CASE FACTS ISSUE HELD

G.R. No. L-49120 June 30,

1988

ESTATE OF GEORGE
LITTON, petitioner,
vs.
CIRIACO B. MENDOZA and
COURT OF
APPEALS, respondents.

GANCAYCO, J.:

G.R. No. L-53955 January BIDIN, J.:

13, 1989

THE MANILA BANKING

CORPORATION, plaintiff-
appellee,
vs.
ANASTACIO TEODORO, JR.
and GRACE ANNA
TEODORO,

BIDIN, J.:

G.R. No. L-78519 September Victoria bought cement from
26, 1989 CAMS and secured her
payments with deeds of
assignment over her time
VICTORIA YAU CHU,
deposits in Family Savings
assisted by her husband
Bank.
MICHAEL CHU, petitioners,
vs.
She assigned about
HON. COURT OF APPEALS,
P314,689K worth but her
FAMILY SAVINGS BANK
obligations to CAMS came up
and/or CAMS TRADING
to about P404K.
ENTERPRISES,
INC., respondents.
CAMS requested the bank to
encash the time deposit
GRINO-AQUINO, J.: certificates, which the bank
did only after calling up and
obtaining Victoriaâ consent.(
P283,737.75)
Victoria then sued the bank
and CAMS for alleged pactum
commissorium.
RTC MAKATI: dismissed for
lack of merit
CA::AFFIRMED THE RTC
Court of Appeals found that
Did the encashment of
Victoria’s time deposit
certificates amount to pactum
commissorium?
No. Petition denied.
Ratio: Since the collateral in
this case was also money,
there was no need to sell the
thing pledged at public
auction in order to satisfy
the pledge’s obligation.
All that had to be done to
convert the pledgor's time
deposit certificates into cash
was to present them to the
bank for encashment after
due notice to the debtor. The
encashment of the deposit
certificates was not a partum
commissorium as prohibited
under Article 2088 of the Civil
Code. pactum
commissorium is a provision
for
the automatic appropriation
of the pledged or mortgaged
property by the creditor in
payment of the loan upon its
maturity.
This prohibition is intended
to protect the obligor,

CITIBANK vs. SABENIANO
G.R.No. 156132, October 16,
2006
CHICO-NAZARIO, J.:
the deeds of assignment were pledgor, or mortgagor against
contracts of pledge, but, as being overreached by his
the collateral was also money creditor who holds a pledge
or an exchange of "peso for or mortgage over property
peso," the provision in Article whose value is much more
2112 of the Civil Code for the than the debt.
sale of the thing pledged at
public auction to convert it Where, as in this case, the
into money to satisfy the security for the debt is also
pledgor's obligation, did not money deposited in a bank,
have to be followed. All that the amount of which is even
had to be done to convert the less than the debt, it is not
pledgor's time deposit illegal for the creditor to
certificates into cash was to encash the time deposit
present them to the bank for certificates to pay the
encashment after due notice debtor’s overdue
to the debtor. obligation, with the latter’s
consent.
Respondent(Modesta
Sabeniano)was a client of Whether petitioner may
petitioners(Citibank and
FNCB). exercise its right to set-off
respondent’s loans with her
She had several deposits and
market placements with deposits and money in
petitioners, among which
were her savings account Citibank-Geneva
with the local branch of
petitioner Citibank (Citibank-
Manila3 ); money market
placements with petitioner
FNCB Finance; and dollar
accounts with the Geneva
branch of petitioner Citibank
(Citibank-Geneva).
At the same time, respondent
had outstanding loans with
petitioner Citibank, incurred
at Citibank-Manila, the
principal amounts
aggregating to
₱1,920,000.00, all of which
had become due and
demandable by May 1979.
Despite repeated demands by
petitioner Citibank,
respondent failed to pay
her outstanding loans.
Thus, petitioner Citibank used
respondent’s deposits and
money market placements to
off-set and liquidate her
outstanding obligations,
Respondent, however,
denied having any
outstanding loans with
petitioner Citibank. She
likewise denied that she was
duly informed of the off-
setting or compensation
 thereof made by petitioner
Citibank using her deposits
and money market
placements with petitioners.

