Go Cinco vs.

Court of Appeals (2009)

G.R. No. 151903 | 2009-10-09

Facts:

In December 1987, petitioner Manuel Cinco obtained a commercial loan of P700,000 from Maasin
Traders Lending Corporation (MTLC). The loan was secured by a real estate mortgage executed on
December 15, 1987 over the spouses Go Cinco's land and 4-storey building located in Maasin, Southern
Leyte.

Under the terms of the promissory note, the P700,000 loan was subject to a monthly interest rate of 3% or
36% per annum and was payable within a term of 180 days or 6 months, renewable for another 180 days.
As of July 16, 1989, Manuel's outstanding obligation with MTLC amounted to P1,071,256.66, which
amount included the principal, interest, and penalties.

To be able to pay the loan in favor of MTLC, the spouses Go Cinco applied for a loan with the Philippine
National Bank, (PNB) and offered as collateral the same properties previously mortgaged to MTLC.

Manuel went to the house of Ester Servacio, MTLC's President, to inform her that there was money with
the PNB for the payment of his loan with MTLC. Manuel executed a Special Power of Attorney (SPA)
authorizing Ester to collect the proceeds of his PNB loan. Outraged that the spouses Go Cinco used the
same properties mortgaged to MTLC as collateral for the PNB loan, Ester refused to sign the deed and did
not collect the P1.3 Million loan proceeds.

To prevent the foreclosure of their properties, the spouses Go Cinco filed an action for specific
performance, damages, and preliminary injunction before the RTC. The spouses alleged that the
assignment of the proceeds of the PNB loan amounted to the payment of the MTLC loan, and thus,
foreclosure was no longer proper.

Hence, the present petition by the spouses Go Cinco. The petition raises the issue of whether the loan due
the MTLC had been extinguished.

ISSUE: W/N there was unjust refusal to accept by the creditor does not produce the effect of payment,
consignation is required to release debtor from obligation?

HELD: While Ester's refusal was unjustified and unreasonable, the court cannot agree with Manuel's
position that this refusal had the effect of payment that extinguished his obligation to MTLC. Article 1256
provides that - ARTICLE 1256. If the creditor to whom tender of payment has been made refuses without
just cause to accept it, the debtor shall be released from responsibility by the consignation of the thing or
sum due. A refusal without just cause is not equivalent to payment; to have the effect of payment and the
consequent extinguishment of the obligation to pay, the law requires the companion acts of tender of
payment and consignation. Tender of payment is the definitive act of offering the creditor what is due him
or her, together with the demand that the creditor accept the same. When a creditor refuses the debtor's
tender of payment, the law allows the consignation of the thing or the sum due. Tender and consignation
have the effect of payment, as by consignation, the thing due is deposited and placed at the disposal of the
judicial authorities for the creditor to collect. [see Far East Bank and Trust Company v. Diaz Realty, Inc.]
Spouses Cacayorin vs. AFP Mutual Benefit Association, Inc. (2013)

G.R. No. 171298 | 2013-04-15

Facts: Oscar Cacayorin filed an application with AFPMBAI to purchase a

property which the latter owned through a loan facility. Oscar and his wife,
Thelma, and the Rural Bank of San Teodoro executed a Loan and Mortgage
Agreement with the former as borrowers and the Rural Bank as lender, under
the auspices of PAG-IBIG. On the basis of the Rural Bank's letter of guaranty,
AFPMBAI executed in petitioners' favor a Deed of Absolute Sale, and a new
title was issued in their name. Then, the PAG-IBIG loan facility did not push
through and the Rural Bank closed. Meanwhile, AFPMBAI somehow was able
to take possession of petitioners' loan documents and the TCT, while
petitioners were unable to pay the loan for the property. AFPMBAI made
written demands for petitioners to pay the loan for the property. Then,
petitioners filed with the RTC a complaint for consignation of loan payment,
recovery of title and cancellation of mortgage annotation against AFPMBAI,
PDIC and the Register of Deeds of Puerto Princesa City. AFPMBAI filed a
motion to dismiss claiming that petitioners' Complaint falls within the
jurisdiction of the Housing and Land Use Regulatory Board (HLURB), as it was
filed by petitioners in their capacity as buyers of a subdivision lot and it
prays for specific performance of contractual and legal obligations decreed
under Presidential Decree No. 957(PD 957). It added that since no prior valid
tender of payment was made by petitioners, the consignation case was
fatally defective and susceptible to dismissal.

