ARTICLE 16
Wells Fargo Banks & Union Trust Company vs Collector of Internal
Revenue
G.R. No. L-46720
FACTS:
In September 1932, Birdie Lillian Eye died in Los Angeles, California, USA
which was also her place of domicile. She left various properties. Among those
properties include some intangibles consisting of 70,000 shares in the Benguet
Consolidated Mining Company, a corporation organized and existing under
Philippine laws. The Collector of Internal Revenue sought to assess and collect
estate tax on the said shares. Wells Fargo Banks & Union Trust Company, the
trustee of the estate of the decedent Eye, objected to said assessment. Wells
Fargo averred that said shares were already subjected to inheritance tax in
California and hence cannot be taxed again in the Philippines (note at that time
the Philippines was still under the Commonwealth and were not yet totally
independent from the US).
ISSUE:
Whether or not the shares are subject to estate tax in the Philippines.
HELD:
Yes. The Supreme Court ruled that even though the Philippines was
considered a US territory at that time, it is still a separate jurisdiction from the
US in several aspects particularly taxation. Hence, the Philippines has the power
to tax said shares. The situs of taxation is here in the Philippines because the
situs of the shares of stock concerned is here in the Philippines because of the
fact that the said shares were issued here by a corporation organized and existing
under the laws of the Philippines which is also domiciled here. Further, (and this
is the deeper reason), when Eye was alive, she actually delivered the title to said
shares to the resident secretary of the corporation here in the Philippines hence
the shares never left the Philippines.
GIBBS v. GOVERNMENT (1933)
FACTS:
Since 1902, Allison D. Gibbs has been a citizen of the State of California
and domiciled therein. He and Eva Johnson Gibbs were married at Columbus,
Ohio, in July 1906; there was no ante nuptial marriage contract between the
parties; that during the existence of said marriage the spouses acquired lands in
the Philippine Islands, as conjugal property. Eva Johnson died, and Allison
sought to have the Certificates of Title transferred in his name. He argues that
in accordance with the law of California, the community property… belongs
absolutely to the surviving husband without administration. The court granted
said petition and entered a decree adjucating Allison D. Gibbs to be the sole and
absolute owner of said lands, applying section 1401 of the Civil Code of
California. Gibbs presented this decree to the register of deeds of Manila and
demanded that the latter issue to him a "transfer certificate of title". Register of
deeds refused to transfer the title of the said conjugal property to Allison D.
Gibbs, on the ground that the corresponding inheritance tax had not been paid.
ISSUE:
Whether or not the law of California will determine the nature and extent
of title.
HELD:
Yes. Even if the nature and extent of her title under said certificates be
governed by the law of the Philippine Islands, the laws of California govern the
succession to such title, citing the 2nd paragraph of article 10 of the Civil Code.
Nevertheless, legal and testamentary successions, in respect to the order of
succession as well as to the amount of the successional rights and the intrinsic
validity of their provisions, shall be regulated by the national law of the person
whose succession is in question, whatever may be the nature of the property or
the country in which it may be situated. Under the law of California, upon the
death of the wife, the entire community property without administration belongs
to the surviving husband; that he is the absolute owner of all the community
property from the moment of the death of his wife, not by virtue of succession or
by virtue of her death, but by virtue of the fact that when the death of the wife
precedes that of the husband he acquires the community property, not as an
heir or as the beneficiary of his deceased wife, but because she never had more
than an inchoate interest or expectancy which is extinguished upon her death.
Collector of Internal Revenue v. Anglo California National Bank
L-12476, Jan. 29, 1960
FACTS: The sale of shares of the capital stock of the Pampanga Sugar Mills was
negotiated, perfected, and consummated in San Francisco, California.
ISSUE: May our Government impose income tax on said sale?
HELD: No, since all the factors (negotiation, perfection and consummation) took
place in California, said place is deemed to be the source of the capital gain.
Therefore, this is income derived from abroad. Under our present laws, only
corporate income derived from Philippine sources may be taxed in our country.
Miciano v. Brimo
50 Phil. 867
FACTS: An alien testator (Turk) who made his will in the Philippines stated in
the will that his property should be distributed in accordance with Philippine
law, and not that of his nation.
ISSUE: Is the provision valid?
HELD: No, for Turkish law should govern the dis position of his property. This
is clear under Art. 16.
Bohanan v. Bohanan, et al.
106 Phil. 997
Since the laws of the State of Nevada allow the testa tor to dispose of all his
property according to his will, his testamentary dispositions depriving his wife
and children of what should be their legitimes under Philippine laws, should be
respected and the project of partition made in accordance with his testamentary
dispositions respected, and with the project of partition made in accordance with
his testamentary dispositions approved.
Bellis v. Bellis
L-23678, June 6, 1967
FACTS: Amos G. Bellis was a citizen and resident of Texas at the time of his
death. Before he died, he made two wills, one disposing of his Texas properties,
the other, disposing of his Philippine properties. In both wills, his recognized
illegitimate children were not given anything. Texas has no conflicts rule (rule of
Private International Law) governing successional rights. Furthermore, under
Texas Law, there are no compulsory heirs and therefore no legitimes. The
illegitimate children opposed the wills on the ground that they have been
deprived of their legitimes (to which they would be entitled, if Philippine law were
to apply).
ISSUE: Are they entitled to their legitimes?
HELD: (1) Said children are NOT entitled to their legitimes — for under Texas
Law which we must apply (because it is the national law of the deceased), there
are no legitimes. (See Art. 16, par. 2, Civil Code). (2) The renvoi doctrine cannot
be applied. Said doctrine is usually pertinent where the decedent is a national of
one country, and a domiciliary of Texas at the time of his death. So that even
assuming that Texas has a conflicts of law rule providing that the law of the
domicile should govern, the same would not result in a reference back (renvoi)
to Philippine law, but would still refer to Texas law because the deceased was
BOTH a citizen and a domiciliary of Texas. Nonetheless, if Texas has a conflicts
rule adopting the situs theory (lex rei sitae) calling for the application of the law
of the place where the properties are situated, renvoi would arise, since the
properties here involved are found in the Philippines. In the absence, however,
of proof as to the conflicts of law rule in Texas, it should not be presumed
different from ours.
PCIB v. Hon. Venicio Escolin
L-27860 and L-27896, Mar. 29, 1974
FACTS: A married woman, Linnie Jane Hodges, a citizen of Texas, USA, was a
domiciliary of the Philippines at the moment of her death. With respect to the
validity of certain testamentary provisions she had made in favor of her husband,
a question arose as to what exactly were the laws of Texas on the matter at the
precise moment of her death (for while one group contended that Texan law
would result in the renvoi, the other group contended that no renvoi was
possible).
