SPECIAL CONTRACTS SALES A. IN GENERAL B. ELEMENTS C. OBLIGATIONS OF SELLER/BUYER D. REMEDIES E. EXTINGUISHMENT OF SALE CASES: 1. Sanchez v.

Rigos, 45 SCRA 368 a. FACTS: An option to purchase was entered between Sanchez and
Rigos wherein the latter promised to sell to the former a piece of land. Despite having paid what was agreed upon, Rigos refused to execute the contract. He said that there was no contract of sale since there was no consideration but a unilateral promise to sell. b. ISSUE: Whether or not there was a valid contract of sale c. HELD: If an option contract is given without consideration, it is a mere offer, which is not binding until accepted. If acceptance is made before withdrawal, it constitutes a binding contract of sale. The concurrence of offer and acceptance generates a contract of sale.

2. Quiroga v. Parsons Hardware, 38 Phil 501 a. FACTS: Quiroga entered into a contract with Parsons granting to the

latter the exclusive right to sell the formers beds in the Visayan Islands. The relevant stipulation in the said contract states that Quiroga shall furnish beds for Parsonss establishment in Iloilo and shall invoice them at the same price he has fixed for sales in Manila, with 25% discount as commission on sales. However, a case arose between them wherein Quiroga alleges that Parsons violated several provisions in their contract of agency. The court however declared it was a contract of sale. b. ISSUE: Whether or not it is a contract of sale c. HELD: It is a contract of sale for there exists an obligation of the seller (Quiroga) to furnish the beds while the buyer (Parsons) has to pay the price. This differ from a contract of agency where the agents only obligation is to return to the principal the money received.

3. Martinez v. CA, 56 SCRA 647 a. FACTS: b. ISSUE: Whether or not c. HELD: 4. Mapalo v. Mapalo, 17 SCRA 114 a. FACTS: Miguel Mapalo decided to donate half of his land to his
brother, Maximo. However, he was deceived into signing an absolute deed of sale instead of a deed of donation making it appeared that it was sold for P500. Maximo then sold the said land to Narciso who filed

a suit to be declared the owner of said land. Though the CFI annulled the deed of sale, the CA declared that it was only voidable and the suit to annul it prescribed already. b. ISSUE: Whether or not the deed of sale is voidable or void c. HELD: It is void for having no consideration since the price was never proven to be paid. Such is an example of a simulated contract of sale. Being a void contract, the action does not prescribe.

5. Paredes v. Espino, 22 SCRA 1000 a. FACTS: Paredes had filed an action to compel defendant-appellee
Espino to execute a deed of sale and to pay damages. The complaint alleged that the defendant "had entered into the sale" to plaintiff of a lot; that the deal had been "closed by letter and telegram" but the actual execution of the deed of sale and payment of the price were deferred to the arrival of defendant at Puerto Princesa; that defendant upon arrival had refused to execute the deed of sale although plaintiff was able and willing to pay the price, and continued to refuse despite written demands of plaintiff b. ISSUE: Whether or not it is barred by Statute of Frauds c. HELD: The letter showing all the essential elements of a contract of sale was an adequate memorandum of the transaction to remove it from the operation of the Statute of Frauds. The case was remanded to the lower court for decision.

6. Kuenzle & Streiff v. Macke and Chandler, 14 Phil 610 a. FACTS: b. ISSUE: Whether or not c. HELD: 7. Sun Bros. v. Velasco, 54 O.G. 5143 a. FACTS: Sun Bros. sold to Lopez a refrigerator under a conditional
contract of sale wherein the latter only made partial payment. Without the knowledge of the former, Lopez sold it to JV Trading (owned by Velasco), which was gain, sold to another person after displaying the said refrigerator in his store. Sun Bros filed a petition for replevin against Velasco and the last buyer. b. ISSUE: Whether or not Sun Bros can recover the refrigerator c. HELD: No. Though the general rule is goods sold by a person who is not an owner and with no authority to do so, the buyer acquires no better title than the seller had. But, the exception to such is when the said thing is sold in a merchant store to an innocent purchaser for value; the rights of the said purchaser shall be protected. The proper remedy is to collect from Lopez.

8. Bautista v. Sioson, 39 Phil 615 a. FACTS: b. ISSUE: Whether or not c. HELD:

9. Lawyers Cooperative v. Tabora, 13 SCRA 762 a. FACTS: Tabora bought some law books from Lawyers Cooperative.
Having made partial payment, it was stipulated in the contract that the ownership shall remain with the seller but any loss or damage shall be borne by the buyer. The books were destroyed by a fire. Hence, Tabora contends that he was exempted from payment because of force majeure. b. ISSUE: Whether or not he is exempted c. HELD: No. The rule exempting the obligor from liability in case of a fortuitous event is not applicable since the obligor agreed to assume the risk concerning the goods from the time of delivery. The stipulation that the ownership shall remain with owner merely was agreed upon to secure performance by the buyer of his obligation.

10. Carumba v. CA, 31 SCRA 558 a. FACTS: Canuto sold an unregistered parcel of land to Carumba. The
said deed was never registered with the Registrar of Deeds. However, a case was filed against Canuto wherein the complainant was able to obtain a deed of sale over the same land. The said deed was registered. b. ISSUE: Who has the better title over the land c. HELD: Carumba. Art. 1544 (registration in good faith prevails in a double sale) is not applicable for a purchaser in an execution sale only steps into the shoes of the judgment debtor and merely acquires the latters interest in the property sold as of the time it was levied upon. Since the debtor has no more dominical interest over the said property, there is nothing to pass to the complainant.

11. Katigbak v. CA, 4 SCRA 243 a. FACTS: b. ISSUE: Whether or not c. HELD: 12. Song Fo & Co. v. Hawaiian Phil. Co., 47 Phil 821 a. FACTS: Plaintiff presented a complaint for breach of contract against
the Hawaiian-Philippine Co., defendant. In an amended answer and cross-complaint, the defendant set up the special defense that since the plaintiff had defaulted in the payment for the molasses delivered to it by the defendant under the contract between the parties, the latter was compelled to cancel and rescind the said contract. b. ISSUE: Whether or not defendant has right to rescind the contract c. HELD: The general rule is that rescission will not be permitted for a slight or casual breach of the contract, but only for such breaches as are so substantial and fundamental as to defeat the object of the parties in making the agreement. A delay in payment for a small quantity of molasses for some twenty days is not such a violation of an essential condition of the contract was warrants rescission for nonperformance. Also, Hawaiian-Philippine Co. waived this condition when

it arose by accepting payment of the overdue accounts and continuing with the contract. Thereafter, Song Fo & Company was not in default in payment so that the Hawaiian-Philippine co. had in reality no excuse to cancel the contract

13. Gerardino v. CA, 50 SCRA 646 a. FACTS: b. ISSUE: Whether or not c. HELD: 14. Doromal v. CA, 66 SCRA 575 a. FACTS: Six of the co-owners of a property decided to sell their share

and executed special power of attorney to that effect. Before the 7th owner executed a SPA, the prospective buyer, Doromal, paid earnest money. The 7th owner decided not to sell his part hence only 6/7 of the land was sold with a simulated price appearing on the deed of sale. When the 7th owner decided to redeem the property, the buyer refused to do so claiming that the redemption period had expired already from the notice of sale as evidenced in the letters sent by the co-owners. b. ISSUE: Whether or not the letters were notice of sale c. HELD: Neither the letter nor the earnest money paid were evidenced of a consummated sale. When the letters were written, the SPAs had not even been received by the representative of the co-owners. Also, the said earnest money was not really as such, which will imply the perfection of a contract of sale. It was more of means to prevent the buyer from backing out.