Issue: Whether or not the case falls within the exclusive jurisdiction of the
HLURB.

Ruling: No. Unlike tender of payment which is extrajudicial, consignation is

necessarily judicial; hence, jurisdiction lies with the RTC, not with the HLURB.
Under Article 1256 of the Civil Code, the debtor shall be released from
responsibility by the consignation of the thing or sum due, without need of
prior tender of payment, when the creditor is absent or unknown, or when he
is incapacitated to receive the payment at the time it is due, or when two or
more persons claim the same right to collect, or when the title to the
obligation has been lost. The said provision clearly precludes consignation in
venues other than the courts.
BANCO FILIPINO SAVINGS AND MORTGAGE BANK, Petitioner, versus ANTONIO G. DIAZ and ELSIE B. DIAZ,
Respondents. G.R. No. 153134 | 2006-06-27
Facts:

Spouse Antonio and Elsie Diaz secured a loan from petitioner Banco Filipino the amount of P400,000 with
16% interest per annum. The loan was restructured in the amount of P3,163,000 payable within a period of
20 yrs at an interest of 22% per annum. The obligation was to be paid in equal monthly amortization &
secured by a real estate mortgage (properties found at Bolton 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 denied such application, which the CA also affirmed said order. Thereafter, 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 tendered the amount to petitioner bank. However, petitioner bank refused to accept it because
the amount due is P 10,160,649. The respondent then consign it 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 respondents remain the owners of the sum of P1,034,600.00 deposited with 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) before a judicial declaration that the consignation has been properly 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 to be determined is whether
petitioner bank had already accepted the respondent from exercising their rights to withdraw the same.
Before the consignation has been judicially declared proper, the creditor may prevent the 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.
Petitioner banks allegation has failed to establish by convincing evidence that 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 claim, petitioner bank relies on the statement of account prepared by its
employees purportedly showing that the deposit in question was deducted from the respondents'
outstanding obligation as of December 31, 1998. This statement of account, however, is self-serving and
has no probative value especially considering that the persons who prepared the same were not presented in
court. The claimed "acceptance" was obviously an afterthought, and proffered for the sole purpose of
opposing the deposit withdrawal.
Before the consignation has been accepted by the creditor or judicially declared as properly made, the
debtor is still the owner of the thing or amount deposited, and therefore, the other parties liable for the
 obligation have no right to oppose debtors withdrawal. However, creditor 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.
GAISANO CAGAYAN, INC.Petitioner, versus INSURANCE COMPANY OF NORTH
AMERICA, Respondent. G.R. No. 147839 | 2006-06-08
Facts:
IMC and Levi Strauss (Phils.) Inc. (LSPI) separately obtained from respondent fire insurance policies
with book debt endorsements. The insurance policies provide for coverage on "book debts in connection
with ready-made clothing materials which have been sold or delivered to various customers and dealers of
the Insured anywhere in the Philippines."
The policies defined book debts as the "unpaid account still appearing in the Book of Account of the
Insured 45 days after the time of the loss covered under this Policy." The policies also provide for the
following conditions:
1. Warranted that the Company shall not be liable for any unpaid account in respect of the merchandise
sold and delivered by the Insured which are outstanding at the date of loss for a period in excess of six (6)
months from the date of the covering invoice or actual delivery of the merchandise whichever shall first
occur.
2. Warranted that the Insured shall submit to the Company within twelve (12) days after the close of every
calendar month all amount shown in their books of accounts as unpaid and thus become receivable item
from their customers and dealers.
Gaisano is a customer and dealer of the products of IMC and LSPI. On February 25, 1991, the Gaisano
Superstore Complex in Cagayan de Oro City, owned by petitioner, was consumed by fire. Included in the
items lost or destroyed in the fire were stocks of ready-made clothing materials sold and delivered by
IMC and LSPI.
Insurance of America filed a complaint for damages against Gaisano. It alleges that IMC and LSPI were
paid for their claims and that the unpaid accounts of petitioner on the sale and delivery of ready-made
clothing materials with IMC was P2,119,205.00 while with LSPI it was P535,613.00.
The RTC rendered its decision dismissing Insurance's complaint. It held that the fire was purely
accidental; that the cause of the fire was not attributable to the negligence of the petitioner. Also, it said
that IMC and LSPI retained ownership of the delivered goods and must bear the loss.
The CA rendered its decision and set aside the decision of the RTC. It ordered Gaisano to pay Insurance
the P 2 million and the P 500,000 the latter paid to IMC and Levi Strauss.
Hence this petition.

