TANGUILIG V. CAFACTS OF THE CASE:Herce contracted Tanguilig to construct a windmill system for him, for consideration of 60,000.00. Pursuant to the agreement Herce paid the downpayment of 30,000.00 and installment of 15,000.00 leaving a 15,000.00 balance. Herce refused to pay the balance because he had already paid this amount to SPGMI which constructed a deep well to which the windmill system was to be connected since the deepwell, and assuming that he owed the 15,000.00 this should be offset by the defects in the windmill system which caused the structure to collapse after strong winds hit their place. According to Tanguilig, the 60,000.00 consideration is only for the construction of the windmill and the construction of the deepwell was not part of it. The collapse of the windmill cannot be attributed to him as well, since he delivered it in good and working condition and Herce accepted it without protest. Herce contested that the collapse is attributable to a typhoon, a force majeure that relieved him of liability.

The RTC ruled in favor of Tanguilig, but this decision was overturned by the Court of Appeals which ruled in favor of Herce

ISSUES OF THE CASE:

Can the collapse of the windmill be attributed to force majeure? Thus, extinguishing the liability of Tanguilig?

- Yes, in order for a party to claim exemption from liability by reason of fortuitous event under Art 1174 of the Civil Code the event should be the sole and proximate cause of the loss or destruction of the object of the contract.

- In Nakpil vs. Court of Appeals, the S.C. held that 4 requisites must concur that there must be a (a) the cause of the breach of the obligation must be independent of the will of debtor (b) the event must be either unforeseeable or unavoidable; (c) the event be such to render it impossible for the debtor to fulfill his obligation in a normal manner; and (d) the debtor must be free from any participation in or aggravation of the injury to the creditor.

- Tanguilig merely stated that there was a strong wind, and a strong wind in this case is not fortuitous, it was not unforeseeable nor unavoidable, places with strong winds are the perfect locations to put up a windmill, since it needs strong winds for it to work.

HELD:

WHEREFORE, the appealed decision is MODIFIED. Respondent VICENTE HERCE JR. is directed to pay petitioner JACINTO M. TANGUILIG the balance of P15,000.00 with interest at the legal rate from the date of the filing of the complaint. In return, petitioner is ordered to "reconstruct subject defective windmill system, in accordance with the one-year guaranty" and to complete the same within three (3) months from the finality of this decision.

Obligations and Contracts Terms:

Fortuitous Events- Refers to an occurrence or happening which could not be foreseen, or even if foreseen, is inevitable. It is necessary that the obligor is free from negligence. Fortuitous events may be produced by two (2) general causes: (1) by Nature, such as but not limited to, earthquakes, storms, floods, epidemics, fires, and (2) by the act of man, such as but not limited to, armed invasion, attack by bandits, governmental prohibitions, robbery, provided that they have the force of an imposition which the contractor or supplier could not have resisted.H. E. HEACOCK COMPANY vs. MACONDRAY & COMPANY, INC.

Facts: Plaintiff caused to be delivered on board of steamshipBolton Castle, four cases of merchandise one of which contained twelve (12) 8-day Edmond clocks properly boxed and marked for transportation to Manila, and paid freight on said clocks from New York to Manila in advance. The said steampship arrived in the port of Manila on or about the 10th day of September, 1919, consigned to defendant. Neither the master of said vessel nor the defendant herein, as its agent, delivered to the plaintiff the aforesaid twelve 8-day Edmond clocks, although demand was made upon them for their delivery.

The invoice value of the said twelve 8-day Edmond clocks in the city of New York was P22 and the market value of the same in the City of Manila at the time when they should have been delivered to the plaintiff was P420. The bill of lading issued and delivered to the plaintiff by the master of the said steamship Bolton Castle contained, among others, the following clauses:

1. It is mutually agreed that the value of the goods receipted for above does not exceed $500 per freight ton, or, in proportion for any part of a ton, unless the value be expressly stated herein and ad valorem freight paid thereon.

9. Also, that in the event of claims for short delivery of, or damage to, cargo being made, the carrier shall not be liable for more than the net invoice price plus freight and insurance less all charges saved, and any loss or damage for which the carrier may be liable shall be adjusted pro rata on the said basis.

The case containing the aforesaid twelve 8-day Edmond clocks measured 3 cubic feet, and the freight ton value thereof was $1,480, U. S. currency.No greater value than $500, U. S. currency, per freight ton was declared by the plaintiff on the aforesaid clocks, and no ad valorem freight was paid thereon. The lower court, in accordance with clause 9 of the bill of lading above quoted, rendered judgment in favor of the plaintiff against the defendant for the sum of P226.02.

The plaintiff-appellant insists that it is entitled to recover from the defendant the market value of the clocks in question, to wit: the sum of P420. The defendant-appellant, on the other hand, contends that, in accordance with clause 1 of the bill of lading, the plaintiff is entitled to recover only the sum of P76.36, the proportionate freight ton value of the said clocks. The claim of the plaintiff is based upon the argument that the two clause in the bill of lading above quoted, limiting the liability of the carrier, are contrary to public order and, therefore, null and void. The defendant, on the other hand, contends that both of said clauses are valid, and the clause 1 should have been applied by the lower court instead of clause 9.Issue: Whether or not a common carrier, by stipulations inserted in the bill of lading, limit its liability for the loss of or damage to the cargo to an agreed valuation.

Held: Yes

Three kinds of stipulations have often been made in a bill of lading. The first is one exempting the carrier from any and all liability for loss or damage occasioned by its own negligence. The second is one providing for an unqualified limitation of such liability to an agreed valuation. And the third is one limiting the liability of the carrier to an agreed valuation unless the shipper declares a higher value and pays a higher rate of freight. According to an almost uniform weight of authority, the first and second kinds of stipulations are invalid as being contrary to public policy, but the third is valid and enforceable.

A reading of clauses 1 and 9 of the bill of lading here in question, however, clearly shows that the present case falls within the third stipulation, to wit: That a clause in a bill of lading limiting the liability of the carrier to a certain amount unless the shipper declares a higher value and pays a higher rate of freight, is valid and enforceable.

It seems clear from the foregoing authorities that the clauses (1 and 9) of the bill of lading here in question are not contrary to public order. Article 1255 of the Civil Code provides that "the contracting parties may establish any agreements, terms and conditions they may deem advisable, provided they are not contrary to law, morals or public order." Said clauses of the bill of lading are, therefore, valid and binding upon the parties thereto.