BARTER OR EXCHANGE CASES: 1. Murphy v. Trinidad, 44 Phil 649 a. FACTS: American Import Company (AIC), of San Francisco, California,
is engaged in the exportation of embroideries from the Philippine Islands for sale in the United States. R. E. Murphy, during the period covered by the transactions was employed by said company as its supervising agent. AIC has adopted a plan to have all its products embroidered in the Philippines under the supervision Murphy. However, the materials supplied will come from the United States. In Murphys capacity as agent, he receives from AIC the goods to be embroidered, supervises the manufacture of the embroidered product, and returns the same from time to time in a finished state to AIC in San Francisco. The controversy began when Murphy was assessed by the Collector of Internal Revenue merchant tax. Murphy opposed payment by saying that he was not a merchant engaged in the sale, barter, or exchange of goods. The CFI, however, held that the tax in question was legally due and had been properly collected. Hence, Murphy now seeks to recover the sum of money, which had been paid under protest by him on the tax of certain embroideries exported by the plaintiff from the Philippines. b. ISSUE: Whether or not Murphy should be held liable for the tax imposed on merchants for the sale

c. HELD: As provided by law, tax is imposed upon the gross value of

goods sold, bartered, exchanged, or consigned abroad as merchant tax. Murphy contends that he himself is not a "merchant." However, this contention is undoubtedly incorrect because Murphy has a relation to the master that stands behind him. Individually, Murphy may not be considered a merchant. But since he is the agent and representative in the Philippine Islands of the American Import Company of San Francisco (a merchant), then he should obviously be considered also as a merchant. The term "merchant" is there defined as a person engaged in the sale, barter, or exchanged of personal property of whatever character, and it is declared that the term includes manufacturers who sell articles of their own production. The American Import Company fulfills every requirement of this definition because it is engaged in the manufacture of Philippine embroideries and exports the finished product for sale in the United States. The fact that the production and export of these embroideries is effect through the agency of the plaintiff Murphy and that the operations of the company in these Islands are conducted in his name in no wise alters the case. Nor is the further circumstance here material that the consignor or shipper of the goods from these Islands is Murphy and the consignee in the United States in the American Import Company. Where a consignment of goods is otherwise taxable, the tax should be assessed and collected regardless of the personality of the consignor or consignee.

2. Biagtan v. Oller, 62 Phil 933 a. FACTS: Oller mortgaged his land to the PNB to secure a loan. When
the payment for the loan was due, he failed to pay the bank so it led to a foreclosure of the mortgage in the banks favor. Later, PNB was able to sell the property to Biagtan. The controversy arose because Oller alleged that he and Biagtan had an oral agreement stating that should the latter purchase the property from PNB, he should keep only one parcel of the property, that described as parcel No. 1 and that he would turn over the other (parcel No. 2) to the former. However, when Biagtan already obtained the complete transfer to him by the two parcels of land in question, he then not only refused to acknowledge his verbal contract with Oller but imposed the condition that in order that he might transfer the second parcel to Oller it was necessary for the latter to convey to him the other lands which Oller had in another barrio (San Jose). Hence, Rafael Oller was left with no other choice but to convey the other lands to Biagtan. However, the issue becomes more complicated as Oller was not able to deliver all the lands required by Biagtan. Only 2 of the 5 parcels were conveyed to Biagtans name because Oller did not own the other 3 parcels . Hence, a case was filed by Biagtan to recover the ownership and possession of parcel No. 2. The trial court ruled in favor of Biagtan stating that the contract they entered into was void. Hence this appeal b. ISSUE: Whether or not Oller has the right over the property in question by virtue of the oral agreement entered into between him and Biagtan

c. HELD: NO. Barter, for such is the contract lastly entered into between
Oller and Biagtan is a contract conveying ownership for the consummation of which the mutual delivery by the contracting parties of the things that they promised in barter is necessary. When Oller entered into it, he was not the owner of all the land promised by him and, if he were, he would not have the free disposal thereof. He owned only two of them, which are those actually in the possession of Biagtan. Therefore, the contract as to him could not be effective for lack of one of the requisites essential to its validity; the under taking or promise to give entirely five parcels of land in the barrio of San Jose, which promise could not be fulfilled and in fact it was not fulfilled by him. Under such circumstances, the appellee can not be compelled to fulfill his promise

LEASE A. IN GENERAL A. ELEMENTS B. OBLIGATIONS OF LESSOR AND LESSEE C. REMEDIES D. TERMINATION OF LEASE CASES: 1. Dee v. CA, 176 SCRA 651 (1989) a. FACTS: Dee and his father went to the residence of Atty Mutuc to seek

his advice regarding the problem of the alleged indebtedness of petitioners brother Dewey Dee, to Ceasars Palace. Petitioners father was apprehensive over the safety of his son, Dewey having heard of a link between the mafia and Ceasars Palace and his possibility that his son may be harmed at the instance of the latter. Atty Mutuc assured petitioner and his father that he would inquire into the matter, after which his services were reportedly contracted for P100,000. Further investigations revealed that the alleged debt of Dewey had actually been incurred by Ramon Sy, with Dewey merely signing for the chits. Atty. Mutuc talked with the president of Ceasars palace and advised the president that for the sake and in the interest of the casino it would be better to make Ramon Sy answer for the indebtedness. The president told him that if he could convince Ramon Sy to acknowledge the obligation, Dewey would be exculpated from liability. Ramon Sy acknowledged the obligation, thereafter, the account of Dewey was cleared. Atty Mutuc sent demand letters to petitioner demanding the balance of P50,000 as attorneys fees. Petitioner Dee ignored said letters. Atty Mutuc filed a complaint against petitioner Dee for the collection of attorneys fees. Petitioner denied the existence of any professional relationship of attorney and client between him and Atty Mutuc. Dee insists that the visits made to Atty Mutuc were merely informal and that Atty Mutuc had not been specifically contacted to handle the problem. The P50,000 given to Atty Mutuc was alleged to be given not in the nature of attorneys fees but merely pocket money b. ISSUE: Whether or not there is an lawyer-client relationship

c. HELD: The absence of a written contract will not preclude the finding

that there was a professional relationship which merits attorneys fees for professional services rendered. To establish the relationship, it is sufficient that the advice and assistance of an attorney is sought and received in any matter pertinent to his profession. An acceptance of the relation is implied on the part of the attorney from his acting on behalf of his client in pursuance of a request from the latter. Therefore, Mutuc is entitled to receive a reasonable compensation. Atty Mutuc did not represent conflicting interests as claimed by Dee when Dee alleged that Mutuc was acting as agent of Ceasars Palace. Mutucs representations in behalf of petitioner Dee were not in resistance to the casinos claim but were actually geared toward proving the liability of true debtor, Ramon Sy.

