THE THE MANI MANILA LA BANK BANKIN ING G CORP CORPOR ORA ATION TION vs. vs. ANASTACIO TEODORO, JR. and GRACE ANNA TEODORO G.R. No. L-53955 Jana!" #3, #9$9 B%d%n, J. 1. Apri Aprill 19 1966 66,, Spou Spouse ses s Teodo eodorro toge togeth ther er with with Teodoro Teodoro Sr executed executed a PN in favour of Manila an!ing "orp #M"$% - Pa&a'le a&a'le withi within n 1() da&s da&s #until #until Aug$, Aug$, with with 1(* interest per annu+% - The& failed to pa& and left 'alance 'alance of 1! as of Septe+'er 1969% (. Ma& and -une 1966, execut executed ed two two PNs% PNs% - ! and 1! respectivel& pa&a'le within 1() da&s and 1(* per annu+% - The& +ade partial partial pa&+ent 'ut 'ut still left left .9! 'alance as of Septe+'er 1969% /. 0t appear appears s than in 196, 196, Teod Teodor oro o -r execu executed ted a 2eed of Assign+ent of 3eceiva'les in favour of M" fro+ 4+ergenc& 4+plo&+ent Ad+inistration% - A+ounted to !% consideration - The deed provided it was for consideration of certa certain in credi credits, ts, loans loans,, overd overdra rafts fts and other credit credit acco++oda acco++odations tions extended extended to the spouses and Teodoro Sr as securit& for the the pa&+ pa&+en entt of said said su+ su+ and and inte interrest est thereon% and that the& release and 5uitclai+ all its rights, title and interest in the receiva'les% . 0n the stipu stipula lati tion ons s of fact, fact, it was was ad+i ad+itt tted ed '& the parties - That M" extended loans to the spouses and Teodoro -r 'ecause of certain contracts entered into '& latter with 44A for fa'ri fa'ricat cation ion of 7shin 7shing g 'oats 'oats and that that the Philippine 8isheries 8isheries "o++ission succeeded 44A after its a'olition% - That nonpa&+ent of the PNs was due to failure of the "o++ission to pa& spouses% - That the an! too! steps to collect fro+ the "o++ission 'ut no collection was e:ected% . 8or failu failure re of the the spouses spouses and Teodor Sr Sr to pa&, M" instituted against the+% - Teodoro Teodoro Sr su'se5uentl& died so suit onl& against the spouses% 6. T" favour favoured ed M"% M"% M83 M83 denie denied% d% Spouses s appea appealed led to "A 'ut since since iss issue ue - Spouse pure 5uestion of law, "A forwarded to S"% Iss&s' ;
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when it is '& gratuitous title% o ?uarant& > creditor gives as a collateral, o to secure his own de't in favour of the assignee, without trans+itting ownership% - ='ligations 'etween the parties will depend upon the @uridical relation which is the 'asis of the assign+ent% ;hat ;hat is the the lega legall e:ec e:ectt of the the Assi Assign gn+e +ent nt #since its validit& is not in 5uestion$ 1. Assi Assign gn+e +ent nt of recei eceiva va'l 'les es in 196 196 did not transfer the ownership of the receiva'les to M" M" and relea release se the spouse spouses s fro+ fro+ their their loans% - "onsid "onsidera eratio tion n was was for certai certain n credi credits, ts, loans, overdrafts and credit acco++odations worth 1)! extended '& M" to spouses and as securit& for the pa&+en &+entt of said said su+ and int intere erest thereon% also 5uitclai+ of rights to M" of their interest in the receiva'les% - Stipulated also that it was a continuing guarant& for future loans and corres correspondi pondingl& ngl&,, the assign+e assign+ent nt shall shall extend to all accounts receiva'le% Con Con(&n (&n(%on (%on o+ so sos&s' s&s' no( *&!& &!& )a!an(" s%n& %( as s(%/a(&d' release and 5uitclai+ - That the assignor release to assi assign gnee ee all all its its righ rights ts,, titl title e and and interest in the accounts receiva'le%
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That title and right of possession to account receiva'le is to re+ain in assignee and it shall have right to collect directl& fro+ the de'tor% that whatever the assignor does in connection with collection of such, it does so as agent and representative and in trust of assignee% S" character of transaction is not deter+ined '& the language in docu+ent 'ut '& intention of the parties%% 0f it was intended to secure the pa&+ent of +one&, it +ust 'e construed as a pledge. A transfer of propert& '& the de'tor to a creditor, even if sucient on its far+ to +a!e an a'solute conve&ance, should 'e treated as a pledge if the de't continues in existence and is not discharged '& the transfer%