Issues:
1. WON the CA erred in construing a fire insurance policy on book debts as one covering the unpaid
accounts of IMC and LSPI since such insurance applies to loss of the ready-made clothing materials sold
and delivered to petitioner
2. WON IMC bears the risk of loss because it expressly reserved ownership of the goods by stipulating in
the sales invoices that "[i]t is further agreed that merely for purpose of securing the payment of the
purchase price the above described merchandise remains the property of the vendor until the purchase
price thereof is fully paid."
3. WON petitioner is liable for the unpaid accounts
4. WON it has been established that petitioner has outstanding accounts with IMC and LSPI.

Held: No. Yes. Yes. Yes but account with LSPI unsubstantiated. Petition partly granted.

Ratio:
1. Nowhere is it provided in the questioned insurance policies that the subject of the insurance is the
goods sold and delivered to the customers and dealers of the insured.
Thus, what were insured against were the accounts of IMC and LSPI with petitioner which remained
unpaid 45 days after the loss through fire, and not the loss or destruction of the goods delivered.
2. The present case clearly falls under paragraph (1), Article 1504 of the Civil Code:
ART. 1504. Unless otherwise agreed, the goods remain at the seller's risk until the ownership therein is
transferred to the buyer, but when the ownership therein is transferred to the buyer the goods are at the
buyer's risk whether actual delivery has been made or not, except that:
(1) Where delivery of the goods has been made to the buyer or to a bailee for the buyer, in pursuance of
the contract and the ownership in the goods has been retained by the seller merely to secure performance
by the buyer of his obligations under the contract, the goods are at the buyer's risk from the time of such
delivery
Thus, when the seller retains ownership only to insure that the buyer will pay its debt, the risk of loss is
borne by the buyer. Petitioner bears the risk of loss of the goods delivered.
IMC and LSPI had an insurable interest until full payment of the value of the delivered goods. Unlike the
civil law concept of res perit domino, where ownership is the basis for consideration of who bears the risk
of loss, in property insurance, one's interest is not determined by concept of title, but whether insured has
substantial economic interest in the property.
Section 13 of our Insurance Code defines insurable interest as "every interest in property, whether real or
personal, or any relation thereto, or liability in respect thereof, of such nature that a contemplated peril
might directly damnify the insured." Parenthetically, under Section 14 of the same Code, an insurable
interest in property may consist in: (a) an existing interest; (b) an inchoate interest founded on existing
interest; or (c) an expectancy, coupled with an existing interest in that out of which the expectancy arises.
Anyone has an insurable interest in property who derives a benefit from its existence or would suffer loss
from its destruction. Indeed, a vendor or seller retains an insurable interest in the property sold so long as
he has any interest therein, in other words, so long as he would suffer by its destruction, as where he has a
vendor's lien. In this case, the insurable interest of IMC and LSPI pertain to the unpaid accounts
appearing in their Books of Account 45 days after the time of the loss covered by the policies.
3. Petitioner's argument that it is not liable because the fire is a fortuitous event under Article 117432 of
the Civil Code is misplaced. As held earlier, petitioner bears the loss under Article 1504 (1) of the Civil
Code.
Moreover, it must be stressed that the insurance in this case is not for loss of goods by fire but for
petitioner's accounts with IMC and LSPI that remained unpaid 45 days after the fire. Accordingly,