2. Herrera v. Herrera, 7 Phil 274 a. FACTS: b. ISSUE: Whether or not c. HELD: 3. Gonzales v. Mateo, 74 Phil 573 a. FACTS: Vicente Mateo et al. (lessors) went into business as an
unregistered partnership under the name "Samahang Sabungang Malaya." They leased to Gonzales their cockpit situated in Malolos, Bulacan, under a written contract for the period of six years at the agreed yearly rental of P100 with several conditions. Before using the cockpit, Gonzales made some improvements on the building to improve its structural support. A cockfight was held in said cockpit with a large attendance. The building broke down and collapsed during that event. Mateo et al demanded of Gonzales that he either reconstruct the cockpit or pay damages. But, Gonzales refused to comply, alleging that under his contract he was not obligated to make repairs, but only improvements, on the building and that its collapse was due to hidden defects which the lessors had concealed from him b. ISSUE: Whether or not Gonzales should be held liable for the collapse of the cockpit c. HELD: It is evident that Gonzales accepted the cockpit in question from the lessors in the condition in which it was found at the time under the express agreement that all that was necessary to put it in use had to be done by the petitioner at his own expense without any obligation on the part of the respondents to reimburse him or pay for the improvements thus made upon the expiration of the lease. While it is true that under the law (paragraph 2 article 1554 of the Civil Code) it is the duty of the lessor to make on the building leased all repairs necessary in order to keep it in serviceable condition for the purpose for which it was intended, the parties were at liberty to stipulate the contrary. The collapse of the building in question on the occasion of the heavily attended cockfight of September 12, 1937, was not due to any hidden defect but to the fact that thru petitioner's negligence in making the repairs he failed to place the posts on firm, solid, and

sound foundation Under article 1563 of the Civil Code, "the lessee is liable for any deterioration or loss suffered by the thing leased, unless he proves that it took place without his fault."

4. Dakudao v. Judge Consalacion, 122 SCRA 877 (1983) a. FACTS: Petitioners are co-owners of a parcel of land. On this land

stands the house of defendant Ang Singco who had a verbal lease contract with herein petitioners. Without the knowledge and consent of petitioners, Ang Singco sold his house to the Laurecios. When Dakudao visited the premises in question, she was told of the transaction that transpired between Ang Singco and the Laurecios. Since the house is at present occupied by the Laurecios, Dakudao demanded that they vacate the premises and for the payment of the use and occupation of the same at P100.00 a month. But, for failure to reach an agreement for the rental of the premises, no agreement took place. Hence, Petitioners filed this suit to eject the Laurecios. However, the court dismissed the case for unlawful detainer against the Laurecios because it believes that the essence of the action for unlawful detainer is the existence of a previous contract, expressed or implied, between the plaintiff and the defendant. Since no contract was entered into between Dakudao and the Laurecios, unlawful detainer is not a proper remedy b. ISSUE: Whether or not the Laurecios can be lawfully evicted from the property owned by Dakudao c. HELD: The primary argument of the respondents Laurecio in this petition is that they are not unlawfully withholding possession from the petitioners after the expiration or termination of the right to hold possession by virtue of any contract because there never was any contract express or implied between them and the petitioners. In its decision, the City Court of Davao City admitted that the petitioners had a right to recover possession of the land involved in the litigation but "unfortunately" for them their cause of action did not fit in an unlawful detainer case. Neither could it be a forcible entry case, according to the judge, because the plaintiffs failed to allege in the pleadings or prove with evidence the fact that the defendants occupied the land through stealth and strategy. Moreover, respondents further claim that they cannot be considered privies or successors-in-interest of the former lessee, Francisco Ang Singco, because Article 1649 of the Civil Code provides that "the lessee cannot assign the lease without the consent of the lessor, unless there is a stipulation to the contrary." But, the provision was never intended to permit one who claims no right to the premises to avoid ejectment by such a dubious allegation. Since there was no contract between the lot owners and the Laurecios, the latter's occupation of the land is only as successors of Ang Singco from whom they purchased the house built on the lot. If Article 1649 had been followed and the consent of the owners to the sale secured, the Laurecios would be more than mere successors-in-interest. They would have become the new lessees. Hence, the unlawful detainer case was proper

5. Manlapat v. Salazar, 98 Phil 356 a. FACTS: A lease was entered into which would last until June 1, 1967.

The lessee, however, entered into a contract with Salazar wherein she would lease the same property to Salazar until May 31, 1967 (a shorter period than the orginal lease, by one day). Inasmuch as the contract was entered into without the consent of the lessor, he alleged that the contract was void on the ground that the same was an assignment, not a sublease. b. ISSUE: Whether or not it is a contract of assignment or sublease c. HELD: This is a sublease, and therefore it could be effected even without the lessors consent there being no express prohibition on a sublease. The sublessor has not stepped out of the original contract; she remains a party to it. All the terms (given above) of the sublease clearly indicate that indeed a sublease, not an assignment, has been agreed upon. Moreover, the under letting for a period less than the entire term in this case (indeed, the reservation of even so short a period as the last day of the term) makes the transfer a sublease, and not an assignment

6. Pamintuan v. CA, 42 SCRA 344 a. FACTS: A lease contract was executed in favor of petitioners Tan and
Pamintuan for two. It provided for an agreed monthly rental of P15.00 payable promptly at the end of every month for each lot or P30.00 for the two. The lease was entered into on October 10, 1951 to expire at the discretion of the lessee after twenty years. There was another provision that failure on the part of the lessee to pay the rental for six consecutive months would automatically annul the contract. The complaint for rescission filed by private respondents as plaintiffs against petitioners as defendants alleged that with respect to the first lot, Tan was in arrears for the period of twelve months and, with respect to the second lot, for a period of eight months. Lower Court granted the petition to rescind the contract. Appeal to the CA affirmed lower courts decision. Hence, this appeal b. ISSUE: Whether or not the petitioners had violated the provision in the contract of lease as to the monthly rental being promptly paid at the end of every month as claimed by plaintiffs c. HELD: While claiming to have committed no such violations, the petitioners nevertheless admitted that they in their pleadings nor at any time during the trial, never claimed to have offered to pay the rental at the end of each month. On the contrary, they impliedly admitted in their pleadings that no such monthly payments were ever made. With their above admission that 'no such monthly payments were ever made' by them, it stands clear that they violated the aforequoted provision of paragraph 2 of the contract of lease. Clearly, said violation of lessees' obligation to pay the price of the lease according to the terms stipulated entitles the respondents to rescind said contract of lease under Article 1659 of the Civil Code providing that 'If the lessor or the lessee should not comply with the obligations set forth in articles 1654 and 1657, the aggrieved party may ask for

the rescission of the, contract and indemnification for damages or only the latter, allowing the contract to remain in force.

7. Heirs of Dimaculangan v. IAC, 170 SCRA 393 (1989) a. FACTS: Dimaculangan and her children occupy by lease an apartment
at a monthly rental of P250.00. Respondent Uy sent Dimaculangan a letter informing her that the property, which she has been occupying, has been sold to him and should she desire to continue occupying the same, she should sign a contract of lease for a period of two (2) years at a monthly rental of P1,500.00. Uy received no reply to this demand. Thus, he wrote another letter, demanding payment of P750.00 covering unpaid rentals. But still, there was no word from Dimaculangan such that Uy was forced to file a complaint for ejectment b. ISSUE: Whether or not the trial court may alter the agreement of the parties by shortening the period of the lease from an indefinite period within the purview of Presidential Decree No. 20, the law in force at the time, and of the amendatory Batas Pambansa Blg. 25, to a fixed two (2) years c. HELD: Yes. It is exempt from the application of P.D. No. 20, it must be one with a definite period It has been established that petitioners have been occupying the leased premises on a verbal contract since 1961 at a monthly rent of P250.00, and that although no fixed period for the duration of the lease has been agreed upon the original lessor and lessee, the rentals were paid monthly. The SC had already ruled that leases are deemed on a "month-to-month basis", if rentals therefore are paid monthly.