Other issue related to the case (as to interpretation of BOL):

It will be noted, however, that whereas clause 1 contains only an implied undertaking to settle in case of loss on the basis of not exceeding $500 per freight ton, clause 9 contains an express undertaking to settle on the basis of the net invoice price plus freight and insurance less all charges saved. "Any loss or damage for which the carrier may be liable shall be adjusted pro rata on the said basis," clause 9 expressly provides. It seems to us that there is an irreconcilable conflict between the two clauses with regard to the measure of defendant's liability. It is difficult to reconcile them without doing violence to the language used and reading exceptions and conditions into the undertaking contained in clause 9 that are not there. This being the case, the bill of lading in question should be interpreted against the defendant carrier, which drew said contract. "A written contract should, in case of doubt, be interpreted against the party who has drawn the contract." It is a well-known principle of construction that ambiguity or uncertainty in an agreement must be construed most strongly against the party causing it.(6 R. C. L., 855.) These rules as applicable to contracts contained in bills of lading. "In construing a bill of lading given by the carrier for the safe transportation and delivery of goods shipped by a consignor, the contract will be construed most strongly against the carrier, and favorably to the consignor, in case of doubt in any matter of construction." AUTOCORP and Rodriguez vs. ISAC and BOCG.R. No. 166662June 27, 2008FACTS:Autocorp Group, represented by its President, Rodriguez, secured an ordinary re-export bond from private respondent Intra Strata Assurance Corporation (ISAC) in favor of public Bureau of Customs (BOC), to guarantee the re-export of 2 units of car (at 2 different dates) and/or to pay the taxes and duties thereon. Petitioners executed and signed two Indemnity Agreements with identical stipulations in favor of ISAC, agreeing to act as surety of the subject bonds

In sum, ISAC issued the subject bonds to guarantee compliance by petitioners with their undertaking with the BOC to re-export the imported vehicles within the given period and pay the taxes and/or duties due thereon. In turn, petitioners agreed, as surety, to indemnify ISAC for the liability the latter may incur on the said bonds

Autocorp failed to re-export the items guaranteed by the bonds and/or liquidate the entries or cancel the bonds, and pay the taxes and duties pertaining to the said items, despite repeated demands made by the BOC, as well as by ISAC. By reason thereof, the BOC considered the two bonds forfeited.

Failing to secure from petitioners the payment of the face value of the two bonds, ISAC filed with the RTC an action against petitioners to recover a sum of money plus AF. ISAC impleaded the BOC as a necessary party plaintiff in order that the reward of money or judgment shall be adjudged unto the said necessary plaintiff.

Petitioners filed a MTD, which was denied. RTC ordered Autocorp to pay ISAC and/or BOC the face value of the subject bonds plus AF. Autocorps MR was denied. CA affirmed the trial courts decision. MR was denied. Hence this Petition for Review on Certiorari

ISSUE:WON these bonds are now due and demandable, as there is yet no actual forfeiture of the bonds, but merely a recommendation of forfeiture, for no writ of execution has been issued against such bonds, therefore the case was prematurely filed by ISACHELD:PETITION IS WITHOUT MERIT

YESThe Indemnity Agreements give ISAC the right to recover from petitioners the face value of the subject bonds plus attorneys fees at the time ISAC becomes liable on the said bonds to the BOC, (specifically to re-export the imported vehicles within the period of six months from their date of entry) regardless of whether the BOC had actually forfeited the bonds, demanded payment thereof and/or received such payment. It must be pointed out that the Indemnity Agreements explicitly provide that petitioners shall be liable to indemnify ISAC whether or not payment has actually been made by the [ISAC] and ISAC may proceed against petitioners by court action or otherwise even prior to making payment to the [BOC] which may hereafter be done by [ISAC].

Article 2071 of the Civil Code provides:

Art. 2071.The guarantor, even before having paid, may proceed against the principal debtor:

(1) When he is sued for the payment;

(2) In case of insolvency of the principal debtor;

(3) When the debtor has bound himself to relieve him from the guaranty within a specified period, and this period has expired;

(4)When the debt has become demandable, by reason of the expiration of the period for payment;(5) After the lapse of ten years, when the principal obligation has no fixed period for its maturity, unless it be of such nature that it cannot be extinguished except within a period longer than ten years;

(6) If there are reasonable grounds to fear that the principal debtor intends to abscond;

(7) If the principal debtor is in imminent danger of becoming insolvent.

In all these cases, the action of the guarantor is to obtain release from the guaranty, or to demand a security that shall protect him from any proceedings by the creditor and from the danger of insolvency of the debtor.

NOTES:A demand is only necessary in order to put an obligor in a due and demandable obligation in delay, which in turn is for the purpose of making the obligor liable for interests or damages for the period of delay. Thus, unless stipulated otherwise, an extrajudicial demand is not required before a judicial demand, i.e., filing a civil case for collection, can be resorted toBRICKTOWN DEVELOPMENT CORP vs MOR TIERRA DEVELOPMENT CORPORATION Case Digest

BRICKTOWN DEVELOPMENT CORP. and MARIANO Z. VERALDEVS. AMOR TIERRA DEVELOPMENT CORPORATION andthe HON. COURT OF APPEALSG.R. No. 112182December 12, 1994239 SCRA 127FACTS:Bricktown Development Corporation, represented by its President and co-petitioner Mariano Z. Velarde, executed two Contracts to Sell in favor of Amor Tierra Development Corporation, represented in these acts by its Vice-President, Moises G. Petilla, covering a total of 96 residential lots at the Multinational Village Subdivision, La Huerta, Paraaque, Metro Manila.

The total price of P21,639,875.00 was stipulated to be paid by private respondent in such amounts and maturity dates, as follows: P2,200,000.00 on 31 March 1981; P3,209,968.75 on 30 June 1981; P4,729,906.25 on 31 December 1981; and the balance of P11,500,000.00 to be paid by means of an assumption by private respondent of petitioner corporation's mortgage liability to the Philippine Savings Bank or, alternately, to be made payable in cash. On date, March 31, 1981, the parties executed a Supplemental Agreement, providing that private respondent would additionally pay to petitioner corporation the amounts of P55,364.68, or 21% interest on the balance of down payment for the period from 31 March to 30 June 1981, and of P390,369.37 representing interest paid by petitioner corporation to the Philippine Savings Bank in updating the bank loan for the period from 01 February to 31 March 1981.

Private respondent was only able to pay petitioner corporation the sum of P1,334,443.21. However, the parties continued to negotiate for a possible modification of their agreement, but nothing conclusive happened. And on October 12, 1981, petitioners counsel sent private respondent a Notice of Cancellation of Contract because of the latters failure to pay the agreed amount.

Several months later, private respondents counsel, demanded the refund of private respondent's various payments to petitioner corporation, allegedly "amounting to P2,455,497.71," with interest within fifteen days from receipt of said letter, or, in lieu of a cash payment, to assign to private respondent an equivalent number of unencumbered lots at the same price fixed in the contracts. When the demand was not heeded, Amor Tierra filed an action with the court a quo which rendered a decion in its favor. The decision of the lower court was affirmed in toto by the Court of Appeals. Hence, this petition.

ISSUE:1. Whether or not the contract was properly rescinded.

2. Whether or not Bricktown properly forfeited the payments of Amor Tierra.

RULING:The contract between Bricktown and Amor Tierra was validly rescinded because of the failure of the latter to pay the agreed amounts stipulated in the contract on the proper date even after the sixty-days grace period. Furthermore, the records showed that private respondent corporation paid less than the amount agreed upon. The Supreme Court also added that such cancellation must be respected. It may also be noteworthy to add that in a contract to sell, the non-payment of the purchase price can prevent the obligation to convey title from acquiring any obligatory force.

On the second issue, the Supreme Court ruled that since the private respondent did not actually possessed the property under the contract, the petitioner is then ordered to return to private respondent the amount remitted. However, to adjudge any interest payment by petitioners on the amount to be thus refunded, private respondent should not be allowed to totally free itself from its own breach.

