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1. Aldaba v. CA, Aldaba, et.

al employment) apply such that all that Alcantara will receive is a small sum
based on the number of years he has been employed by the Company?
HELD: RA 1052 as amended, will not apply, because in the present case there
Two lots owned by Belen Aldaba are being disputed in this case. Petitoners Dr. is an express agreement as to the period of Alcantara’s employment, that
Vicente Aldaba and Jane Aldaba, father and daughter, lived with Belen Aldaba period to start from Alcantara’s employment up to the time Alcantara may
for 10 years and took care of her until her death. Belen had presumptive heirs voluntarily resign, or when the employer removes Alcantara for a valid cause.
her surviving husband Estanislao Bautista, and her brother Cesar Aldaba Thus, the employment has a period subject only to the resolutory condition of
(represented as the respondents in this case.) After the death of Belen, the resignation or removal for cause. RA 1052 as amended by RA 1787, does not
respondents asked the petitioners to leave the premises and upon their apply. The employer, having terminated Alcantara’s employment without a
refusal, the former instituted an ejectment case. The petitioners argue that valid cause, committed a breach of contract making it liable for damages. (Art.
Belen really intended to donate the property to them as evidence by the note 1170, Civil Code). (See Art. 1193)
written by Belen to them which reads, ―Huag kayong umalis diyan. Talagang
iyan ay para sa inyo. Alam nila na iyan ay sa inyo.‖ They also argue that the
property was for compensation of their services which amounted to P53,000.
The respondents contend that the letter no way proves a donation. 4. Maria Luisa Martinez v. Manuel B. Barredo