8. Fermin v. CA, 196 SCRA 723 a. FACTS: Spouses Fermin and spouses Alpas as lessors and lessees,
respectively, entered into a contract of lease. Before the expiration of the ten (10) year period, defendants sent plaintiffs representative a document entitled 'Lease of Real Property' already signed by them. It was never signed by plaintiffs up to this day. AGRA & Co., Inc., as collection agent of the plaintiffs collected payment from the defendants for the annual rental. Key Management Corporation in a letter informed defendants that said company was appointed attorneyin-fact. In another letter, they advised Mr. Alpas that they were unilaterally terminating the lease effective 18 April 1987. Mr. Alpas responded that the lease was renewed. However, Key Mgt. reiterated its demand for him to vacate. b. ISSUE: Whether or not the spouses Alpas can be validly ejected from the property c. HELD: No, there was an implied renewal of the lease from year to year. From the foregoing set of facts, it cannot be said that the lease agreement had been effectively renewed for another 10 years. The stipulation of the parties is clear in that such a renewal is subject to the mutual agreement of the parties. While there is no question that private respondents expressed their desire to renew the lease by

another 10 years at the rate of the rental stipulated in the lease agreement, apparently petitioners would be willing to renew said lease. Obviously, there was no meeting of the minds as to the rate of the rental. As there was no agreement reached, then the term of the lease may not be considered to have been renewed for another 10 years. However, since after the expiration of the lease agreement, the private respondents continued to occupy the premises for more than 15 days with the acquiescence of petitioners, then it is understood that there is an implied new lease, not for the period of the original contract, but from year to year. Article 1670 of the Civil Code so provides for this situation.

LOAN A. IN GENERAL B. KINDS OF LOAN a. COMMODATUM b. MUTUUM C. NATURE AND CHARACTERISTICS D. SUBJECT MATTER E. RIGHTS AND OBLIGATIONS OF BAILOR AND BAILEE F. MODES OF EXTINGUISHMENT CASES: 1. Catholic Vicar Apostolic v. CA, 165 SCRA 515 (1988) a. FACTS: The defendant VICAR filed with the court an application for
registration of title over lots. But two sets of heirs oppose such registration claiming ownership and title thereto. The land registration court confirmed the registrable title to the VICAR. The heirs appealed the decision of the land registration court wherein it reversed the decision of the land registration court and dismissing the VICAR's application as to Lots 2 and 3, the lots claimed by the two sets of oppositors in the land registration case (and two sets of plaintiffs in the two cases now at bar), the first lot being presently occupied by the convent and the second by the women's dormitory and the sister's convent. b. ISSUE: Whether or not CA erred in its decision c. HELD: Private respondents were able to prove that their predecessors' house was borrowed by petitioner Vicar after the church and the convent were destroyed. They never asked for the return of the house, but when they allowed its free use, they became bailors in commodatum and the petitioner the bailee. The bailees' failure to return the subject matter of commodatum to the bailor did not mean adverse possession on the part of the borrower. The bailee held in trust the property subject matter of commodatum. The adverse claim of petitioner came only in 1951 when it declared the lots for taxation purposes. The action of petitioner Vicar by such adverse claim could not ripen into title by way of ordinary acquisitive prescription because of the absence of just title. Hence, CA did not erred in its decision.

2. Republic v. Bagtas, 6 SCRA 262 (1962) a. FACTS: Bagtas borrowed from Bureau of Animal Industry 3 bulls. He

was made to pay a breeding fee. He kept the bulls longer than what was agreed upon. Unfortunately, the bulls were killed by HUKs. Bagtas contends that since the contract was a commodatum, the owner shall suffer the loss. b. ISSUE: Whether or not Bagtas was relieved from paying for the loss c. HELD: No. The said contract is not a commodatum since it was not gratuitous. Such may be considered as a contract of lease. Being a lessee in bad faith (keeping it longer that what was stipulated), he is liable. Even if it was a commodatum, he is still liable for keeping it longer than what was stipulated and the thing has an appraisal value when delivered.

3. Saura Import & Export v. DBP, (1972) a. FACTS: Saura Inc. applied to Rehabilitation Finance Corporation (now
DBP) for an industrial loan, which was secured by a mortgage. It was granted at first but was denied several times when the co-signors of Saura in a promissory notes request for the said loan to be withdrawn. It was again granted with several conditions. But, Saura failed to comply, which made it, decide not to purse the loan and ask for the cancellation of the mortgage. Such cancellation was requested to make way for the registration of another mortgage with another bank. Saura failed to pay the loan obtained from the said bank. Saura filed an action against DBP for failure to release the loan granted to them. b. ISSUE: Whether or not there was a perfected contract of loan c. HELD: Yes. Article 1934 of the Civil Code provides, An accepted promise to deliver something by way of commodatum or simple loan is binding upon the parties, but the commodatum or simple loan itself shall not be perfected until the delivery of the object of the contract. There was undoubtedly offer and acceptance in this case. But this fact alone falls short of resolving the basic claim that DBP failed to fulfill its obligations and that Saura is therefore entitled to recover damages. Also, instead of insisting to obtain the loan, petitioner withdraws from the said loan hence there were mutual desistance.

4. Herrera V. Petrophil, 146 SCRA 385 a. FACTS: The plaintiff-appellant and ESSO Standard Eastern. Inc., (later
substituted by Petrophil Corporation) entered into a "Lease Agreement" whereby the former leased to the latter a portion of his property. Pursuant to the said contract, the defendant-appellee paid to the plaintiff-appellant advance rentals for the first eight years, subtracting therefrom the amount of P101,010.73, the amount it computed as constituting the interest or discount for the first eight years, in the total sum P180,288.47. A mistake in computation was asserted by the defendant so they paid to the appellant the additional sum of P2,182.70, thereby reducing the deducted amount to only P98,828.03. The plaintiff-appellant sued the defendant-appellee for the

sum of P98,828.03, with interest, claiming this had been illegally deducted from him in violation of the Usury Law. b. ISSUE: Whether or not it is a lease or loan agreement c. HELD: The difference between a discount and a loan or forbearance is that the former does not have to be repaid. The loan or forbearance is subject to repayment and is therefore governed by the laws on usury. In this case, there is no usury in this case because no money was given by the defendant-appellee to the plaintiff-appellant, nor did it allow him to use its money already in his possession. There was neither loan nor forbearance but a mere discount in a lease agreement, which the plaintiff-appellant allowed the defendant-appellee to deduct from the total payments because they were being made in advance for eight years. The discount was in effect a reduction of the rentals, which the lessor had the right to determine, and any reduction thereof, by any amount, would not contravene the Usury Law.