ISSUE: Should the laws of Texas on the matter be ascertained?
HELD: Yes, for what the law of Texas is on the matter, is a question of fact to be
resolved by the evidence that would be presented in the probate Court. Texas
law at the time of her death (and not said law at any other time) must be proved.
Christensen v. Garcia
G.R. No. L-16749, January 31, 196
FACTS: Edward E. Christensen, though born in New York, migrated to
California, where he resided (and consequently was considered a California
citizen) for a period of nine years. In 1913, he came to the Philippines where he
became a domiciliary till the time of his death. However, during the entire period
of his residence in this country he had always considered himself a citizen of
California. In his will executed on March 5, 1951, he instituted an acknowledged
natural daughter, Maria Lucy Christensen (now Mrs. Bernard Daney) as his only
heir, but left a legacy of sum of money in favor of Helen Christensen Garcia (who
in a decision rendered by the Supreme Court had been declared another
acknowledged natural daughter of his). Counsel for the acknowledged natural
daughter Helen claims that under Art. 16, par. 2 of the Civil Code, California law
should be applied; that under California law, the matter is referred back to the
law of the domicile; that therefore Philippine law is ultimately applicable; that
finally, the share of Helen must be increased in view of the successional rights
of illegitimate children under Philippine law. Upon the other hand, counsel for
the child Maria Lucy contends that inasmuch as it is clear that under Art. 16,
par. 2 of our Civil Code, the national law of the deceased must apply, our courts
must immediately apply the internal law of California on the matter; that under
California law there are no compulsory heirs and consequently a testator could
dispose of any property possessed by him in absolute dominion and that finally,
illegitimate children not being entitled to anything under California law, the will
of the deceased giving the bulk of the property to Maria Lucy must remain
undisturbed.
ISSUE: Whether or not the principle of renvoi applies to the case.
HELD: The Court in deciding to grant more successional rights to Helen said in
effect that there are two rules in California on the matter: the internal law (which
should apply to Californians domiciled in California); and the conflicts rule
(which should apply to Californians domiciled OUTSIDE of California). The
California conflicts rule, found in Art. 946 of the California Civil Code, says: “If
there is no law to the contrary in the place where personal property is situated,
it is deemed to follow the person of its owner and is governed by the law of his
domicile.’’ Christensen being domiciled outside California, the law of his
domicile, the Philippines, ought to be followed. Were we to throw back the matter
to California, the problem would be tossed back and forth between the states
concerned, resulting in “international football.”
ARTICLE 17
Germann & Co v Donaldson
FACTS:
This is an incident of want of personality of the plaintiff’s attorney. The
action is to recover money said to be due for freight under charter party. It was
brought by virtue of general power of suits, executed in Manila by Fernando
Kammerzell, and purports to be a substitution in favor of several attorneys of
power given to Kammerzell in an instrument executed in Berlin by Max Leonard
Tornow, the sole owner of the business carried on in Berlin and Manila under
the name Germann & Co.
ISSUES:
Whether or not the power of attorney executed in Germany is valid.
RULING:
Held that a power of attorney executed in Germany, should be tested as to
its formal validity by the laws of that country and not by the provisions of the
CC. It was executed in Germany. There is no reason why the lex loci celebrationis
should not apply. Article 17, paragraph 1: forms and solemnities of contracts,
wills and other public instruments are governed by the laws of the country where
they are executed (lex loci celebrationis).
ARTICLE 19
Albetz Investments v. Court of Appeals
G.R. No. L-32570, February 28, 1977
FACTS
Having won a case in a final and executory judgment, Albetz Investments
did not give the occupants of a house (sought to be demolished) sufficient time
to remove their personal belongings. An action for damages was filed by the
plaintiffs due to the alleged indiscriminate, negligent, and wanton demolition of
the house of the plaintiffs when the sheriff served the writ of execution issued
by the Municipal Court. Plaintiff Spouses Calma alleged the demolition was
illegal because it was made eight months after issuance of the demolition order,
and that the manner it was carried out was indiscriminate causing damage to
their personal properties. The Court of First Instance of Manila ruled in favor of
the plaintiffs hence this petition.
ISSUE
Whether or not the occupants are entitled to damages?
RULING
Yes. The Court affirmed the decision appealed from. Since no reasonable
time was given, and the belongings were damaged, the demolition of the house
may be said to have been carried out in a manner not consistent with justice and
good faith, as required by Art. 19 of the Civil Code. Damages may therefore be
awarded in view of this abuse of a right.
MERALCO v. CA
G.R. NO. L-39019, January 22, 1988
FACTS
At or about the end of March 1965, Pedro Yambao, a bill collector of
MERALCO, went to the residence of the respondents and presented two overdue
bills to Juana Chavez, who informed Yambao that the said bills would be paid at
the MERALCO main office. On April 2, 1965, Isaac Chavez went to the MERALCO
main office, but only paid for one of the two overdue bills. Past 2:30 pm in the
afternoon of April 21, 1965, MERALCO caused the discontinuation of the electric
service in the respondent’s residence. The next day, Rosendo Chavez went to the
main office and paid for the other overdue bill as of April 2, and also paid for the
subsequent bill already due. The power line was reconnected at about 7:00 pm
of the same day. In an action for recovery of damages for embarrassment,
humiliation, wounded feelings and hurt pride, caused to the private respondents,
by reason of the disconnection of their electrical service by the petitioners, the
then Court of First Instance of Manila ordered the petitioners jointly and
severally to pay the private respondents the sum of Php 10,000.00 as moral
damages, Php 2,000.00 as exemplary damages, and Php 1,000.00 as attorney’s
fees. Petitioners contend that in the absence of bad faith, they could not be held
liable for moral and exemplary damages as well as attorney's fees. The failure to
give a notice of disconnection to private respondents might have been a breach
of duty or breach of contract, but by itself does not constitute bad faith or fraud.
ISSUE
Whether or not the absence of bad faith in cutting the Yambao’s electricity
precludes MERALCO from being held liable for moral and exemplary damage
HELD
No. It was held that MERALCOs right to disconnect the electric service of
a delinquent customer is absolute, subject only to the requirement that
MERALCO should give a written notice of disconnection 48 hours in advance,
and that such disconnection shall never be made after 2:00 pm of any working
day. Thus, as held in the case of Manila Gas Corporation v. Court of Appeals,
failure to give such prior notice amounts to a tort, and the delinquency of a
customer cannot be utilized to defeat or null the claim of damages. At most, such
circumstance can be considered as a mitigating factor in ascertaining the
amount of damages.
