3. GR No.

173140 January 11, 2016

Petitioner: MACTAN CEBU INTERNATIONAL AIRPORT AUTHORITY [MCIAA]
Respondent: HEIRS OF GAVINA IJORDAN, NAMELY, JULIAN CUISON, FRANCISCA CUISON,
DAMASTNA CUISON, PASTOR CUISON, ANGELINA CUISON, MANSUETO CUISON, BONIFACIA
CUISON, BASILIO CUISON, MOISES CUISON, AND FLORENCIO CUISON
Ponente: Bersamin, J.

TOPIC: A sale of jointly owned real property by a co-owner without the express authority of the others is
unenforceable against the latter, but valid and enforceable against the seller.

FACTS:
Julian Cuison and the rest of the respondents are the heirs of Gavina Ijordan. Sometime in 1957, the former executed a
deed of sale in favor of the Civil Aeronautics Administration (CAA). Later on the subject lot was transferred and
conveyed to MCIAA.

In 1980, the respondents caused the judicial reconstitution of the original certificate of title covering the subject lot. It
was eventually reconstituted in the names of the respondents’ predecessors-in-interest and their ownership was
evidenced by OCT No. RO-2431. The failure of the respondents to surrender the owner’s copy of OCT No. RO-2431
prompted petitioner to sue them for the cancellation of title.

Respondents argue that the sale was unenforceable against them because it was only Julian who had executed the same
without obtaining their consent or authority as his co-heirs; that Article 1317 of the Civil Code provided that "no one
may contract in the name of another without being authorized by the latter, or unless he has by law a right to represent
him;" and that the tax declaration had no probative value by virtue of its having been derived from the unenforceable
sale.

RTC dismissed the complaint of MCIAA and only recognized the sale as to the 1/22 share of Julian. The said decision
has been affirmed by the CA. Hence, the appeal.

ISSUE:
WON the deed of sale was void as far as the respondents’ shares in the subject lot were concerned but valid as to Julian’s
share.

RULING:
YES. the Deed was void as far as the respondents' shares in the subject lot were concerned, but valid as to Julian's share.
Their conclusion was based on the absence of the authority from his co-heirs in favor of Julian to convey their shares in
the subject lot. We have no reason to overturn the affirmance of the CA on the issue of the respondents' co-ownership
with Julian. Hence, the conveyance by Julian of the entire property pursuant to the Deed did not bind the
respondents for lack of their consent and authority in his favor. As such, the Deed had no legal effect as to their
shares in the property.

Article 1317 of the Civil Code provides that no person could contract in the name of another without being authorized
by the latter, or unless he had by law a right to represent him; the contract entered into in the name of another by one
who has no authority or legal representation, or who has acted beyond his powers, is unenforceable, unless it is ratified,
expressly or impliedly, by the person on whose behalf it has been executed, before it is revoked by the other contracting
party. But the conveyance by Julian through the Deed had full force and effect with respect to his share of 1/22 of the
entire property consisting of 546 square meters by virtue of its being a voluntary disposition of property on his part. As
ruled in Torres v. Lapinid24:

x x x even if a co-owner sells the whole property as his, the sale will affect only his own share but not those of the other
co-owners who did not consent to the sale. This is because the sale or other disposition of a co-owner affects only his
undivided share and the transferee gets only what would correspond to his grantor in the partition of the thing owned in
common.

4. G.R. No. L-48563 May 25, 1979

Petitioner: VICENTE E. TANG,
Respondent: HON. COURT OF APPEALS and PHILIPPINE AMERICAN LIFE INSURANCE
COMPANY,
Ponente: Abad Santos, J.

FACTS:
Lee See Guat who was an illiterate who spoke only Chinese applied for an insurance on her life for Php 60,000. She
later applied for a different insurance on her life for Php 40,000. Both required application which was written in the
English language. The second part of the application dealt wherein she disclosed that she is in a perfectly healthy
condition. Her answers in Part II of her previous application were used in appraising her insurability for the second
insurance. She indicated her nephew Vicente E. Tang as her beneficiary for both insurance.

