Kim: Paki sunod na lang yung format sa note book. Facts, Issue, Held.

Mas importante yung Held. Kung sobra haba yung Facts, pwede mo bawasan para magkasya sa
isang papel. Di na mapapansin yun. Bawas lang ng bawas.
Pwede ka gumamit ng 2 pages ng mga 10 times, binilang ko na yung pages. Pag bulleted, gawin
mo lang paragraph para uniform.
Sunud sunurin mo na kahit may nalaktawan akong number tulad nung number 9, wag mo na
iwanan ng blank page, number 10 na agad.
Pero yung after 16, di ko pa nahahanapan ng digest. 30 na yung sumunod, magiwan ka ng
enough pages para sa mga kulang pa.
Kung ano yung nasa syllabus, yun na lang gamitin mong title.
Thanks!

8 )Overseas Bank of Manila vs. Cordero

Facts:
Private respondent opened a 1-year time deposit with petitioner bank amounting to P80,000, with
interest of 6% p.a. Due to its distressed financial condition, the bank was unable to pay. Cordero
instituted an action before the CFI Manila. Petitioner raised the defenses of insolvency and
prejudice to other depositors. The lower court, and the Court of Appeals, ruled in favor of
Cordero. Hence, the instant petition for review on certiorari.
Certain supervening events rendered the issue moot and academic. Respondents brother and
attorney-in-fact sent a letter to the Commercial Bank of Manila (petitioners successor-ininterest), acknowledging receipt of P10,000, and another manifestation for P73,840, with waiver
of damages. Upon further examination, it was found that the respondents brother has no SPA.
Respondents brother submitted the SPA, with explanatory comment that the waiver applies only
to third party claims, suits and damages, not to interest and attorneys fees.
Issue:
Whether respondent is entitled to interest and attorneys fees
Held:
The obligation to pay interest on the deposit ceases the moment the operation of the bank is
completely suspended by the Central Bank. Neither can respondent Cordero recover attorneys
fees. Petitioners refusal to pay was not due to a willful and dishonest refusal to comply with its
obligation but to restrictions imposed by Central Bank.

10) Consolidated Bank v CA

Facts: Private respondent L.C. Diaz instructed his employee, Calapre, to deposit in his savings
account in petitioner bank. Calapre left the passbook of L.C. Diaz to the teller of the petitioner
bank because it was taking time to accomplish the transaction and he had to go to another bank.
When he returned, the teller told him that somebody got it. The following day, an impostor
succeeded in withdrawing P300,000.00 by using said passbook and a falsified withdrawal slip.
Private respondent sued the bank for the amount withdrawn by the impostor.
The trial court dismissed the complaint but the CA reversed the decision of the trial court and
held the bank liable.
Issue: Whether or not petitioner bank is liable solely for the amount withdrawn by the impostor.
Held: No. The bank is liable for breach of contract due to negligence or culpa contractual.
The contract between the bank and its depositor is governed by the provisions of the Civil Code
on simple loan. Article 1172 of the Civil Code provides that responsibility arising from
negligence in the performance of every kind of obligation is demandable. The bank is liable to
its depositor for breach of the savings deposit agreement due to negligence or culpa contractual.
The bank is under obligation to treat the accounts of its depositors with meticulous care, always
having in mind the fiduciary nature of their relationship (Simex International vs. CA).
The tellers know, or should know, that the rules on savings account provide that any person in
possession of the passbook is presumptively its owner. If the tellers give the passbook to the
wrong person, they would be clothing that person presumptive ownership of the passbook,
facilitating unauthorized withdrawals by that person.
The doctrine of last clear chance states that where both parties are negligent but the negligent act
of one is appreciably later than that of the other, or where it is impossible to determine whose
fault or negligence caused the loss, the one who had the last clear opportunity to avoid the loss
but failed to do so, is chargeable with the loss. This doctrine is not applicable to the present case.
The contributory negligence of the private respondent or his last clear chance to avoid the loss
would not exonerate the petitioner from liability. However, it serves to reduce the recovery of
damages by the private respondent. Under Article 1172, the liability may be regulated by the
courts, according to the circumstances. In this case, respondent L.C. Diaz was guilty of
contributory negligence in allowing a withdrawal slip signed by its authorized signatories to fall
into the hands of an impostor. Thus, the liability of petitioner bank should be reduced.
In PHILIPPINE BANK OF COMMERCE VS. CA, the Supreme Court allocated the damages
between the depositor who is guilty of contributory negligence and the bank on a 40-60 ratio.
The same ruling was applied to this case. Petitioner bank must pay only 60% of the actual
damages.