Assign+ent of receiva'les did not result fro+ sale or '& virtue of a dation in pa&+ent% - At ti+e the deed was executed, the loans were nonexistent &et% - At +ost, it was a dation for 1)!, the a+ount of credit with M" indicated in the deed% at the ti+e of execution, there was no o'ligation to 'e extinguished except for the 1)!% - 1(9( in order that an o'ligation +a& 'e extinguished '& another which su'stitutes the sa+e, it is i+perative that it 'e so declared in une5uivocal ter+s, or that the old and the new o'ligations 'e on ever& point inco+pati'le with each other% 2eed of assign+ent intended as collateral securit& for the loans, as a continuing guarant& for whatever su+s that would 'e owing '& spouses% - 0n case of dou't as to whether a transaction is a pledge or a dation in pa&+ent, the presu+ption is in favor of pledge, the latter 'eing the lesser trans+ission of rights and interests #BopeC v "A$% (. M" need not exhaust all legal re+edies against P8" - Spouses, not 'eing released '& the assign+ent, re+ain as the principal
de'tors of M", rather than +ere guarantors% +erel& guarantees said - The deed o'ligations% - () #creditor +ust have exhausted propert& of de'tor and resorted to all legal re+edies 'efore it can proceed to guarantor$ does not appl& to the+% - Appellants are 'oth the principal de'tors and the pledgors or +ortgagors% - M" did tr& to collect 'ut at =P, it was disapproved% so the loan was 'asicall& unsecured% 20SM0SS42. Feliciano, J. concurring. -ustice idinDs, Ethe character of the transactions 'etween the parties is not, however, deter+ined '& the language used in the docu+ent 'ut '& their intentionF > not without exception% - 2eed here contains language which suggest that the parties intended co+plete alienation of title to and rights over the receiva'les% - ;ords Gre+iseD, GreleaseD and G5uitclai+D and clauses G title the title and right of possession to said accounts receiva'le is to re+ain in said assigneeE who Eshall have the right to collect directl& fro+ the de'torD% - ;ords GagentD also conve& the ideas% - ut such +ust 'e ta!en in con@unction with and 5uali7ed '& other language showing intent of the parties that title to the receiva'les shall pass to the assignee for the limited purpose of securing another, principal obligation owed '& the assignor to the assignee% Title +oves fro+ assignor to assignee 'ut that title is defeasi'le 'eing designed to collateraliCe the principal o'ligation - =perationall& +eans assignee is 'urdened to collateraliCe the principal o'ligation% ta!ing the proceeds of the receiva'les assigned and appl&ing such proceeds to the satisfaction of the principal o'ligation and returning an& 'alance re+aining thereafter to the assignor% The parties gave the deed of assign+ent the for+ of an a'solute conve&ance of title over the receiva'les assigned, essentiall& for the convenience of the assignee
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;ithout such nature of a'solute conve&ance, the assignee would have to foreclose the properties% he would have to co+pl& with docu+entation and registration re5uire+ents of a pledge or chattel +ortgage$% A deed of assign+ent '& wa& of securit& avoids the necessit& of a pu'lic sale i+pose '& the rule on pactum commisorium, '& in e:ect placing the sale of the collateral up front% The foregoing is applica'le where the deed of assign+ent of receiva'les co+'ines ele+ents of 'oth a co+plete alienation of the credits and a securit& arrange+ent to assure pa&+ent of a principal o'ligation% ;here the ( nd ele+ent is a'sent, the assign+ent would constitute essentiall& a +ode of pa&+ent or dacion en pago% in order that a deed of assign+ent of receiva'les which is in for+ an a'solute conve&ance of title to the credits 'eing assigned, +a& 'e 5uali7ed and treated as a securit& arrange+ent, language to such e:ect +ust 'e found in the docu+ent itself and that language, precisel&, is e+'odied in the deed of assign+ent in the instant case.