5. Integrated Realty v. PNB, 174 SCRA 295 (1989) a. FACTS: IRC thru its president applied for a loan and/or credit line with
PNB. To secure the said loan, he executed a Deed of Assignment of two time deposits with Overseas Development Bank in favor of plaintiff. The defendant OBM after the due dates of the time deposit certificates did not pay plaintiff PNB. PNB demanded payment from IRC and from defendant OBM (Exhibit L). IRC replied that the obligation (loan) was deemed paid with the irrevocable assignment of the time deposit certificates. Whereupon, IRC and Santos filed a third-party complaint against OBM for failure to comply with their obligation b. ISSUE: Whether or not OBM is liable for damages c. HELD: OBM should be held liable for damages. When respondent Santos invested his money in time deposits with OBM they entered into a contract of simple loan or mutuum, not a contract of deposit. While it is true that under Article 1956 of the Civil Code no interest shall be due unless it has been expressly stipulated in writing, this applies only to interest for the use of money. It does not comprehend interest paid as damages. He has the right to recover damages resulting from the default of OBM on the amounts due and unpaid at the expiration of the periods respectively provided in the contracts. In fine, OBM is being required to pay such interest, not as interest income stipulated in the certificates of time deposit, but as damages for failure and delay in the payment of its obligations which thereby compelled IRC and Santos to resort to the courts.

6. Republic v. CA, 146 SCRA 15 (1986) a. FACTS: Applicants' claim is anchored on their possessory information
title coupled with their continuous, adverse and public possession over the land in question. An examination of the possessory information title shows that the description and the area of the land stated therein substantially coincides with the land applied for and that said possessory information title had been regularly issued having been acquired by applicants' predecessor, Domingo Baloy, under the

provisions of the Spanish Mortgage Law. Applicants presented their tax declaration on said lands. The Director of Lands opposed the registration alleging that this land had become public land thru the operation of Act 627 of the Philippine Commission. Pursuant to the executive order of the President of the U.S., the area was declared within the U.S. Naval Reservation b. ISSUE: Whether or not occupation of US navy became the concept of the owner c. HELD: The occupancy of the U.S. Navy was not in the concept of owner. It partakes of the character of a commodatum. It cannot therefore militate against the title of Domingo Baloy and his successors-in-interest. One's ownership of a thing may be lost by prescription by reason of another's possession if such possession be under claim of ownership, not where the possession is only intended to be transient, as in the case of the U.S. Navy's occupation of the land concerned, in which case the owner is not divested of his title, although it cannot be exercised in the meantime

7. Quintos v. Beck, 69 Phil 108 (1939) a. FACTS: Under the contract of lease of a house, Beck was gratuitously
granted the use of the furniture described in the contract of lease, subject to the condition that former would return them to Quintos upon the latters demand. Thereafter, Quintos required Beck to return all the furniture since he has already sold the property. However, Beck could not give up the 3 gas heaters and the 4 electric lamps because he would use them until the lease was due to expire. Quintos refused to get the furniture in view of the fact that Beck had declined to make delivery of all of them. On the 15th of the month, Beck deposited all the furniture in warehouse in the custody of the sheriff b. ISSUE: Whether or not Beck has complied with his obligation c. HELD: No. The contract entered into between of the parties is one of commodatum because under it, Quintos gratuitously granted the use of the furniture to Beck reserving for himself the ownership thereof. By this contract, Beck bound himself to return the furniture to Quintos upon demand. Beck did not comply with his obligation when he merely placed them at the disposal of the sheriff and retaining for his benefit the 3 gas heaters and 4 electric lamps. Hence, the court could not legally compel Quintos to bear the expenses occasioned by the deposit; nor was Quintos under a duty to accept the return of the other furniture.

8. Republic v. Grijaldo, 15 SCRA 638 a. FACTS: Grijaldo obtained crop loans from the Bank of Taiwan.
However, a law was created wherein all the assets of the said bank was transferred to the Republic of the Philippines. RP made extrajudicial demands but Grijaldo failed to pay. b. ISSUE: Whether or not RP has cause of action c. HELD: It has a cause of action. Such transfer was pursuant under a valid law. Hence, this made RP the successor of rights over the loans.

The obligation was to pay a generic thing (money). The destruction of the loan, even if caused by force majeure, does not exempt him from liability.

9. De Los Santos v. Jarra, 15 Phil 147 (1910) a. FACTS: De los Santos file a case against Jarra, the administratrix of the

estate of Magdaleno Jimenea, alleging Jimenea borrowed and obtained from De los Santos first-class carabaos to be used at the animal-power mill without remuneration whatever for the use thereof, under the sole condition that they should be retuned to the owner as soon as the work at the mill was terminated. Jimenea did not return the carabaos. Jarra alleged that Jimenea received only 3 second-class animals, which were afterwards transferred by sale by De los Santos to Jimenea. It was proven during trial that Jimenea received 10 carabaos, four died of rinderpest. b. ISSUE: Whether or not the carabaos were sold or loaned c. HELD: Carabaos were loaned or given on commodatum to Jimenea. The 6 surviving carabaos have not been returned to the owner. Art. 1742 CV: The obligations and rights which arise from the commodatum pass to the heirs of both contracting parties, unless the loan has been made in consideration for the person of the bailee, in which case his heirs shall not have the right to continue using the thing loaned. The carabaos delivered to be used not being retuned by Jarra upon demand, there are no doubt that she is under obligation to indemnify the owner by paying him their value.

10. Mina v. Pascual, 25 Phil 540 (1913) a. FACTS: Francisco was the owner of the lot where Andres Fontanilla,
with the consent of the owner, erected a warehouse. Mina et al. were considered as Franciscos heirs while Ruperta Pascuals children were considered as heirs of Andres. Pascual, as guardian of her minor children, requested for an authorization to sell the six-sevenths of one half of the warehouse together with its lot. Mina opposed the petition for the reason that Pascual had included therein the lot occupied by the warehouse, which they claimed was their exclusive property. The court, before determining the ownership of the lot, ordered the sale of the building. b. ISSUE: Whether or not the sale is void c. HELD: Yes. What is essentially pertinent is the fact that the defendants agree that the plaintiffs have the ownership and they themselves only the use (commodatum) of the said lot. He who has only the use of a thing cannot validly sell the thing itself. The effect of the sale being a transfer of the ownership of the thing, it is evident that he who has only the mere use of the thing cannot transfer its ownership. Hence, it is null and void.

11. Briones v. Cammayo, 41 SCRA 404 (1971) a. FACTS: Briones filed an action against Cammayo for unpaid loan.
However, the defendant alleges the said contract was usurious and

should be declared void ab initio. The court declared that the defendant should pay for the principal loan less the usurious interest. b. ISSUE: Whether the creditor is entitled to collect from the debtor the amount representing the principal obligation c. HELD: Even if the contract of loan is declared usurious the creditor is entitled to collect the money actually loaned and the legal interest due thereon. In answer to the contention that the forfeiture of the principal of the usurious loan is necessary to punish the usurer, under the Usury Law there is already provision for adequate punishment for the usurer namely, criminal prosecution.

