ALLIED BANKING CORPORATION VS LIM SIO WAN, Facts: On November 14, 1983, respondent Lim Sio Wan deposited

with petitioner Allied Banking Corporation (Allied) a money market placement of 1,152,597.35 for a term of 31 days to mature on December 15, 1983, as evidenced by Provisional Receipt No. 1356 dated November 14, 1983. On December 5, 1983, a person claiming to be Lim Sio Wan called up Cristina So, an officer of Allied, and instructed the latter to pre-terminate Lim Sio Wan's money market placement, to issue a manager's check representing the proceeds of the placement, and to give the check to one Deborah Dee Santos who would pick up the check. Lim Sio Wan described the appearance of Santos so that So could easily identify her. Later, Santos arrived at the bank and signed the application form for a manager's check to be issued. The bank issued Manager's Check No. 035669 for PhP 1,158,648.49, representing the proceeds of Lim Sio Wan's money market placement in the name of Lim Sio Wan, as payee. The check was cross-checked "For Payee's Account Only" and given to Santos. Thereafter, the manager's check was deposited in the account of Filipinas Cement Corporation (FCC) at respondent Metropolitan Bank and Trust Co. (Metro bank), with the forged signature of Lim Sio Wan as endorser. Earlier, on September 21, 1983, FCC had deposited a money market placement for PhP 2 million with respondent Producers Bank. Santos was the money market trader assigned to handle FCC's account. Such deposit is evidenced by Official Receipt No. 317568 and a Letter dated September 21, 1983 of Santos addressed to Angie Lazo of FCC, acknowledging receipt of the placement. The placement matured on October 25, 1983 and was rolled-over until December 5, 1983 as evidenced by a Letter dated October 25, 1983. When the placement matured, FCC demanded the payment of the proceeds of the placement. On December 5, 1983, the same date that So received the phone call instructing her to pre-terminate Lim Sio Wan's placement, the manager's check in the name of Lim Sio Wan was deposited in the account of FCC, purportedly representing the proceeds of FCC's money market placement with Producers Bank. In other words, the Allied check was deposited with Metro bank in the account of FCC as Producers Bank's payment of its obligation. The check was sent to Allied through the PCHC. Upon the presentment of the check, Allied funded the check even without checking the authenticity of Lim Sio Wan's purported endorsement. Thus, the amount on the face of the check was credited to the account of FCC.

On December 14, 1983, upon the maturity date of the first money market placement, Lim Sio Wan went to Allied to withdraw it. She was then informed that the placement had been preterminated upon her instructions. She denied giving any instructions and receiving the proceeds thereof. Consequently, Lim Sio Wan filed with the RTC a Complaint against Allied to recover the proceeds of her first money market placement. On May 15, 1984, or more than six (6) months after funding the check, Allied informed Metro bank that the signature on the check was forged. Thus, Metro bank withheld the amount represented by the check from FCC. Later on, Metro bank agreed to release the amount to FCC after the latter executed an Undertaking, promising to indemnify Metro bank in case it was made to reimburse the amount. After trial, the RTC issued its Decision holding Allied solely liable to Lim1 Sio Wan Allied appealed to the CA which ruled that Allied shall be liable for the 60% of the amount of the money and 40% shall be borne by Metro bank Hence, Allied filed the instant petition. Issue: Whether or not Allied is solely liable to Lim Sio Wan Held: As to the liability of the parties, we find that Allied is liable to Lim Sio Wan. Fundamental and familiar is the doctrine that the relationship between a bank and a client is one of debtorcreditor. Articles 1953 and 1980 of the Civil Code provide: Art. 1953. A person who receives a loan of money or any other fungible thing acquires the ownership thereof, and is bound to pay to the creditor an equal amount of the same kind and quality. Art. 1980. Fixed, savings, and current deposits of money in banks and similar institutions shall be governed by the provisions concerning simple loan. Thus, we have ruled in a line of cases that a bank deposit is in the nature of a simple loan or mutuum. More succinctly, in Citibank, N.A. (Formerly First National City Bank) v. Sabeniano, this Court ruled that a money market placement is a simple loan or mutuum. Further, we defined a money market in Cebu International Finance Corporation v. Court of Appeals, as follows: [A]
1