After a few months, Lee See Guat died due to Lung Cancer. Petitioner, beneficiary, then claimed for the face value of
the insurance in the amount of Php 100,000 but the insurance company refused to pay it on the ground that the insured
was guilty of concealment and misrepresentation at the time she applied for the two policies. CFI and CA dismissed the
claim of petitioner. Hence, the appeal.

Petitioner contends that because Lee See Guat was illiterate and spoke only Chinese, she could not be held guilty of
concealment of her health history because the applications for insurance were in English and the insurer has not proved
that the terms thereof had been fully explained to her.

ISSUE:
WON Art 1332 of the Civil Code applies to the case at bar.
“Art. 1332. When one of the parties is unable to read, or if the contract is in a language not understood by him,
and mistake or fraud is alleged, the person enforcing the contract must show that the terms thereof have been
fully explained to the former.”

WON the insured was guilty of concealment as to her state of health.

RULING:
No. Art 1332 of the Civil Code does not apply to the case at bar.
Yes. The insured was guilty of concealment as to her state of health.
It should be noted that under Art. 1332 above quoted, the obligation to show that the terms of the contract had been
fully explained to the party who is unable to read or understand the language of the contract, when fraud or mistake is
alleged, devolves on the party seeking to enforce it. Here the insurance company is not seeking to enforce the contracts;
on the contrary, it is seeking to avoid their performance. It is petitioner who is seeking to enforce them even as fraud or
mistake is not alleged. Accordingly, respondent company was under no obligation to prove that the terms of the
insurance contracts were fully explained to the other party. Even if we were to say that the insurer is the one seeking the
performance of the contracts by avoiding paying the claim, it has to be noted as above stated that there has been no
imputation of mistake or fraud by the illiterate insured whose personality is represented by her beneficiary the petitioner
herein. In sum, Art. 1332 is inapplicable to the case at bar. Considering the findings of both the CFI and Court of
Appeals that the insured was guilty of concealment as to her state of health, we have to affirm.

GR No. 190755 November 24, 2010

Petitioner: Landbank of the Philippines
Respondent: Alfredo Ong
Ponente: Velasco, Jr. J.

TOPICS: Article 1236; Novation; Equity and Justice

FACTS:
Spouses Johnson and Evangeline Sy secured a loan from petitioner in the amount of P16 Million pesos. The loan is
secured by three residential lots, five cargo trucks and a warehouse. In later time, spouses found out that they can no
longer pay their loan. They sold three of their mortgaged parcels of land to Agelina Gloria Ong.

Evangeline’s father, respondent, went to Land Bank to inform it about the sale and assumption and mortgaged. He was
told that he should pay part of the principal which was computed at Php 750,000 and to update due or accrued interests
on the promissory notes so that Atty. Hingco could easily approve the assumption of mortgage. Respondent did what
was advised but he later found out that his application was not approved by the bank. The latter contended that they
learned from its credit investigation report that the Ongs had a real estate mortgage in the amount of Php 18,300,000
with another bank that was past due. Alfredo claimed that it was fully paid later on. Nonetheless, the bank foreclosed the
morgage of the Sps Sy after several months.

Alfredo demands for his payment plus damages to be returned to him. He argued that he was lured into believing that
his payment of P750,000 would cause LandBank to approve his assumption of the loan of the Sps. Sy and the transfer
of the mortgaged properties in his and his wife’s name.

RTC rendered a decision ordering petitioner to pay respondent with interest at 12% per annum. Petitioner bank applied
for reconsideration in the Appellate Court but the same denied it for lack of merit.

ISSUE:
1. WON the CA erred in holding that Art. 1236 of the Civil Code does not apply
2. WON there is novation.
3. WON petitioner is liable to return to respondent the P750,000.