We do not apply the doctrine of last clear chance to the present case. This is a case of culpa
contractual, where neither the contributory negligence of the plaintiff nor his last clear
chance to avoid the loss, would exonerate the defendant from liability. Such contributory
negligence or last clear chance by the plaintiff merely serves to reduce the recovery of
damages by the plaintiff but does not exculpate the defendant from his breach of contract
Mitigated Damages
Under Article 1172, liability (for culpa contractual) may be regulated by the courts, according to
the circumstances. This means that if the defendant exercised the proper diligence in the
selection and supervision of its employee, or if the plaintiff was guilty of contributory
negligence, then the courts may reduce the award of damages. In this case, L.C. Diaz was guilty
of contributory negligence in allowing a withdrawal slip signed by its authorized signatories to
fall into the hands of an impostor. Thus, the liability of Solidbank should be reduced.
In PBC v. CA where the Court held the depositor guilty of contributory negligence, we allocated
the damages between the depositor and the bank on a 40-60 ratio. Applying the same ruling to
this case, we hold that L.C. Diaz must shoulder 40% of the actual damages awarded by the
appellate court. Solidbank must pay the other 60% of the actual damages.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED with MODIFICATION.
11) G.R. No. L-59096 October 11, 1985
PACITA F. REFORMINA and HEIRS OF FRANCISCO REFORMINA, petitioners,
vs.
THE HONORABLE VALERIANO P. TOMOL, JR., as Judge of the Court of First
Instance, Branch XI, CEBU CITY, SHELL REFINING COMPANY (PHILS.), INC., and
MICHAEL, INCORPORATED, respondents.
FACTS

This is a a Petition for Review on certiorari of the Resolution of CFI-Cebu Judge Tomol for an
action for Recovery of Damages for injury to Person and Loss of Property.
On June 7, 1972, judgment was rendered by the Court of First instance of Cebu in Civil Case No.
R-11279, 2 the dispositive portion of which reads

WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and third party defendants
and against the defendants and third party plaintiffs as follows:
Ordering defendants and third party plaintiffs Shell and Michael, Incorporated to pay jointly and
severally the following persons:
(g) Plaintiffs Pacita and Francisco Reformina the sum of P131,084.00 which is the value of the
boat F B Pacita Ill together with its accessories, fishing gear and equipment minus P80,000.00
which is the value of the insurance recovered and the amount of P10,000.00 a month as the
estimated monthly loss suffered by them as a result of the fire of May 6, 1969 up to the time they
are actually paid or already the total sum of P370,000.00 as of June 4, 1972 with legal interest
from the filing of the complaint until paid and to pay attorney's fees of P5,000.00 with costs
against defendants and third party plaintiffs.
On appeal to the then Court of Appeals, the trial court's judgment was modified to reads as
follows
WHEREFORE. the judgment appealed from is modified such that defendants-appellants Shell
Refining Co. (Phils.), Inc. and Michael, Incorporated are hereby ordered to pay ... The two (2)
defendants- appellants are also directed to pay P100,000.00 with legal interests from the filing of
the complaint until paid as compensatory and moral damages and P41,000.00 compensation for
the value of the lost boat with legal interest from the filing of the complaint until fully paid to
Pacita F.Reformina and the heirs of Francisco Reformina. The liability of the two defendants
for an the awards is solidary.
Petitioners' motion for the reconsideration of the questioned Resolution having been denied, they
now come before Us through the instant petition praying for the setting aside of the said
Resolution and for a declaration that the judgment in their favor should bear legal interest at the
rate of twelve (12%) percent per annum pursuant to Central Bank Circular No. 416 dated July
29, 1974.
ISSUE
How much, by way of legal interest, should a judgment debtor pay the judgment creditor?

