G.R. No. 190755 November 24, 2010LAND BANK OF THE PHILIPPINES, Petitioner,vs. ALFREDO ONG, Respondent.

Facts : On March 18, 1996, spouses Johnson and Evangeline Sy secured a loan from Land Bank Legazpi City in the amount of PhP 16 million. The loan was secured by three (3) residential lots, five (5) cargo trucks, and a warehouse. Under the loan agreement, PhP 6 million of the loan would be short-term and would mature on February 28, 1997, while the balance of PhP 10 million would be payable in seven (7) years. The Spouses Sy could no longer pay their loan which resulted to the sale of three (3) of their mortgaged parcels of land for PhP 150,000 to Angelina Gloria Ong, Evangelines mother, under a Deed of Sale with Assumption of Mortgage. Evangelines father, petitioner Alfredo Ong, later went to Land Bank to inform them about the sale and assumption of mortgage. Land Bank Banch Head told Alfredo that there was nothing wrong with agreement with the Spouses Sy and provided him requirements for the assumption of mortgage. Alfredo later found out that his application for assumption of mortgage was not approved by Land Bank. On December 12, 1997, Alfredo initiated an action for recovery of sum of money with damages against Land Bank, as Alfredos payment was not returned by Land Bank. Alfredo said that Land Banks foreclosure without informing him of the denial of his assumption of the mortgage was done in bad faith and that he was made to believed that P750,000 would cause Land Bank to approve his assumption to the mortgage. He also claimed incurring expenses for attorneys fees of PhP 150,000, filing fee of PhP 15,000, and PhP 250,000 in moral damages. This prompted Alfredo to file a case with RTC against Land Bank. On its decision to the case, RTC held that the contract approving the assumption of mortgage was not perfected as a result of the credit investigation conducted on Alfredo where he was disapproved.. As such, it ruled that it would be incorrect to consider Alfredo a third person with no interest in the fulfillment of the obligation under Article1236 of the Civil Code. Although Land Bank was not bound by the Deed between Alfredo and the Spouses Sy, the appellate court found that Alfredo and Land Banks active preparations for Alfredos assumption of mortgage essentially novated the agreement. Issues : 1) Whether or not the Court of Appeals erred in holding that Art. 1236 of the Civil Code does not apply and in finding that there is novation.2) Whether or not the Court of Appeals misconstrued the evidence and the law when it affirmed the trial court decisions ordering Land Bank to pay Ong the amount of Php750,000.00 with interest at 12% annum. Ruling : The Supreme Court affirmed with modification to the appealed decision that recourse against Land Bank. Land Bank contends that Art.1236 of the Civil Code backs their claim that Alfredo should have sought recourse against the Spouses Sy instead of Land Bank. The courtagreed with Land Bank on the point mentioned as to the first part of paragraph 1 of Art. 1236. However,. Alfredo made a conditionalpayment so that the properties subject of the Deed of Sale with Assumption of Mortgage which Land Bank required from him would be approved. Thus, he made payment not as a debtor but as a prospective mortgagor. Furthermore, the contract between Alfredo and LandBank was not perfected nor consummated because of the adverse disapproval of the proposed assumption. The Supreme Court did not agree with the Court of Appeals that there was novation in the contract between the parties because not all elements of novation were present.The court further stresses that the instant case would not have been

litigated had Land Bank been more circumspect in dealing with Alfredo. The bank chose to accept payment from Alfredo even before a credit investigation was underway and also failed to informed him of the disapproval. The court found that there was negligence to a certain degree on the part of Land Bank in handling the transaction with Alfredo. A bank as a business entity should observe a higher standard of diligence when dealing with the public which Land Bank neglect to observe in this case.The petitioners appeal was denied by the Supreme Court and the decision of the Court of Appeals was affirmed with modification in thatthe amount of PhP 750,000 will earn interest at 6% per annum and the total aggregate monetary awards will in turn earn 12% per annum from the finality of this Decision until fully paid.

MANZANAL vs. ILUSORIOGR No. 189311, DECEMBER 6, 2010FACTS: A penthouse unit at the Baguio Country Club Corporation (BCCC) building in Baguio was assigned torespondent, Ramon Ilusorio, by one Felix Adolfo B. Lopez, Jr., with the conformity of BCCC. By respondentsclaim, he, for a period of five (5) years since the assignment, enjoyed the use of the unit and the clubs facilities, along with his business colleagues and friends but that when conflict within the family arose in 1998and escalated to great proportions, he was barred from using the unit and was almost expelled as member of the club. Hence, spawned his filing of multiple suits against BCCC before the courts and SEC. Respondent senta letter to BCCC requesting for his current statement of account. Replying, BCCC charged him the amount of P102,076.74 which he paid under protest. He, however, requested a breakdown of the amount which BCCC,thru Manzanal, complied with, to which was attached respondents Statement of Account itemizing the amount which in fact totaled P2,928,223.26.BCCC subsequently sent a final demand letter to respondent for the immediate payment of the unpaid charges, failing which, BCCC stated, it "shall be constrained to take the necessary action available under the clubs rules to protect the interests of the club." Respondent questioned Manzanals authority as an Assistant Vice President, as well as the billing for P2,431,000 and P599,300 as bereft of bases. Hence, this prompted him to file a complaint for damages against petitioners. Respondent contends that he should not be charged for the use of the unit as he, as owner, is entitled to its use and enjoyment. And he cast doubt on billing him for charges dating back to 1995. On the other hand, Petitioner filed a Motion to Dismiss the complaint for failure to state a cause of action, he alleging that being merely an officer who signed on behalf of BCCC, he should not be personally liable. He explained that the act of sending a demand letter does not constitute a cause of action against the obligee/creditor. Alternatively, Manzanal claimed that respondents asseverations against him and BCCC should be ventilated as a matter of defense in the collection suit filed against him. BCCC also filed a Motion to Dismiss on the groundof litis pendentia, it having filed a collection suit against respondent before the RTC of Baguio City.RTC- dismissed the complaint CA- reversed the decision of the RTC and ordered the reinstatement of respondents complaint ISSUE: W/N the complaint for damages filed by Ramon K. Ilusorio (respondent) against petitioners Dennis R.Manzanal and Baguio Country Club Corporation (BCCC) states a cause of action. HELD: YES. A cause of action is the act or omission by which a party violates the right of another, entitling the injured party to relief. Its existence is determined from the allegations in the complaint. The Court finds from the tenor of the demand letters, which respondent annexed to his complaint,that it did not deviate from the standard practice of pursuing the satisfaction of a club members obligations. Respondent did not indicate in his complaint how tenuous petitioners claim for unpaid charges is. In his

reply to petitioners final letter of demand, he in fact did not contradict petitioners statement that his work