Hence, respondent sought to

recover her deposits and
money market placements.

RTC declared the act illegal,

null and void and ordered the

petitioner to refund the

amount plus interest,

ordering Sabeniano, on the

other hand to pay Citibank

her indebtedness. CA

affirmed the decision entirely

in favor of the respondent.

Sometime in Whether the sale : Petition

PCI Leasing 1997, Trojan
with lease
DENIED.
Metal Industries,
vs. Trojan Inc. (TMI) came agreement the First issue:
Metal to PCI Leasing parties entered
Digest and Finance, into was a Civil Code
Inc. (PCILF) to
G.R. No. seek a loan. financial lease or In the present
176381: Instead of a loan secured case, since the
December extending a loan, by chattel transaction
PCILF offered to between PCILF
15, 2010 buy various
mortgage.
and TMI involved
equipment TMI equipment
CARPIO, J.: owned. Hard- II. Whether already owned by
pressed for PCILF should TMI, it cannot
money, TMI be considered
agreed. PCILF pay TMI, by way as one of
and TMI of refund financial
immediately leasing, as
executed deeds defined by law,
of sale but simply a
evidencing TMIs loan secured by
sale to PCILF of the various
the various equipment
equipment. owned by TMI.

PCILF and TMI Hence, had the

then entered true transaction
into a lease between the
agreement , parties been
whereby the expressed in a
latter leased proper
from the former instrument, it
the various would have been
equipment it a simple loan
previously secured by a
owned. Pursuant chattel mortgage,
to the lease instead of a
agreement, TMI simulated
issued postdated financial leasing.
checks
representing 24 Thus, upon
monthly TMIs default,
installments. PCILF was
entitled to seize
The lease the mortgaged
agreement equipment, not
required TMI to as owner but as
give PCILF a creditor-
guaranty mortgagee for
deposit which the purpose of
would serve as foreclosing the
security for the chattel
timely mortgage.
performance of
TMIs PCILFs sale to a
obligations third party of the
under the lease mortgaged
agreement, to be equipment and
automatically collection of the
forfeited should proceeds of the
TMI return the sale can be
leased deemed in the
equipment exercise of its
before the right to foreclose
expiration of the chattel
the lease mortgage as
agreement. creditor-
mortgagee.
Further, spouses
Dizon, as TMIs Second issue
President and
Vice-President, Section 14 of the
executed in favor Chattel Mortgage
of PCILF a Law expressly
Continuing entitles the
Guaranty of debtor-
Lease mortgagor to
Obligations. the balance of
Under the the proceeds,
continuing upon
guaranty, the satisfaction of
Dizon spouses the principal
agreed to loan and costs.
immediately Prevailing
pay whatever jurisprudence
obligations also holds that
would be due the Chattel
PCILF in case Mortgage Law
TMI failed to bars the creditor-
meet its mortgagee from
obligations retaining the
under the lease excess of the sale
agreement. proceeds.

To obtain TMIs right to

additional loan the refund
from another accrued from
financing the time PCILF
company, TMI received the
used the leased proceeds of the
equipment as sale of the
temporary mortgaged
collateral. equipment.
However, since
PCILF TMI never made
considered the a counterclaim
second or demand for
mortgage a refund due on
violation of the the resulting
lease overpayment
agreement. after offsetting
PCILF sent TMI a the proceeds of
demand letter the sale against
for the payment the remaining
of the latters balance on the
outstanding principal loan
obligation. plus applicable
PCILFs demand interest, no
remained interest applies
unheeded. on the amount of
refund due.
RTC: ruled that Nonetheless, in
the lease accord with
agreement must prevailing
be presumed jurisprudence,
valid as the law the excess
between the amount PCILF
parties even if must refund to
some of its TMI is subject
provisions to interest at
constituted 12% per annum
unjust from finality of
enrichment on this Decision
the part of until fully paid.
PCILF.

On appeal, the
CA reversed the
RTCs decision.