GLOBE MACKAY CABLE VS CA
GR NO 81262 AUGUST 25, 1989
FACTS
Private respondent Tobias was the purchasing agent and administrative
assistant of GLOBE MACKAY. He allegedly discovered anomalies in the company.
Hendry, the Executive VP and General Manager of GLOBE MACKAY, confronted
respondent in a letter, tagging her as the number one suspect and was ordered
a one week forced leave. Upon return, he was again tagged by Hendry as “crook”
and a “swindler.” He was also asked to take lie-detector test, and give a specimen
of his handwriting and signature for the police investigators. The investigators,
however, cleared him from the anomalies. He was later on impleaded for estafa
but was dismissed by the fiscal. He was later on terminated from the company.
After termination, he sought for employment at RETELCO. Hendry, however,
wrote a letter to RETELCO stating that Tobias was dismissed from GLOBE
MACKAY due to dishonesty. Upon the series of events, Tobias filed for a civil
case, seeking for the payment of damages on the ground of alleged unlawful,
malicious, oppressive, and abusive acts of petitioners.
ISSUE:
Whether or not the petitioners are liable for damages to the private
respondent under the Civil Code.
HELD:
YES. Petitioners are liable for damages to the private respondent under
the provisions of Art 19 of the Civil Code. Said Article, also referred to as the
principle of abuse of rights, ascertains standards that must be observed in the
exercise of rights and the performance of duties. The Court ruled when the
exercise of a right does not conform to the standards set by Article 19 and such
exercise of right resulted in a damage to another, a legal wrong is committed. In
the case, belligerence towards the private respondent was clear on his dismissal.
Imputations of guilt and various forms of harassment also ensued during the
investigation. The Court contended that these are all transgressions against the
standards set forth by Art 19 and as enforced by Article 21 of the Civil Code.
Hence, the order to pay actual, moral, and exemplary damages to the private
respondent is just and called for.
ALBENSON ENTERPRISES CORP VS. CA
G.R. No. 88694 JANUARY 11, 1993
FACTS:
Petitioner delivered mild steel plates to Guaranteed Industries from
September to November of 1980. A check was issued to Albenson for partial
payment by Guaranteed but the check was dishonored. Albenson traced the
origin of the issued check. It was registered under the name of Eugenio Baltao
and not Eugenio S. Baltao. Albenson requested for the rectification of the check
but Baltao denied the issuance of the check and his signature therein. He also
alleged that no transaction was made with Albenson since Guaranteed was
already defunct. Albenson then filed a complaint against Eugenio S. Baltao for
violating BP Blg 22. However, respondent has a namesake, Eugenio Baltao III.
Baltao then filed a complaint for damages against the petitioners before the RTC,
anchoring it to Article 19 in relation to Articles 20 and 21 of the Civil Code. The
RTC rendered judgement in favor of Baltao and ordered Albenson to pay for
actual, moral and exemplary damages as well as attorney’s fees. Albenson
appealed before the CA and contended that the RTC decision was one of
malicious prosecution. They also alleged that the absence of malice on their part
absolves them from any liability for malicious prosecution. The CA modified the
decision by reducing moral damages and attorney’s fees, hence, this case.
ISSUE:
Whether or not Baltao can claim damages against petitioners on account
of Article 19 of the Civil Code.
RULING:
NO. Petitioners cannot be said to have violated Article 19 of the Civil Code,
hence, Baltao cannot claim damages. In this case, no proof of sinister design to
vex private respondent is present since petitioners had every cause to believe
that they were charging the right person especially that Baltao did not clarify
that there are three persons with the same name. Further, the absence of proof
for fraud and having acted in bad faith cannot hold the petitioners liable for
damages.
NIKKO HOTEL MANILA GARDEN ET. AL. V. REYES
G.R. No. 154259. February 28, 2005
FACTS:
Mr. Reyes attended the personal party thrown for the hotel’s manager, Mr.
Masakazu Tsuroka, on account of Dr. Violeta Filart vouching for his attendance,
to which she agreed. While at the buffet table, Ruby Lim, executive secretary of
Hotel Nikko, allegedly ordered him to leave the party in a loud voice, effectively
embarrassing him in front of many people. Petitioner, on the other hand,
contends that she asked the respondent to leave in a discreet manner. Petitioner
prays for the reversal of the decision of CA against them.
ISSUE:
Did the petitioner violate articles 19 and 21 of the Civil Code thus entitling
the respondent for compensation of damages?
HELD:
Petitioner did not violate articles 19 and 21 for there was no intention on
her part to humiliate Reyes as demonstrated by the fact that she was close to be
able to kiss the respondent while she was asking him to leave. The decision of
CA was reversed and of RTC Quezon City affirmed.
Capitle, et al. v. Vda. De Gaban, et al.,
G.R. No. 146890, June 8, 2004
Fabian Correjado inherited from his father two parcel of land subject of the case
at bar. Fabian died intestate in 1919. He was survived by four children, namely:
Julian, Zacarias, Francisco and Manuel, all surnamed Correjado.
After Fabians death in 1919, his son Julian occupied and cultivated the two
subject parcels of land until his death in 1950. He was survived by three children
(Respondent). Julians brother Francisco died in 1960. He was survived by five
children. And his other brother Zacarias died in 1984. He was survived by seven
children.
The petitioners were the descendant of Zacarias and Francisc they are filed a
complaint on November 26, 1986 for partition of the property and damages
against to respondent Julians Children, alleging that Fabian married twice. First
with the mother of Julian, and subsequent one with the mother of Francisco,
Zacarias and Manuel; that respondent refused to give a partition of property.
The respondent counter the complaint, they say that the mother of Francisco,
Zacarias and Manuel was only a mistress. And the son of Fabian Francisco,
Zacarias and Manuel was an illegitimate son that was not entitles to inherit
under the old civil code.
The RTC of branch 63 of the La Carlota City Dismissed the complaint upon of
unreasonable delay of making claim and also lack of basis.
CA dismissed the appeal and affirmed the decision of the trial court. The
appellate court found that respondents failed to discharge the onus
of proving that Francisco and Zacarias were illegitimate. But it too found that
petitioners also failed to prove that Zacarias and Francisco were
legitimate. And the action of the petitioners has prescribed.
ARTICLE 21
BUNAG v CA
G.R. No. 101749
FACTS
Plaintiff and defendant Bunag, Jr. were sweethearts, he invited her to take
their merienda at the Aristocrat Restaurant in Manila, to which plaintiff obliged.