LEANO vs. Court of Appeals369 SCRA 295 (Art. 1169)

Facts:Hermogenes Fernando, as vendor and Carmelita Leao, as vendee executed a contract to sell involving a piece of land.In the contract, Leao bond herself to pay Fernando the sum of P107,750 as the total purchase price.

P10,775 shall be paid at the signing of the contract;P96,975 shall be paid within 10 yrs. at a monthly amortization of P1,747.30 to begin from Dec. 7, 1985 with interest of 18% per annum;18% per annum shall be charged if the month of grace period expires w/out the installments;should the 90 days elapse from the expiration of the grace period, Respondent was authorized to declare the contract cancelled & to dispose of the land.

Carmelita Leao made several payments in lump sum. Thereafter she constructed a house (P800K). Last payment she made was on April 1989.

Trial Court rendered decision in an ejectment case filed by Fernando.

Leao filed with the RTC for specific performance with preliminary injunction and assailing that for being violative of her right to due process being contrary to R.A 6552 regarding protection to buyers of lots on installments. According to Trial Court, transaction was an absolute sale, making Leao the owner upon actual & constructive delivery thereof. Fernando divested of ownership & cannot recover the same unless rescinded under Art. 1592ISSUE:WON the transaction was an absolute sale or conditional sale? Conditional SaleWON was there a proper cancellation of the contract to sell? NOWON petitioner was in delay? YESHELD:It was a conditional sale because the intention of the parties was to reserve the ownership of the land in the seller until the buyer has paid the total purchase price.

Consideration: (a) Contract was subject to condition. (b) What was transferred was the possession & not ownership. (c) It was covered by Torrens title. Act of Registration was the operative act that could transfer ownership.What was transferred was the possession of the property, not ownership.

In a contract to sell real property on installments, the full payment of the purchase price is a positive suspensive condition, the failure of which is not considered a breach, casual or serious, but simply an event that prevented the obligation of the vendor to convey title from acquiring any obligatory force. The transfer of ownership and title would occur after full payment of the price.

No proper cancellation as Leao was not given the cash surrender value. She may still reinstate the contract by updating the account during grace period & before actual cancellation.

Sec. 3 of RA 6552. If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty percent of the total payments made and, after five years of installments, an additional five percent every year but not to exceed ninety percent of the total payment made: Provided, That the actual cancellation of the contract shall take place after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer.Leao was in delay because under Art. 1169, provides that Reciprocal Obligation; Neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by the other begins.

Fernando performed his part by allowing Leao to continue in possession & use of the property. Clearly, when Leao did not pay the monthly amortization, she was in delay and liable for damages.

LORENZO SHIPPING VS. BJ MARTHEL443 SCRA 163November 19, 2004FACTS:Petitioner Lorenzo Shipping is engaged in coastwise shipping and owns the cargo M/V Dadiangas Express. BJ Marthel is engaged in trading, marketing an dselling various industrial commodities. Lorenzo Shipping ordered for the second time cylinder lines from the respondent stating the term of payment to be 25% upon delivery, the balance payable in 5 bi-monthly equal installments, no again stating the date of the cylinders delivery. It was allegedly paid through post dated checks but the same was dishonored due to insufficiency of funds. Despite due demands by the respondent, petitioner falied contending that time was of the essence in the delivery of the cylinders and that there was a delay since the respondent committed said items within two months after receipt of fir order. RTC held respondents bound to the quotation with respect to the term of payment, which was reversed by the Court of appeals ordering appellee to pay appellant P954,000 plus interest. There was no delay since there was no demand.

ISSUE:Whether or not respondent incurred delay in performing its obligation under the contract of sale

RULING:By accepting the cylinders when they were delivered to the warehouse, petitioner waived the claimed delay in the delivery of said items. Supreme Court geld that time was not of the essence. There having been no failure on the part of the respondent to perform its obligations, the power to rescind the contract is unavailing to the petitioner.

HEIRS OF LUIS BACUS vs. Court of Appeals371 SCRA 295 (Art. 1169)Facts:On June 1, 1984, Bacus leased to private respondent Faustino Duray a parcel of agricultural land.

The lease was for 6 years ending May 31, 1990. The contract contained an option to buy clause which had the exclusive & irrevocable right to buy the property within 5 yrs after the effectivity of contract.

Close to the expiration, Bacus died. Duray informed the heir of Bacus that they are willing & ready to purchase the property under option to buy.

However, Petitioner Bacus refuse to sell the property without first receiving the payment of purchase price before the land would be delivered to Duray which the latter filed a complaint.Issue:WON Duray opted to buy the property covered by lease contract with option to buy, were they already required to deliver the money or consign it in court before petitioner execute the deed of transfer? NO \WON did Duray incur in delay when they did not deliver the purchase price or consign it in court on or before the expiration of the contract? NOHeld:The obligation under option to buy is a reciprocal obligation. The performance of one obligation is conditioned on the simultaneous fulfillment of the other obligation. The payment of the purchase price by the creditor is contingent upon the execution and delivery of a deed of sale by the debtor.

In this case, private respondent Duray opted to buy the property, their obligation was to advise petitioner of their decision & readiness to pay the price. They were not obliged to make actual payment. Only upon execution of deed of sale were they required to pay.

Notice of the creditors decision to exercise his option to buy need not be coupled with actual payment of the price, so long as this is delivered to the owner of the property upon performance of his part of the agreement. Consequently, since the obligation was not yet due, consignation in court of the purchase price was not yet required (Nietes vs CA, 46 SCRA 654).

Consignation is the act of depositing the thing due with the court or judicial authorities whenever the creditor cannot accept or refuses to accept payment and it generally requires a prior tender of payment. Consignation is not proper because the debt is not due and owing.

Under Art. 1169, provides that reciprocal obligation, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. Only from the moment one of the parties fulfills his obligation, does delay by the other begins.

In this case, private respondent Duray already communicated their interest to buy before the contact expires & it was the petitioner who refused because they want the money first. Thus, as there was no compliance yet with what is incumbent upon the petitioner, PR had not incurred delay when the cashiers check was issued even after the contract expired.

Cathay Pacific Airways VS. Vazquez399 SCRA 207 (2003)Facts of the Case:Respondents-spouses Dr. Daniel Earnshaw Vazquez and Maria Luisa Madrigal Vazquez together with two friends went to Hong Kong for business and pleasure. On their return flight to Manila, they were booked on Cathay Pacifics flight CX-905. Upon boarding, Dr. Vazquez was informed by ground attendant Clara Chiu that they were being upgraded to first class from business class because Business Class was fully booked. Dr. Vazquez refused the upgrade, explaining that it would not look good for them as hosts to travel in First Class while their guests remained in the Business Class Section. Moreover, they were going to discuss business matters during the flight. He also told Ms. Chiu that she could have other passengers transferred to the First Class Section instead of them. Ms. Chiu informed them that since they were Marco Polo Club members they had the priority to be upgraded to First Class. Dr. Vazquez continued to refuse, so Ms. Chiu told them that if they would not avail of the privilege, they would not be allowed to take the flight. Eventually, Dr. Vazquez gave in and proceeded to the First Class Cabin.ISSUES:1. Whether or not by upgrading the seating accommodations of the Vazquezes from Business Class to First Class, Cathay Pacific Airways breached its contract of carriage with the Vazquezes.

