos, payable in January of said year under the agreement that if, at the expiration of the said period, said amount should not be paid it would be understood that the house and lot they owned be considered as absolutely sold to the plaintiff for the said sum.  The plaintiff filed a complaint in the Court of First Instance of La Laguna, praying that judgment be rendered in his behalf ordering the defendants to deliver to him the house and lot claimed, and to pay him in addition thereto as rent the sum of pesos per month from February of that year, and to pay the costs of the action.

            The defendants argued that the principal borrowed was only 200 pesos and that the interest was 280 pesos, although the amount of indebtedness was made to appear in the sum of 480 pesos; and that as their special defense defendants alleged that they offered to pay the plaintiff the sum of 480 pesos, but the plaintiff had refused to accept the same. 

            The trial court rendered a judgment ordering the defendants to deliver to the plaintiff the house and lot and to pay the costs of the action. 

ISSUE:
            Whether or not the two contracts entered into between the parties are void.

HELD:
            The fact that the parties have agreed at the same time, in such a manner that the fulfillment of the promise of sale would depend upon the nonpayment or return of the amount loaned, has not produced any charge in the nature and legal conditions of either contract, or any essential defect which would tend to nullify the same. 

            If the promise of sale is not vitiated because, according to the agreement between the parties thereto, the price of the same is to be the amount loaned and not repaid, neither would the loan be null or illegal, for the reason that the added agreement provides that in the event of failure of payment the sale of property as agreed will take effect, the consideration being the amount loaned and not paid.

            The property, the sale of which was agreed to by the debtors, does not appear mortgaged in favor of the creditor, because in order to constitute a valid mortgage it is indispensable that the instrument be registered in the Register of Property, in accordance with article 1875 of the Civil Code.  In the case at bar, the transaction does not constitute a mortgage, nor could it possibly be a mortgage, for the reason of said document is not vested with the character and conditions of a public instrument.  Also, the said property could not be pledged, not being personal property, and notwithstanding the said double contract the debtor continued in possession thereof and the said property has never been occupied by the creditor.

            Neither was there ever any contract of antichresis by reason of the said contract of loan, inasmuch as the creditor-plaintiff has never been in possession thereof, nor has he enjoyed the said property, nor for one moment ever received its rents; therefore, there are no proper terms in law, taking into consideration the terms of the conditions contained in the aforesaid contract, whereby this court can find that the contract was null, and under no consideration whatever would it be just to apply to the plaintiff articles 1859 and 1884 of the same code.

            The contract (pactum commissorium), indicates the existence of the contracts of mortgage or of pledge or that of antichresis, none of which have coincided in the loan indicated herein.

            It is a principle in law, that the will of the contracting parties is the law of contracts.  It was agreed between plaintiff and defendants herein that if defendants should not pay the loan of 480 pesos in January1905, the property belonging to the defendants and described in the contract should remain sold for the aforesaid sum.        The document of contract has been recognized by the defendant Alinea and by the witnesses who signed same with him, being therefore an authentic and efficacious document, in accordance with article 1225 of the Civil Code; and as the amount loaned has not been paid and continues in possession of the debtor, it is only just that the promise of sale be carried into effect, and the necessary instrument be executed by the vendees. 

            Therefore, by virtue of the reasons given above and accepting the findings given in the judgment appealed from, we affirm the said judgment herein, with the costs against the appellants.

            After expiration of twenty days from the date of the notification of this decision let judgment be entered in accordance herewith and ten days thereafter let the case be remanded to the court from whence it came for proper action.

WILLARD, J., dissenting:
This contract violates the fundamental principle of the Spanish law, which does not permit a debtor, at the time he secures a loan of money, to make an agreement whereby the mere failure to pay the loan at maturity shall divest him irrevocably or allow his interest in the specific property mentioned in the agreement without any right on his part to redeem or to have the property sold to pay the debt. (Civil Code, arts. 1859, 1872, and 1884.) I therefore dissent.