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Philippine Supreme Court Jurisprudence > Year 2015 > April 2015 Decisions > G.R. No. 194642, April 06, 2015 - NUNELON R.
MARQUEZ, Petitioner, v. ELISAN CREDIT CORPORATION, Respondents.:

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Search G.R. No. 194642, April 06, 2015 - NUNELON R. MARQUEZ, Petitioner, v. ELISAN CREDIT CORPORATION,
Respondents.

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SECOND DIVISION

G.R. No. 194642, April 06, 2015

NUNELON R. MARQUEZ, Petitioner, v. ELISAN CREDIT CORPORATION, Respondents.

DECISION

BRION, J.:

We resolve the present petition for review on certiorari1 assailing the May 17, 2010 decision2 and the November 25,
2010 resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 102144.4 redarclaw

The Factual Antecedents

On December 16, 1991, Nunelon R. Marquez (petitioner) obtained a (first loan) from Elisan Credit Corporation
(respondent) for fifty-three thousand pesos (Php 53,000.00) payable in one-hundred eighty (180) days.5 redarclaw

The petitioner signed a promissory note which provided that it is payable in weekly installments and subject to twenty-six
percent (26%) annual interest. In case of non-payment, the petitioner agreed to pay ten percent (10%) monthly penalty
based on the total amount unpaid and another twenty-five percent (25%) of such amount for attorney's fees exclusive of
costs, and judicial and extrajudicial expenses.6redarclaw

To further secure payment of the loan, the petitioner executed a chattel mortgage7 over a motor vehicle. The contract of
chattel mortgage provided among others, that the motor vehicle shall stand as a security for the first loan and "all other
obligations of every kind already incurred or which may hereafter be incurred."8
DebtKollect Company, Inc. redarclaw

Both the petitioner and respondent acknowledged the full payment of the first loan.9 redarclaw

Subsequently, the petitioner obtained another loan (second loan) from the respondent for fifty-five thousand pesos
(P55,000.00) evidenced by a promissory note10 and a cash voucher11 both dated June 15, 1992.

The promissory note covering the second loan contained exactly the same terms and conditions as the first promissory
note.

When the second loan matured on December 15, 1992, the petitioner had only paid twenty-nine thousand nine hundred
sixty pesos (P29,960.00), leaving an unpaid balance of twenty five thousand forty pesos (P25,040.00).12 redarclaw

Due to liquidity problems, the petitioner asked the respondent if he could pay in daily installments (daily payments) until
the second loan is paid. The respondent granted the petitioner's request. Thus, as of September 1994 or twenty-one
(21) months after the second loan's maturity, the petitioner had already paid a total of fifty-six thousand four-hundred
forty pesos (P56,440.00), an amount greater than the principal.13 redarclaw

Despite the receipt of more than the amount of the principal, the respondent filed a complaint for judicial foreclosure of
the chattel mortgage because the petitioner allegedly failed to settle the balance of the second loan despite demand.14 redarclaw

The respondent further alleged that pursuant to the terms of the promissory note, the petitioner's failure to fully pay upon
ChanRobles Intellectual Property Division maturity triggered the imposition of the ten percent (10%) monthly penalty and twenty-five percent (25%) attorney's fees.

The respondent prayed that the petitioner be ordered to pay the balance of the second loan plus accrued penalties and
interest.15
redarclaw

Before the petitioner could file an answer, the respondent applied for the issuance of a writ of replevin. The MTC issued
the writ and by virtue of which, the motor vehicle covered by the chattel mortgage was seized from the petitioner and
delivered to the respondent.16 redarclaw

Trial on the merits thereafter ensued.

The MTC Ruling17

The MTC found for the petitioner and held that the second loan was fully extinguished as of September 1994.

It held that when an obligee accepts the performance or payment of an obligation, knowing its incompleteness or
irregularity and without expressing any protest or objection, the obligation is deemed fully complied with.18 The MTC
noted that the respondent accepted the daily payments made by the petitioner without protest. The second loan having
been fully extinguished, the MTC ruled that respondent's claim for interests and penalties plus the alleged unpaid portion
of the principal is without legal basis.

The MTC ordered: LawlibraryofCRAlaw

1. "the plaintiff Elisan Credit Corporation to return/deliver the seized motor vehicle with Plate No.
UV-TDF-193 to the possession of the defendant and in the event its delivery is no longer
possible, to pay the defendant the amount of P30,000.00 corresponding to the value of the said
vehicle;"

2. "the bonding company People's Trans-East Asia Insurance Corporation to pay the defendant
the amounts of P20,000.00 and P5,000.00 representing the damages and attorney's fees under
P.T.E.A.LC Bond No. JCL (13)-00984;"

3. "the plaintiff is likewise directed to surrender to the defendant the originals of the documents
evidencing indebtedness in this case so as to prevent further use of the same in another
proceeding."

The RTC Ruling19

Except for the MTC's order directed to the bonding company, the RTC initially affirmed the ruling of the MTC.