But instead to Aristocrat he brought plaintiff to a motel or hotel where he raped
her. Later that evening, defendant brought plaintiff to the house of his
grandmother Juana de Leon in Pamplona, Las Piñas, Metro Manila, where they
lived together as husband and wife for 21 days. Defendant-appellant Bunag, Jr.
and plaintiff-appellant filed their respective applications for a marriage license
with the Office of the Local Civil Registrar of Bacoor, Cavite. October 1, 1973
Defendant-appellant Bunag, Jr. filed an affidavit withdrawing his application for
a marriage license. Defendant Bunag, Jr. left and never returned, humiliating
plaintiff and compelled her to go back to her parents. Plaintiff was ashamed when
she went home and could not sleep and eat because of the deception done
against her by defendants-appellants. Petitioner filed a complaint for damages
for alleged breach of promise to marry. The trial court ruled in favor of the
plaintiff and against petitioner, but absolved his father.
ISSUE
Whether or not the failure to comply with the promise of marriage of the
defendant considered contrary to morals, good custom or public policy.
HELD
It is true that in this jurisdiction, we adhere to the time-honored rule that
an action for breach of promise to marry has no standing in the civil law, apart
from the right to recover money or property advanced by the plaintiff upon the
faith of such promise. Generally, therefore, a breach of promise to marry per se
is not actionable, except where the plaintiff has actually incurred expenses for
the wedding and the necessary incidents thereof.
Pe v. Pe – G.R. No. L-17396
FACTS:
Plaintiffs are the parents, brothers and sisters of one Lolita Pe, who is 24
years old and unmarried. Defendant, Alfonso Pe, on the other hand, is a married
man. Because of the similarity in their family name, defendant became close to
the plaintiffs who regarded him as a member of their family. Defendant
frequented the house of Lolita on the pretext that he wanted her to teach him
how to pray the rosary. The two eventually fell in love with each other and
conducted clandestine love affairs. When the rumors about their illicit affairs
reached the knowledge of her parents, defendant was forbidden from going to
their house and even from seeing Lolita. Nevertheless, defendant continued his
love affairs with Lolita until she disappeared from the parental home.
Plaintiffs then brought an action to recover moral, compensatory,
exemplary and corrective damages. They based their action on Article 21 of the
New Civil Code, which provides that “Any person who wilfully causes loss or
injury to another in a manner which is contrary to morals, good customs or
public policy shall compensate the latter for the damage.” Defendant set up as
a defense that the facts alleged therein, even if true, do not constitute a valid
cause of action.
ISSUE:
Did the defendant commit injury to Lolita’s family in a manner contrary to
morals, good customs and public policy as contemplated in Article 21 of the New
Civil Code?
HELD:
YES. Alfonso committed an injury to Lolita’s family in a manner contrary
to morals, good customs and public policy contemplated in Article 20 of the Civil
Code. The wrong caused by Alfonso is immeasurable considering the fact that he
is a married man.
The defendant took advantage of the trust of the plaintiffs and even used
the praying of rosary as a reason to get close with Lolita. The defendant tried to
win Lolita’s affection thru an ingenious scheme or trickery, seduced Lolita to the
extent of making her fall in love with him. No other conclusion can be drawn
from this chain of events than that defendant not only deliberately, but through
a clever strategy, succeeded in winning the affection and love of Lolita to the
extent of having illicit relations with her.
BREACH OF PROMISE TO MARRY
Hermosisima v CA
FACTS
In 1950, Soledad Cagigas, 33 years old (then a school teacher, later she
became an insurance underwriter), and Francisco Hermosisima, 23 years old
(apprentice ship pilot), fell in love with each other. Since 1953, both had a regular
intimate and sexual affair with each other. In 1954, Soledad got pregnant.
Francisco then promised to marry Soledad. In June 1954, Soledad gave birth to
a baby girl. The next month, Francisco got married but with a different woman
named Romanita Perez. Subsequently, Soledad filed an action against Francisco
for the latter to recognize his daughter with Soledad and for damages due to
Francisco’s breach of his promise to marry Soledad. The trial court ruled in favor
of Soledad. The Court of Appeals affirmed the decision of the trial court and even
increased the award of damages. The Court of Appeals reasoned that Francisco
is liable for damages because he seduced Soledad. He exploited the love of
Soledad for him in order to satisfy his sexual desires – that being, the award of
moral damages is proper.
ISSUE
Whether or not moral damages are recoverable under our laws for breach
of promise to marry.
HELD
No. Breach of promise to marry is not an actionable wrong per se. The
Court of Appeals based its award of damages on Article 2219 of the Civil Code
which says in part that “Moral damages may be recovered from… (3) Seduction,
xxx…” However, it must be noted that the “Seduction” being contemplated in the
said Civil Code provision is the same “Seduction” being contemplated in Article
337 and 338 of the Revised Penal Code. Such “seduction” is not present in this
case. Further, it cannot be said that Francisco morally seduced (in lieu of
criminal seduction) Soledad given the circumstances of this case. Soledad was
10 years older than Francisco. Soledad had a better job experience and a better
job overall than Francisco who was a mere apprentice. Further still, it was
admitted by Soledad herself that she surrendered herself to Francisco and that
she wanted to bind “by having a fruit of their engagement even before they had
the benefit of clergy.”
WASSMER v VELEZ
FACTS
Francisco Velez and Beatriz Wassmer, following their mutual promise of
love decided to get married on September 4, 1954. Wassmer made the necessary
preparations for the wedding including making and sending wedding invitations,
buying of wedding dress and other apparels, and other wedding necessities. On
Sept. 2, 1954, Velez left this note for his bride-to-be advising her that he will not
be able to attend the wedding because his mom was opposed to said wedding.
And one day before the wedding, he sent another message to Wassmer advising
her that nothing has changed and that he will be returning soon. Therefore, Velez
did not appear and was not heard from again. Wassmer sued Velez for damages
and he failed to answer and was declared in default. On April 29, 1955, judgment
was rendered ordering defendant to pay plaintiff P2,000.00 as actual damages;
P25,000.00 as moral and exemplary damages; P2,500.00 as attorney’s fees; and
the costs. Velez argued that he cannot be held civilly liable for breaching his
promise to marry Wassmer because there is no law upon which such an action
may be grounded. He also contested the award of exemplary and moral damages
against him.
ISSUE
Whether or not breach of promise to marry is an actionable wrong in this
case.