R0RAL BANK O1 CALOOCAN, INC. and JOSE O. DESIDERIO, JR., vs. THE CO0RT O1 APPEALS and MA2IMA CASTRO G.R. No. L-3##4 A!%/ /, #9$# D& Cas(!o, J. 1a(s =n 2ece+'er H, 199, respondent Maxi+a "astro, acco+panied '& Severino Ialencia, went to the 3ural an! of "aloocan to appl& for an industrial loan. 0t was Severino Ialencia who arranged ever&thing a'out the loan with the 'an! and who supplied to the latter the personal data re5uired for "astroJs loan application. =n 2ece+'er 11, 199, after the 'an! approved the loan for the a+ount of P/,))).)), "astro, acco+panied '& the Ialencia spouses, signed a pro+issor& note corresponding to her loan in favor of the 'an!. =n the sa+e da&, 2ece+'er 11, 199, the Ialencia spouses o'tained fro+ the 'an! an e5ual a+ount of loan for P/,))).)). The& signed a pro+issor& note #4xhi'it E(E$ corresponding to their loan in favor of the 'an! and had "astro axed thereon her signature as co+a!er. The two loans were secured '& a realestate
+ortgage #4xhi'it E6E$ on "astroJs house and lot of 1) s5uare +eters, covered '& Transfer "erti7cate of Title No. H19 of the =ce of the 3egister of 2eeds of Manila. =n 8e'ruar& 1/, 1961, the sheri: of Manila, thru Acting "hief 2eput& Sheri: asilio Magsa+'ol, sent a notice of sheri:Js sale addressed to "astro, announcing that her propert& covered '& T.".T. No. H19 would 'e sold at pu'lic auction on March 1), 1961 to satisf& the o'ligation covering the two pro+issor& notes plus interest and attorne&Js fees. Kpon re5uest '& "astro and the Ialencias and with confor+it& of the 'an!, the auction sale that was scheduled for March 1), 1961 was postponed for April 1), 1961. ut when April 1), 1961 was su'se5uentl& declared a special holida&, the sheri: of Manila sold the propert& covered '& T.".T. No. H19 at a pu'lic auction sale that was held on April 11, 1961, which was the next succeeding 'usiness da& following the special holida&. "astro alleged that it was onl& when she received the letter fro+ the Acting 2eput& Sheri: on 8e'ruar& 1/, 1961, when she learned for the 7rst ti+e that the +ortgage contract #4xhi'it E6E$ which was an encu+'rance on her propert& was for P6.))).)) and not for P/,))).)) and that she was +ade to sign as co+a!er of the pro+issor& note #4xhi'it E(E$ without her 'eing infor+ed of this. =n April , 1961, "astro 7led a suit deno+inated E3e Su+ of Mone&,E against petitioners an! and 2esiderio, the Spouses Ialencia, asilio Magsa+'ol and Arsenio 3e&es as defendants in "ivil "ase No. 669 'efore the "ourt of 8irst 0nstance of Manila upon the charge, a+ongst others, that thru +ista!e on her part or fraud on the part of Ialencias she was induced to sign as co+a!er of a pro+issor& note #4xhi'it E(E$ and to constitute a +ortgage on her house and lot to secure the 5uestioned note. At the ti+e of 7ling her co+plaint, respondent "astro deposited the a+ount of P/,//.)) with the court a 5uo in full pa&+ent of her personal loan plus interest. 0n her a+ended co+plaint, "astro pra&ed, a+ongst other, for the annul+ent as far as she is concerned of the pro+issor& note #4xhi'it E(E$ and +ortgage #4xhi'it E6E$ insofar as it exceeds P/,))).))% for the discharge of her personal o'ligation with the 'an! '& reason of a deposit of P/,//.)) with the court a 5uo upon the 7ling of her co+plaint% for the annul+ent of the foreclosure sale of her propert& covered '& T.".T. No. H19 in favor of Arsenio