money

market

is

market

dealing

in

Louie Escalera

standardized short-term credit instruments (involving large amounts) where lenders and borrowers do not deal directly with each other but through a middle man or dealer in open market. In a money market transaction, the investor is a lender who loans his money to a borrower through a middleman or dealer. In the case at bar, the money market transaction between the petitioner and the private respondent is in the nature of a loan. Lim Sio Wan, as creditor of the bank for her money market placement, is entitled to payment upon her request, or upon maturity of the placement, or until the bank is released from its obligation as debtor. Until any such event, the obligation of Allied to Lim Sio Wan remains unextinguished. Since there was no effective payment of Lim Sio Wan's money market placement, the bank still has an obligation to pay her at six percent (6%) interest from March 16, 1984 until the payment thereof. To reiterate, had Allied exercised the diligence due from a financial institution, the check would not have been issued and no loss of funds would have resulted. In fact, there would have been no issuance of endorsement had there been no check in the first place. Given the relative participation of Allied and Metro bank to the instant case, both banks cannot be adjudged as equally liable. Hence, the 60:40 ratio of the liabilities of Allied and Metro bank, as ruled by the CA, must be upheld. WHEREFORE, the petition is PARTLY GRANTED NEW PACIFIC TIMBER & SUPPLY CO. INC. VS. SENERIS NEW PACIFIC TIMBER & SUPPLY CO. INC. VS. SENERIS 10 SCRA 686 FACTS: Petitioner, New Pacific Timber & Supply Co. Inc. was the defendant in a complaint for collection of money filed by private respondent, Ricardo A. Tong. In this complaint, respondent Judge rendered a compromise judgment based on the amicable settlement entered by the parties wherein petitioner will pay to private respondent P54, 500.00 at 6% interest per annum and P6, 000.00 as attorneys fee of which P5, 000.00 has been paid. Upon failure of the petitioner to pay the judgment obligation, a writ of execution

worth P63, 130.00 was issued levied on the personal properties of the petitioner. Before the date of the auction sale, petitioner deposited with the Clerk of Court in his capacity as the Ex-Officio Sheriff P50, 000.00 in Cashiers Check of the Equitable Banking Corporation and P13, 130.00 in cash for a total ofP63, 130.00. Private respondent refused to accept the check and the cash and requested for the auction sale to proceed. The properties were sold for P50, 000.00 to the highest bidder with a deficiency of P13, 130.00. Petitioner subsequently filed an ex-parte motion for issuance of certificate of satisfaction of judgment which was denied by the respondent Judge. Hence this present petition, alleging that the respondent Judge capriciously and whimsically abused his discretion in not granting the requested motion for the reason that the judgment obligation was fully satisfied before the auction sale with the deposit made by the petitioner to the Ex-Officio Sheriff. In upholding the refusal of the private respondent to accept the check, the respondent Judge cited Article 1249 of the New Civil Code which provides that payments of debts shall be made in the currency which is the legal tender of the Philippines and Section 63 of the Central Bank Act which provides that checks representing deposit money do not have legal tender power. In sustaining the contention of the private respondent to refuse the acceptance of the cash, the respondent Judge cited Article 1248 of the New Civil Code which provides that creditor cannot be compelled to accept partial payment unless there is an express stipulation to the contrary. ISSUE: Can the check be considered a valid payment of the judgment obligation? RULING: Yes. It is to be emphasized that it is a well-known and accepted practice in the business sector that a Cashiers Check is deemed cash. Moreover, since the check has been certified by the drawee bank, this certification implies that the check is sufficiently funded in the drawee bank and the funds will be applied whenever the check is presented for payment. The object of certifying a check is to enable the holder to use it as money. When the holder procures the check to be certified, it operates as an assignment of a part of the funds to the creditors. Hence, the exception provided in Section 63 of the Central Bank Act which states that checks which have been cleared and credited to the account of the creditor shall be equivalent to a delivery to the creditor in cash the amount equal to that which is credited to his account. The Cashiers Check and

