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Catholic Vicar vs.

CA
Wednesday, April 30, 2014
Date: September 31, 1988
Facts:
- 1962: Catholic Vicar Apostolic of the Mountain Province (Vicar), petitioner, filed
with the court an application for the registration of title over lots 1, 2, 3 and 4
situated in Poblacion Central, Benguet, said lots being used as sites of the Catholic
Church, building, convents, high school building, school gymnasium, dormitories,
social hall and stonewalls.
- 1963: Heirs of Juan Valdez and Heirs of Egmidio Octaviano claimed that they have
ownership over lots 1, 2 and 3. (2 separate civil cases)
- 1965: The land registration court confirmed the registrable title of Vicar to lots 1 ,
2, 3 and 4. Upon appeal by the private respondents (heirs), the decision of the lower
court was reversed. Title for lots 2 and 3 were cancelled.
- VICAR filed with the Supreme Court a petition for review on certiorari of the
decision of the Court of Appeals dismissing his application for registration of Lots 2
and 3.
- During trial, the Heirs of Octaviano presented one (1) witness, who testified on the
alleged ownership of the land in question (Lot 3) by their predecessor-in-interest,
Egmidio Octaviano; his written demand to Vicar for the return of the land to them;
and the reasonable rentals for the use of the land at P10,000 per month. On the other
hand, Vicar presented the Register of Deeds for the Province of Benguet, Atty. Sison,
who testified that the land in question is not covered by any title in the name of
Egmidio Octaviano or any of the heirs. Vicar dispensed with the testimony of Mons.
Brasseur when the heirs admitted that the witness if called to the witness stand,
would testify that Vicar has been in possession of Lot 3, for 75 years continuously and
peacefully and has constructed permanent structures thereon.
Issue: WON Vicar had been in possession of lots 2 and 3 merely as bailee borrower in
commodatum, a gratuitous loan for use.
Held: YES.
Private respondents were able to prove that their predecessors' house was borrowed
by petitioner Vicar after the church and the convent were destroyed. They never
asked for the return of the house, but when they allowed its free use, they became
bailors in commodatum and the petitioner the bailee.
The bailees' failure to return the subject matter of commodatum to the bailor did not
mean adverse possession on the part of the borrower. The bailee held in trust the
property subject matter of commodatum. The adverse claim of petitioner came only
in 1951 when it declared the lots for taxation purposes. The action of petitioner Vicar
by such adverse claim could not ripen into title by way of ordinary acquisitive
prescription because of the absence of just title.

The Court of Appeals found that petitioner Vicar did not meet the requirement of 30
years possession for acquisitive prescription over Lots 2 and 3. Neither did it satisfy
the requirement of 10 years possession for ordinary acquisitive prescription because
of the absence of just title. The appellate court did not believe the findings of the
trial court that Lot 2 was acquired from Juan Valdez by purchase and Lot 3 was
acquired also by purchase from Egmidio Octaviano by petitioner Vicar because there
was absolutely no documentary evidence to support the same and the alleged
purchases were never mentioned in the application for registration.

Pajuyo vs. CA & GuevarraFacts:


Pajuyo and Guevarra executed a Kasunduan. Pajuyo, as owner of a house, allowed
Guevarra to live in the house for free provided Guevarra would maintain the
cleanliness and orderliness of the house. Guevarra promised that he would voluntarily
vacate the premises on Pajuyos demand. After some time, Pajuyo informed Guevarra
of his need of the house, however, Guevarra refused to vacate the house.
Hence, Pajuyo filed an ejectment case against Guevarra in the MTC. The MTC ruled in
favor of Pajuyo and ordered Guevarra to vacate the lot. Pajuyo is the owner of the
house, and he allowed Guevarra to use the house only by tolerance. Thus, Guevarras
refusal to vacate the house on Pajuyos demand made Guevarras continued
possession of the house illegal. The RTC upheld the Kasunduan, which established the
landlord and tenant relationship between Pajuyo and Guevarra. However, the Court
of Appeals reversed the MTC and RTC rulings, which held that the Kasunduan Between
Pajuyo and Guevarra created a legal tie akin to that of a landlord and tenant
relationship. The Court of Appeals ruled that the
Kasunduan is not a lease contract but a commodatum because the agreement is not for
a pricecertain.
Issue:
Whether or not the Kasunduan voluntarily entered into by the partieswas in fact a
commodatum, instead of a Contract of Lease as found by the MTC.
Ruling:
No. The Kasunduan reveals that the accommodation accorded by Pajuyo toGuevarra
was not essentially gratuitous. While the Kasunduan did not require Guevarra to pay
rent, it obligated him to maintain the property in good condition. The imposition of
this obligation makes the Kasunduan a contract different from a commodatum. The
effects of the Kasunduan Are also different from that of a commodatum. Even assuming
that the relationship between Pajuyo and Guevarra is one of Commodatum , Guevarra
as bailee would still have the duty to turn overpossession of the property to Pajuyo,
the bailor. The obligation to deliver orto return the thing received attaches to
contracts for safekeeping, orcontracts of commission, administration and
commodatum. These contractscertainly involve the obligation to deliver or return the
thing received