ISSUE: FACTS: On Apr. 11, 1940 a taxicab owned by Fausto Barredo and driven by
Rosendo Digman collided with a Chevrolet car driven by Maria Luisa Martinez.
Whether or not there was a disposition of property by Belen in favour of the A criminal case was instituted against the taxi driver, who pleaded guilty, and
petitioners? was made to pay a fi ne and to indemnify Martinez. Due to Digman’s
insolvency, Martinez fi led an action against Barredo to hold him subsidiarily
RULING: No liable. At the trial, Martinez relied solely on:
For the following reasons: (1) The note was insufficient conveyance, and hence a) the judgment of conviction against Digman;
could not be considered as evidence of a donation with onerous caus. The note b) the writ of execution issued against Digman and proof of his
can be considered, at most, as indicative of the intention to donate. (2) no insolvency.
notarial document was executed by Belen to the petitioners during those 10
years. (3) P53,000 worth of services made by the petitioners no way proves ISSUE: Would the evidence of Martinez be sufficient to hold Barredo civilly
the alleged donation. If at all, the petitioners believed that the gratuitous use liable?
of the property was not sufficient to compensate them for their services, they
could have presented their claims in the intestate proceedings, which they HELD: Yes, the judgment of conviction plus proof of insolvency is sufficient to
themselves could have initiated, if none was instituted. hold the employer subsidiarily liable; in the absence of collusion between the
driver and the victim, the stigma of a criminal conviction surpasses in effect
The SC emphasized that there was no express agreement between the parties mere civil liability. Common sense dictates that a finding of guilt in a criminal
and that respondents Jane did not even expect to be compensated. (See Art. case in which proof beyond reasonable doubt is necessary, should not be
1159) nullified in a subsequent civil action requiring only preponderance of evidence.
Barredo cannot be said to have been deprived of his day in court because the
[Paras] liability really depended upon the driver’s guilt and insolvency, the liability
being automatic and subsidiary. It is high time that employers should have
FACTS: Dr. Vicente Aldaba and his daughter, Dr. Jane Aldaba, rendered
their employees defended very well, supplying them with counsel, for in
services to Belen Aldaba, a rich woman of Malolos, Bulacan for 10 years
defending his employees’ interest (in a criminal case), he, the employer, is
without receiving any compensation. It was admitted that for such services,
automatically defending himself. It would have been different had the case
the two doctors did NOT expect to be paid. Issues: Was there a contract,
been one of culpa aquiliana.
whether express or implied? Was Belen obliged to compensate the two
doctors? [NOTE: This ruling was reiterated in the case of Manalo, et al. v. Robles Trans.
Co., Inc., L-8171, Aug. 16, 1956. In said case the Court also held that the
HELD: There was no contract, whether express or implied, and therefore Belen
sheriff’s return of the writ of execution showing non-satisfaction of the
was not obliged to compensate the two doctors; no express contract, for
judgment because of accused’s insolvency was admissible in evidence and the
nothing on this point was agreed upon; and no implied contract, for the
sheriff does not need to testify in court as to the fact stated in the entry
doctors did not expect to be paid for their services. When a person does not
because it is an official judgment. Moreover, the civil case can be brought not
expect to be paid for his services, there cannot be a contract implied in fact to
within only four years but within ten (10) years because it arises out of a final
give compensation for such services. To give rise to an implied contract to pay
judgment.] (See Art. 1172)
for services, said services must have been rendered by one party in
expectation that the other party would pay for them and must have been
accepted by the other party with knowledge of that expectation.
5. Fe Perez v. Josefina Gutierrez, et al.
2. Gil v. CA
FACTS: Gutierrez, holder of a certificate of public convenience and authorized
to operate an auto-calesa in the province of Davao, sold the vehicle to Alajar.
The sale, at the time of the accident, had not been approved by the Public
3. Lirag Textile Mills, Inc. and Felix K. Lirag v. Court of Appeals and Cristan
Service Commission, and was therefore not registered with such Commission.
Later, thru the reckless imprudence of its driver, Cordero, the vehicle met an
FACTS: Alcantara was persuaded by Felix Lirag of the Lirag Textile Mills to give
accident resulting in injuries to Perez, one of its passengers. Issue: Who should
up a permanent job and to join Lirag in the latter’s business until such period
be held liable to Perez?
as when Alcantara would voluntarily resign or until Alcantara is removed for a
valid cause. Sometime later, Alcantara was removed on account of financial HELD: The registered owner, Gutierrez, should be the one directly liable to
reverses on the part of the Company (a ground which proved, however, to be Perez (See Erezo v. Jepte) despite the transfer of the vehicle to another. In
false). Issue: In an action by Alcantara for damages, would the provisions of RA dealing with vehicles registered under the Public Service Law, the public has
1052 as amended (the Termination Pay Law when there is no time fixed for right to presume that the registered owner is the actual owner thereof, for it
would be difficult for the public to enforce the action for damages for injuries installment. Subsequently, a fortuitous event destroyed the boat. B now
caused to them by vehicles being negligently operated, if the public should be instituted an action to recover what has not yet been paid (the third
required to prove who the actual owner is. The transferee, however, should in installment) plus 6% interest from default. A claims, however, that the loss of
turn be responsible to the registered owner for in operating the vehicle the boat by a fortuitous event has excused him from the obligation to pay the
without its transfer having been approved by the Public Service Commission, balance. Issue: Is he correct?
the transferee acted merely as an agent of the registered owner and should
be responsible to him. The driver should also be held liable solidarily with HELD: A must still pay. Under the contract and under the law, B, the seller-
Gutierrez to Fe Perez in accordance with the provisions of Art. 2184 in relation creditor, had the right to demand specific performance (payment) or
to Art. 2180 of the Civil Code. (NOTE: The driver was also held liable on the rescission (getting back her share). She selected specific performance (for
basis of a quasi-delict, there being no contractual relation between him and under the contract the first default entitled her to collect plus interest). The
the passenger.) (See Art. 1207) loss of the boat is immaterial, for the generic obligation to pay money is not
extinguished or excused by the fortuitous loss of the boat.