the cash are valid payment of the obligation of the petitioner. The private respondent has no valid reason to refuse the acceptance of the check and cash as full payment of the obligation Myrna Ramos vs. Susana Sarao & Jonas Ramos G.R. No. 149756 February 11, 2005 Facts: Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing the August 31, 2001 Decision of the Court of Appeals, WHEREFORE, the instant appeal is DISMISSED for lack of merit. The decision dated January 19, 1995 of the Regional Trial Court, Branch 145, Makati City is AFFIRMED in toto. On February 21, 1991, Spouses Jonas Ramos and Myrna Ramos executed a contract over their conjugal house and lot in favor of Susana S. Sarao for and in consideration of P1, 310,430. Entitled "DEED OF SALE UNDER PACTO DE RETRO," the contract, inter alia, granted the Ramos spouses the option to repurchase the property within six months from February 21, 1991, for P1, 310,430 plus an interest of 4.5 percent a month. It was further agreed that should the spouses fail to pay the monthly interest or to exercise the right to repurchase within the stipulated period; the conveyance would be deemed an absolute sale. On July 30, 1991, Myrna Ramos tendered to Sarao the amount of P1, 633,034.20 in the form of two managers checks, which the latter refused to accept for being allegedly insufficient. On August 8, 1991, Myrna filed a Complaint for the redemption of the property and moral damages plus attorneys fees. On August 13, 1991, she deposited with the RTC two checks that Sarao refused to accept. On December 21, 1991, Sarao filed against the Ramos spouses a Petition "for consolidation of ownership in pacto de retro sale"; the civil cases were later consolidated and jointly tried before RTC in Makati. After trial, the RTC dismissed the Complaint and granted the prayer of Sarao to consolidate the title of the property in her favor. Aggrieved, Myrna elevated the case to the CA. The appellate court sustained the RTCs finding that the disputed contract was a bonafide pacto

de retro sale, not a mortgage to secure a loan. It ruled that Myrna Ramos had failed to exercise the right of repurchase, as the consignation of the two managers checks was deemed invalid. She allegedly failed (1) to deposit the correct repurchase price and (2) to comply with the required notice of consignation. Issues: a) Whether or not the honorable appellate court erred in ruling the subject Deed of Sale under Pacto de Retro was, and is in reality and under the law an equitable mortgage? b) Whether or not the honorable appellate court erred in affirming the ruling of the court a quo that there was no valid tender of payment of the redemption price neither [sic] a valid consignation in the instant case? c) Whether or not [the] honorable appellate court erred 2in affirming the ruling of the court a quo denying the claim of petitioner for damages and attorneys fees? Held: The Petition is meritorious in regard to Issues 1 and 2. A Pacto de Retro Sale or an Equitable Mortgage? Respondent Sarao avers that the herein Petition should have been dismissed outright, because petitioner (1) failed to show proof that she had served a copy of it to the Court of Appeals and (2) raised questions of fact that were not proper issues in a petition under Rule 45 of the Rules of Court. This Court, however, disregarded the first ground; otherwise, substantial injustice would have been inflicted on petitioner. Since the Court of Appeals is not a party here, failure to serve it a copy of the Petition would not violate any right of respondent. Service to the CA is indeed mentioned in the Rules, but only to inform it of the pendency of the appeal before this Court. As regards Item 2, there are exceptions to the general rule barring a review of questions of fact. The Court reviewed the factual findings in the present case, because the CA had manifestly overlooked certain relevant and undisputed facts which, after being considered, justified a different conclusion.
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Louie Escalera

Pacto de Retro Sale Distinguished from Equitable Mortgage The pivotal issue in the instant case is whether the parties intended the contract to be a bona fide pacto de retro sale or an equitable mortgage. In a pacto de retro, ownership of the property sold is immediately transferred to the vendee a retro, subject only to the repurchase by the vendor a retro within the stipulated period. The vendor a retros failure to exercise the right of repurchase within the agreed time vests upon the vendee a retro, by operation of law, absolute title to the property. Such title is not impaired even if the vendee a retro fails to consolidate title under Article 1607 of the Civil Code. On the other hand, an equitable mortgage is a contract that -- although lacking the formality, the form or words, or other requisites demanded by a statute -- nevertheless reveals the intention of the parties to burden a piece or pieces of real property as security for a debt. The essential requisites of such a contract are as follows: (1) the parties enter into what appears to be a contract of sale, but (2) their intention is to secure an existing debt by way of a mortgage. The nonpayment of the debt when due gives the mortgagee the right to foreclose the mortgage, sell the property, and apply the proceeds of the sale to the satisfaction of the loan obligation. Equitable Favored Mortgage Presumed by to be Law