G.R. No. L-46240

November 3, 1939

MARGARITA QUINTOS and ANGEL A. ANSALDO, plaintiffs-appellants,


vs.
BECK, defendant-appellee.
Mauricio Carlos for appellants.
Felipe Buencamino, Jr. for appellee.

IMPERIAL, J.:
The plaintiff brought this action to compel the defendant to return her certain
furniture which she lent him for his use. She appealed from the judgment of the Court
of First Instance of Manila which ordered that the defendant return to her the three
has heaters and the four electric lamps found in the possession of the Sheriff of said
city, that she call for the other furniture from the said sheriff of Manila at her own
expense, and that the fees which the Sheriff may charge for the deposit of the
furniture be paid pro rata by both parties, without pronouncement as to the costs.
The defendant was a tenant of the plaintiff and as such occupied the latter's house on
M. H. del Pilar street, No. 1175. On January 14, 1936, upon the novation of the
contract of lease between the plaintiff and the defendant, the former gratuitously
granted to the latter the use of the furniture described in the third paragraph of the
stipulation of facts, subject to the condition that the defendant would return them to
the plaintiff upon the latter's demand. The plaintiff sold the property to Maria Lopez
and Rosario Lopez and on September 14, 1936, these three notified the defendant of
the conveyance, giving him sixty days to vacate the premises under one of the clauses
of the contract of lease. There after the plaintiff required the defendant to return all
the furniture transferred to him for them in the house where they were found. On
November 5, 1936, the defendant, through another person, wrote to the plaintiff
reiterating that she may call for the furniture in the ground floor of the house. On the
7th of the same month, the defendant wrote another letter to the plaintiff informing
her that he could not give up the three gas heaters and the four electric lamps
because he would use them until the 15th of the same month when the lease in due
to expire. The plaintiff refused to get the furniture in view of the fact that the
defendant had declined to make delivery of all of them. On
November 15th,
before vacating the house, the defendant deposited with the Sheriff all the furniture
belonging to the plaintiff and they are now on deposit in the warehouse situated at
No. 1521, Rizal Avenue, in the custody of the said sheriff.

In their seven assigned errors the plaintiffs contend that the trial court incorrectly
applied the law: in holding that they violated the contract by not calling for all the
furniture on November 5, 1936, when the defendant placed them at their disposal; in
not ordering the defendant to pay them the value of the furniture in case they are not
delivered; in holding that they should get all the furniture from the Sheriff at their
expenses; in ordering them to pay-half of the expenses claimed by the Sheriff for the
deposit of the furniture; in ruling that both parties should pay their respective legal
expenses or the costs; and in denying pay their respective legal expenses or the costs;
and in denying the motions for reconsideration and new trial. To dispose of the case,
it is only necessary to decide whether the defendant complied with his obligation to
return the furniture upon the plaintiff's demand; whether the latter is bound to bear
the deposit fees thereof, and whether she is entitled to the costs of
litigation.lawphi1.net
The contract entered into between the parties is one of commadatum, because under
it the plaintiff gratuitously granted the use of the furniture to the defendant,
reserving for herself the ownership thereof; by this contract the defendant bound
himself to return the furniture to the plaintiff, upon the latters demand (clause 7 of
the contract, Exhibit A; articles 1740, paragraph 1, and 1741 of the Civil Code). The
obligation voluntarily assumed by the defendant to return the furniture upon the
plaintiff's demand, means that he should return all of them to the plaintiff at the
latter's residence or house. The defendant did not comply with this obligation when
he merely placed them at the disposal of the plaintiff, retaining for his benefit the
three gas heaters and the four eletric lamps. The provisions of article 1169 of the Civil
Code cited by counsel for the parties are not squarely applicable. The trial court,
therefore, erred when it came to the legal conclusion that the plaintiff failed to
comply with her obligation to get the furniture when they were offered to her.
As the defendant had voluntarily undertaken to return all the furniture to the
plaintiff, upon the latter's demand, the Court could not legally compel her to bear the
expenses occasioned by the deposit of the furniture at the defendant's behest. The
latter, as bailee, was not entitled to place the furniture on deposit; nor was the
plaintiff under a duty to accept the offer to return the furniture, because the
defendant wanted to retain the three gas heaters and the four electric lamps.
As to the value of the furniture, we do not believe that the plaintiff is entitled to the
payment thereof by the defendant in case of his inability to return some of the
furniture because under paragraph 6 of the stipulation of facts, the defendant has
neither agreed to nor admitted the correctness of the said value. Should the
defendant fail to deliver some of the furniture, the value thereof should be latter