HELD
This is not a case of mere breach of promise to marry. As stated, mere
breach of promise to marry is not an actionable wrong. But to formally set a
wedding and go through all the preparation and publicity, only to walk out of it
when the matrimony is about to be solemnized, is quite different. This is palpably
and unjustifiably contrary to good customs for which defendant must be held
answerable in damages in accordance with Article 21 which provides in part “any
person who wilfully causes loss or injury to another in a manner that is contrary
to morals, good customs or public policy shall compensate the latter for the
damage.” And under the law, any violation of Article 21 entitles the injured party
to receive an award for moral damages as properly awarded by the lower court
in this case. Further, the award of exemplary damages is also proper. Here, the
circumstances of this case show that Velez, in breaching his promise to
Wassmer, acted in wanton, reckless, and oppressive manner – this warrants the
imposition of exemplary damages against him.
Cabrera v. Agustin
FACTS
Respondent courted the complainant and thereafter proposed marriage
which was accepted by the complainant. The couple went to Pasay City Hall to
apply for a marriage license where they signed two sheets of paper and a doctor
took blood from them. After that the respondent told the complainant that they
were already married, and the respondent took the complainant to a hotel and
successfully had carnal knowledge with her with the assurance that they were
already civilly married. The incident happened several times and after passing
the bar examination and during the preparation of their church wedding the
respondent sent a letter that he is withdrawing from their agreement to marry in
church. Complainant knew thereafter that they are not civilly married.
Complainant and respondent had a daughter. The respondent married another
woman after the incident.
ISSUE
Whether or not the act of the respondent constitute immorality.
RULING
Yes, respondent’s act of making the complainant believe that they have
been married civilly to satisfy his carnal desires, knowing that complainant lacks
education and does not have any idea of a valid marriage constitute immorality.
Respondent is disbarred form the practice of law and his name is stricken out in
the roll of attorney.
Gashem Shookat Baksh v. CA
FACTS:
Petitioner was a medicine student at Lyceum Northwestern Colleges at
Dagupan City. He was an Iranian exchange student and was 29 years old.
Respondent was a former waitress on a luncheonette, and was 22 years old.
Petitioner was allegedly the lover of the respondent, and was said to promise
marriage to the latter, which convinced her to live with him in his apartment. It
was even alleged that the petitioner went to the house of the respondent to inform
her family about the marriage on the end of the semester. However, the marriage
did not materialize, with several beatings and maltreatment experienced by the
respondent from the petitioner. The case was filed in the RTC of Pangasinan, and
the decision was held in favor of the respondent. However, the petitioner claimed
that the judgment of the RTC was an error, for the claims of the respondent are
not true, and that he did not know about the custom of the Filipinos; his acts
were in accordance of his custom. The decision of the RTC was affirmed in toto
by the Court of Appeals.
ISSUE:
Whether or not the respondent could claim payment for the damages
incurred by the petitioner.
RULING:
Mere breach of marriage is not punishable by law. However, since the
respondent was proved to have a good moral character, and that she had just let
her virginity be taken away by the petitioner since the latter offered a promise of
marriage, then she could ask for payment for damages. Furthermore, since she
let her lover, the petitioner, “deflowered” her since she believed that his promise
to marry was true, and not due to her carnal desire, then she could have her
claims against the petitioner. Moreover, the father of the respondent had already
looked for pigs and chicken for the marriage reception and the sponsors for the
marriage, and then damages were caused by the petitioner against the
respondents, which qualified the claims of the respondent against the petitioner.
ARTICLE 22
H.L. CARLOS CONSTRUCTION, INC. VS. MARINA PROPERTIES
CORPORATION, ET AL.
G.R No. 147614, January 29, 2004
FACTS
Marina Properties Corporation entered into a contract with H.L. Carlos
Construction, Inc. to construct a condominium complex for a total consideration
of P35.58 million within a period of 365 days from receipt of notice to proceed.
The original completion date of the project was May 16, 1989, but it was extended
to October 31, 1989 with a grace period until November 30, 1989. On December
15, 1989, HLC instituted a case for sum of money, among others, for costs of
labor escalation, change orders and material price escalation. The Construction
Contract contains the provision that no cost escalation shall be allowed except
on the labor component of the work. HLC argues that it is entitled to price
escalation for both labor and material because MPC was delayed for paying its
obligations. MPC, on the other hand, avers that HLC was delayed in finishing its
project; hence, it is not entitled to price increases.
ISSUE
Whether or not MPC is liable for price escalation.
HELD
MPC is liable for price escalation, but only for the labor component. The
Construction Contract contains the provision that no cost escalation shall be
allowed except on the labor component of the work. Since the contract allows
escalation only of the labor component, the implication is that material cost
escalations are barred. There appears to be no provision, either in the original or
in the amended contract that would justify billing of increased cost of material.
HLC attempts to pass off material cost escalation as a form of damages suffered
by it as a natural consequence of the delay in the payment of billings. However,
the contentious billing itself contains no claim for material cost escalation.
UP vs Philab Industries, Inc.
G.R. No. 152411 September 29, 2004
FACTS
In 1979, the University of the Philippines (UP) decided to construct an
integrated system of research organization known as the Research Complex. As
part of the project, laboratory equipment and furniture were purchased for the
National Institute of Biotechnology and Applied Microbiology (BIOTECH) at the
UP Los Baños. Providentially, the Ferdinand E. Marcos Foundation (FEMF) came
forward and agreed to fund the acquisition of the laboratory furniture, including
the fabrication thereof.
Renato E. Lirio, the Executive Assistant of the FEMF, gave the go-signal to
BIOTECH to contact a corporation to accomplish the project. On July 23, 1982,
Dr. William Padolina, the Executive Deputy Director of BIOTECH, arranged for
Philippine Laboratory Industries, Inc. (PHILAB), to fabricate the laboratory
furniture and deliver the same to BIOTECH for the BIOTECH Building Project,
for the account of the FEMF.
On July 13, 1982, Padolina wrote Lirio and requested for the issuance of
the purchase order and downpayment for the office and laboratory furniture for
the project, thus: 1) Supply and Installation of Laboratory furniture for the
BIOTECH Building Project, and 2) Fabrication and Supply of office furniture for
the BIOTECH Building Project, and paying the downpayment of 50% or
P286,687.50.
Ten days after, Padolina informed Hector Navasero, the President of
PHILAB, to proceed with the fabrication of the laboratory furniture, per the
directive of FEMF Executive Assistant Lirio. Subsequently, PHILAB made partial
deliveries of office and laboratory furniture to BIOTECH after having been duly
inspected by their representatives and FEMF Executive Assistant Lirio.