3e&es% and for the award in her favor of attorne&Js fees, da+ages and cost. Iss&' TL4 "=K3T =8 APP4ABS 43342 0N KPL=B20N? TL4 PA3T0AB ANNKBM4NT =8 TL4 P3=M0SS=3 N=T4, 4L00T (, AN2 TL4 M=3T?A?4, 4L00T 6, 0NS=8A3 AS TL4 A884"T 34SP=N24NT MA0MA "AST3= I0SAI0S P4T0T0=N43 ANO 24SP0T4 TL4 T=TAB AS4N"4 =8 40TL43 ABB4?AT0=N 0N TL4 "=MPBA0NT =3 "=MP4T4NT P3==8 0N TL4 4I024N"4 =8 AN 83AK2 =3 =TL43 KNBA;8KB "=N2K"T "=MM0TT42 =3 PA3T0"0PAT42 0N P4T0T0=N43S 0N P3="K30N? TL4 44"KT0=N =8 SA02 "=NT3A"TS 83=M 34SP=N24NT "AST3=. H&/d At an& rate, ;e o'serve that while the Ialencias defrauded "astro '& +a!ing her sign the pro+issor& note #4xhi'it ($ and the +ortgage contract #4xhi'it 6$, the& also +isrepresented to the 'an! "astroJs personal 5uali7cations in order to secure its consent to the loan. This +ust 'e the reason which pro+pted the 'an! to contend that it was defrauded '& the Ialencias. ut to reiterate, ;e cannot agree with the contention for reasons a'ove+entioned. Lowever, if the contention deserves an& consideration at all, it is in indicating the ad+ission of petitioners that the 'an! co++itted +ista!e in giving its consent to the contracts. Thus, as a result of the fraud upon "astro and the +isrepresentation to the 'an! inicted '& the Ialencias 'oth "astro and the 'an! co++itted +ista!e in giving their consents to the contracts. 0n other words, su'stantial +ista!e vitiated their consents given. 8or if "astro had 'een aware of what she signed and the 'an! of the true 5uali7cations of the loan applicants, it is evident that the& would not have given their consents to the contracts. Pursuant to Article 1/( of the "ivil "ode, which provides Art. 1342. Misrepresentation by a third person does not vitiate consent, unless such misrepresentation has created substantial mistake and the same is mutual. ;e cannot declare the pro+issor& note #4xhi'it ($ valid 'etween the 'an! and "astro and the +ortgage contract #4xhi'it 6$ 'inding on "astro 'e&ond the a+ount of P/,))).)), for while the
contracts +a& not 'e invalidated insofar as the& a:ect the 'an! and "astro on the ground of fraud 'ecause the 'an! was not a participant thereto, such +a& however 'e invalidated on the ground of su'stantial +ista!e +utuall& co++itted '& the+ as a conse5uence of the fraud and +isrepresentation inicted '& the Ialencias. Thus, in the case of Lill vs. Ieloso, 1) this "ourt declared that a contract +a& 'e annulled on the ground of vitiated consent if deceit '& a third person, even without connivance or co+plicit& with one of the contracting parties, resulted in +utual error on the part of the parties to the contract. PEDRO ALCANTARA vs. AMBROSIO ALINEA, ET AL. Ma! , #967 G.R. No. 37 To!!&s, J. 1ACTS' =n 8e'ruar& (9. 19), A+'rosio Alinea and 4udosia elar+ino, herein defendants, 'orrowed +one& fro+ Pedro Alcantara, herein plainti:, a+ounting to ) pesos, pa&a'le in -anuar& 19). The parties further agreed that if said a+ount should not 'e paid at the expiration of the stated date it would 'e understood that the house and lot owned '& the defendants located in the town of San Pa'lo, Baguna 'e considered as a'solutel& sold to the plainti: for the said su+. The ti+e for pa&+ent for the said su+ has expired and no pa&+ent has 'een +ade. The defendants refuse to deliver the house propert& to plainti:. Lence, the plainti:Ds action. ISS0E' ;hether or not the contract was one of pactu+ co++issoriu+. R0LING' ;e have in this case a contract of loan and a pro+ise of sale of a house and lot, the price of which should 'e the a+ount loaned, if within a 7xed period of ti+e such a+ount should not 'e paid '& the de'torvendor of the propert& to the creditorvendee of sa+e. The propert&, the sale of which was agreed to '& the de'tors, does not appear +ortgaged in favorof the creditor, 'ecause in order to constitute a valid +ortgage it is indispensa'le that the instru+ent 'e registered in the 3egister of Propert&, in accordance with article 1H of the "ivil "ode. Said propert& could not 'e pledged as well, not 'eing