determined by the trial Court through evidence which the parties may desire to
present.
The costs in both instances should be borne by the defendant because the plaintiff is
the prevailing party (section 487 of the Code of Civil Procedure). The defendant was
the one who breached the contract of commodatum, and without any reason he
refused to return and deliver all the furniture upon the plaintiff's demand. In these
circumstances, it is just and equitable that he pay the legal expenses and other
judicial costs which the plaintiff would not have otherwise defrayed.
The appealed judgment is modified and the defendant is ordered to return and
deliver to the plaintiff, in the residence to return and deliver to the plaintiff, in the
residence or house of the latter, all the furniture described in paragraph 3 of the
stipulation of facts Exhibit A. The expenses which may be occasioned by the delivery
to and deposit of the furniture with the Sheriff shall be for the account of the
defendant. the defendant shall pay the costs in both instances. So ordered.
ABC vs Lim Sio Wan

FACTS:

January 6, 1981: Allied Bank (Allied) purchased Export Bill of $20,085 from
G.G. Sportswear Mfg. Corporation (GGS)

The bill, drawn under a letter of credit covered Men's Valvoline Training
Suit that was in transit to West Germany
The export bill was issued by Chekiang First Bank Ltd., Hongkong.

With the purchase of the bill, ALLIED credited GGS the peso equivalent
of the bill amounting to P151,474.52

Nari Gidwani and Alcron International Ltd. (Alcron) executed their


respective Letters ofGuaranty, holding themselves liable on the export bill if it
should be dishonored or retired by the drawee for any reason.

spouses Leon and Leticia de Villa and Nari Gidwani also executed a
Continuing Guaranty/Comprehensive Surety (surety), guaranteeing payment of any
and all such creditaccommodations which ALLIED may extend to GGS

When ALLIED negotiated the export bill to Chekiang, payment was refused due
to somematerial discrepancies in the documents submitted by GGS relative to
the exportationcovered by the letter of credit.
ALLIED demanded payment

GGS and Nari Gidwani: signed blank forms of the Letters of Guaranty and
the Surety, and the blanks were only filled up by ALLIED after they had affixed
their signatures. They also added that the documents did not cover the transaction
involving the subject export bill.

spouses de Villa: not aware of the existence of the export bill; they
signed blank forms of the surety; and averred that the guaranty was not meant to
secure the export bill

Alcron: foreign corporation doing business in the Philippines, its branch


in the Philippines is merely a liaison office; neither its liaison office in the
Philippines nor its then representative, Hans-Joachim Schloer, had the authority to
issue Letters of Guaranty for and in behalf of local entities and persons

RTC: in favor of Allied


CA: modified holding GGS liable to reimburse Allied, but it exonerated the
guarantors from their liabilities under the Letters of Guaranty

ISSUE: W/N Gidwani, Alcron and Spouses Villa can be held jointly and severally liable
becuase of their capacity as guarantors and surety in the absence of protest on the
bill in accordance with Section 152 of the Negotiable Instruments Law?

HELD: YES. CA modified. Nari Gidwani, and Spouses Leon and Leticia de Villa are
jointly and severally liable together with G.G. Sportswear

Art. 2047. By guaranty a person, called the guarantor, binds himself to the creditor to
fulfill the obligation of the principal debtor in case the latter should fail to do so.

If a person binds himself solidarily with the principal debtor, the provisions of
Section 4, Chapter 3, Title I of this Book shall be observed. In such case the
contract is called a suretyship.

Section 152 of the Negotiable Instruments Law pertaining to indorsers, relied


on by respondents, is not pertinent to this case.