RULING:
1. NO. CA did not err in holding that Art 1236.
We agree with Land Bank on this point as to the first part of paragraph 1 of Art. 1236. Land Bank was not bound to
accept Alfredo’s payment, since as far as the former was concerned, he did not have an interest in the payment of the
loan of the Spouses Sy. However, in the context of the second part of said paragraph, Alfredo was not making payment
to fulfill the obligation of the Spouses Sy. Alfredo made a conditional payment so that the properties subject of the
Deed of Sale with Assumption of Mortgage would be titled in his name. It is clear from the records that Land Bank
required Alfredo to make payment before his assumption of mortgage would be approved. He was informed that the
certificate of title would be transferred accordingly. He, thus, made payment not as a debtor but as a prospective
mortgagor. But the trial court stated:
[T]he contract was not perfected or consummated because of the adverse finding in the credit investigation which led to
the disapproval of the proposed assumption. There was no evidence presented that plaintiff was informed of the
disapproval. What he received was a letter dated May 22, 1997 informing him that the account of spouses Sy had
matured but there [were] no payments. This was sent even before the conduct of the credit investigation on June 20,
1997 which led to the disapproval of the proposed assumption of the loans of spouses Sy.13
Alfredo, as a third person, did not, therefore, have an interest in the fulfillment of the obligation of the Spouses Sy, since
his interest hinged on Land Bank’s approval of his application, which was denied. The circumstances of the instant case
show that the second paragraph of Art. 1236 does not apply. As Alfredo made the payment for his own interest and not
on behalf of the Spouses Sy, recourse is not against the latter. And as Alfredo was not paying for another, he cannot
demand from the debtors, the Spouses Sy, what he has paid.

2. NO. There is NO novation.

We do not agree, then, with the CA in holding that there was a novation in the contract between the parties. Not all the
elements of novation were present. Novation must be expressly consented to. Moreover, the conflicting intention and
acts of the parties underscore the absence of any express disclosure or circumstances with which to deduce a clear and
unequivocal intent by the parties to novate the old agreement.

3. YES. Petitioner is liable to return to respondent the amount he has paid.

We rule that Land Bank is still liable for the return of the PhP 750,000 based on the principle of unjust enrichment.
Land Bank is correct in arguing that it has no obligation as creditor to recognize Alfredo as a person with interest in the
fulfillment of the obligation.

The principle applies to the parties in the instant case, as, Alfredo, having been deemed disqualified from assuming the
loan, had no duty to pay petitioner bank and the latter had no right to receive it.

As to the claim that the trial court erred in applying equity to Alfredo’s case, we hold that Alfredo had no other remedy
to recover from Land Bank and the lower court properly exercised its equity jurisdiction in resolving the collection suit.
As we have held in one case:
Equity, as the complement of legal jurisdiction, seeks to reach and complete justice where courts of law, through the
inflexibility of their rules and want of power to adapt their judgments to the special circumstances of cases, are
incompetent to do so. Equity regards the spirit and not the letter, the intent and not the form, the substance rather than
the circumstance, as it is variously expressed by different courts
G.R. No. 186550 July 05, 2010
Petitioner: ASIAN CATHAY FINANCE AND LEASING CORPORATION
Respondent: SPOUSES CESARIO GRAVADOR AND NORMA DE VERA AND SPOUSES EMMA
CONCEPCION G. DUMIGPI AND FEDERICO L. DUMIGPI
Ponente: Nachura, J.

TOPICS: Art 1175; Usurious transactions

FACTS:
Petitioner extended a loan amounting to Php 800,000 to respondent Cesario Gravador, with respondents Norma de Vera
and Emma Concepcion Dumigpo as co-makers. Respondents paid the initial installment due on November 1999 but
were unable to pay the subsequent ones. On February 1, 2000, respondents received a letter demanding payment of
Php1,871,480.00 within 5 days from receipt. Respondents requested for an additional period to settle their account but
to no avail. Petitioner filed a petition for extrajudicial foreclosure of mortgage which respondnets filed a suit for
annulment of real estate mortgage and promissory note with damages.

Respondents prayed for damages and for issuance of a TRO to enjoin ACFLC from foreclosing their property.
RTC denied the application of respondents for TRO. They ruled that respondents are well-educated individuals who
could not feign naiveté in the execution of the loan documents. Said decision was reversed by CA and held the amount
demanded by petitioner unconscionable and excessive. Thus, it declared respondents’ principal loan to be Php800,000
and fixed the interest rate at 12% per annum and reduced the penalty charge to 1% per month.