WON legal interest meant 6% as provided for under Article 2209 of the Civil Code .

What kind of judgment is covered under USURY Law?

RULING
Article 2209 of the Civil Code is applicable in case at bar. It must be noted that the decision
herein 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. As correctly argued by the private respondents, the law applicable to the said case is
Article 2209 of the New Civil Code which reads
Art. 2209. If the obligation consists in the payment of a sum of money, and the debtor incurs in
delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment
of interest agreed upon, and in the absence of stipulation, the legal interest which is six percent
per annum.
The above provision remains untouched despite the grant of authority to the Central Bank by Act
No. 2655, as amended. To make Central Bank Circular No. 416 applicable to any case other than
those specifically provided for by the Usury Law will make the same of doubtful
constitutionality since the Monetary Board will be exercising legislative functions which was
beyond the intendment of P.D. No. 116.
Central Bank Circular No. 416 which provides
By virtue of the authority granted to it under Section 1 of Act 2655, as amended, otherwise
known as the "Usury Law" the Monetary Board in its Resolution No. 1622 dated July 29, 1974,
has prescribed that the rate of interest for the loan or forbearance of any money, goods, or
credits and the rate allowed in judgments, in the absence of express contract as to such rate
of interest, shall be twelve (12%) per cent per annum. This Circular shall take effect
immediately. (Italics supplied)

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.
15) Security Bank and Trust Company v RTC (Credit Transactions)
SECURITY BANK AND TRUST COMPANY v RTC-MAKATI
FACTS:

In 1983, Eusebio acquired 3 separate loans from Security Bank amounting to P265k. The agreed
interest rate was 23% per annum. The promissory note was freely and voluntarily signed by both
parties. Leia Ventura was the co-maker. Eusebio defaulted from paying. Security Bank sued for
collection.
DECISION OF LOWER COURTS:
* RTC: Judge Gorospe of the Makati RTC ordered Eusebio to pay but he lowered the interest
rate to 12% per annum.
* directly to SC in petition for certiorari.
ISSUES & RULING:
1. Should the rate of interest on a loan or forbearance of money, goods or credits, as stipulated in
a contract, far in excess of the ceiling prescribed under or pursuant to the Usury Law, prevail
over Section 2 of Central Bank Circular No. 905 which prescribes that the rate of interest thereof
shall continue to be 12% per annum? or whether or not the 23% rate of interest per annum agreed
upon by petitioner bank and respondents is allowable and not against the Usury Law?
Yes, the rate per contract prevails.
From the examination of the records, it appears that indeed the agreed rate of interest as
stipulated on the three (3) promissory notes is 23% per annum. The applicable provision of law
is the Central Bank Circular No. 905 which took effect on December 22, 1982:
Sec. 1. The rate of interest, including commissions, premiums, fees and other charges, on a loan
or forbearance of any money, goods or credits, regardless of maturity and whether secured or
unsecured, that may be charged or collected by any person, whether natural or judicial, shall not
be subject to any ceiling prescribed under or pursuant to the Usury Law, as amended.
Only in the absence of stipulations will the 12% rate be applied or if the stipulated rate is grossly
excessive.
Further, Eusebio never questioned the rate. He merely expressed to negotiate the terms and
conditions. The promissory notes were signed by both parties voluntarily. Therefore, stipulations
therein are binding between them.
2. Do the Courts have the discretion to arbitrarily override stipulated interest rates of promissory
notes and stipulated interest rates of promissory notes and thereby impose a 12% interest on the
loans, in the absence of evidence justifying the imposition of a higher rate?
NO. The rate of interest was agreed upon by the parties freely. Significantly, respondent did not
question that rate. It is not for respondent court a quo to change the stipulations in the contract
where it is not illegal. Furthermore, Article 1306 of the New Civil Code provides that contracting
parties may establish such stipulations, clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, morals, good customs, public order, or public
policy. We find no valid reason for the respondent court a quo to impose a 12% rate of interest on