There are well-defined distinctions between the contract of an indorser


and that of a guarantor/surety of a commercial paper, which is what is involved in
this case.

The contract of indorsement is primarily that of transfer, while the


contract of guaranty is that of personal security

The liability of a guarantor/surety is broader than that of an indorser.

Unless the bill is promptly presented for payment at maturity and due
notice of dishonor given to the indorser within a reasonable time, he will be
discharged from liability thereon. On the other hand, except where required by
the provisions of the contract of suretyship, a demand or notice of default is not
required to fix the surety's liability.

Therefore, no protest on the export bill is necessary to charge all


the respondents jointly and severally liable

having affixed their consenting signatures in several documents executed at


different times, it is safe to presume that they had full knowledge of its terms and
conditions, hence, they are precluded from asserting ignorance of the legal effects
of the undertaking they assumed thereunder

Antonio Tan vs. Court of Appeals/CCP


GR No. 116285

1.
2.
1.
2.
3.

FACTS:
Petition for review.
TAN OBTAINED 2 LOANS, EACH FOR P2,000,000 FROM CCP.
Executed a promissory note in amount of P3,411,421.32; payable in 5
installments.
TAN failed to pay any installment on the said restructured loa.
In a letter, TAN requested and proposed to respondent CCP a mode of
paying the restructured loan
i.
20% of the principal amount of the loan upon the respondent giving its
conformity to his proposal

4.

3.
1.

2.

4.

1.

5.
1.
1.
2.

ii.
Balance on the principal obligation payable 36 monthly installments
until fully paid.
TAN requested for a moratorium on his loan obligation until the following
year allegedly due to a substantial deduction in the volume of his business and on
account of the peso devaluation.
i.
No favorable response was made to said letters.
ii.
CCP demanded full payment, within ten (10) days from receipt of said
letter P6,088,735.03.
CCP FILED COMPLAINT collection of a sum of money
TAN interposed the defense that he accommodated a friend who asked
for help to obtain a loan from CCP.
i.
Claimed that cannot find the friend.
TAN filed a Manifestation wherein he proposed to settle his indebtedness
to CCP by down payment of P140,000.00 and to issue1 2 checks every beginning of the
year to cover installment payments for one year, and every year thereafter until the
balance is fully paid.
i.
CCP did not agree to the petitioners proposals and so the trial of the
case ensued.
TRIAL COURT ORDERED TAN TO PAY CCP P7,996,314.67, representing
defendants outstanding account as of August 28, 1986, with the corresponding
stipulated interest and charges thereof, until fully paid, plus attorneys fees in an
amount equivalent to 25% of said outstanding account, plus P50,000.00, as exemplary
damages, plus costs.
REASONS:
i.
Reason of loan for accommodation of friend was not credible.
ii.
Assuming, arguendo, that the TAN did not personally benefit from
loan, he should have filed a 3rd-party complaint against Wilson Lucmen
iii.
3 times the petitioner offered to settle his loan obligation with CCP.
iv. TAN may not avoid his liability to pay his obligation under the
promissory note which he must comply with in good faith.
v. TAN is estopped from denying his liability or loan obligation to the
private respondent.
TAN APPEALED TO CA, asked for the reduction of the penalties and charges on
his loan obligation.
Judgment appealed from is hereby AFFIRMED.
No alleged partial or irregular performance.
However, the appellate court modified the decision of the trial court by deleting
exemplary damages because not proportionate to actual damage caused by the nonperformance of the contract

ISSUES:
WON there are contractual and legal bases for the imposition of the penalty, interest
on the penalty and attorneys fees.

TAN imputes error on CA in not fully eliminating attorney fees and in not reducing the
penalties considering that he made partial payments on the loan.
And if penalty is to be awarded, TAN asking for non-imposition of interest on the
surcharges because compounding of these are not included in promissory note.
No basis in law for the charging of interest on the surcharges for the reason that the
New Civil Code is devoid of any provision allowing the imposition of interest on
surcharges.
WON interest may accrue on the penalty or compensatory interest without violating
ART 1959: Without prejudice to the provisions of Article 2212, interest due and
unpaid shall not earn interest. However, the contracting parties may by stipulation
capitalize the interest due and unpaid, which as added principal, shall earn new
interest.
TAN- No legal basis for the imposition of interest on the penalty charge for the reason
that the law only allows imposition of interest on monetary interest but not the
charging of interest on penalty. Penalties should not earn interest.
WON TAN can file reduction of penalty due to made partial payments.
Petitioner contends that reduction of the penalty is justifiable under ART 1229: 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
performance, the penalty may also be reduced by the courts if it is iniquitous or
unconscionable.