On August 24, 1982, FEMF remitted P600,000 to PHILAB as
downpayment for the laboratory furniture for the BIOTECH project, for which
PHILAB issued Official Receipt No. 253 to FEMF. On October 22, 1982, FEMF
made another partial payment of P800,000 to PHILAB, for which the latter issued
Official Receipt No. 256 to FEMF. The remittances were in the form of checks
drawn by FEMF and delivered to PHILAB, through Padolina.
On October 16, 1982, UP, through Emil Q. Javier, the Chancellor of UP
Los Baños and FEMF, represented by its Executive Officer, Rolando Gapud,
executed a Memorandum of Agreement (MOA) in which FEMF agreed to grant
financial support and donate sums of money to UP for the construction of
buildings, installation of laboratory and other capitalization for the project, not
to exceed P29,000,000.00.
The Board of Regents of the UP approved the MOA with Philab on
November 25, 1982. Later, President Marcos was ousted from office during the
February 1986 EDSA Revolution. On April 22, 1986, PHILAB wrote President
Corazon C. Aquino asking her help to secure the payment of the amount due
from the FEMF. In the meantime, the PCGG wrote UP requesting for a copy of
the relevant contract and the MOA for its perusal.
PHILAB filed a complaint for sum of money and damages against UP. In
the complaint, PHILAB prayed that it be paid the following: (1) P702,939.40 plus
an additional amount (as shall be determined during the hearing) to cover the
actual cost of money which at the time of transaction the value of the peso was
eleven to a dollar (P11.00:$1) and twenty seven (27%) percent interest on the
total amount from August 1982 until fully paid; (2) P50,000.00 as and for
attorney’s fees; and (3) Cost of suit.
In its answer, UP denied liability and alleged that PHILAB had no cause of
action against it because it was merely the donee/beneficiary of the laboratory
furniture in the BIOTECH; and that the FEMF, which funded the project, was
liable to the PHILAB for the purchase price of the laboratory furniture. UP
specifically denied obliging itself to pay for the laboratory furniture supplied by
PHILAB.
ISSUE
Whether or not the Court of Appeals erred in applying the legal principle
of unjust enrichment when it held that UP and not FEMF, is liable to Philab?
HELD
YES. Petition Granted. CA decision is reversed and set aside. There is no
dispute that the respondent is not privy to the MOA executed by the petitioner
and FEMF; hence, it is not bound by the said agreement. Contracts take effect
only between the parties and their assigns. A contract cannot be binding upon
and cannot be enforced against one who is not a party to it, even if he is aware
of such contract and has acted with knowledge thereof. Likewise admitted by the
parties, is the fact that there was no written contract executed by the petitioner,
the respondent and FEMF relating to the fabrication and delivery of office and
laboratory furniture to the BIOTECH. Even the CA failed to specifically declare
that the petitioner and the respondent entered into a contract of sale over the
said laboratory furniture. The Court of Appeals agreed with the petitioner that,
based on the records, an implied-in-fact contract of sale was entered into
between the Philab and FEMF. In this case, the respondent was aware, from the
time Padolina contacted it for the fabrication and supply of the laboratory
furniture until the go-signal was given to it to fabricate and deliver the furniture
to BIOTECH as beneficiary, that the FEMF was to pay for the same. Indeed,
Padolina asked the respondent to prepare the draft of the contract to be received
by the FEMF prior to the execution of the parties (the respondent and FEMF),
but somehow, the respondent failed to prepare one. The respondent knew that
the petitioner was merely the donee-beneficiary of the laboratory furniture and
not the buyer; nor was it liable for the payment of the purchase price thereof.
From the inception, the FEMF paid for the bills and statement of accounts of the
respondent, for which the latter unconditionally issued receipts to and under the
name of the FEMF. The respondent, in its Letter dated March 26, 1986, informed
the petitioner and sought its assistance for the collection of the amount due from
the FEMF: The respondent even wrote former President Aquino seeking her
assistance for the payment of the amount due, in which the respondent admitted
it tried to collect from her predecessor, namely, the former President Ferdinand
E. Marcos: Unjust enrichment claims do not lie simply because one party
benefits from the efforts or obligations of others, but instead it must be shown
that a party was unjustly enriched in the sense that the term unjustly could
mean illegally or unlawfully.[39] Moreover, to substantiate a claim for unjust
enrichment, the claimant must unequivocally prove that another party
knowingly received something of value to which he was not entitled and that the
state of affairs are such that it would be unjust for the person to keep the benefit.
[40] Unjust enrichment is a term used to depict result or effect of failure to make
remuneration of or for property or benefits received under circumstances that
give rise to legal or equitable obligation to account for them; to be entitled to
remuneration, one must confer benefit by mistake, fraud, coercion, or request.
[41] Unjust enrichment is not itself a theory of reconvey. Rather, it is a
prerequisite for the enforcement of the doctrine of restitution.[42] Article 22 of
the New Civil Code reads: Every person who, through an act of performance by
another, or any other means, acquires or comes into possession of something at
the expense of the latter without just or legal ground, shall return the same to
him. (Boldface supplied) In order that accion in rem verso may prosper, the
essential elements must be present: (1) that the defendant has been enriched,
(2) that the plaintiff has suffered a loss, (3) that the enrichment of the defendant
is without just or legal ground, and (4) that the plaintiff has no other action
based on contract, quasi-contract, crime or quasi-delict.[43] An accion in rem
verso is considered merely an auxiliary action, available only when there is no
other remedy on contract, quasi-contract, crime, and quasi-delict. If there is an
obtainable action under any other institution of positive law, that action must
be resorted to, and the principle of accion in rem verso will not lie.[44] The
essential requisites for the application of Article 22 of the New Civil Code do not
obtain in this case. The respondent had a remedy against the FEMF via an action
based on an implied-in-fact contract with the FEMF for the payment of its claim.
The petitioner legally acquired the laboratory furniture under the MOA with
FEMF; hence, it is entitled to keep the laboratory furniture.
ARTICLE 24
SPOUSES DOMINGO vs. ASTORGA
FACTS:
Petitioners were the owners of a 5-storey building located at corner Makati
Avenue and Valdez Streets, Makati City. Meanwhile, Armas Family is the third
party owner of the lot where the Paguyo Building stand was subject for civil case
which have been decided by the RTC Makati Branch 57 settling in a compromise
agreement with a prescribed amount for the consideration of its ownership in
favour of the Paguyo spouses. On November 29 1988, Lourdes Paguyo entered
in an agreement with Pierre Astorga for the sale of the former’s property (5 storey
building) including the lot to be purchase from the Armases. This move was done
in order to raise fund needed to be paid for the Armases’ lot. On the same date,
the petitioner received P50,000 as earnest money for the sale of her property.