the principal balance owing to petitioner by respondent in the presence of a valid stipulation. In a
loan or forbearance of money, the interest due should be that stipulated in writing, and in the
absence thereof, the rate shall be 12% per annum. Hence, only in the absence of a stipulation can
the court impose the 12% rate of interest.
APPLICABLE PROVISION OF LAW:
Central Bank Circular No. 905 which took effect on December 22, 1982, particularly Sections 1
and 2 which state:
Sec. 1. The rate of interest, including commissions, premiums, fees and other charges, on a loan
or forbearance of any money, goods or credits, regardless of maturity and whether secured or
unsecured, that may be charged or collected by any person, whether natural or judicial, shall not
be subject to any ceiling prescribed under or pursuant to the Usury Law, as amended.
Sec. 2. The rate of interest for the loan or forbearance of any money, goods or credits and the rate
allowed in judgments, in the absence of express contract as to such rate of interest, shall continue
to be twelve per cent (12%) per annum.
All the promissory notes were signed in 1983 and, therefore, were already covered by CB
Circular No. 905. Contrary to the claim of respondent court, this circular did not repeal nor in
anyway amend the Usury Law but simply suspended the latter's effectivity.

16) Medel vs Court of Appeals, 299 SCRA 481; GR No. 131622, November 27, 1998,

Facts: Defendants obtained a loan from Plaintiff in the amount P50, 000.00, payable in 2 months
and executed a promissory note. Plaintiff gave only the amount of P47, 000.00 to the borrowers
and retained P3, 000.00 as advance interest for 1 month at 6% per month.
Defendants obtained another loan from Defendant in the amount of P90, 000.00, payable in 2
months, at 6% interest per month. They executed a promissory note to evidence the loan and
received only P84, 000.00 out of the proceeds of the loan.
For the third time, Defendants secured from Plaintiff another loan in the amount of P300, 000.00,
maturing in 1 month, and secured by a real estate mortgage. They executed a promissory note in
favor of the Plaintiff. However, only the sum of P275, 000.00, was given to them out of the
proceeds of the loan.
Upon maturity of the three promissory notes, Defendants failed to pay the indebtedness.
Defendants consolidated all their previous unpaid loans totalling P440, 000.00, and sought from
Plaintiff another loan in the amount of P60, 000.00, bringing their indebtedness to a total of
P50,000.00. They executed another promissory note in favor of Plaintiff to pay the sum of P500,

000.00 with a 5.5% interest per month plus 2% service charge per annum, with an additional
amount of 1% per month as penalty charges.
On maturity of the loan, the Defendants failed to pay the indebtedness which prompt the
Plaintiffs to file with the RTC a complaint for collection of the full amount of the loan including
interests and other charges.
Declaring that the due execution and genuineness of the four promissory notes has been duly
proved, the RTC ruled that although the Usury Law had been repealed, the interest charged on
the loans was unconscionable and revolting to the conscience and ordered the payment of the
amount of the first 3 loans with a 12% interest per annum and 1% per month as penalty.
On appeal, Plaintiff-appellants argued that the promissory note, which consolidated all the
unpaid loans of the defendants, is the law that governs the parties.
The Court of Appeals ruled in favor of the Plaintiff-appellants on the ground that the Usury Law
has become legally inexistent with the promulgation by the Central Bank in 1982 of Circular No.
905, the lender and the borrower could agree on any interest that may be charged on the loan,
and ordered the Defendants to pay the Plaintiffs the sum of P500,000, plus 5.5% per month
interest and 2& service charge per annum , and 1% per month as penalty charges.
Defendants filed the present case via petition for review on certiorari.
Issue: WON the stipulated 5.5% interest rate per month on the loan in the sum of P500, 000.00 is
usurious.
Held: No.
A stipulated rate of interest at 5.5% per month on the P500, 000.00 loan is excessive, iniquitous,
unconscionable and exorbitant, but it cannot be considered usurious because Central Bank
Circular No. 905 has expressly removed the interest ceilings prescribed by the Usury Law and
that the Usury Law is now legally inexistent.
Doctrine: A CB Circular cannot repeal a law. Only a law can repeal another law.
Jurisprudence provides that CB Circular did not repeal nor in a way amend the Usury Law but
simply suspended the latters effectivity (Security Bank and Trust Co vs RTC). Usury has been
legally non-existent in our jurisdiction. Interest can now be charged as lender and borrower may
agree upon.
Law: Article 2227, Civil Code
The courts shall reduce equitably liquidated damages, whether intended as an indemnity or a
penalty if they are iniquitous or unconscionable.