12. Lopez v. del Rosario, 44 Phil 98 (1922) a. FACTS: Del Rosario was the owner of a bonded warehouse engaged in
the business of a warehouse keeper, and stored copra and other merchandise. One of his customers was Lopez, which holds a quedans with a declared value of P107,990.40. The warehouse of Mrs. Del Rosario and its contents were destroyed by fire. The warehouse was a total loss, while of the copra stored therein, only an amount equal to P49,985 was salvaged b. ISSUE: Whether or not the plaintiff can recover from the defendant c. HELD: Yes, the plaintiff shall have and recover from the defendants the sum of P81,093.65, with interest at 6 per cent per annum from May 13, 1921, until paid.

13. Zobel v. City of Manila, 47 Phil 169 (1925) a. FACTS: Action was instituted by the Zobel minors under the
guardianship of Fernando Zobel, to recover of the City of Manila the amount of the first two installments of the purchase price of a tract of land, which has been conveyed by the guardian of the minor-plaintiffs by deed of sale. Court ordered such payment with interest in only one of the installment, which had an express stipulation for the said interest. b. ISSUE: Whether or not the court erred in its decision c. HELD: As to the first installment, which was to fall due at three months, it was stipulated that it should bear no interest. The trial judge appears to have considered that this stipulation deprived the plaintiffs of the right to interest after default, and no interest whatever was allowed by him upon this installment. This was error. The stipulation that this installment should draw no interest was made in the expectation that the obligation would be paid upon the date stipulated. After default occurred the defendant became liable for interest as damages regardless of the absence of any express stipulation for interest and regardless of the statement that this installment should draw no interest. It is only the 2nd installment which will accrued up to the date of the filing of the complaint and consolidated as of that date with the capital, after which the whole shall bear interest at the contract rate of five per centum per annum until paid.

14. Reformina v. Tomol, 139 SCRA 260 a. FACTS: Judgment was rendered by the Court of First instance of Cebu

in favor of the plaintiffs (the Reforminas) against the defendants, ordering Shell and Michael, Incorporated to pay the Reforminas the value of the boat and other equipments with legal interest from the filing of the complaint until paid. In the computation of the "legal interest" petitioners claim that the "legal interest" should be at the rate 12% per annum, invoking in support of their aforesaid submission, Central Bank of the Philippines Circular No. 416. Upon the other hand, private respondents insist that said legal interest should be at the rate of 6% percent per annum only, pursuant to Article 2209 of the New Civil Code in relation to Articles 2210 and 2211 b. ISSUE: Whether or not the rate of interest for the loan or forbearance of any money, goods, or credits and the rate allowed in judgments shall be 12% c. HELD: The judgments spoken of and referred to are judgments in litigations involving loans or forbearance of any 'money, goods or credits. Any other kind of monetary judgment which has nothing to do with, nor involving loans or forbearance of any money, goods or credits does not fall within the coverage of the said law for it is not within the ambit of the authority granted to the Central Bank. The decision sought to be executed is one rendered in an Action for Damages for injury to persons and loss of property and does not involve any loan, much less forbearances of any money, goods or credits. The rate applicable should be 6%.

15. Liam Law v. Olympic Sawmill, 129 SCRA 439 (1984) a. FACTS: Plaintiff loaned P10, 000.00, without interest, to defendant
partnership and defendant Elino Lee Chi, as the managing partner. The loan became ultimately due but was not paid on that date, with the debtors asking for an extension. The parties executed another loan document. Payment of the P10, 000.00 was extended but the obligation was increased by P6, 000.00. Defendants again failed to pay their obligation. Plaintiff instituted this collection case. Defendants admitted the P10, 000.00 principal obligation, but claimed that the additional P6, 000.00 constituted usurious interest and that they dont have to prove it since the plaintiff did not specifically denied it under oath. b. ISSUE: Whether or not it is a usurious interest c. HELD: Section 9 of the Usury law envisages a complaint filed against an entity, which has committed usury, for the recovery of the usurious interest, paid. In that case, if the entity sued shall not file its answer under oath denying the allegation of usury, the defendant shall be deemed to have admitted the usury. The provision does not apply to a case, as in the present, where it is the defendant, not the plaintiff, who is alleging usury. Under Article 1354 of the Civil Code, in regards to the agreement of the parties relative to the P6, 000.00 obligation, "it is presumed that it exists and is lawful, unless the debtor proves the contrary". No

evidentiary hearing having been held, it has to be concluded that defendants had not proven that the P6, 000.00 obligation was illegal and in fact constitute as liquidated damages suffered by plaintiff.

16. Banco Filipino v. Navarro, 152 SCRA 346 (1987) a. FACTS: b. ISSUE: Whether or not c. HELD: 17. PNB v. IAC and Magaslang, 183 SCRA 133 (1990) a. FACTS: The petitioner, a government banking institution, extended
financial assistance to the private respondents in the form of loans as embodied in the promissory notes that the latter have executed on various dates, the payment of which to come from the proceeds of sugar sales of the private respondents. The promissory notes bore 12% interest per annum plus 1% interest as penalty charge in case of default in the payments b. ISSUE: Whether or not the revised rate of interest imposed on the loans of the private respondents is legal c. HELD: There can be an increase in interest if increased by law or by the Monetary Board; and in order for such stipulation to be valid, it must include a provision for reduction of the stipulated interest "in the event that the applicable maximum rate of interest is reduced by law or by the Monetary Board," as provided for in P.D. No. 1684. The Bank reserves the right to increase the interest rate within the limits allowed by law or by the Monetary Board, provided, that the interest rate agreed upon shall be reduced in the event that the applicable maximum interest rate is reduced by law or by the Monetary Board: Provided, further, that the adjustment in the interest rate shall take effect on or after the effectivity of the increase or increase in the maximum rate of interest

18. PNB v. CA and Padilla, 196b SCRA 536 (1991) a. FACTS: b. ISSUE: Whether or not c. HELD: 19. PNB v. CA and Fernandez, 238 SCRA 80 (1994) a. FACTS: b. ISSUE: Whether or not c. HELD: 20. Florendo v. CA 265 SCRA 678 (1996) a. FACTS: b. ISSUE: Whether or not c. HELD: DEPOSIT WAREHOUSE RECEIPTS LAW/TRUST RECEIPTS LAW

A. IN GENERAL B. KINDS OF DEPOSIT a. JUDICIAL b. EXTRAJUDICIAL C. NATURE/CHARACTERSITICS D. SUBJECT MATTER E. RIGHTS AND OBLIGATION OF DEPOSITOR AND DEPOSITARY F. MODES OF EXTINGUISHMENT CASES: 1. BPI v. IAC, 164 SCRA 630 (1988) a. FACTS: The original parties to this case were Rizaldy T. Zshornack and

the Commercial Bank and Trust Company of the Philippines [hereafter referred to as "COMTRUST."] In 1980, the Bank of the Philippine Islands (hereafter referred to as BPI absorbed COMTRUST through a corporate merger, and was substituted as party to the case. b. ISSUE: Whether or not the foreign exchange entered is valid c. HELD: A deposit is constituted from the moment a person receives a thing belonging to another, with the obligation of safely keeping it and of returning the same. If the safekeeping of the thing delivered is not the principal purpose of the contract, there is no deposit but some other contract. Note that the object of the contract between Zshornack and COMTRUST was foreign exchange. As provided by law, all receipts of foreign exchange by any resident person, firm, company or corporation shall be sold to authorized agents of the Central Bank by the recipients within one business day following the receipt of such foreign exchange. Any resident person, firm, company or corporation residing or located within the Philippines, who acquires foreign exchange shall not, unless authorized by the Central Bank, dispose of such foreign exchange in whole or in part, nor receive less than its full value, nor delay taking ownership thereof except as such delay is customary; Provided, That, within one business day upon taking ownership or receiving payment of foreign exchange the aforementioned persons and entities shall sell such foreign exchange to the authorized agents of the Central Bank