Unfortunately, despite of the full financial support given by the respondents, the
petitioner failed to acquire the lot in question. On December 12 1988, the
petitioner asked for and were given another P50,000 by the respondents to which
was badly needed by the former to finance their construction business.
Eventually, proposed the separate sale of the building in question while the effort
to purchase the lot is on-going and the respondents were assured of its success.
On January 5, 1989, the parties executed four documents namely; Deed of
Absolute Sale, Deed of Real Estate Mortgage, Mutual Understanding, and Deed
of Assignment of Rights and Interest. Pursuant to their agreement particularly
in Mutual understanding, the respondent filed for the ejectment case before the
MTC where they obtained favourable decision. On October 1989, petitioners filed
for the recession of their agreement on the contention that the respondents led
them to the wrong belief the respondents will advance the amount needed by the
petitioner to be paid for the Armases but instead the respondents stopped the
said payment. Respondents in their answer as gleaned from the agreements that
their original purpose was the purchase of the building and the lot which it
stands. They added that at that time, the petitioners are in dire need of the
amount to finance their construction business and the balance to the Armases.
It was on July 1989 when the petitioner asked the respondents to execute the
check amounting to P917,470.00 for the final execution of the Deed of
Conveyance of the lot. However, the respondent stopped the payment of check
upon knowing that the petitioners have no rights over the lot in question which
was already transferred to the Bacani spouses. The RTC dismissed the complaint
of the petitioners dated April 21 1994. The CA also affirmed the decision of the
lower court. The Supreme Court affirmed the decision of the appellate court with
modifications on the amounts of damages and attorney’s fee.
ISSUE:
Whether or not the petitioners could rescind the agreement by claiming as
the injured party or party on a disadvantage.
HOLDING:
Neither does the fact that the subject contracts have been prepared by
respondents ipso facto entail that their validity and legality be strictly interpreted
against them. Petitioner Lourdes Paguyo’s insinuation that she was
disadvantaged will not hold. True, Article 24 of the New Civil Code provides that
“(i)n all contractual, property or other relations, when one of the parties is at a
disadvantage on account of his moral dependence, ignorance, indigence, mental
weakness, tender age or other handicap, the courts must be vigilant for his
protection.” Thus, the validity and/or enforceability of the impugned contracts
will have to be determined by the peculiar circumstances obtaining in each case
and the situation of the parties concerned. Here, petitioner Lourdes Paguyo,
being not only cultured but a person with great business acumen as well, cannot
claim to be the weaker or disadvantaged party in the subject contract so as to
call for a strict interpretation against respondents. More importantly, the parties
herein went through a series of negotiations before the documents were signed
and executed.
ARTICLE 26
RCPI VS VERCHEZ
GR NO 164349 JANUARY 31, 2006
FACTS:
Grace Verchez hired the services of RCPI to send a telegram to her sister
Zenaida asking her for financial assistance for their mother, Editha Verchez, who
was then confined in Sorsogon. However, it took 25 days before the message
reached Zenaida. Upon Editha’s death, respondents Alfonso, Grace and Zenaida
Verchez, filed an action for damages before the RTC of Sorsogon against the
RCPI. Their contended that the delay of the delivery of the message contributed
to the untimely death of Editha. The RCPI argued, however, that privity of
contract is only with Grace Verchez. They also alleged that the delay in sending
the message was caused by force majeure and that they exercised due diligence
in choosing their employees. On these grounds, they petitioned that they be
released from any liability.
ISSUE:
Whether or not awarding moral damages to the respondents was right
despite the fact that the death of Editha has no direct connection with the alleged
negligent acts of RCPI.
RULING:
YES. Moral damages were properly awarded to the respondents because RCPI’s
breach of contract showed gross negligence amounting to bad faith and showed
wanton disregard of contractual obligations. The law provides, under Art 26 of
the Civil Code, that “every person shall respect the dignity, personality, privacy
and peace of mind of his neighbors and other persons.” Par (2) of Article 26
specifically points out that similar acts include “meddling with or disturbing the
private life or family relations of another.” In the case at bar, RCPI’s negligence
on account of the delay in performing their obligation to Grace disturbed the
peace of mind of the Verchez family. The court specifically noted of the disruption
of their “filial tranquility” when they blamed each other for failing to prompt
swiftly to an emergency.
Hing v. Choachuy
G.R. No. 179736, June 26, 2013
FACTS
Respondents installed video surveillance cameras facing the property of
the petitioners. During the hearing, petitioner testified that when respondents
installed the video surveillance cameras, he immediately broached his concerns
but they did not seem to care, and thus, he reported the matter to the barangay
for mediation, and eventually, filed a complaint against respondents before the
RTC. He also admitted that as early as 1998 there has already been a dispute
between his family and the Choachuy family concerning the boundaries of their
respective properties.
ISSUE
Whether or not there is a violation of the petitioner’s right to privacy.
RULING
Yes. The installation of surveillance cameras directed on the petitioner’s
business office without consent of the owner is a violation of the right to privacy
under Article 26 of the Civil Code. Considering the law includes “similar acts,”
business offices are also included where the owner has the right to exclude the
public or deny them access.
ARTICLE 27
Vda. de Laig v. Court of Appeals
G.R. No. L-26882, April 5, 1978
FACTS
The CA affirmed the decision of the lower court in dismissing the complaint
of the petitioner. A deed of sale was executed but the husband of the petitioner
failed to solicit the approval of the Secretary of Agriculture and Natural
Resources so as not to violate Public Land Act. After the death of her husband,
the petitioner claimed for the ownership of the land previously bought by her
husband. Meanwhile, Petre Galero sold the same property to another. Petitioner
called the attention of the Director of Lands to the existence of two deeds of sale,
one in favor of Atty. Benito Laig, and another in favor of Carmen Verzo. Petre
Galero denied having sold the land in issue to Atty. Benito K. Laig. Petitioner
prayed for the annulment of the sale in favor of the other person.
ISSUE
Whether or not the original respondents be held liable for damages for
approving the sale of one and the same piece of land in favor of two different
persons.
RULING
Yes. His refusal to follow the directive of law was a conduct injurious to
the petitioner. Thus a chief of police is liable under Article 27 of the New Civil
Code for refusal to give assistance to the complainants which was his official
duty as an officer of the law. Similarly, a municipal mayor incurs the same
liability for neglecting to perform his official functions.