petitioner's obligation is for the payment of money. As correctly stated by the CA, where the obligation
consists in the payment of money, the failure of the debtor to make the payment even by reason of a
fortuitous event shall not relieve him of his liability. The rationale for this is that the rule that an obligor
should be held exempt from liability when the loss occurs thru a fortuitous event only holds true when the
obligation consists in the delivery of a determinate thing and there is no stipulation holding him liable
even in case of fortuitous event. It does not apply when the obligation is pecuniary in nature.
Under Article 1263 of the Civil Code, "[i]n an obligation to deliver a generic thing, the loss or destruction
of anything of the same kind does not extinguish the obligation." This rule is based on the principle that
the genus of a thing can never perish. An obligation to pay money is generic; therefore, it is not excused
by fortuitous loss of any specific property of the debtor.
4. With respect to IMC, the respondent has adequately established its claim. The P 3 m claim has been
proven. The subrogation receipt, by itself, is sufficient to establish not only the relationship of respondent
as insurer and IMC as the insured, but also the amount paid to settle the insurance claim. The right of
subrogation accrues simply upon payment by the insurance company of the insurance claim Respondent's
action against petitioner is squarely sanctioned by Article 2207 of the Civil Code which provides:
Art. 2207. If the plaintiff's property has been insured, and he has received indemnity from the insurance
company for the injury or loss arising out of the wrong or breach of contract complained of, the insurance
company shall be subrogated to the rights of the insured against the wrongdoer or the person who has
violated the contract.
As to LSPI, respondent failed to present sufficient evidence to prove its cause of action. There was no
evidence that respondent has been subrogated to any right which LSPI may have against petitioner.
Failure to substantiate the claim of subrogation is fatal to petitioner's case for recovery of P535,613.00.

De Leon vs Ong

GR No. 170405 February 2, 2010

Facts:
De Leon sold 3 parcels of land to Ong. The properties were mortgaged to
Real Savings and Loan Association. The parties executed a notarized deed of
absolute sale with assumption of mortgage. The deed of Assumption of
mortgage shall be executed in favor of Ong after the payment of 415K. Ong
complied with it. De Leon handed the keys of to Ong and informed the loan
company that the mortgage has been assumed by Ong. Ong made some
improvements in the property. After sometime, Ong learned that the
properties were sold to Viloria and changed the locks to it. Ong went to the
mortgage company and learned that the mortgage was already paid and the
titles were given to Viloria. Ong filed a complaint for the nullity of second
sale and damages. De Leon contended that Ong does not have a cause of
action against him because the sale was subject to a condition which
requires the approval of the loan company and that he and Ong only entered
a contract to sell.

Issue:
Whether or not the parties entered into a contract of sale

Ruling:
Yes, the parties entered into a contract of sale. In a contract of sale, the
seller conveys ownership of the property to the buyer upon the perfection of
the contract. The non-payment of the price is a negative resolutory
condition. Contract to sell is subject to a positive suspensive condition. The
buyer does not acquire ownership of the property until he fully pays the
purchase price. In the present case, the deed executed by the parties did not
show that the owner intends to reserve ownership of the properties. The
terms and conditions affected only the manner of payment and not the
immediate transfer of ownership. It was clear that the owner intended a
sale because he unqualifiedly delivered and transferred ownership of the
properties to the respondent