presumption; the party challenging it must overthrow it, lest it persist. To overturn that prima facie fact that operated against her, Sarao needed to adduce substantial and credible evidence to prove that the contract was a bona fide pacto de retro. This evidentiary burden she miserably failed to discharge. Contrary to Saraos bare assertions, a meticulous review of the evidence reveals that the alleged contract was executed merely as security for a loan. Second Issue: Payment Propriety and of Tender of Consignation

Tender of payment is the manifestation by debtors of their desire to comply with or to pay their obligation If the creditor refuses the tender of payment without just cause, the debtors are discharged from the obligation by the consignation of the sum due. Consignation is made by depositing the proper amount to the judicial authority, before whom the tender of payment and the announcement of the consignation shall be proved. All interested parties are to be notified of the consignation. Compliance with these requisites is mandatory. The trial and the appellate courts held that there was no valid consignation, because petitioner had failed to offer the correct amount and to provide ample consignation notice to Sarao. This conclusion is incorrect. Third Issue: Moral Damages and Attorneys Fees Petitioner seeks moral damages in the amount of P500,000 for alleged sleepless nights and anxiety over being homeless. Her bare assertions are insufficient to prove the legal basis for granting any award under Article 2219 of the Civil Code. Verily, an award of moral damages is uncalled for, considering that it was Respondent Saraos accommodation that settled the earlier obligation of the spouses with the commercial bank and allowed them to retain ownership of the property. Neither have attorneys fees been shown to be proper. As a general rule, in the absence of a contractual or statutory liability therefore, sound public policy frowns on penalizing the right to litigate. This policy applies especially to the present case, because there is a need to determine whether the disputed contract was a pacto de retro sale or an equitable mortgage. WHEREFORE, the Petition is partly GRANTED and

Jurisprudence has consistently declared that the presence of even just one of the circumstances set forth in the forgoing Civil Code provision suffices to convert a contract to an equitable mortgage. Article 1602 specifically states that the equitable presumption applies to any of the cases therein enumerated. In the present factual milieu, the vendor retained possession of the property allegedly sold. Petitioner and her children continued to use it as their residence, even after Jonas Ramos had abandoned them. In fact, it remained as her address for the service of court orders and copies of Respondent Saraos pleadings. The presumption of equitable mortgage imposes a burden on Sarao to present clear evidence to rebut it. Corollary to this principle, the favored party need not introduce proof to establish such

the assailed Decision SET ASIDE. Judgment is hereby rendered: (1) DECLARING (a) the disputed contract as an equitable mortgage, (b) petitioners loan to Respondent Sarao to be in the amount of P1,633,034.19 as of July 30, 1991; and (c) the mortgage on the property -- covered by TCT No. 151784 in the name of the Ramos spouses and issued by the Register of Deeds of Makati City --as discharged (2) ORDERING the RTC to release to Sarao the consigned amount of P1,633,034.19 (3) COMMANDING Respondent Sarao to return to petitioner the owners copy of TCT No. 151784 in the name of the Ramos spouses and issued by the Register of Deeds of Makati City (4) DIRECTING the Register of Deeds of Makati City to cancel Entry No. 24057, the annotation appearing on TCT No. 151784 (5) ORDERING petitioner to pay Sarao in the amount of P67,567.10 as reimbursement for real property taxes. No pronouncement as to costs. SO ORDERED. URACA V. CA| Panganiban G.R. No. 115158 September 5, 1997 FACTS: On July 8, 1985, respondent (Velez), o w n e r o f t h e l e a s e d l o t a n d building, offered to sell the subject property for 1.05M to petitioner-lessee and at the same time requesting to reply in 3 days. Petitioner we nt to see the re spondent but was tol d that the pric e w as 1.4 M. P e t i t i o n e r a g r e e d b u t c o u n t e r proposed that payment be paid in i nstall me nts with a dow n payment of 1M and the bal ance of 400K be paid in 30 days. Petitioner did not accept the offer. Later, the land was sold to the Avenue Group for 1.05M. Thereafter, petitioner filed a complaint against the respondents. 3 months later, the Ave nue Group file d an ejectme nt case against the petitione r. The trial court rul ed i n favor of the pe ti ti oner findi ng a perfe cte d contract of sale between the parti es. On appeal, C A rule d that the first c ontrac t was mutuall y wi thdraw n,