ISSUE:
WON CA erred in invalidating the interest rates imposed on respondents’ loan.

RULING:
NO. CA did not err in invalidating the interest rates imposed on respondents’ loan.

It is true that parties to a loan agreement have a wide latitude to stipulate on any interest rate in view of Central
Bank Circular No. 905, series of 1982, which suspended the Usury Law ceiling on interest rate effective January
1, 1983.  However, interest rates, whenever unconscionable, may be equitably reduced or even invalidated. In
several cases,[10] this Court had declared as null and void stipulations on interest and charges that were found
excessive, iniquitous and unconscionable.

Records show that the amount of loan obtained by respondents on October 22, 1999 was P800,000.00. 
Respondents paid the installment for November 1999, but failed to pay the subsequent ones.  On February 1,
2000, ACFLC demanded payment of P1,871,480.00.  In a span of three months, respondents' obligation
ballooned by more than P1,000,000.00.  ACFLC failed to show any computation on how much interest was
imposed and on the penalties charged.  Thus, we fully agree with the CA that the amount claimed by ACFLC is
unconscionable.

In Spouses Isagani and Diosdada Castro v. Angelina de Leon Tan,  Sps. Concepcion T. Clemente and Alexander C. Clemente,
Sps. Elizabeth T. Carpio and Alvin Carpio, Sps. Marie Rose T. Soliman and Arvin Soliman and Julius Amiel Tan,[11] this
Court held:

The imposition of an unconscionable rate of interest on a money debt, even if knowingly and
voluntarily assumed, is immoral and unjust. It is tantamount to a repugnant spoliation and an
iniquitous deprivation of property, repulsive to the common sense of man. It has no support in law, in
principles of justice, or in the human conscience nor is there any reason whatsoever which may justify
such imposition as righteous and as one that may be sustained within the sphere of public or private
morals.
G.R. No. 185798               January 13, 2014
Petitioner: FIL-ESTATE PROPERTIES, INC. AND FIL-ESTATE NETWORK INC.
Respondents: SPOUSES CONRADO AND MARIA VICTORIA RONQUILLO,
Ponente: PEREZ, J.:

TOPICS: Art 1170; Fortuitous event; Art 1191 Rescission of reciprocal obligation
FACTS:
Petitioner, Fil-Estate Properties, Inc, is the owner and developer of the Central Park Place Tower while co-petitioner is
the authorized marketing agent. Respondent Spouses purchased from petitioners a unit at the aforementioned building.
Respondents have executed and signed a reservation application agreement wherein they deposited Php200,000 as
reservation fee and paid the full down payment of Php 1,552,200.00 and had been paying the Php63,363.33 monthly
amortizations.

When respondents learned that the construction works had stopped, they likewise stopped paying their monthly
amortization. Respondents through two successive letters demanded a full refund of their payment with interest.
Petitioner aver that they cannot be blamed for the Asian economic crisis as the direct, proximate, and only cause of their
failure to complete the project.

They filed a complaint with the Housing and Land Use Regulatory Board (HLURB) wherein petitioners were held liable,
jointly and severally to pay the pay respondents their total payments with damages, attorney’s fees, cost of suit and
administrative fine. Arbiter considered petitioner’s failure to develop the condominium project as a substantial break of
their obligation which entitles respondents to seek for rescission with payment for damages. The said economic crisis is
not a fortuitous event which will exempt petitioners from the performance of their contractual obligation.

ISSUE:
1. WON the Asian financial crisis constitute a fortuitous event which would justify the delay by petitioners in the
performance of their contractual obligations.
2. WON the non-performance of petitioners’ obligation entitles respondents to rescission.