Ledesma v. Court of Appeals
GR 54598, April 15, 1988
FACTS
A college student scheduled to graduate with magna cum laude honors
was deprived of the distinction because of her act of lending money to members
of an organization of which she was a member, purportedly in violation of
existing school rules and regulations, according to the president of the State
College. This, despite the intervention of the Bureau of Public Schools who
instructed the state college not to deprive her of the honors. But just the same,
she was made to graduate as a plain student.
ISSUE
Whether or not the state college president, being a public servant, be deemed
liable for damages for failure to perform his duties.
RULING
Yes. The state college president was held liable for damages under Article 27 of
the Civil Code for failure to graduate a student with honors, on account of said
official’s neglect of duty and callousness. He should have acted with
circumspection and due regard to the rights of the college student. Inasmuch as
he exceeded the scope of his authority by defiantly disobeying the lawful directive
of his superior, the state college president is liable for damages in his personal
capacity.
ARTICLE 32
Liwayway Vinzons-Chato v. Fortune Tobacco
G.R. No. 141309, December 23, 2008
FACTS
Petitioner issued RMC 37-93 reclassifying "Champion," "Hope," and "More"
as locally manufactured cigarettes bearing a foreign brand subject to the 55%
ad valorem tax. They are subject to the provisions of RA 7654, specifically, to
Sec. 142,(c)(1) on locally manufactured cigarettes which are currently classified
and taxed at 55%, and which imposes an ad valorem tax of "55% provided that
the minimum tax shall not be less than P5.00 per pack." Respondent filed a
motion for reconsideration requesting the recall of RMC 37-93, but was denied.
Respondent contended that petitioner should be held liable for damages
considering that the issuance of RMC 37-93 violated its constitutional right
against deprivation of property without due process of law and the right to equal
protection of the laws.
ISSUE
Whether or not the cause of action for damages can succeed.
RULING
No. Respondent must allege that it suffered a particular or special injury
on account of the non-performance by the petitioner of the public duty. In the
case at bar, the respondent failed to reveal particular injury sustained. With no
particular injury alleged in the complaint, there is no delict or wrongful act or
omission attributable to the petitioner that would violate the primary rights of
the respondent.
Aberca v. Ver
GR 69866, April 15, 1988
FACTS
Persons apprehended and imprisoned without charges during the Martial
Law regime, upon their release after a new administration took over, fi led suits
for damages against General Fabian Ver and company who effected their arrest
and detention.
ISSUE
Whether or not military authorities are liable in violation of the
constitutional rights.
RULING
Yes. Art. 32, which renders any public officer or employee or any public
individual liable in damages for violating the constitutional rights and liberties
of another, as enumerated therein, does not exempt military officials and officers
from responsibility. While military authorities are not restrained from pursuing
their assigned task or carrying out their mission with vigor, they must
nonetheless, observe the constitutional and legal limitations. The linchpin in the
psychological struggle (struggle of the mind versus struggle of arms) is faith in
the rule of law. Once that faith is lost or compromised, the struggle may well be
abandoned.
Esguerra v. Gonzales-Asdala
FACTS:
This is a case for the recovery of a Ford-Trader cargo truck, alledgedly,
unlawfully seized by the agents of GAMI. The cargo truck was sold by GAMI to
Hilario Lagmay and Bonifacio Masilungan. It was then bought by Montelibano
Esguerra, who assumed the unpaid purchase price of P20,454.74. In so doing,
Esguerra executed in favor of GAMI a promissory note and a chattel mortgage
over the said truck. Esguerra defaulted in his obligation, but GAMI granted his
request for extension, and a new chattel mortgage new promissory note were
executed to secure the unpaid balance of P16,000.00 plus interest. On May 18,
1966, Esguerra had paid GAMI the total sum of P1,297.00.
In June 1966, the truck was taken by GAMI’S agents while it was in the
possession of Esguerra’s driver, Carlito Padua. Despite Esguerra’s demands to
return the truck, GAMI did not comply.
Esguerra filed a complaint with the CFI to recover the truck and for
damages. Esguerra alleged among others, that due to his failure to pay the
installments due, the agents of GAMI seized the cargo truch with use of force,
threats, and intimidation.
GAMI answered, alleging as affirmative defense that the plaintiff gave his
consent to the taking of the truck by the agents on condition that he be allowed
to recover its possession upon payment of his back accounts. The lower court
dismissed the complaint as well as the counterclaim, stating that GAMI could
exercise its option under the contract of mortgage to take possession of the truck
without court action as long as the mortgagor agreed, and that the mortgagee
has no further action against Esguerra to recover the unpaid balance of the
purchase price.
On appeal by Esguerra, the CA sustained the findings of the trial court
that it was not unlawful on the part of GAMI to repossess the cargo truck in
question as Esguerra gave his consent to the repossession. However, the CA
noted that GAMI should have foreclosed the mortgage. The CA set aside the
appealed decision and entered another one, sentencing the appellee to pay the
appellant for attorney’s fees as well as moral and exemplary damages.
ISSUE:
Whether or not the mortgage vendor of personal property sold on
installment is legally obligated to foreclose the chattel mortgage, and sell the
chattel subject at public auction in case the mortgagor-vendee defaults in the
payment of the agreed installments.
RULING:
Yes. Esguerra admitted that he is in arrears in the payments of his
account. Consequently, the mortgagee has the option to foreclose the mortgage
either judicially or extrajudicially and in case of foreclosure, it was expressly
agreed by the parties that the mortgagee may take the property outside the
municipality or city where the mortgagee may conveniently sell the same.
Both the trial court and the CA found that there was no forcible taking of
the cargo truck. Esguerra consented to the repossession of the truck or at least
did not make any objection. Both courts concluded that it was not unlawful on
the part of the appellee to repossess the cargo truck in question.
However, the respondent appellate court did not err in holding that while
the mortgagee can take possession of the chattel, such taking did not amount to
the foreclosure of the mortgage. The taking of Esguerra’s truck without
proceeding to the sale of the same at public auction, but instead, appropriating
the same in payment of Esguerra’s indebtedness, is not lawful.
As clearly stated in the chattel mortgage contract, the express purpose of
the taking of the mortgaged property is to sell the same and/or foreclose the
mortgage constituted thereon either judicially or extrajudicially and thereby,
liquidate the indebtedness in accordance with law.
Even if such automatic appropriation of the cargo truck in question can
be inferred from or be contemplated under the aforesaid mortgage contract, such
stipulation would be pactum commissorium which is expressly prohibited by the
New Civil Code, and therefore, null and void.