c ance lled and resci nded by novation when the respondents raised the consideration. ISSUE/S: Whether or not there was a perfected contract between the petitioner and respondent HELD: Ye s. The re w as a perfec te d c ontrac t of sale . The C ourt note s that the petitione rs acc epte d in w ri ti ng and without quali fi cati on the Vele ze s written offer to sell at P1,050,0 00.00 within the three-day p e r i o d stipulated therein. Hence, from the moment of acceptance on July 10,1985, a contract of sale was perfected since undisputedly the contractual elements of consent, object certain and cause concurred. W i t h r e s p e c t to the second issue of double sale. Avenue Group had prior knowledge of plaintiffs interes t evidenced by the previous agree me nt between the pl ai ntiffs and defe ndant. He nc e, the Avenue Group defe ndants, e arl ier fore warned of the plainti ffs prior c ontrac t with the Velezes, were guilty of bad faith when they proceeded to buy the properties to the prejudice of the plaintiffs.

DOCTRINE/S: Extinctive novation must be prove d. N ovation is ne ver presumed; it must be sufficiently established that a v a l i d n e w a g r e e m e n t o r obligation has extinguished or changed an existing one. Article 1600 of t h e C i v i l C o d e p r o v i d e s t h a t ( s ) a l e s are extinguished by the same c ause s as all othe r obl igations, x. Arti cl e 1231 of the same Code states that novation is one of th e ways to wipe out an obligation . Extinctive novation requires: (1) the existence of a previous valid obligation; (2) the agreement of all the parties to the new contract; (3)t h e e x t i n g u i s h m e n t o f t h e o l d obligation or contract; and (4) t h e validity of the new one. The foregoing clearly show that novation i s effected only when a new contract has

extinguished an earlier contract between the same parties. In this light, novation is never presumed; it must be proven as a fact either by express stipulation of the parties or by i mpli cati on de rived from an irrec onci labl e i nc ompatibil ity be twee n old and new obligations or contracts.15 After a thorough review of there cords, we find this element lacking in the case at bar. RULING: The Supreme Court GRANTED the petition. The trial courts decision is REVIVED. Isaias Fabrigas vs. San Francisco del Monte FACTS: Petitioner spouses Isaias and Marcelina Fabrigas (Spouses Fabrigas or petitioners) and respondent San Francisco Del Monte, Inc. (Del Monte) entered into an agreement, denominated as Contract to Sell No. 2482-V , whereby the latter agreed to sell to Spouses Fabrigas a parcel of residential land situated in Barrio Almanza, Las Pias, Manila for and in consideration of the amount of P109,200.00. The agreement stipulated that Spouses Fabrigas shall pay P30,000.00 as down payment and the balance within ten (10) years in monthly successive installments of P1,285.69. Among the clauses in the contract is an automatic cancellation clause in case of default, which states as follows: 7. Should the PURCHASER fail to make any of the payments including interest as herein provided, within 30 days after the due date, this contract will be deemed and considered as forfeited and annulled without necessity of notice to the PURCHASER, and said SELLER shall be at liberty to dispose of the said parcel of land to any other person in the same manner as if this contract had never been executed. In the event of such forfeiture, all sums of money paid under this contract will be considered and treated as rentals for the use of said parcel of land, and the PURCHASER hereby waives all right to ask or demand the return thereof and agrees to peaceably vacate the said premises.3 After paying P30,000.00, Spouses Fabrigas took possession of the property but failed to make any installment payments on the balance of the purchase price. In Del Montes third letter, it demanded the payment of arrears in the amount
3

