AURELIO TIRO, as City Superintendent of Schools of Cebu City, petitioner-appellant,

vs.
HONORABLE AGAPITO HONTANOSAS, Judge of the Court of First Instance of Cebu, Branch XI, ZAFRA
FINANCING ENTERPRISE and MARCELINO ZAFRA, respondents-appellees.

FACTS:

In Civil Case No. 11616 of the defunct Court of First Instance of Cebu, Zafra Financing Enterprise sued Aurelio Tiro in his
official capacity as Superintendent of Schools in Cebu City. It appears that Zafra had extended loans to public school
teachers in Cebu City and the teachers concerned executed promissory notes and special powers of attorney in favor of
Zafra to take and collect their salary checks from the Division Office in Cebu City of the Bureau of Public Schools.
However, Tiro forbade the collection of the checks on the basis of Circular No. 21, series 1969, dated December 5, 1969,
of the Director of Public Schools. Circular no. 21 prohibits the payment of salary of teachers other than the person
concerned.

Zafra sought to compel Tiro to honor the special powers of attorney; to declare Circular No. 21 to be illegal as it impairs
obligation and contracts; and to make Tiro pay attorney's fees and damages. The trial court granted the prayer of Zafra
but the claim for money was disallowed on the ground that he acted in good faith in implementing Circular No. 21.

ISSUE:

Is Circular No. 21 valid and enforceable? YES

RULING:

WHEREFORE, the petition is granted; the judgment of the court a quo is hereby set aside; costs against the private
respondent.

RATIO:

The salary check of a government officer or employee such as a teacher does not belong to him before it is physically
delivered to him. Until that time the check belongs to the Government. Accordingly, before there is actual delivery of the
check, the payee has no power over it; he cannot assign it without the consent of the Government. On this basis Circular
No. 21 stands on firm legal footing.

Zafra's claim that the Circular impairs the obligation of contracts with the teachers is baseless. For the Circular does not
prevent Zafra from collecting the loans. The Circular merely makes the Government a non-participant in their collection
which is within its competence to do.

RODOLFO T. GANZON and GREGORIO L. LIRA, in his capacity as Ex-Oficio Provincial Sheriff of Iloilo,
petitioners,
vs.
THE HONORABLE SANCHO Y. INSERTO, Presiding Judge, Branch I of the Court of First Instance of Iloilo,
RANDOLPH C. TAJANLANGIT and ESTEBAN C. TAJANLANGIT, respondents.

FACTS:

On August 28, 1979, petitioner Rodolfo Ganzon initiated proceedings to extra-judicially foreclose a real estate mortgage
executed by the private respondents in his favor. The Deed of Real Estate Mortgage executed on March 19, 1979
between Randolph Tajanlangit and Esteban Tajanlangit as mortgagors on one hand and Rodolfo Ganzon as mortgagee
on the other hand was to secure the payment by the Tajanlangits of a promissory note amounting to P40,000.00 in favor
of Ganzon.

The mortgage covered a parcel of residential land, Lot No. 1901-E-61-B-1- F of the subdivision plan Psd-274802, located
in the District of Molo, Iloilo City covered by Transfer Certificate of Title No. T-50324.

On September 27, 1979, a day before the scheduled public auction, the private respondents filed a civil action for
specific performance, damages, and prohibition with preliminary injunction against the petitioners with the respondent
court. The action sought to declare the extrajudicial foreclosure proceedings and all proceedings taken in connection
therewith null and void and to enjoin the foreclosure and public auction sale.
The private respondents contend that Incorporated in the aforesaid deed of absolute sale was a proviso to the effect that
vendor-defendant Rodolfo Ganzon guaranteed to have the occupants of the lot to vacate the premises within 120 days
after the execution thereof. The guaranty was violated by defendant Ganzon since the occupants of the said lot up to the
present are still within the premises of the lot; and the extra-judicial foreclosure is illegal since defendant Ganzon
committed a breach in his warranty and the deed of real estate mortgage does not contain any stipulation authorizing
mortgagee Ganzon to extrajudicially foreclose the mortgaged property.

The lower court granted the respondents's motion. The petitioners filed a motion for reconsideration but was denied by
the respondent judge.

ISSUE:

Did the trial court violate the non-impairment clause for ordering the cancellation of a mortgage lien annotated in a
Torrens Certificate of Title to secure the payment of a promissory note and substitute such mortgage lien with a surety
bond approved by the same court to secure the payment of the promissory note? YES

RULING:

WHEREFORE, the instant petition is hereby GRANTED. The Orders dated November 20, 1980 and February 24, 1981
of the trial court are SET ASIDE. Our March 18, 1981 Temporary Restraining Order is made PERMANENT. No costs.

RATIO:

The questioned orders violate the non-impairment of contracts clause guaranteed under the Constitution. Substitution of
the mortgage with a surety bond to secure the payment of the P40,000.00 note would in effect change the terms and
conditions of the mortgage contract. Even before trial on the very issues affecting the contract, the respondent court has
directed a deviation from its terms, diminished its efficiency, and dispensed with a primary condition.