HELD
CA DECISION AFFIRMED with MODIFICATION in that the penalty charge of two percent
(2%) per month on the total amount due, compounded monthly, is hereby reduced to
a straight twelve percent (12%) per annum starting from August 28, 1986. With costs
against the petitioner.
1.

WON there are contractual and legal bases for the imposition of the penalty,
interest on the penalty and attorneys fees. YES. WITH LEGAL BASES.
1.
ART 1226: In obligations with a penal clause, the penalty shall substitute
the indemnity for damages and the payment of interests in case of non-compliance, if
there is no stipulation to the contrary. Nevertheless, damages shall be paid if the
obligor refuses to pay the penalty or is guilty of fraud in the fulfillment of the
obligation.
i.
The penalty may be enforced only when it is demandable in
accordance with the provisions of this Code.
2.
CASE AT BAR: promissory note expressed the imposition of both interest
and penalties in case of default on the part of the petitioner in the payment of the
subject restructured loan.
3.
PENALTY IN MANY FORMS:

i.
If the parties stipulate penalty apart monetary interest, two are
different and distinct from each other and may be demanded separately.
ii.
If stipulation about payment of an additional interest rate partakes of
the nature of a penalty clause which is sanctioned by law:
1. ART 2209: If the obligation consists in the payment of a sum of money, and the debtor
incurs in delay, the indemnity for damages, there being no stipulation to the contrary,
shall be the payment of the interest agreed upon, and in the absence of stipulation,
the legal interest, which is six per cent per annum.
4.
CASE AT BAR: Penalty charge of 2% per month began to accrue from the
time of default by the petitioner.
i.
No doubt petitioner is liable for both the stipulated monetary interest
and the stipulated penalty charge.
1. PENALTY CHARGE = penalty or compensatory interest.
2.
1.

1.
a.

2.

2.
3.

3.

WON interest may accrue on the penalty or compensatory interest without


violating ART 1959.
Penalty clauses can be in the form of penalty or compensatory interest.
i.
Thus, the compounding of the penalty or compensatory interest is
sanctioned by and allowed pursuant to the above-quoted provision of Article 1959 of
the New Civil Code considering that:
There is an express stipulation in the promissory note (Exhibit A) permitting the
compounding of interest.
5th paragraph of the said promissory note provides that: Any interest which may
be due if not paid shall be added to the total amount when due and shall become part
thereof, the whole amount to bear interest at the maximum rate allowed by law..
Therefore, any penalty interest not paid, when due, shall earn the legal interest of
twelve percent (12%) per annum, in the absence of express stipulation on the specific
rate of interest, as in the case at bar.
ART 2212: Interest due shall earn legal interest from the time it is
judicially demanded, although the obligation may be silent upon this point.
CASE AT BAR: interest began to run on the penalty interest upon the
filing of the complaint in court by CCP.
i.
Hence, the courts did not err in ruling that the petitioner is bound to
pay the interest on the total amount of the principal, the monetary interest and the
penalty interest.

WON TAN can file reduction of penalty due to made partial payments. YES.
BUT NOT 10% REDUCTION AS SUGGESTED BY PETITIONER.
1.
REDUCED TO 2% REDUCTION:
i.
PARTIAL PAYMENTS showed his good faith despite difficulty in
complying with his loan obligation due to his financial problems.
1. However, we are not unmindful of the respondents long overdue deprivation of the
use of its money collectible.

4.

The petitioner also imputes error on the part of the appellate court for not
declaring the suspension of the running of the interest during period when the CCP
allegedly failed to assist the petitioner in applying for relief from liability
1.
Alleges that his obligation to pay the interest and surcharge should have
been suspended because the obligation to pay such interest and surcharge has
become conditional
i.
Dependent on a future and uncertain event which consists of whether
the petitioners request for condonation of interest and surcharge would be
recommended by the Commission on Audit.
1. Since the condition has not happened due to the private respondents reneging on its
promise, his liability to pay the interest and surcharge on the loan has not arisen.
2.
COURT ANSWER:
i.
Running of the interest and surcharge was not suspended.
ii.
CCP correctly asserted that it was the primary responsibility of
petitioner to inform the Commission on Audit of his application for condonation of
interest and surcharge

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