of P8,999.00 and granted the petitioners a fifteen-day grace period within which to settle their accounts. Upon failure of spouses to pay, another grace period of fifteen days was given. Petitioners received Del Montes final demand letter wherein Del Monte considered Contract to Sell No. 2482-V cancelled fifteen days thereafter, but did not furnish petitioners any notice regarding its cancellation. Petitioner Fabrigas again remitted the amount of P12,000.00. A few days thereafter petitioner Fabrigas and Del Monte entered into another agreement denominated as Contract to Sell No. 2491-V , covering the same property but under restructured terms of payment. Under the second contract, the parties agreed on a new purchase price of P131,642.58,the amount of P26,328.52 as down payment and the balance to be paid in monthly installments of P2,984.60 each. Thereafter, Spouses Fabrigas made irregular payments under Contract to Sell No. 2491-V Del Monte sent a demand letter dated February 3, 1986, informing petitioners of their overdue account equivalent to nine (9) installments or a total amount of P26,861.40. Petitioner then paid a total of P18,000 from February to July. Del Monte sent a letter demanding the payment of accrued installments under Contract to Sell No. 2491-V in the amount of P165,759.60 less P48,128.52, representing the payments made under the restructured contract, or the net amount of P117,631.08. Del Monte allowed petitioners a grace period of thirty (30) days within which to pay the amount asked to avoid rescission of the contract. For failure to pay, Del Monte notified petitioners on March 30, 1989that Contract to Sell No. 2482-V had been cancelled and demanded that petitioners vacate the property. Action by Del Monte: Recovery of Possession with Damages alleging that Spouses Fabrigas owed Del Monte the principal amount of P206,223.80 plus interest of 24% per annum. TC: Upholding the validity of Contract to Sell No. 2491-V (second contract)and ordering Spouses Fabrigas either to complete payments there under or to vacate the property.

Louie Escalera

CA: Contract to Sell No. 2482-V (first contract)had been rescinded pursuant to the automatic rescission clause therein. While the Court of Appeals declared Contract to Sell No. 2491-V as merely unenforceable for having been executed without petitioner Marcelinas signature; it upheld its validity upon finding that the contract was subsequently ratified. TOPCAL ISSUE: Did Del Monte validly rescind the contract through the demand letters it sent? HELD: No, letters did not constitute valid rescission under RA 6552 The Court of Appeals erred in ruling that Del Monte was well within its right to cancel the contract by express grant of paragraph7 without the need of notifying [petitioners], instead of applying the pertinent provisions of R.A. 6552. Petitioners contention that none of Del Montes demand letters constituted a valid rescission of Contract to Sell No. 2482-V is correct. Petitioners defaulted in all monthly installments. They may be credited only with the amount of P30,000.00 paid upon the execution of Contract to Sell No. 2482-V , which should be deemed equivalent to less than two (2) years installments. Given the nature of the contract between petitioners and Del Monte, the applicable legal provision on the mode of cancellation of Contract to Sell No. 2482-V is Section 4 and not Section 3 of R.A. 6552. Section 4 is applicable to instances where less than two years installments were paid. It reads: SECTION 4. In case where less than two years of installments were paid, the seller shall give the buyer a grace period of not less than sixty days from the date the installment became due. If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract 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. Thus, the cancellation of the contract under Section 4 is a two-step process. First, the seller should extend the buyer a grace period of at least sixty (60) days from the due date of the installment. Second, at the end of the grace period, the seller shall furnish the buyer with a notice of cancellation or demand for rescission through a notarial act, effective thirty (30) days from the buyers receipt thereof. It is worth mentioning, of course, that a mere notice or