2. Whether or not the Vazquezes are entitled to damages.HELD:In previous cases, the breach of contract of carriage consisted in either the bumping off of a passenger with confirmed reservation or the downgrading of a passengers seat accommodation from one class to a lower class. In this case, what happened was the reverse. The Vazquezes knew that as members of the Marco Polo Club, they had priority for upgrading of their seat accommodation at no extra cost when an opportunity arises. But, just like other privileges, such priority could be waived.

The Vazquezes should have been consulted first whether they wanted to avail of the privilege or consent to a change of seat accommodation before their seat assignments were given to other passengers. The Vazquezes had every right to decline the upgrade and insist on the Business Class accommodation they had booked for. They clearly waived their priority or preference when they asked that other passengers be given the upgrade. It should not have been imposed on them over their vehement objection. By insisting on the upgrade, Cathay Pacific breached its contract of carriage with the Vazquezes.

The Court, however, is not convinced that the upgrading or the breach of contract was attended by fraud or bad faith. Bad faith and fraud are allegations of fact that demand clear and convincing proof. The court is not persuaded by the Vazquezes argument that the overbooking of the Business Class Section constituted bad faith on the part of Cathay Pacific Airways. Section 3 of the Economic Regulation No. 7 of The Civil Aeronautics Board, as amended, provides that an overbooking that does not exceed ten percent (10%) is not considered deliberate and therefore does not amount to bad faith.

The Court of Appeals awarded each of the Vazquezes moral damages in the amount of P250, 000. In this case, it was ruled that the breach of contract of carriage was not attended by fraud or bad faith. The Court Of Appeals award of moral damages has, therefore, no leg to stand on. The most that can be adjudged in favour of the Vazquezes for Cathays breach of contract is an award for nominal damages Under Article 2221 of the New Civil Code.Rizal Commercial Banking Corporation vs. Intermediate Appellate Court and BF HomesG.R. No. 74851 (December 9, 1999)

Facts:

Petitioner RCBC is a mortgagor-creditor of the party respondent BF Homes. BF Homes, being a distressed firm, filed before the Securities and Exchange Commission a Petition for Rehabilitation and for Declaration of Suspension of Payments. Consequently, RCBC requested the sheriff of Rizal to levy on execution the properties of party respondent, and consequently obtained favorable judgment. RCBC being the highest bidder during the public auction is now seeking for the transfer certificate of titles from the Register of Deeds issued in its name. It is worthy to note that it was on October 26, 1984 that RCBC obtained favor over the execution of the respondents properties, and it was only on March 18, 1985 that a Management Committee was organized by the SEC for BF Homes.

Issue:

Whether or not the Court may depart from the words of the law which clearly provides that a creditor may levy execution on a firms properties when such execution precedes SECs organization of a Management Committee to act as its receiver.Held:

PD 209-A states that suspension of claims against a corporation under rehabilitation is counted or figured up only upon the appointment of a management committee or a rehabilitation receiver. The holding that suspension of actions for claims against a corporation under rehabilitation takes effect as soon as the application or a petition for rehabilitation is filed with the SEC may, to some, be more logical and wise but unfortunately, such is incongruent with the clear language of the law. Suspension of actions for claims commences only from the time a management committee or receiver is appointed by the SEC. Petitioner RCBC rightfully moved for the extrajudicial foreclosure of its mortgage on October 26, 1984 because a management committee was not appointed by the SEC until March 18, 1985.Reasoning:

No matter how practical and noble a reason would be, in order to depart from the words of the law stated in clear and unambiguous manner, would be to encroach upon legislative prerogative to define the wisdom of the law. Such is plainly judicial legislation.Policy:

Paragraph C Section 6 of PD 209-A states that upon appointment of a management committee rehabilitation receiver, board or body, pursuant to this Decree, all actions for claims against corporations, partnerships or associations under management or receivership, pending before any court, tribunal, board or body shall be suspended accordingly.

Guanio v. Shangi La HotelA couple sought the services of a five-star hotel for their wedding reception.A week before their wedding reception, the hotel scheduled a food tasting. Eventually, the parties agreed to a package where the final price was P1,150.00 per person.According to the complainants, when the actual reception took place, the respondents representatives did not show up despite their assurance that they would; their guests complained of the delay in the service of the dinner; certain items listed in the published menu were unavailable; the hotels waiters were rude and unapologetic when confronted about the delay; and despite Alvarezs promise that there would be no charge for the extension of the reception beyond 12:00 midnight, they were billed and paid P8,000 per hour for the three-hour extension of the event up to 4:00 A.M. the next day. They further claim that they brought wine and liquor in accordance with their open bar arrangement, but these were not served to the guests who were forced to pay for their drinks. They sent a letter-complaint to hotel and received an apologetic reply from the hotels Executive Assistant Manager in charge of Food and Beverage.

They nevertheless filed a complaint for breach of contract and damages before the Regional Trial Court (RTC) of Makati City.Answering, the hotel said that complainants requested a combination of king prawns and salmon, hence, the price was increased to P1,200.00 per person, but discounted at P1,150.00; that contrary to their claim, the hotel representatives were present during the event, albeit they were not permanently stationed thereat as there were three other hotel functions; that while there was a delay in the service of the meals, the same was occasioned by the sudden increase of guests to 470 from the guaranteed expected minimum number of guests of 350 to a maximum of 380, as stated in the Banquet Event Order (BEO);2 and the Banquet Service Director in fact relayed the delay in the service of the meals to complainants father.The RTC, relying heavily on the letter of the hotels Executive Assistant ruled in favour of the complainants and awarded damages in their favour.

The Court of Appeals reversed the decision, noting that the proximate cause of the complainants injury was the unexpected increase in the number of their guests.

The Supreme Court reversed the Court of Appeals decision, noting that in this case, the obligation was based on a contract, hence, the concept of proximate cause has no application. In resolving the matter, the Supreme Court relied on the terms and conditions of the contract between the parties, particularly the pertinent provisions of the Banquet and Meeting Services Contract between the parties which read:4.3 The ENGAGER shall be billed in accordance with the prescribed rate for the minimum guaranteed number of persons contracted for, regardless of under attendance or non-appearance of the expected number of guests, except where the ENGAGER cancels the Function in accordance with its Letter of Confirmation with the HOTEL. Should the attendance exceed the minimum guaranteed attendance, the ENGAGER shall also be billed at the actual rate per cover in excess of the minimum guaranteed attendance.x x x x4.5. The ENGAGER must inform the HOTEL at least forty eight (48) hours before the scheduled date and time of the Function of any change in the minimum guaranteed covers. In the absence of such notice, paragraph 4.3 shall apply in the event of under attendance. In case the actual number of attendees exceed the minimum guaranteed number

by ten percent (10%), the HOTEL shall not in any way be held liable for any damage or inconvenience which may be caused thereby. The ENGAGER shall also undertake to advise the guests of the situation and take positive steps to remedy the same.In absolving the hotel from damages, the Supreme Court noted that: The appellate court, and even the trial court, observed that petitioners were remiss in their obligation to inform respondent of the change in the expected number of guests. The observation is reflected in the records of the case. Petitioners failure to discharge such obligation thus excused, as the above-quoted paragraph 4.5 of the parties contract provide, respondent from liability for any damage or inconvenience occasioned thereby