Note: While the Usury Law ceiling on interest rates was lifted by the CB Circular 905, nothing
in the said circular could possibly be read as granting carte blanche authority to lenders to raise
interest rates to levels which would either enslave their borrowers or lead to a haemorrhaging of
their assets (Almeda vs. CA, 256 SCRA 292 [1996]).

30) YHT Realty v. CA

FACTS:
Respondent McLoughlin would stay at Tropicana Hotel every time he is here in the
Philippines and would rent a safety deposit box.
The safety deposit box could only be opened through the use of 2 keys, one of which is
given to the registered guest, and the other remaining in the possession of the
management of the hotel.
McLoughlin allegedly placed the following in his safety deposit box 2 envelopes
containing US Dollars, one envelope containing Australian Dollars, Letters, credit cards,
bankbooks and a checkbook.
When he went abroad, a few dollars were missing and the jewelry he bought was likewise
missing.
Eventually, he confronted Lainez and Paiyam who admitted that Tan opened the safety
deposit box with the key assigned to him. McLoughlin went up to his room where Tan
was staying and confronted her. Tan admitted that she had stolen McLouglins key and
was able to open the safety deposit box with the assistance of Lopez, Paiyam and Lainez.
Lopez alsto told McLoughlin that Tan stole the key assigned to McLouglin while the
latter was asleep.
McLoughlin insisted that it must be the hotel who must assume responsibility for the loss
he suffered.
Lopez refused to accept responsibility relying on the conditions for renting the safety
deposit box entitled Undertaking For the Use of Safety Deposit Box
ISSUE: Whether the hotels Undertaking is valid?
HELD: NO
Article 2003 was incorporated in the New Civil Code as an expression of public policy
precisely to apply to situations such as that presented in this case. The hotel business like
the common carriers business is imbued with public interest. Catering to the public,
hotelkeepers are bound to provide not only lodging for hotel guests and security to their
persons and belongings. The twin duty constitutes the essence of the business. The law in
turn does not allow such duty to the public to be negated or diluted by any contrary
stipulation in so-called undertakings that ordinarily appear in prepared forms imposed
by hotel keepers on guests for their signature.
In an early case (De Los Santos v. Tan Khey), CA ruled that to hold hotelkeepers or
innkeeper liable for the effects of their guests, it is not necessary that they be actually

delivered to the innkeepers or their employees. It is enough that such effects are within
the hotel or inn. With greater reason should the liability of the hotelkeeper be enforced
when the missing items are taken without the guests knowledge and consent from a
safety deposit box provided by the hotel itself, as in this case.
Paragraphs (2) and (4) of the undertaking manifestly contravene Article 2003, CC for
they allow Tropicana to be released from liability arising from any loss in the contents
and/or use of the safety deposit box for any cause whatsoever. Evidently, the undertaking
was intended to bar any claim against Tropicana for any loss of the contents of the safety
deposit box whether or not negligence was incurred by Tropicana or its employees.

36) PNB v SAYO, JR.