letter, short of a notarial act, would not suffice. While the Court concedes that Del Monte had allowed petitioners a grace period longer than the minimum sixty (60)-day requirement under Section 4, it did not comply, however, with the requirement of notice of cancellation or a demand for rescission. Instead, Del Monte applied the automatic rescission clause of the contract. Contrary, however, to Del Montes position which the appellate court sustained, the automatic cancellation clause is void under Section 7 in relation to Section 4 of R.A. 6552. ISSUE : Was the first contract novated by the second? HELD : Yes. Notwithstanding the improper rescission, the facts of the case show that Contract to Sell No. 2482-V was subsequently novated by Contract to Sell No. 2491-V . The execution of Contract to Sell No. 2491-V accompanied an upward change in the contract price, which constitutes a change in the object or principal conditions of the contract. In entering into Contract to Sell No. 2491-V, the parties were impelled by causes different from those obtaining under Contract to Sell No.2482-V . On the part of petitioners, they agreed to the terms and conditions of Contract to Sell No. 2491-V not only to acquire ownership over the subject property but also to avoid the consequences of their default under Contract No. 2482-V . On Del Montes end, the upward change in price was the consideration for entering into Contract to Sell No. 2491-V . ISSUE : If a contract entered into by one spouse involving a conjugal property lacks the consent of the other spouse, as in the case at bar, is it automatically void for that reason alone? HELD : No. Any transaction entered by the wife without the court or the husbands authority is unenforceable in accordance with Article 1317 of the Civil Code. That is the status to be accorded Contract to Sell No. 2491-V, it having been executed by petitioner Marcelina without her husbands conformity. Being an unenforceable contract, Contract to Sell No. 2491-V

is susceptible to ratification. As found by the courts below, after being informed of the execution of the contract, the husband, petitioner Isaias Fabrigas, continued remitting payments for the satisfaction of the obligation under Contract to Sell No. 2491-V .These acts constitute ratification of the contract. Such ratification cleanses the contract from all its defects from the moment it was constituted. The factual findings of the courts below are beyond review at this stage. BPI ( Pe t it io ne r) and Jimmy Go 1 42 73 1 v. Co urt o f Ap pe als (Re sp o nd e nt) GR N o.

or noti c e of non- payme nt o[r] di shonor w i th re spe c t to thi s note or any e xte nsi on the re of. Iss ue : W he the r N oah s Ark Me rc handi si n g w as al re ady i n de faul t. Rule : Ye s. The C i vi l C ode i n Arti c l e 1 16 9 provi de s that one i nc urs i n de l ay or i s i n de faul t from the ti me the obl i gor de mands the ful fi ll me nt of the obl i gati on from the obl i gee . How e ve r, the l aw e xpre ssl y provi de s that de mand is not ne c e ssary unde r ce rtai n c i rc umstanc e s, and one of the se ci rc umsta nc e s i s w he n the parti e s e xpre ssl y w ai ve de mand. He nc e , si nc e the c o- si gnors e xpre ssl y w ai ve d de mand i n the promi ssory note s, de mand w as unne c e ssary for the m to be i n de faul t. He nc e , the pe ti ti on is GRAN TED BANCO FILIPINO SAVING & MORTGAGE BANK VS DIAZGR No. 153134 June 27, 2009 Facts: Spouse Antoni o and El sie Di az sec ured a l oan from petitione r Banco Fili pi no the amount of P400,000 with 16% interest per annum. The loan was restructured in the amount of P3,163,000payable within a period of 20 yrs at an interest of 22% per annum. The obligation was to be paid in e qual month l y amorti zation & se cure d by a real estate mortgage (properti es found at B olton and Bonifacio Sts., Davao City) & additional collateral (the rentals on the mortgage properties). Despite repeated demands made on them, the respondents defaulted. Before petitioner bank could institute the foreclosure proceedings, respondent filed with the RTC a complaint but it de nie d such appli cati on, w hi ch the C A also affirme d sai d order. The re afte r, respondent filed another complaint for consignation & declaration of cancellation of obligation with prayer for issuance of a preliminary injunction & TRO. Based on the ex-parte evidence, the respondents had a remaining balance of P1,034,600, which the respondent te ndered the amount to petitione r bank . Howe ve r, pe ti ti oner bank re fuse d to accept it because the amount due is P 10,160,649. The respondent then consign it