Nevertheless, on grounds of equity, the High Court awarded P50,000.00 in favour of the complainants and justified it by saying:The exculpatory clause notwithstanding, the Court notes that respondent could have managed the situation better, it being held in high esteem in the hotel and service industry. Given respondents vast experience, it is safe to presume that this is not its first encounter with booked events exceeding the guaranteed cover. It is not audacious to expect that certain measures have been placed in case this predicament crops up. That regardless of these measures, respondent still received complaints as in the present case, does not amuse.Respondent admitted that three hotel functions coincided with petitioners reception. To the Court, the delay in service might have been avoided or minimized if respondent exercised prescience in scheduling events. No less than quality service should be delivered especially in events which possibility of repetition is close to nil. Petitioners are not expected to get married twice in their lifetimes.(G.R. No. 190601, February 7, 2011, SPOUSES LUIGI M. GUANIO and ANNA HERNANDEZ-GUANIO, Petitioners, vs.MAKATI SHANGRI-LA HOTEL and RESORT, INC., also doing business under the name of SHANGRI-LA HOTEL MANILA, Respondent.)

China Airlines v CA (G.R. No. 129988)

Facts:Respondents, Antonio Salvador and Rolando Lao planned to travel to Los Angeles, California to pursue a cable business deal involving the distribution of Filipino films. Initially, Morelia Travel Agency booked their flight with China Airlines (CAL).

Upon discovering that Morelia charged higher rates than American Express Travel (Amexco), they dropped the services of Morelia. Lao called Amexco claiming that he and Salvador had a confirmed booking with CAL. Lao then gave to Amexco the record locator number that CAL issued previously to Morelia. CAL confirmed the booking.

When the respondents were at the airport, CAL prevented them from boarding because their names were not in the passenger's manifest. CAL cancelled the reservations when Morelia revoked the booking. But the respondents were able to get a flight with Northwest Airlines.

Issue/s:1. Whether or not there was a breach in the contract of carriage.2. Whether or not there there was bad faith.3. Whether or not there was sufficient claims for damages.

Held:1. Yes. When an airline issues a ticket to a passenger confirmed for a particular flight on a certain date, a contract of carriage arises. The passenger has every right to expect that he would fly on that flight and on that date.

When CAL did not allow respondents, who were in possession of the confirmed tickets, from boarding its airplane because their names were not in the manifest, it ocnsituted a breach of contract of carriage.

2. No. Bad faith should always be established by clear and convincing evidence since the law always presumes good faith.

In the case, there were three reasons why CAL cancelled the reservations. First was Amexco's unauthorized use of the record locator number. Second was CAL's negligence in confirming the reservations of Amexco. Third was the absence of the correct contact numbers of private respondents. There was no concerted effort on the part of CAL to cancel respondent's reservations in favor of other passengers.

3. Not entitled to moral damages because not every case of mental anguish, fright or anxiety calls for the award of moral damages.

Not entitled to exemplary damages because CAL was not in bad faith and its employees did not act in a wanton, fraudulent, reckless, oppressive or malevolent manner.

Not entitled to actual damages because respondents did not shell out any money for their CAL tickets. Respondents would have been entitled to the price difference between the tickets of CAL and Northwest had the latter cost more than the former but this was not the case. Evidence shows that Northwest tickets ($625) cost less than CAL tickets ($629). The court cannot order reimbursement of the Northwest tickets because this would have enabled respondents to fly for free. The cost of the tickets were a necessary expense that private respondents could not pass on to CAL.

Entitled to nominal damages of P5,000 when the plaintiff suffers some species of injury not enough to warrant an award of actual damages.

International Corporate Bank vs. Gueco351 SCRA 516Facts:

Respondent Gueco spouses obtained a loan from petitioner International Corporate Bank (now Union Bank of Philippines) to purchase a car Nissan Sentra 1989 model.

In consideration, spouses executed promissory note which were payable in monthly installment & chattel mortgage over the car.

The spouses defaulted payment. Dr. Gueco had a meeting & the unpaid installment of P184k was reduced to P150k. However, the car was detained by the bank.

When Dr. Gueco delivered the mangers check of P150k, the car was not released because of his refusal to sign the Joint Motion to Dismiss.

The bank insisted that the JMD is a standard operating procedure to effect a compromise & to preclude future filing of claims or suits for damages.

Gueco spouses filed an action against the bank for fraud, failing to inform them regarding JMD during the meeting & for not releasing the car if they do not sign the said motion.Issue:

WON the bank was guilty of fraud? NOHeld:

Fraud has been defined as the deliberate intention to cause damage or prejudice. It is the voluntary execution of a wrongful act, or a willful omission, knowing and intending the effects which naturally and necessarily arise from such act or omission. the fraud referred to in Article 1170 of the Civil Code is the deliberate and intentional evasion of the normal fulfillment of obligation.

We fail to see how the act of the petitioner bank in requiring the respondent to sign the joint motion to dismiss could constitute as fraud.

The JMD cannot in any way have prejudiced Dr. Gueco. The motion to dismiss was in fact also for the benefit of Dr. Gueco, as the case filed by petitioner against it before the lower court would be dismissed with prejudice. The whole point of the parties entering into the compromise agreement was in order that Dr. Gueco would pay his outstanding account and in return petitioner would return the car and drop the case for money and replevin before the Metropolitan Trial Court. The joint motion to dismiss was but a natural consequence of the compromise agreement and simply stated that Dr. Gueco had fully settled his obligation, hence, the dismissal of the case. Petitioners act of requiring Dr. Gueco to sign the joint motion to dismiss cannot be said to be a deliberate attempt on the part of petitioner to renege on the compromise agreement of the parties.

The law presumes good faith. Dr. Gueco failed to present an iota of evidence to overcome this presumption. In fact, the act of petitioner bank in lowering the debt of Dr. Gueco from P184,000.00 to P150,000.00 is indicative of its good faith and sincere desire to settle the case. If respondent did suffer any damage, as a result of the withholding of his car by petitioner, he has only himself to blame. Necessarily, the claim for exemplary damages must fail. In no way, may the conduct of petitioner be characterized as wanton, fraudulent, reckless, oppressive or malevolent.

THE CONSOLIDATED BANK and TRUST CORPORATION vs. COURT OF APPEALS and L.C. DIAZ and COMPANY, CPAsG.R. No. 138569, Sep 11, 2003.FACT:Petitioner Solidbank is a domestic banking corporation organized and existing under Philippine laws. Private respondent L.C. Diaz and Company, CPAs, is a professional partnership engaged in the practice of accounting.

In March 1976, L.C. Diaz opened a savings account with Solidbank. On 14 August 1991, L.C. Diaz through its cashier, Mercedes Macaraya, filled up a savings (cash) deposit slip for P990 and a savings (checks) deposit slip for P50. Macaraya instructed the messenger of L.C. Diaz, Ismael Calapre, to deposit the money with Solidbank. Macaraya also gave Calapre the Solidbank passbook.