6. Nakpil and Sons, et al. v. CA GR 47851, Resolution on Motion for

Reconsideration 9. Tamayo v. Aquino L-12634-12720, May 29, 1959

FACTS: The promissory note signed by the borrower states that the loan of FACTS: A, registered operator (in the Public Service Com.) of a common carrier,
P42,050 shall bear interest at the rate of 19% per annum, and subject to sold the vehicle to B without prior approval of the Commission. B then
penalty charges equivalent to 2% per month of any amount due and unpaid. operated the vehicle. An accident took place one day, injuring a passenger of
This would yield an interest of P7,989.50 per annum or a total of P46,339.10 B. Issue: Are A and B jointly or solidarily liable?
from November 22, 1978 to September 12, 1984, the date of fi ling the
HELD: Only A, the registered owner is liable, but he can recover indemnity
from B. Since only one is liable, the distinction between joint and solidary
HELD: Penalty interest of 1% a month or 12% per annum is reasonable so that liability does not exist. A is liable as a result of the culpa contractual (not culpa
from December 12, 1980 to September 12, 1984, penalty charges should be aquiliana) because the vehicle was still registered under his name. This is true
P19,202.83. Considering that the borrowers have paid the amount of even if the property had already been sold to another at the time the accident
P68,676.75, they therefore owed the bank the amount of P38,915.18 when took place. If the rule were otherwise, a registered owner can easily evade
the complaint was fi led. There is no indication in the records as to the responsibility by collusion with others who may possess no property to answer
fluctuation of actual interest rates from 1984 and, therefore, the Court orders for the damages. (See Erezo v. Jepte, GR L-9605, Sept. 30, 1957). (See Art.
interest at the legal rate of 12% per annum on the unpaid amount. 1207)

The imposition of 12% pursuant to Central Bank [Bangko Sentral] Circular 416 NOTE: In Caners, et al. v. Arias, et al., (Court of Appeals) GR L-24881-R, March
(passed pursuant to the authority granted to the Central Bank (Bangko Sentral) 4, 1961, it was held that if the vehicle which figured in an accident was
by Presidential Decree 116 which amended Act 2655, otherwise known as the operated under the so-called “kabit system,” the award of exemplary
Usury Law, is applicable only in the following: (1) loans; (2) forbearance of any damages, among others, payable jointly and severally by the operator and the
money, goods or credit; and (3) rate allowed in judgments (judgments spoken grantee of the certificate of public convenience is justified. This pernicious
of refer to judgments involving loans or forbearance of any money, goods or system is not only a violation of law but a fraud upon the travelling public,
credits). (See Art. 1226) which has a right to expect that the holder of the certificate be the one to
actually operate his transportation line, hire the drivers, and other employees
and exercise the necessary supervision over them.

7. Regalado v. Luchasingco and Co. 5 Phil. 625

FACTS: A was a defendant in a civil case. He lost, and attachment was issued 10. Liwanag, et al. v. Workmen’s Compensation Commission L-12164, May
against his property. B, the winner, could not collect his claim because it was 22, 1959
discovered that A had sold his warehouse to his son, C, after attachment had
been issued on such property. B, who could not collect in any other way FACTS: Roque Balderama, a security guard of a partnership, the Liwanag Auto
because A had no money, brought an action to rescind the contract allegedly Supply, was killed in line of duty. His heirs claim compensation under the
made to defraud him. It was proved that: Workmen’s Compensation Act. Issue: The Act being silent on the point, what
is the liability of the partners — joint or solidary?
1) Although the warehouse was worth P25,000, the son allegedly paid only
P15,000 for it; HELD: Solidary. It is true that ordinarily, the liability of partners is only joint,
but this should not apply to a case of compensation for death in line of duty.
2) The son probably did not have the P15,000 or any other sum of importance Arts. 1711 and 1712 of the Civil Code, taken together with Sec. 2 of the
with which to buy the said warehouse. Workmen’s Compensation Law, reasonably indicate that in compensation
cases, the liability of business partners should be solidary, otherwise the right
HELD: The transaction is fraudulent and since B, the creditor, cannot recover of the employee may be defeated, or at least crippled. If the responsibility of
in any other way, the contract ought to be rescinded. (See Art. 1177) the partners were to be merely joint and not solidary, and one of them
happens to be insolvent, the amount awarded would only be partially
satisfied. This is evidently contrary to the intent and purposes of the Act, which
8. Ramirez v. Court of Appeals, et al. 98 Phil. 225 is to give full protection to the employees. (See Art. 1208)