FACTS: Pe ti ti one r, B PI , grante d a total of e i ght (8 ) l oans to N oah s Arc Me rc handi si n g (N oah s Ark , for bre vi ty). The sai d l oans we re e vi de nc e d by i de nti c al Promi ssory N ote s al l si gne d by Al be rt T. L ooyuk o, pri vate re sponde n t J i mmy T. Go and one Wi l son Go. Li ke w i se, al l l oans w e re se c ure d by re al e state mortga ge c onsti tute d ove r a parc e l of l and re gi ste re d i n the name s of Mr. L ooyuk o and he re i n pri vate re sponde nt. Pe ti ti one r, c l ai mi ng that N oah s Ark de faul te d in i ts obl i gati ons, extra j udi c i al l y fore cl ose d the mortga ge . The pri vate re sponde nt fil e d a c ompl ai nt for dama ge s w i th praye r [for] i ssuanc e of TRO and/ or w ri t of pre li mi nary i nj unc ti on see k i ng [to] e nj oi n the auc ti on sale . Pri vate re spon de nt cl ai me d that de mand w as not made upon hi m, i n spi te of the fac t that he c o-si gne d the promi ssory note s. He al so argue s that onl y four of the ei ght promi ssory note s se c ure d by the mortgage had be c ome due . Howe ve r, the promi ssory note s c ontai n an ac c e le rati on c l ause , to wi t: Upon the happe ni ng of any of the fol l owi ng e ve nts, F AR EAST B AN K AN D TRUSTC O MPAN Y (B PI ) or the hol de r, may at i ts opti on, forthw i th ac c el e rate maturi ty and the unpai d bal anc e of the pri nc i pal , as we l l as i nte re st and othe r c harge s w hi c h have ac c rue d, shal l be c ome due and payabl e wi thout de mand or noti c e [: ](1 ) de faul t i n payme nt or pe rformanc e of any obl i gati on of any of the unde rsi gne d to F AR EASTB AN K AN D TRUST C O MPAN Y or i ts affi l i ate d c ompa ni e s; I/ We he re by w ai ve any di l i ge nc e , pre se ntme nt, de mand , prote st

with the RTC, a managers check as full payment of their loan obligation. The RTC ruled that the consignation is valid because Banco Filipino could not charge any interest during the time it was closed by the Central Bank. The C.A, however, declared that it failed to effect a valid consignation because it did not include all interest due. Its decision because final & executory. Thereafter, respondent filed a motion to withdraw deposit alleging that their obligation was settled with the payment of P25 M by Gaisano brothers. Petitioner bank opposed & asserted that the deposit be released to it as part of the full payment &maintained that it accepted the said consignation & respondent could no longer withdraw the said amount. Issue: WON respondent Diaz may still withdraw the amount deposited with the RTC? YES HELD: The re spon dents remai n the ow ne rs of the sum of P1, 034,600. 00 deposit ed wi th the RTC of Makati City. When they filed their motion to withdraw the deposit, they did so in the exercise of their right. Under Art. 1260, the debtor may withdraw as a matter of right, the thing or amount deposited on consignation in the following instances: a)before the creditor has accepted the consignation or b) befo re a judicial declarat io n t hat t he cons ig nation has bee n prop erly made. In this case, there was no judicial declaration that the consignation had been properly made. On the contrary, the C.A declared that there was no valid consignation. What remains t o b e determined is whether petitioner bank had already accepted the respondent from exercising their rights to withdraw the same. Before the consignation has been ju dicially declared proper, the creditor

m a y p r e v e n t t h e withdrawal by the debtor, by accepting the consignation, even with reservations. Thus, when the amount consigned does not cover the entire obligation, the creditor may accept it, reserving his right to the balance. Pet it io ne r bank s alle gation has failed to est ab lish b y convincing evide nce t hat it had made such acceptance of the deposit in question prior to the respondents filing of their motion to withdraw the amount deposited. To prove this cl ai m, pe ti ti oner bank relie s on the statement of account prepared by its employees purportedly showing that the deposit in question was de ducted from the re spondents' outstandi ng obl igation as of De cembe r 31, 1998. Thi s statement of account, however, is self-serving and has no probative value especially considering that the persons who prepared t he same were not presented in c ourt. The claimed acceptance" was obviously an aft erthought, and proffered for the s o l e p u r p o s e o f opposing the deposit withdrawal. Be fore the c onsi gnati on has been acc epte d by the c reditor or j udic iall y dec lared as prope rl y made, the debtor is sti ll the owner of the thi ng or amount deposited, and therefore, the other partie s liabl e for the obli gati on have no ri ght to oppose debtor s wi thdraw al . Howeve r, cre di tor may prevent the withdrawal by accepting the consignation even with reservation. Thus, when the amount consigned does not cover the entire obligation, the creditor may accept it, reserving his right to the balance. But in this case, petitioner bank did not do so.
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Louie Escalera