Calapre went to Solidbank and presented to Teller No. 6 the two deposit slips and the passbook. The teller acknowledged the receipt of the deposit by returning to Calapre the duplicate copies of the two deposit slips. Teller No. 6 stamped the deposit slips with the words DUPLICATE and SAVING TELLER 6 SOLIDBANK HEAD OFFICE. Since the transaction took time and Calapre had to make another deposit for L.C. Diaz with Allied Bank, he left the passbook with Solidbank. Calapre then went to Allied Bank. When Calapre returned to Solidbank to retrieve the passbook, Teller No. 6 informed him that somebody got the passbook. Calapre went back to L.C. Diaz and reported the incident to Macaraya.

Macaraya immediately prepared a deposit slip in duplicate copies with a check of P200,000. Macaraya and Calapre went to Solidbank and presented to Teller No. 6 the deposit slip and check. The teller stamped the words DUPLICATE and SAVING TELLER 6 SOLIDBANK HEAD OFFICE on the duplicate copy of the deposit slip. When Macaraya asked for the passbook, Teller No. 6 told Macaraya that someone got the passbook but she could not remember to whom she gave the passbook. When Macaraya asked Teller No. 6 if Calapre got the passbook, Teller No. 6 answered that someone shorter than Calapre got the passbook. Calapre was then standing beside Macaraya.

The following day L.C. Diaz learned of the unauthorized withdrawal the day before (14 August 1991) of P300,000 from itssavings account. The withdrawal slip for the P300,000 bore the signatures of the authorized signatories of L.C. Diaz, namely Diaz and Rustico L. Murillo. The signatories, however, denied signing the withdrawal slip. A certain Noel Tamayo received the P300,000.

L.C. Diaz demanded from Solidbank the return of its money. Solidbank refused. L.C. Diaz filed a Complaint for Recovery of a Sum of Money against Solidbank. The trial court absolved Solidbank. L.C. Diaz appealed to the CA. CA reversed the ecision of the trial court. CA denied the motion for reconsideration of Solidbank. But it modified its decision by deleting the award of exemplary damages and attorneys fees. Hence this petition.

ISSUE:WON petitioner Solidbank is liable.

RULING:Yes. Solidbank is liable for breach of contract due to negligence, or culpa contractual.

The contract between the bank and its depositor is governed by the provisions of the Civil Code on simple loan. Article 1980 of the Civil Code expressly provides that x x x savings x x x deposits of money in banks and similar institutions shall be governed by the provisions concerning simple loan. There is a debtor-creditor relationship between the bank and its depositor. The bank is the debtor and the depositor is the creditor. The depositor lends the bank money and the bank agrees to pay the depositor on demand. The savings deposit agreement between the bank and the depositor is the contract that determines the rights and obligations of the parties.

The law imposes on banks high standards in view of the fiduciary nature of banking. The bank is under obligation to treat the accounts of its depositors with meticulous care, always having in mind the fiduciary nature of their relationship.

This fiduciary relationship means that the banks obligation to observe high standards of integrity and performance is deemed written into every deposit agreement between a bank and its depositor. The fiduciary nature of banking requires banks to assume a degree of diligence higher than that of a good father of a family. Article 1172 of the Civil Code states that the degree of diligence required of an obligor is that prescribed by law or contract, and absent such stipulation then the diligence of a good father of a family. Section 2 of RA 8791 prescribes the statutory diligence required from banks that banks must observe high standards of integrity and performance in servicing their depositors.

However, the fiduciary nature of a bank-depositor relationship does not convert the contract between the bank and its depositors from a simple loan to a trust agreement, whether express or implied. Failure by the bank to pay the depositor is failure to pay a simple loan, and not a breach of trust. The law simply imposes on the bank a higher standard of integrity and performance in complying with its obligations under the contract of simple loan, beyond those required of non-bank debtors under a similar contract of simple loan.

The fiduciary nature of banking does not convert a simple loan into a trust agreement because banks do not accept deposits to enrich depositors but to earn money for themselves.

Solidbanks Breach of its Contractual ObligationArticle 1172 of the Civil Code provides that responsibility arising from negligence in the performance of every kind of obligation is demandable. For breach of the savings deposit agreement due to negligence, or culpa contractual, the bank is liable to its depositor.

Calapre left the passbook with Solidbank because the transaction took time and he had to go to Allied Bank for another transaction. The passbook was still in the hands of the employees of Solidbank for the processing of the deposit when Calapre left Solidbank. When the passbook is in the possession of Solidbanks tellers during withdrawals, the law imposes on Solidbank and its tellers an even higher degree of diligence in safeguarding the passbook.

Solidbanks tellers must exercise a high degree of diligence in insuring that they return the passbook only to the depositor or his authorized representative. For failing to return the passbook to Calapre, the authorized representative of L.C. Diaz, Solidbank and Teller No. 6 presumptively failed to observe such high degree of diligence in safeguarding the passbook, and in insuring its return to the party authorized to receive the same.

In culpa contractual, once the plaintiff proves a breach of contract, there is a presumption that the defendant was at fault or negligent. The burden is on the defendant to prove that he was not at fault or negligent. In contrast, in culpa aquiliana the plaintiff has the burden of proving that the defendant was negligent. In the present case, L.C. Diaz has established that Solidbank breached its contractual obligation to return the passbook only to the authorized representative of L.C. Diaz. There is thus a presumption that Solidbank was at fault and its teller was negligent in not returning the passbook to Calapre. The burden was on Solidbank to prove that there was no negligence on its part or its employees. But Solidbank failed to discharge its burden. Solidbank did not present to the trial court Teller No. 6, the teller with whom Calapre left the passbook and who was supposed to return the passbook to him. Solidbank also failed to adduce in evidence its standard procedure in verifying the identity of the person retrieving the passbook, if there is such a procedure, and that Teller No. 6 implemented this procedure in the present case.

Solidbank is bound by the negligence of its employees under the principle of respondeat superior or command responsibility. The defense of exercising the required diligence in the selection and supervision of employees is not a complete defense in culpa contractual, unlike in culpa aquiliana. The bank must not only exercise high standards of integrity and performance, it must also insure that its employees do likewise because this is the only way to insure that the bank will comply with its fiduciary duty

Proximate Cause of the Unauthorized WithdrawalProximate cause is that cause which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury and without which the result would not have occurred. Proximate cause is determined by the facts of each case upon mixed considerations of logic, common sense, policy and precedent.

L.C. Diaz was not at fault that the passbook landed in the hands of the impostor. Solidbank was in possession of the passbook while it was processing the deposit. After completion of the transaction, Solidbank had the contractual obligation to return the passbook only to Calapre, the authorized representative of L.C. Diaz. Solidbank failed to fulfill its contractual obligation because it gave the passbook to another person.

Had the passbook not fallen into the hands of the impostor, the loss of P300,000 would not have happened. Thus, the proximate cause of the unauthorized withdrawal was Solidbanks negligence in not returning the passbook to Calapre.

Doctrine of Last Clear ChanceThe doctrine of last clear chance states that where both parties are negligent but the negligent act of one is appreciably later than that of the other, or where it is impossible to determine whose fault or negligence caused the loss, the one who had the last clear opportunity to avoid the loss but failed to do so, is chargeable with the loss. The antecedent negligence of the plaintiff does not preclude him from recovering damages caused by the supervening negligence of the defendant, who had the last fair chance to prevent the impending harm by the exercise of due diligence.