2. BPI v. CA, 232 SCRA 302 (1994) a. FACTS: Respondents Eastern Plywood Corporation (Eastern) and
Lim held at least one joint bank account ("and/or" account) with the Commercial Bank and Trust Co. (CBTC), the predecessor-in-interest of petitioner Bank of the Philippine Islands (BPI). Eastern obtained a loan from CBTC which signed another document entitled "Holdout Agreement," wherein it was stated that "as security for the Loan [Lim and Eastern] have offered [CBTC] and the latter accepts a holdout on joint names of Lim and Velasco b. ISSUE: Whether or not BPI is still liable to the private respondents on the account subject of the Holdout Agreement after its withdrawal by the heirs of Velasco

c. HELD: The deposit under the questioned account was an ordinary

bank deposit; hence, it was payable on demand of the depositor. When the ownership of a particular property is disputed, the determination by a probate court of whether that property is included in the estate of a deceased is merely provisional in character and cannot be the subject of execution. The payment of the money deposited with BPI that will extinguish its obligation to the creditor-depositor is payment to the person of the creditor or to one authorized by him or by the law to receive it. Payment made by the debtor to the wrong party does not extinguish the obligation as to the creditor who is without fault or negligence, even if the debtor acted in utmost good faith and by mistake as to the person of the creditor, or through error induced by fraud of a third person

3. Serrano v. CB, 96 SCRA 96 (1980) a. FACTS: Serrano and Maneja made separate time deposits with interest

with the respondent Overseas Bank of Manila. Maneja assigned and conveyed to petitioner her time deposit. Notwithstanding series of demands for encashment of the aforementioned time deposits from the respondent Overseas Bank of Manila not a single one of the time deposit certificates was honored by respondent Overseas Bank of Manila. b. ISSUE: Whether or not the contract of petitioner may sue Central Bank for negligence in supervising Overseas Bank. c. HELD: The claims of these nature are not proper in actions for mandamus and prohibition as there is no shown clear abuse of discretion by the Central Bank in its exercise of supervision over the other respondent Overseas Bank of Manila, and if there was, petitioner here is not the proper party to raise that question, but rather the Overseas Bank of Manila, as it did in another case. The bank deposits are in the nature of irregular deposits. They are really loans because they earn interest. All kinds of bank deposits, whether fixed, savings, or current are to be treated as loans and are to be covered by the law on loans. Current and savings deposit are loans to a bank because it can use the same. The petitioner here was in reality a creditor of the respondent Bank and not a depositor while the respondent Bank was in turn a debtor of petitioner. Failure of he respondent Bank to honor the time deposit is failure to pays obligation as a debtor and not a breach of trust arising from depositary's failure to return the subject matter of the deposit.

4. Lua Kian v. Manila Railroad, 19 SCRA 5 (1967) a. FACTS: Lua Kian imported 2,000 cases of Carnation Milk from San
Francisco. The said goods were shipped and subsequently discharged to Manila Port Services. However, only 1, 829 were received by the Manila Port Service. From the same vessel, about 3, 171 cases of Carnation Milk were on the other hand discharged to the Manila Port Service for the account of Cebu United Enterprise despite the fact that the bill of lading provides for only 3,000 cases. Lua Kian filed a suit

against the Manila Port Service for the undelivered articles. The Manila Port Service on the other hand contends that it actually delivered 1,913 cases to Lua Kian when it was only bound to deliver 1,829. Thus, it has even over-delivered. b. ISSUE: Whether or not the Manila Port Service as an Arrastre Operator is liable to Lua Kian c. HELD: Although it is true, that arrastre operators are exempted from responsibility for mis-delivery or non-delivery due to improper or insufficient marking, the defendants cannot invoke such since it is clear from the bills of lading that 2,000 cases has to be delivered to Lua Kian and 3,000 to Cebu United. It should have been sufficient reason for the Manila Port Service to withhold the delivery of the said anomalous goods. The legal relationship between an arrastre operator and the consignee is akin to that of a depositor and a warehouseman. With the given circumstances, the Warehouse Receipts Law provides that the former should have withheld delivery because of the discrepancy between the bill of lading and the markings and called the parties to interplead so as to determine the rightful owner of the goods

5. Javellana v. Lim, 11 Phil 141 a. FACTS: Lim et al. received from Javellana as a deposit without interest
certain sum of money, which they will return, jointly and severally. Javellana granted an extension of time for the payment thereof when the debtors bind themselves to pay interest on the amount of their indebtedness. The debtors paid on account of interest due but they failed to pay any other sum on account of either capital or interest. b. ISSUE: Whether or not it was a deposit or loan c. HELD: It was a real loan of money with interest even if it was called a deposit. So that when they bound themselves to him back, they did not engage to return the same coins received. For this reason, the debtors were lawfully authorized to make use of the amount of money deposited, as they have done, as subsequently shown when asking for an extension of the time for the return thereof, inasmuch as, acknowledging that they have subjected Javellana to losses and damages for not complying with what had been stipulated. Hence, it was a loan.

6. Baron v. David, 51 Phil 2 a. FACTS: The spouses Baron placed several thousands of cavans of
palay in the mill being run by David with the understanding that the same may also be milled. Unfortunately, a fire broke out in the mill destroying all the palay stored therein. Consequently, the spouses wanted to collect he amount of the palay previously delivered by them in the concept of sale. On the other hand, David denied liability by alleging that the cavans of palay were placed upon him in the concept of deposit. As such, loss of the thing by fortuitous event shall absolve the depositary (David) of any liability. b. ISSUE: Whether or not David should pay for the destroyed palay

c. HELD: David must pay the Barons on account of what was delivered to

him. It was found that the practice of the milling company is to mix the cavans of palay received, as it is difficult to segregate them on account of their volume. These are subsequently milled and disposed of. Given the capacity of the mills, the court concluded that the cavans of palay delivered by the spouses are in all probability already milled and disposed of by David. This is in light with the fact that the fire broke out a year after the delivery. Given such circumstances, it is immaterial that there has been an initial agreement for deposit. The Code provides that once permission to use the subject matter has been granted, the transaction loses the concept of deposit and becomes a loan or commodatum. When David appropriated the palay for his own use, the latter became bound to its value.

7. Vintola v. IBAA, 150 SCRA 578 a. FACTS: The spouses Vintola was granted a domestic letter of credit by

the Insular Bank of Asia and America (IBAA) for the purchase of seashells. Upon receipt of such seashells, the spouses executed a trust receipt agreement with IBAA. However, the spouses failed to pay their obligation and offered to relinquished possession of the seashells to IBAA, which they assert to be the owner. Also, their acquittal in the estafa case (also instituted by the bank) barred IBAA to file the civil action. b. ISSUE: Whether or not the obligation of spouses was extinguished by the surrender of the goods Whether or not the acquittal in the estafa case barred the civil action c. HELD: No. A trust receipt is only a security agreement to which the bank acquires a security interest in the goods. IBAA is not the factual owner of the goods. Hence, the spouses cannot justifiably claim that their obligation was extinguished by the surrender of the goods. Also, the civil action may proceed independent from the criminal case since the case is based on an ex contractu. Also, the decision in the criminal case states that the remedy of the bank was civil and not criminal.