(Illustrating Effect of Loss in Connection with Art. 1191)

FACTS: A and B were co-owners of a motor boat. In a written instrument, B 11. Inchausti & Co. v. Yulo 34 Phil. 978
sold her half-share in the boat to A for P4,500 which was to be paid in three
FACTS: A, B, C, D, and E borrowed money from F. The contract stipulated
equal installments. It was agreed that in case of fi rst default, A must pay
solidary one, and the debtors were bound under different terms and
interests; and that in case of second default, B gets back her half-share in the
conditions. F brought an action to recover from A, whose obligation was
boat without the necessity of reimbursing A for whatever A has already paid.
already due. A claims that he cannot be made to pay because the obligations
After paying two installments, A defaulted in the payment of the third
incurred by his solidary co-debtors were not yet due. Issue: When the debtors (b) Did payment by Haw Pia to the Bank of Taiwan extinguished the debt?
of a solidary obligation are bound by different terms and conditions, may the
creditor sue one of them? (c) Was Japanese money then legal tender?

HELD: Yes, the creditor may sue the one whose share has already become due HELD:
and demandable but the creditor cannot recover yet from the debtor sued,
(a) Yes, the Japanese Military Administration, under the principles of
the shares of the other debtors, until the conditions or terms of the others
international law, had the right to liquidate and freeze the assets of enemy
have already been fulfilled. In other words, F may recover now from A only A’s
banks. What it did was not confiscation, but merely liquidation so as to freeze
share; and when the conditions and terms have been fulfilled for the shares of
B, C, D, and E, the creditor F can recover their shares from A. This, after all, is
still a solidary obligation. (See Art. 1211) (b) Yes, payments by Haw Pia to the Bank of Taiwan extinguished the mortgage
debt, inasmuch as under the law then prevailing, the Bank of Taiwan was
authorized to receive payment. Hence, the mortgage should be cancelled.
12. Braganza v. Villa Abrille L-12471, Apr. 13, 1957
(c) Yes, the Japanese Military notes was legal tender because under
FACTS: On Oct. 20, 1944, Rosario de Braganza and her two minor sons (18 and International Law, the invading power has the right to issue currency for
16 years of age) borrowed from Villa Abrille P70,000 in Japanese money, circulation here.
promising to pay solidarily P10,000 in legal currency of the Philippines 2 years
Subsidiary Issue: Does not the fact that the obligation here to pay in Philippine
after the war. The money was used for the support of the children. For failure
peso make it an obligation to pay in a specified specie?
to pay, Villa Abrille sued in March 1949. The mother and the two sons pleaded
in defense the minority of the two children at the time the contract was HELD: True, the obligation was to pay in Philippine pesos, but this was not a
entered into. stipulated specie, but obviously referred only to the legal tender since after
all, the most common occurrences are transactions in Philippine pesos. It was
never the intention of the parties to specify that only Philippine pesos, of pre-
1) The mother is liable for 1/3 of the P10,000. Reason: The minority war valuation, may be paid. The use of the term “Philippine peso” here is
of her children did not completely release her from liability, since merely incidental. (See Art. 1240)
minority is a personal defense of the minors. She can avail herself
of said defense only as regards that part of the debt for which the
minors are liable. 16. Zagala v. Jimenez GR 33050, Jul. 23, 1987
2) The contract entered into by the minors is voidable, but since it
cannot be denied that they had profi ted by the money they A judgment awarding an amount in U.S. dollars may be paid with its equivalent
received (for their support), it is fair to hold them liable to the amount in local currency in the conversion rate prevailing at the time of
extent of said benefi t (computed in accordance with the payment. If the parties cannot agree on the same, the trial court should
Ballantyne scale). (See Art. 1222) determine such conversion rate. Needless to say, the judgment debtor may
simply satisfy said award by paying in full the amount in U.S. dollars.
13. Lo v. CA
If the plaintiff fi les a motion to fi x the peso value of the judgment in dollars,
they only intend to exercise the right granted to them by the present
jurisprudence — that the trial court shall determine or fi x the conversion rate
14. Harry E. Keeler Electric Co. v. Rodriguez 44 Phil. 19
prevailing at the time of payment, and it is error for the trial court to deny said
FACTS: Rodriguez owed the company a certain amount of money. One motion. (See Art. 1249)
Montelibano approached Rodriguez and claimed that he (Montelibano) was
duly authorized to receive payment for the company. Without making any
verification, Rodriguez paid Montelibano. Later, the company sued Rodriguez 17. Filipino Pipe and Foundry Corp. v. National Waterworks and Sewerage
for payment of debt. Rodriguez presented the defense that he had already Authority GR 43446, May 3, 1988
paid his debt to Montelibano who was not authorized to receive payment.
Issue: Should Rodriguez still pay his debt to the company? Extraordinary inflation exists when “there is a decrease or increase in the
purchasing power of the Philippine currency which is unusual or beyond the
HELD: Yes. Rodriguez’s payment to Montelibano was not valid because common fluctuation in the value of said currency, and such decrease or
Montelibano was not duly authorized to receive such payment. Payment to an increase could not have been reasonably foreseen or was manifestly beyond
unauthorized agent is at the risk of the payor. Rodriguez should have made a the contemplation of the parties at the time of the establishment of the
proper verification. (See Art. 1240) obligation.’’