FACTS
-

Noahs Ark Sugar Refinery (Noahs) issued several warehouse receipts (quedans), which
were negotiated to Rosa, RNS and St. Therese (vendees), which were again negotiated to
Luis and Cresencia, which they (Luis and Cresencia) endorsed to PNB as security for 2
loan agreements.
o Transfer of quedans Noahs Rosa, RNS and St. Therese Luis and
Cresencia PNB
Luis and Cresencia failed to pay their loans hence PNB demanded delivery of sugar
stocks, however, Noahs Ark refused, alleging ownership thereof.
Noahs Ark contended that the agreement made by them with the vendees was stopped
since the bank dishonored the payments made by the vendees to Noahs Ark. As such, the
vendees and the endorsers of the quedans never acquired ownership thereof.
Noahs Ark claimed for warehousemans lien for the storage of the goods.
LC granted lien
PNB appealed

ISSUE: WoN PNB is entitled to the stocks of sugar as the endorsee of the quedans, without
paying the lien
SC: YES
-

While PNB is entitled to the stocks of sugar as the endorsee of the quedans, delivery to it
shall be effected only upon payment of the storage fees.
The warehouseman is entitled to the warehousemans lien that attaches to the goods
invokable against anyone who claims a right of possession thereon.
However, in this case, the lien was lost when R refused to deliver the goods, which were
not anchored to a valid excuse (i.e. non satisfaction of W/Hman Lien) but on an adverse
claim of ownership.
The loss of W/H Mans lien does not necessarily mean the extinguishment of the
obligation to pay the W/H fees and charges which continues to be a personal liability of
the owners, PNB in this case. However, such fees and charges have ceased to accrue from
the date of the rejection by Noahs Ark to heed the lawful demand for the release of the
goods.

37) PARAY v RODRIGUEZ

Facts: Respondents were the owners, in their respective personal capacities, of shares of stock in
a corporation known as the Quirino-Leonor-Rodriguez Realty Inc.1 Sometime during the years
1979 to 1980, respondents secured by way of pledge of some of their shares of stock to
petitioners Bonifacio and Faustina Paray ("Parays") the payment of certain loan obligations.
When the Parays attempted to foreclose the pledges on account of respondents failure to pay
their loans, respondents filed complaints with the Regional Trial Court (RTC) of Cebu City and ,
sought the declaration of nullity of the pledge agreements. However the RTC, in its decision3
dated 14 October 1988, dismissed the complaint and gave "due course to the foreclosure and sale
at public auction of the various pledges. Respondents then received Notices of Sale which
indicated that the pledged shares were to be sold at public auction. However, before the
scheduled date of auction, all of respondents caused the consignation with the RTC Clerk of
Court of various amounts. It was claimed that respondents had attempted to tender these
payments to the Parays, but had been rebuffed. Notwithstanding the consignations, the public
auction took place as scheduled, with petitioner Vidal Espeleta successfully bidding.
Respondents instead filed on 13 November 1991 a complaint seeking the declaration of nullity of
the concluded public auction. Petitioners now argue that the essential procedural requisites for
the auction sale had been satisfied.
Issue: W/N the the essential procedural requisites for the auction sale had been satisfied?
Ruling: Yes. Under the Civil Code, the foreclosure of a pledge occurs extrajudicially, without
intervention by the courts. All the creditor needs to do, if the credit has not been satisfied in due
time, is to proceed before a Notary Public to the sale of the thing pledged.

38) ALCANTARA v ALINEA

Facts:

Alinea and Belarmino loaned P480 from Alcantara.

According to the loan agreement, if the period has expired without payment of the loan, the
house and lot of Alinea and Belarmino will be considered sold to Alcantara.
Alinea and Belarmino failed to pay.
They refused to deliver the property to Alcantara.
Alcantara filed an action against them.
The defendants contend that the amount claimed by Alcantara included the interest and that
the principal borrowed was only 200 and that the interest was 280.

They also alleged as their special defense that they offered to pay Alcantara the sum of 480
but the latter had refused to accept the same.