RULING:
1. NO. The Asian financial crisis DO NOT constitute a fortuitous event which would justify the delay by petitioners in
the performance of their contractual obligations

Notably, the issues had already been settled by the Court in the case of Fil-Estate Properties, Inc. v. Spouses Go13
promulgated on 17 August 2007, where the Court stated that the Asian financial crisis is not an instance of caso fortuito.
Bearing the same factual milieu as the instant case, G.R. No. 165164 involves the same company, Fil-Estate, albeit about
a different condominium property.
We cannot generalize that the Asian financial crisis in 1997 was unforeseeable and beyond the control of a business
corporation. It is unfortunate that petitioner apparently met with considerable difficulty e.g. increase cost of materials
and labor, even before the scheduled commencement of its real estate project as early as 1995. However, a real estate
enterprise engaged in the pre-selling of condominium units is concededly a master in projections on commodities and
currency movements and business risks. The fluctuating movement of the Philippine peso in the foreign exchange
market is an everyday occurrence, and fluctuations in currency exchange rates happen everyday, thus, not an instance of
caso fortuito.

2. YES. The non-performance of petitioners’ obligation entitles respondents to rescission under Article 1191 of the
New Civil Code which states:

Article 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not
comply with what is incumbent upon him.
The injured party may choose between the fulfillment and the rescission of the obligation, with payment of damages in
either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible.
G.R. No. L-55138 September 28, 1984
Petitioner: ERNESTO V. RONQUILLO
Respondents: HONORABLE COURT OF APPEALS AND ANTONIO P. SO
Ponente: CUEVAS, J.:

TOPICS: Art 1207; Art 1208; Solidary Liability

FACTS:
Petitioner Ernesto V. Ronquillo was one of the four defendants (Offshore Catertrade, Inc., Johnny Tan and Pilar Tan) in
a civil case filed by private respondent Antonio P. So. The amount of P117,498.98 represents the value of the checks
issued by petitioners in psyment for foodstuffs delivered to and received by them. The said checks were dishonored by
the drawee bank.

The parties made a compromise agreement stating that defendants are individually and jointly agree to pay within a
period of six months and failure on the part of either party to comply with the foregoing terms and conditions, the
innocent party will be entitled to an execution of the decision based on this compromise agreement and the defaulting
party agrees and hold themselves to reimburse the innocent party for attorney's fees, execution fees and other fees
related with the execution.

Private respondent filed a motion for execution on the ground that defendants failed to make the initial payment.
Petitioner contended that his inability to make the payment was due to private respondent’s own act of making himself
scarce and inaccessible. Because respondent refused to accept their payments, petitioner deposited the said amount with
the Clerk of Court. The amount was subsequently withdrawn by private respondent.

Petitioner opposed the said motion of execution arguing that under the decision of the lower court being executed
which has already become final, the liability of the four (4) defendants was not expressly declared to be solidary,
consequently each defendant is obliged to pay only his own pro-rata or 1/4 of the amount due and payable.

ISSUE: WON the nature of the liability of petitioner is solidary.

RULING: Yes. The liability of petitioner is solidary.

The decision of the lower court based on the parties' compromise agreement, provides:
1. Plaintiff agrees to reduce its total claim of P117,498.95 to only P110,000.00 and defendants agree to
acknowledge the validity of such claim and further bind themselves to initially pay out of the total indebtedness
of P110,000.00, the amount of P5,000.00 on or before December 24, 1979, the balance of P55,000.00,
defendants individually and jointly agree to pay within a period of six months from January 1980 or before June
30, 1980. (Emphasis supply)
Clearly then, by the express term of the compromise agreement and the decision based upon it, the defendants obligated
themselves to pay their obligation "individually and jointly".

The term "individually" has the same meaning as "collectively", "separately", "distinctively", respectively or "severally".
An agreement to be "individually liable" undoubtedly creates a several obligation, and a "several obligation is one by which
one individual binds himself to perform the whole obligation.

In the case of Parot vs. Gemora, We therein ruled that "the phrase juntos or separadamente or in the promissory note is an
express statement making each of the persons who signed it individually liable for the payment of the fun amount of the
obligation contained therein." Likewise in Un Pak Leung vs. Negorra . We held that "in the absence of a finding of facts
that the defendants made themselves individually liable for the debt incurred they are each liable only for one-half of
said amount

The obligation in the case at bar being described as "individually and jointly", the same is therefore
enforceable against one of the numerous obligors.