An example of extraordinary inflation is the following description of what

happened to the deutschemark in 1920: “More recently, in the 1920’s
15. Haw Pia v. China Banking Corporation 80 Phil. 604
Germany experienced a case of hyperinflation. In early 1921, the value of the
FACTS: Haw Pia owed defendant a sum of money (Philippine pesos) secured German mark was 4.2 to the U.S. dollar. By May of the same year it had
by a mortgage. During the Japanese occupation, the Bank of Taiwan was given stumbled to 62 to the U.S. dollar. And as the prices went up rapidly, so that by
the right by the Military Administration to liquidate the assets of enemy banks. Oct. 1923, it had reached 4.2 trillion to the U.S. dollar!” As reported, “prices
Haw Pia then paid off the mortgage, not to the defendant, but to the Bank of were going up every week, then every day, then every hour. Women were paid
Taiwan. Liberation came. Haw Pia is now asking for the cancellation of the several times a day so that they could rush out and exchange their money for
mortgage on the ground that it had been paid. The defendant refused, and on something of value before what little purchasing power was let dissolved in
the contrary asked for payment of the debt. their hands. Some workers tried to beat the constantly rising prices by
throwing their money out of the windows to their waiting wives, who would
ISSUES: rush to unload the nearly worthless paper. A postage stamp cost millions of
marks and a loaf of bread billions.”
(a) Had the Japanese Military Administration the right to liquidate and freeze
the assets of enemy banks?
While there has been a decline in the purchasing power of the Philippine peso, favor of B. A year later, A sued B in the Court of First Instance (now Regional
this downward fall of the currency cannot be considered “extraordinary.’’ It is Trial Court) to compel B to allow A to redeem said lot under Sec. 119 of Com.
simply a universal trend that has not spared our country. (See Art. 1250) Act 141 (Public Land Act). The trial court declared that A has the legal right to
exercise said right at the original purchase price with interests. The Court of
Appeals reversed the trial court’s decision on the ground that A failed to
consign the amount due at the time they fi led the complaint, saying that the
18. Reyes v. NHA
act of merely fi ling the complaint on the part of A without consignation of the
Facts: Respondent National Housing Authority (NHA) filed complaints for the proper amount within the period prescribed was an ineffective and
expropriation of sugarcane lands belonging to the petitioners. The stated incomplete redemption.
public purpose of the expropriation was the expansion of the Dasmariñas
HELD: The bona fi de tender of the redemption price or its equivalent —
Resettlement Project to accommodate the squatters who were relocated from
consignation of said price in court — is not essential or necessary since the fi
the Metropolitan Manila area. The trial court rendered judgment ordering the
ling of the action itself is equivalent to a formal offer to redeem. (See Art. 1257)
expropriation of these lots and the payment of just compensation. The
Supreme Court affirmed the judgment of the lower court.