8. Sia v. People, 121 SCRA 661 (1983) a. FACTS: Sia applied for a letter of credit to import steel with Mitsui Ltd.
to the Continental Bank, under the express obligation of holding the steel sheets in trust and selling and turning over the proceeds of the sale to Continental. When the bills issued for the purpose of collecting the unpaid account fell due, neither the accused nor his company made any payment. The court convicted Sia of estafa. b. ISSUE: Whether or not violation of the trust receipt constitutes estafa c. HELD: No. It only gives rise to civil liability. The transaction is merely that of a security of a loan and the trust element is but an inherent feature of the security aspect of the arrangement where the goods are placed in the possession of the entrustee.

9. Gonzales v. Go Tiong and Luzon Surety, 104 Phil 492

a. FACTS: Go Tiong owned a rice mill and warehouse and later on

obtained a license to engage in the business of a bonded warehouseman. To secure the performance of his obligations as such bonded warehouseman, the Luzon Surety Co. executed a Guaranty Bond. He also insured the warehouse and the palay deposited therein. Both prior to and after the issuance of the license to Go Tiong to operate as bonded warehouseman, he had on several occasions received palay for deposit from plaintiff Gonzales. Before the fire, Go Tiong had been accepting deliveries of palay from other depositors and exceeded from the limit authorized under his license. The receipts issued by Go Tiong to the plaintiff were ordinary receipts, not the "warehouse receipts" as defined by the Warehouse Receipts Act (Act No. 2137). After the burning of the warehouse, the depositors of palay, including plaintiff, filed their claims with the Bureau of Commerce, and it would appear that with the proceeds of the insurance policy, the Bureau of Commerce paid off only some of the claim. b. ISSUE: Whether or not he is liable; Whether or not the provisions of the Warehouse Receipts Act are mandatory c. HELD: The exemption from the responsibility for the damages must be conditioned in his proof that the loss was by force majeure, and without his fault. The fact that he exceeded the limit of the authorized deposit must have increased the risk and would militate against his defense of non-liability Said provisions in our opinion are not mandatory and indispensable in the sense that if they fell short of the requirements of the Warehouse Receipts Act, then the commodities delivered for storage become ordinary deposits and will not be governed by the provisions of the Bonded Warehouse Act. The fact that the receipts issued by him were not "quedans" is no valid ground for defense because he was the principal obligor. As to the contention that the deposits made by the plaintiff were free because he paid no fees therefore, it would appear that he induced plaintiff to deposit his palay in the warehouse free of charge in order to promote his business and to attract other depositors.

10. Consolidated Terminals v. Artex Development Co., 63 SCRA 46 a. FACTS: CTI was the operator of a customs bonded warehouse wherein
it would keep the cotton in behalf of Luzon Brokerage Corporation until certain conditions are met. Allegedly, because of forged permit to deliver imported goods, purportedly issued by the Bureau of Customs, Artex was able to obtain delivery of the bales of cotton after paying storage and handling fees. CTI filed an action for recovery of damages from Artex basing its claim on Section 10 of the WRL b. ISSUE: Whether or not CTI can recover damages c. HELD: No because it has no cause of action against Artex. The real parties interested in the bales of cotton were the depositor, consignee, shipper and the Commissioner of Customs and Internal Revenue with respect to the duties and taxes. These parties have not sued CTI for

damages or for recovery of the bales of cotton or the corresponding taxes. Hence, he cannot recover from Artex.

11. Roman Catholic Bishop v. de La Pena, 2 Phil 144 a. FACTS: Father De La Pena had in his possession as trustee of Roman
Catholic Bishop of Jaro a certain sum of money for charitable purposes. It appeared that he mixed this trust fund with his own and deposited the whole amount in a bank to his personal account in HSBC. Shortly thereafter and during the war, Father De La Pena was arrested by the military authorities as political prisoner and the entire deposit was confiscated in favor of the government b. ISSUE: Whether or not he should be responsible for the loss of the money c. HELD: No. Although the Civil Code states that a person obliged to give something is also bound to preserve it with the diligence of a good father of a family it also provides that no one shall be liable for events which could not be foreseen, or which having been foreseen were inevitable, with the exception of the cases expressly mentioned in the law or those in which the obligation so declares. By placing the money in the bank and mixing it with his personal funds De La Pena does not thereby assume an obligation different from that under which he would have lain if such deposit had not been made, nor does he thereby become liable to repay the money at all hazards. Hence, he is not liable because of force majeure.

ALEATORY CONTRACTS INSURANCE, GAMBLING, LIFE ANNUITY CASES: 1. Rivera v. Peoples Bank and Trust Co., 73 Phil 546 a. FACTS: Rivera was employed by Edgar Stephenson as housekeeper

until his death. Stephenson opened an account in his name with the defendant by depositing therein the sum of P1,000. When there was a balance of P2,072 in said account, the survivorship agreement in question was executed and the said account was transferred to the name of "Edgar Stephenson and/or Rivera. At the time of Stephenson's death she held the deposit book, and there was a balance in said account of P701. 43, which she claimed but which the bank refused to pay to her upon advice of its attorneys who gave the opinion that the survivorship agreement was of doubtful validity. Hence the case. b. ISSUE: Whether or not the survivorship agreement is valid c. HELD: Prima facie, we think it is valid. It is an aleatory contract supported by law a lawful consideration the mutual agreement of the joint depositors permitting either of them to withdraw the whole deposit during their lifetime, and transferring the balance to the survivor upon the death of one of them.

2. Leung Bien v. O Brien, 38 Phil 182 a. FACTS: An action was instituted O'Brien to recover of Leung Ben the
sum of P15,000 alleged to have been lost by the plaintiff to the

defendant in a series of gambling, banking and percentage games conducted ruing the two or three months prior to the institution of the suit. In his verified complaint the plaintiff asked for an attachment, under section 424, and 412 (1) of the Code of Civil Procedure, against the property of the defendant, on the ground that the latter was about to depart from the Philippine islands with intent to defraud his creditors. This attachment was issued; and acting under the authority thereof, the sheriff attached the sum of P15,000 which had been deposited by the defendant with the International Banking Corporation. The defendant thereupon appeared by his attorney and moved the court to quash the attachment. Said motion was dismissed presented to this court his petition for the writ of certiorari b. ISSUE: Whether or not the statutory obligation to restore money won at

gaming an obligation arising from a contract, express or implied c. HELD: In the case now under consideration the duty of the defendant
to refund the money which he won from the plaintiff at gaming is a duty imposed by statute. It therefore arises ex lege. Furthermore, it is a duty to return a certain sum which had passed from the plaintiff to the defendant. By all the criteria which the common law supplies, this a duty in the nature of debt and is properly classified as an implied contract. It is well- settled by the English authorities that money lost in gambling or by lottery, if recoverable at all, can be recovered by the loser in an action of indebitatus assumpsit for money had and received. the cause of action stated in the complaints in the court below is based on a contract, express or implied and is therefore of such nature that the court had authority to issue writ of attachment.