We do not apply the doctrine of last clear chance to the present case. This is a case of culpa contractual, where neither the contributory negligence of the plaintiff nor his last clear chance to avoid the loss, would exonerate the defendant from liability. Such contributory negligence or last clear chance by the plaintiff merely serves to reduce the recovery of damages by the plaintiff but does not exculpate the defendant from his breach of contract

Mitigated DamagesUnder Article 1172, liability (for culpa contractual) may be regulated by the courts, according to the circumstances. This means that if the defendant exercised the proper diligence in the selection and supervision of its employee, or if the plaintiff was guilty of contributory negligence, then the courts may reduce the award of damages. In this case, L.C. Diaz was guilty of contributory negligence in allowing a withdrawal slip signed by its authorized signatories to fall into the hands of an impostor. Thus, the liability of Solidbank should be reduced.

In PBC v. CA where the Court held the depositor guilty of contributory negligence, we allocated the damages between the depositor and the bank on a 40-60 ratio. Applying the same ruling to this case, we hold that L.C. Diaz must shoulder 40% of the actual damages awarded by the appellate court. Solidbank must pay the other 60% of the actual damages.

WHEREFORE, the decision of the Court of Appeals is AFFIRMED with MODIFICATION.

REYES V CA

7NOVG.R. No. 96492| November 26, 1992 | J. Nocon

Facts:

Petitioners Romeo Reyes, Angel Parayao and Emilio Mananghaya question the respondent Courts decision,which affirmed with modification the agrarian courts decision,which ordered them and the other defendants therein to, among others, restore possession of the disputed landholding to private respondent, Eufrocina Vda. dela Cruz.

Juan Mendoza, father of defendant Olympio, is the owner of farm lots in Bahay Pare, Candaba, Pampanga. Devoted to the production of palay, the lots were tenanted and cultivated by now deceased Julian dela Cruz, husband of plaintiff Eufrocina dela Cruz.

Eufrocina alleged that her husbands death, she succeeded him asbona fidetenant of the subject lots; that Olympio, in conspiracy with the other defendants, prevented her daughter Violeta and her workers through force, intimidation, strategy and stealth, from entering and working on the subject premises; and that until the filing of the instant case, defendants had refused to vacate and surrender the lots, thus violating her tenancy rights. Plaintiff therefore prayed for judgment for the recovery of possession and damages with a writ of preliminary mandatory injunction in the meantime.

Defendant barangay officials denied interference in the tenancy relationship existing between plaintiff and defendant Mendoza, particularly in the cultivation of the latters farm lots and asked for the dismissal of the case, moral damages and attorneys fees.

Mendoza raised abandonment, sublease and mortgage of the farm lots without his consent and approval, and non-payment of rentals, irrigation fees and other taxes due the government, as his defenses.

Petitioners now bring the present Petition for Review on Certiorari.

Issue:W/N the court erred in holding petitioners liable

Held:No.The evidence presented before the trial court and CA served as basis in arriving at their findings of fact. The Supreme Court will not analyze such evidence all over again because settled is the rule that only questions of law may be raised in a petition for review oncertiorariunder Rule 45 of the Rules of Courtabsent the exceptions which do not obtain in the instant case.

In agrarian cases, the quantum of evidence is no more thansubstantial evidence. Substantial evidence does not necessarily import preponderant evidence, as is required in an ordinarily civil case. It has been defined to be such relevant evidence as a reasonable mind might accept as adequate to support a conclusion and its absence is not shown by stressing that there is contrary evidence on record, direct or circumstantial, for the appellate court cannot substitute its own judgment or criteria for that of the trial court in determining wherein lies the weight of evidence or what evidence is entitled to belief.

SAN LORENZO DEVELOPMENT CORPORATION, petitioner, vs.COURT OF APPEALS, PABLO S. BABASANTA, SPS. MIGUEL LU and PACITA ZAVALLA LU, respondents

G.R. No. 124242 January 21, 2005

FACTS

On 20 August 1986, the Spouses Lu purportedly sold two parcels of land to respondent Pablo Babasanta, for the price of fifteen pesos (P15.00) per square meter. Babasanta made a downpayment of (P50,000.00) as evidenced by a memorandum receipt issued by Pacita Lu of the same date.

Babasanta wrote a letter to Pacita Lu to demand the execution of a final deed of sale in his favor so that he could effect full payment of the purchase price. In response, Pacita Lu wrote a letter to Babasanta wherein she reminded Babasanta that when the balance of the purchase price became due, he requested for a reduction of the price and when she refused, Babasanta backed out of the sale

herein petitioner San Lorenzo Development Corporation (SLDC) filed a Motion for Intervention. SLDC alleged that it had legal interest in the subject matter under litigation because on 3 May 1989, the two parcels of land involved had been sold to it in a Deed of Absolute Sale with Mortgage. It alleged that it was a buyer in good faith and for value and therefore it had a better right over the property in litigation

Respondent Babasanta, however, argued that SLDC could not have acquired ownership of the property because it failed to comply with the requirement of registration of the sale in good faith. He emphasized that at the time SLDC registered the sale in its favor on 30 June 1990, there was already a notice of lis pendens annotated on the titles of the property made as early as 2 June 1989. Hence, petitioners registration of the sale did not confer upon it any right.

ISSUE:

Did the registration of the sale after the annotation of the notice of lis pendens obliterate the effects of delivery and possession in good faith which admittedly had occurred prior to SLDCs knowledge of the transaction in favor of Babasanta?

HELD:NO

It must be stressed that as early as 11 February 1989, the Spouses Lu executed the Option to Buy in favor of SLDC upon receiving P316,160.00 as option money from SLDC. After SLDC had paid more than one half of the agreed purchase price, the Spouses Lu subsequently executed on 3 May 1989 a Deed of Absolute Sale in favor or SLDC. At the time both deeds were executed, SLDC had no knowledge of the prior transaction of the Spouses Lu with Babasanta. Simply stated, from the time of execution of the first deed up to the moment of transfer and delivery of possession of the lands to SLDC, it had acted in good faith and the subsequent annotation of lis pendens has no effect at all on the consummated sale between SLDC and the Spouses Lu.

A purchaser in good faith is one who buys property of another without notice that some other person has a right to, or interest in, such property and pays a full and fair price for the same at the time of such purchase, or before he has notice of the claim or interest of some other person in the property. We rule that SLDC qualifies as a buyer in good faith since there is no evidence extant in the records that it had knowledge of the prior transaction in favor of Babasanta. At the time of the sale of the property to SLDC, the vendors were still the registered owners of the property and were in fact in possession of the lands. In assailing knowledge of the transaction between him and the Spouses Lu, Babasanta apparently relies on the principle of constructive notice incorporated in Section 52 of the Property Registration Decree (P.D. No. 1529) which reads, thus:Sec. 52. Constructive notice upon registration. Every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting registered land shall, if registered, filed, or entered in the office of the Register of Deeds for the province or city where the land to which it relates lies, be constructive notice to all persons from the time of such registering, filing, or entering.

However, the constructive notice operates as such by the express wording of Section 52 from the time of the registration of the notice of lis pendens which in this case was effected only on 2 June 1989, at which time the sale in favor of SLDC had long been consummated insofar as the obligation of the Spouses Lu to transfer ownership over the property to SLDC is concerned.