A few years later, petitioners contended that respondent NHA violated the 23. Interbank v. CA
stated public purpose for the expansion of the Dasmariñas Resettlement
Project when it failed to relocate the squatters from the Metro Manila area, 24. Goni v. CA
as borne out by the ocular inspection conducted by the trial court which
showed that most of the expropriated properties remain unoccupied. 25. La Campana Food Products, Inc. v. PCIB, et al.
Petitioners likewise question the public nature of the use by respondent NHA
GR 46405, Jun. 30, 1986
when it entered into a contract for the construction of low cost housing units,
which is allegedly different from the stated public purpose in the expropriation Where the mortgagee-bank agreed to guarantee the mortgagor’s foreign loan
proceedings. Hence, it is claimed that respondent NHA has forfeited its rights subject to the condition that the latter should deposit with the former the
and interests by virtue of the expropriation judgment and the expropriated proceeds of the loan which should be made available for payment to the
properties should now be returned to herein petitioners. mortgagor’s obligation to a local financial institution and to serve as working
capital, the mortgagee-bank did not substitute the mortgagor as debtor to the
Issue: Whether or not the judgment of expropriation was forfeited in the light
financial institution. The mortgagee-bank’s guarantee has to be secured by the
of the failure of respondent NHA to use the expropriated property for the
first mortgage on the assets then mortgaged to the said bank and the assets
intended purpose but for a totally different purpose.
offered as additional securities, which included the parcels of land mortgaged
Held: The Supreme Court held in favor of the respondent NHA. Accordingly, to the financial institution. Hence, the mortgagee-bank requires the financial
petitioners cannot insist on a restrictive view of the eminent domain provision institution to lend the transfer certificates of title covering the parcels of land
of the Constitution by contending that the contract for low cost housing is a mortgaged by the mortgagor to the financial institution for the mortgagee-
deviation from the stated public use. It is now settled doctrine that the bank to be able to register its mortgage therein. (See Art. 1292)
concept of public use is no longer limited to traditional purposes. The term
"public use" has now been held to be synonymous with "public interest,"
"public benefit," "public welfare," and "public convenience." Thus, whatever 26. Integrated Construction v. Relova GR 41117, Dec. 29, 1986
may be beneficially employed for the general welfare satisfies the
requirement of public use." FACTS: A decision-award by an arbitration board ordered the Metropolitan
Waterworks and Sewerage System (MWSS) to pay Integrated Construction
In addition, the expropriation of private land for slum clearance and urban P13,188.50. Later, Integrated agreed to give MWSS some discounts provided
development is for a public purpose even if the developed area is later sold to MWSS would pay the amount on Oct. 17, 1972. MWSS, however, paid only on
private homeowners, commercials firms, entertainment and service Dec. 22, 1972, the amount stated in the decision less the reductions. Three
companies, and other private concerns. Moreover, the Constitution itself years later, Integrated moved for execution against MWSS for the balance due
allows the State to undertake, for the common good and in cooperation with under the decision-award. MWSS opposed the execution setting forth the
the private sector, a continuing program of urban land reform and housing defense of payment. The judge denied the execution on the ground that the
which will make at affordable cost decent housing and basic services to parties had novated the award by their subsequent agreement.
underprivileged and homeless citizens in urban centers and resettlement
areas. The expropriation of private property for the purpose of socialized HELD: While the tenor of the subsequent agreement in a sense novates the
housing for the marginalized sector is in furtherance of social justice. judgment award there being a shortening of the period within which to pay,
the suspensive and conditional nature of the said agreement (making the
novation conditional) is acknowledged by MWSS. Its failure to pay within the
stipulated period removed the very cause for the agreement, rendering the
19. Valdellon v. Tengco
same ineffective and, therefore, the parties were remitted to their original
rights under the judgment award. (See Art. 1181)