personal propert&, and notwithstanding the said dou'le contract the de'tor continued in possession thereof and the said propert& has never 'een occupied '& the creditor. Neither was there ever na& contract of antichresis '& reason of the said contract of loan, as is provided in articles 11 and those following of the "ivil "ode, inas+uch as the creditorplainti: has never 'een in possession thereof, nor has he en@o&ed the said propert&, nor for one +o+ent ever received its rents% therefore, there are no proper ter+s in law, ta!ing into consideration the ter+s of the conditions contained in the aforesaid contract, where'& this court can 7nd that the contract was null, and under no consideration whatever would it 'e @ust to appl& to the plainti: articles 19 and 1 of the sa+e code. The pactum commissorium referred to in Baw 1, title , and law 1(, title 1(, of the 7fth Partida, and perhaps included in the prohi'ition and declaration of nullit& expressed in articles 19 and 1 of the "ivil "ode, %nd%a(&s (& &8%s(&n& o+ (& on(!a(s o+ *o!()a)& o! o+ /&d)& o! (a( o+ an(%!&s%s, non& o+ % av& o%n%d&d %n (& /oan %nd%a(&d &!&%n. The docu+ent of contract has 'een recogniCed '& the defendant Alinea and '& the witnesses whosigned sa+e with hi+, 'eing therefore an authentic and ecacious docu+ent, in accordance with article 1(( of the "ivil "ode% and as the a+ount loaned has not 'een paid and continues in possession of the de'tor, it is onl& @ust that the pro+ise of sale 'e carried into e:ect, and the necessar& instru+ent 'e executed '& the vendees. A. 1RANCISCO REALT AND DE:ELOPMENT CORPORATION vs. CO0RT O1 APPEALS and SPO0SES ROM0LO S.A. JA:ILLONAR and ERLINDA P. JA:ILLONAR G.R. No. #5655 O(o;&! 36, #99$ M&ndo
de+anded possession of the +ortgaged realt&. Spouses refused to vacate. Lence, A. 8rancisco 7led a case for possession 'efore the 3T". The spouses ad+itted that the& owed +one& in favor of A. 8rancisco 'ut the& also alleged that it was not their intention to sell the realt& as the deed of sale executed '& the+ was+erel& an additional securit& for the pa&+ent of their loan. 3T" ad@udged in favor of A. 8rancisco. =n appeal, "A reversed 3T" decision and dis+issed the co+plaint against thespouses holding that the deed of sale was void, 'eing in the nature of a pactum commissorium prohi'ited '& law. Lence, this petition with the S". Iss& ;hether or not the deed of sale executed '& the spouses was void, 'eing in the nature of pactum commissorium. H&/d' es. Art. () of the "ivil "ode provides that the creditor cannot appropriate the things given '& wa& of pledge or +ortgage, or dispose of the+. An& stipulation to the contrar& is void. ;hat is envisioned '& this article is a provision in the deed of +ortgage providing forthe auto+atic conve&ance of the +ortgaged propert& in case of the failure of the de'tor to pa& the loan. A pactu+ co++issoriu+ is a forfeiture clause in a deed of +ortgage. Theproscri'ed stipulation of auto+atic conve&ance +ust 'e found in the +ortgage deed itself. 0n the case at 'ar, the stipulations in the pro+issor& note provide that, upon failure of spouses to pa& interest, ownership of the propert& would 'e auto+aticall& transferred to A. 8rancisco and the deed of sale in its favor would 'e registered. These stipulations are in su'stance a pactum commissorium. The& e+'od& the two ele+ents of pactu+ co++issoriu+, to wit #1$ that there should 'e a pledge or +ortgage wherein a propert& is pledged or +ortgaged'& wa& of securit& for the pa&+ent of the principal o'ligation% #($ that there should 'e a stipulation for an auto+atic appropriation '& the creditor of thething pledged or +ortgaged in the event of nonpa&+ent of the principal o'ligation withinthe stipulated period. :ICENTE C. REES vs. 1RANCISCO SIERRA, EMILIO SIERRA, ALEJANDRA SIERRA, 1ELIMON
SIERRA, A0RELIO SIERRA, CONSTANCIO SIERRA, CIRILO SIERRA and ANTONIA SANTOS G.R. No. L-$45$ O(o;&! #$, #979 D& Cas(!o, J.