Selegna v UCPB

Facts: On September 19, 1995, spouses Edgardo and Zenaida Angeles and Selegna Mgmt. acquired a P70 Million loan from UCPB. As security for the loan, Angeles executed a real estate mortgage of their properties in Muntinlupa, Antipolo, Las Pias, Quezon and some condo units in Makati. They also executed a promissory note in favor of UCPB. Later, Angeles increased the loan amount to P103 Million with a 21% interest rate per annum which was to mature on March 26, 1999.

UCPB and Angeles agreed in their Credit Agreement that failure to pay any availment of the accommodation or interest or any sum due constitutes a default in payment which would render the loan amount immediately due in full (this is the Acceleration Clause).

Eventually, in 1999, Angeles went into default and their loan ballooned to P132 M. UCPB sent them demand letters. In response, Angeles paid about P10 M in interest at the same time they asked for a 60 day period to restructure the loan.

UCPB accepted the P10 M payment but was unsatisfied hence they filed for extrajudicial foreclosure. Angeles filed for a TRO to forestall the foreclosure. It was not granted because they failed to show any irreparable damage that may be caused them by reason of the foreclosure. Upon Motion for Reconsideration, Angeles petition was granted but was later lifted. The foreclosure went on on some of the properties in Antipolo. Angeles claimed they were not given by UCPB any clear accounting on these.

The case was re-raffled anew in another RTC which later reinstated the injunction. UCPB filed an appeal with the CA. The CA affirmed the RTC. UCPB filed for reconsideration which was eventually granted.

In the main, Angeles averred that they have a clear right to injunction based on the fact that UCPB never explained how the loan went up to P132 M; that UCPB refused to give them a detailed accounting of the partial foreclosure and that they gave a P10 M payment which prevented the determination of the maturity of the obligation.ISSUE: Whether or not Angeles has a right to forestall the foreclosure.

HELD:No. Angeles is clearly in default per provisions laid down in their Credit Agreement with UCPB which is the binding law between the parties. In fact, the parties stipulated in their credit agreements, mortgage contracts and promissory notes that respondent was authorized to foreclose on the mortgages, in case of a default by petitioners. That this authority was granted is not disputed.

There are three requisites necessary for a finding of default. First, the obligation is demandable and liquidated; second, the debtor delays performance; third, the creditor judicially or extrajudicially requires the debtors performance. All three were present in this case.

The 1strequisite is present notwithstanding a detailed accounting of the partially foreclosed properties. A debt is liquidated when the amount is known or is determinable by inspection of the terms and conditions of the relevant promissory notes and related documentation.Failure to furnish a debtor a detailed statement of account does not ipso facto result in an unliquidated obligation.

It is in fact clear from the agreement of the parties that when the payment is accelerated due to an event of default, the penalty charge shall be based on the total principal amount outstanding, to be computed from the date of acceleration until the obligation is paid in full.Their Credit Agreement even provides for the application of payments.It appears from the agreements that the amount of total obligation is known or, at the very least, determinable.

Further, in the Real Estate Mortgage agreement between the parties (in the Event of Default clause), Angeles granted UCPB the right to extrajudicially foreclose the properties mortgaged which secured the loan/obligation.

Gonzales vs PCIB

Facts:

Gonzales was a client of PCIB. He was granted a credit line by the bank through a Credit-On-Hand-Loan Agreement (COHLA). He drew from the credit line through a check and said credit line was secured by a collateral in the form of his accounts with PCIB which was a foreign currency deposit worth USD 8000.

He obtained below loans from PCIB:1. obtained with his wife P500K2. obtained with spouses Panlilio P1M, P300K

the above loans (total: 1.8M) were covered by 3 promissory notes and were secured by a real estage mortgage on a land co owned by Gonzales and spouses Panlilio. the promissory notes states the solidary liability of Gonzales andspouses Panlilio. However, it was the spouses Panlilio who received the proceeds of 1.8M. The monthly interest dues were paid by the spouses Panlilio through auto debit from their PCIB account. however, they defaulted in the payment because their PCIB account had insufficient deposits.

Gonzales issued a check to Rene Unson worth 250K drawn against his credit line but said check was subsequently dishonored due to termination of gonzales credit line because of the unpaid period interest dues from the loans. PCIB also froze the foreign currency deposit account of Gonzales.Issue: W/N Gonzales is liable for the three promissory notes covering PHP1.8M loan he made with spouses Panlilio?Held:

Yes. Gonzales was an accommodation party of the loan. An accommodation party is one who meets all the three requisites according to Sec 29 of NIL:

1. he must be a party to the instrument, signing as a maker, drawer, acceptor, or indorser

2. he must not receive value therefor

3. he must sign for the purpose of lending his name or credit to some other person.

an accommodation party lends his name to enable the accommodated partyy to obtain credit or raise money. he receives no part but assumed liability.

the relation between an accommodation party is one of principal and surety, the AP being the surety. As such, he is deemed an original promisor and debtor from the beginning. he is considered in law as the same party as the debtor in relation to whatever is adjudged toruching the obligation of the latter since their liabilities are interwoven.

Lastly, the solidary nature of the loan was expressly stated in the promissory notes which state:the undersigned JOINTLY AND SEVERALLY promise

to pay xx.

RCBC VS. CA

G.R. No. 133107 March 25, 1999FACTS:Private respondent Atty. Felipe Lustre purchased a Toyota Corolla from Toyota Shaw, Inc. He made a down payment of P164,620.00. He issued 24 postdated checks amounting to P14,976.00 each in order to pay the remaining balance of the purchase.To secure the balance, private respondent executed a promissory note and a contract of chattel mortgage over the vehicle in favor of Toyota Shaw, Inc. which provided for an acceleration clause. It was stipulated that should the mortgagor default in the payment of any installment, the whole amount remaining unpaid shall become due. In addition, the mortgagor shall be liable for 25% of the principal due as liquidated damages.The checks were encashed and debited by RCBC from private respondents account, except for RCBC Check No. 279805 representing the payment for August 10, 1991, which was unsigned. Previously, the amount represented by RCBC Check No. 279805 was debited from private respondents account but was later recalled and re-credited to him. Because of the recall, the last two checks, dated February 10, 1993 and March 10, 1993, were no longer presented for payment. This was purportedly in conformity with petitioner banks procedure that once a clients account was forwarded to its account representative, all remaining checks outstanding as of the date the account was forwarded were no longer presented for payment.On the theory that respondent defaulted in his payments, the check representing the payment for August 10, 1991 being unsigned, petitioner, in a letter dated January 21, 1993, demanded from private respondent the payment of the balance of the debt, including liquidated damages. The latter refused.Issue: Whether or not the private respondents refusal to pay the balance of the debt constitute delay on his part.Ruling:No. Article 1170 of the Civil Code states that those who in the performance of their obligations are guilty of delay are liable for damages. The delay in the performance of the obligation, however, must be either malicious or negligent. Thus, assuming that private respondent was guilty of delay in the payment of the value of the unsigned check, private respondent cannot be held liable for damages. There is no imputation, much less evidence, that private respondent acted with malice or negligence in failing to sign the check. The omission was mere inadvertence on the part of private respondent.

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