20. Mclaughlin v. CA

21. Legaspi v. CA 27. Petterson v. Azada 8 Phil. 432

FACTS: A owed C P500 and P3,000 evidenced by two promissory notes. Later,
a new loan of P300 was obtained. By express agreement, the three debts were
22. Hulganza, et al. v. C.A. consolidated into one promissory note for P3,800 (P500 plus P3,000 plus
P300). That the last promissory note was to take the place of the others was
GR 56156, Jan. 7, 1987 agreed upon. Issue: Is there novation here?
FACTS: A is the registered owner of a parcel of land covered by an original HELD: Yes, in view of the changes made.
certificate of title issued pursuant to a free patent. He sold said parcel to B and
by virtue of the sale, the original title was cancelled and a new one issued in
(NOTE: Had there been no proof that the third note intended to replace the
others, there really would be nothing inconsistent with having different notes
for different amount. If there is no novation, all the obligations would remain
subsisting and the debtor would be liable for all.) (See Art. 1292)

28. People v. Nery L-19567, Feb. 5, 1964

FACTS: Soledad Nery was given by Federia Mantillaro two diamond rings to be
sold by her. If successful, Nery was supposed to receive a commission. She
failed to return the rings or their cash value, so the owner sued her for estafa.
While the case was pending, she executed a deed of compromise, promising
to pay for the money in installments. After making one payment, she did not
continue paying for the balance. She now contends that she ought to be
acquitted because the acceptance by the owner of the partial payment
NOVATED the original relation between the parties.

HELD: She is still guilty of estafa, firstly, because the exaction of criminal
responsibility is something that can be renounced only by the State, not by the
offended party; and secondly, because there was no intent to extinguish the
original relationship. The novation theory may perhaps apply PRIOR to the fi
ling of the criminal information in court because up to that time, the original
trust relation may be converted by the parties into an ordinary creditor-debtor
situation, thereby placing the victim in estoppel should he insist on the original
trust. But AFTER the filing of the case in court, the offended party may no
longer divest the prosecution of its power to exact the criminal liability as
distinguished from the civil. The crime being an offense against the State, only
the latter may renounce the criminal consequences. The acceptance of partial
satisfaction cannot indeed effect the nullification of a criminal liability that is
already fully mature and in the process of judgment. (U.S. v. Montanes, 8 Phil.
620; Abeto v. People, 90 Phil. 581 and Camus v. Court of Appeals, 48 O.G. No.
3898). (See Art. 1292)

29. California v. State Investment

30. Gil Villanueva v. Filomeno Girged L-15154, Dec. 29, 1960

FACTS: Girged owed Villanueva a certain sum of money. Legaspi wrote

Villanueva a letter stating that he (Legaspi) would be “the one to take care” of
Girged’s debt “as soon as” Girged has made a shipment of logs to Japan. Girged
never made such shipment. Legaspi did NOT pay Villanueva. Issue: Is Legaspi
liable to Villanueva?

HELD: No. First, because Legaspi did NOT assume Girged’s debt. He merely
assured that the debt would be taken cared of. Secondly, even granting that
there was an assumption of indebtedness, still the condition — the shipment
— has NOT yet been fulfi lled. Thus, Legaspi cannot be held liable. (See Art.

31. C.N. Hodges v. Matias C. Rey L-12554, Feb. 28, 1961

FACTS: Rey borrowed from Hodges the sum of P3,000. Three days after the
loan was contracted, Rey by means of a letter, authorized the Phil. Nat. Bank
to pay his indebtedness to Hodges out of whatever crop loan might be granted
to him by said bank. On the same date, the Bank agreed. But the Bank paid
Hodges only P2,000. On the date of maturity, Hodges sued the Bank and Rey
for the remaining P1,000. Issue: Is the Bank liable to Rey?

HELD: No, for the Bank did NOT assume Rey’s indebtedness. The fact that it
paid P2,000 does not bind the Bank for the remainder of P1,000, for what it
did was to merely make available to the creditor what it could lend to Rey. (See
Art. 1293)