Issue:
1) WON there was a valid mortgage?
2) WON the defendants should deliver the property to Alcantara?
Held:
1) No. The property, the sale of which was agreed to by the debtors does not appear mortgaged
in favor of the creditor because in order to constitute a valid mortgage it is indispensable that
the instrument be registered in the Register of Property and the document contract does not
constitute a mortgage nor it could possibly be a mortgage, for the reason that the said
document is not vested with the character and conditions of a public instrument.
The contract is not a pledge since the said property is not personal property and the debtor
continued in possession thereof and was never been occupied by the creditor.
It is also not an antichresis by reason that as the creditor has never been in possession of the
property nor has enjoyed the said property nor for one moment received its rents.
2) Yes. The will of the parties are controlling, In this case, a contract of loan and a promise of
sale of a house and lot, the price of which should be the amount loaned, if within a fixed
period of time such amount should not be paid by the debtor-vendor of the property to the
creditor-vendee of same. The fact that the parties have agreed at the same time, in such a
manner that the fulfillment of the promise of sale would depend upon the nonpayment or
return of the amount loaned, has not produced any change in the nature and legal conditions
of either contract, or any essential defect which would tend to nullify the same.

41) LANUZA v DE LEON

Spouses lanuza executed a deed of sale with a right to repurchase to Reyes. Upon expiration of
term to repurchase, the time was extended without the wife of lanuza signing the document. A
stipulation to the effect that the ownership will only be passed to the vendee if the vendor fails to
repurchase the property was included. The spouses then mortgage the property to respondent to
secure a debt. The debt was unpaid and respondent filed a case to foreclose the mortgage which
was granted. Reyes filed a case for consolidation, claiming she has the right to the property.
Reyes claims the ownership in the property automatically passes immediately to him after the
sale and not after the end of the period to repurchase.

Issue: won reyes contention valid

Ruling: yes. a stipulation in a purported pacto de retro sale that the ownership over the property
sold would automatically pass to the vendee in case no redemption was effected within the
stipulated period is contrary to the nature of a true pacto de retro sale, under which the vendee
acquires ownership of the thing sold immediately upon the execution of the sale, subject only to
the vendors rights of redemption. The said stipulation is a pactum commissorium which enables
the mortgagee to acquire ownership of the mortgaged property without need of forclosure. It is
void. Its insertion in the contract is an avowal of the intention to mortgage rather than to sell the
property.

47) TSAI v CA
FACTS:
- Ever Textile (R) obtained a P3M loan from PBCOM (P), with Real Property and Chattel
Mortgage over the lot, where its factory stands and the chattels located therein as
enumerated in its attached schedule
- A 2nd loan was obtained secured by a Chattel Mortgage over personal properties listed in
its attached list, which is similar to the attached list to the 1st mortgage.
- On the same date of the 2nd loan, R purchased various machines and equipments
- Later, R filed insolvency proceedings
- P commenced an extrajudicial foreclosure (EJF), wherein P won the bid and the
properties were leased and later sold to Tsai. P sold the factory, properties and the
contested machineries of R.
- R filed for annulment of sale contending that the machineries bought by R which are not
included in the list should be excluded from the sale to TSAI
- P contended that the machineries, which are connected to the land, are part of the real
estate stated in the Mortgage.
- RTC and CA ruled in favor of R.
ISSUE: WoN the contested machineries (property bought by R on the same day that the 2nd loan
was executed) should be inlcluded in the auction sale and sale to TSAI
SC: NO!
- Based on the pieces of evidence, the true intention of P and R is to treat machinery and
equipment as chattels.
- The controverted machineries are not covered by or included in either of the 2 mortgages
- The machineries were not included in the Notice of Sale
- An immovable may be considered a personal property if there is a stipulation as when it
is used as security in the payment of an obligation where a chattel mortgage is executed
over it, as in the case at bar.

DOCTRINE: a chattel mortgage shall be deemed to cover only the property described therein
and not like or substituted property thereafter acquired by the mortgagor and placed in the same
depository as the property originally mortgaged