Acting on the respondent's motion for reconsideration, the RTC reversed itself. Citing Article 1253 of the Civil Code, it
April-2015 Jurisprudence held that "if the debt produces interest, payment of the principal shall not be deemed to have been made until the
interests have been covered." It also sustained the contention of the respondent that the chattel mortgage was revived
G.R.No. 212092, April 08, 2015 - PEOPLES GENERAL when the petitioner executed the promissory note covering the second loan.
INSURANCE CORP. (FORMERLY: PEOPLE'S TRANS-EAST ASIA
INSURANCE CORP.), Petitioner, v. COL. FELIX MATEO A. The RTC ordered:
RUNES, Respondent.
LawlibraryofCRAlaw

1. "the defendant to pay the plaintiff the following: a) P25,040.00, plus interest thereon at the rate
A.C. No. 5116, April 13, 2015 - DAVAO IMPORT
DISTRIBUTORS, INC., Complainant, v. ATTY. JOHNNY
of 26% per annum and penalties of 10% per month thereon from due date of the second
LANDERO, Respondent. promissory note until fully paid, b) 25% of the defendant's outstanding obligation as and for
attorney's fees, c) costs of this suit;"
G.R. No. 176114, April 08, 2015 - GRACE SAN DIEGO Y
TRINIDAD, Petitioner, v. THE HONORABLE COURT OF 2. "the foreclosure of the chattel mortgage dated December 16, 1991 and the sale of the
APPEALS, Respondent. mortgaged property at a public auction, with the proceeds thereof to be applied as and in
payment of the amounts awarded in a and b above."
G.R.No. 212092, April 08, 2015 - PEOPLES GENERAL
INSURANCE CORP. (FORMERLY: PEOPLE'S TRANS-EAST ASIA The CA Ruling20
INSURANCE CORP.), Petitioner, v. COL. FELIX MATEO A.
RUNES, Respondent.
The CA affirmed the RTC's ruling with modification.
A.C. No. 5116, April 13, 2015 - DAVAO IMPORT
DISTRIBUTORS, INC., Complainant, v. ATTY. JOHNNY The CA observed that the disparity in the amount loaned and the amount paid by the petitioner supports the
LANDERO, Respondent. respondent's view that the daily payments were properly applied first for the payment of interests and not for the
principal.
G.R. No. 193169, April 06, 2015 - ROGELIO ROQUE,
Petitioner, v. PEOPLE OF THE PHILIPPINES, Respondent. According to the CA, if the respondent truly condoned the payment of interests as claimed by the petitioner, the latter did
not have to pay an amount in excess of the principal. The CA believed the petitioner knew his payments were first
G.R. No. 176114, April 08, 2015 - GRACE SAN DIEGO Y applied to the interests due.
TRINIDAD, Petitioner, v. THE HONORABLE COURT OF
APPEALS, Respondent.
The CA held that Article 1253 of the Civil Code is clear that if debt produces interest, payment of the principal shall not
G.R. No. 209741, April 15, 2015 - SOCIAL SECURITY
be deemed made until the interests have been covered. It ruled that even if the official receipts issued by the respondent
COMMISSION, Petitioner, v. EDNA A. AZOTE, Respondent. did not mention that the payments were for the interests, the omission is irrelevant as it is deemed by law to be for the
payment of interests first, if any, and then for the payment of the principal amount.
G.R. No. 185664, April 08, 2015 - ANGELES P. BALINGHASAY,
RENATO M. BERNABE, ALODIA L. DEL ROSARIO, CATALINA T. The CA, however, reduced the monthly penalty from ten percent (10%) to two percent (2%) pursuant to Article 1229 of
FUNTILA, TERESITA L. GAYANILO, RUSTICO A. JIMENEZ, the Civil Code which gives the courts the power to decrease the penalty when the principal obligation has been partly or
ARCELI P. JO, ESMERALDA D. MEDINA, CECILIA S. irregularly complied with by the debtor.
MONTALBAN, VIRGILIO R. OBLEPIAS, CARMENCITA R.
PARRE�O, EMMA L. REYES, REYNALDO L. SAVET, SERAPIO P. The dispositive portion of the CA decision provides: LawlibraryofCRAlaw

TACCAD, VICENTE I. VALDEZ, SALVACION F. VILLAMORA, AND


DIONISIA M. VILLAREAL, Petitioners, v. CECILIA CASTILLO, "WHEREFORE, premises considered, the Petition is hereby DENIED for lack of merit. The Order dated
OSCAR DEL ROSARIO, ARTURO S. FLORES, XERXES
07 May 2007 of the Regional Trial Court, Branch 222, Quezon City is hereby AFFIRMED with
NAVARRO, MARIA ANTONIA A. TEMPLO AND MEDICAL
CENTER PARA�AQUE, INC., Respondent. MODIFICATION that the penalty charge should only be two (2%) per month until fully paid."

G.R. No. 203804, April 15, 2015 - DARIO A. CARCEDO The CA denied the petitioner's Motion for Reconsideration dated May 17, 2010 on November 25, 2010 for failing to raise
(SUBSTITUTED BY HIS WIFE PRISCILLA DELA CRUZ- new matters. Hence, this present petition.
CARCEDO), Petitioner, v. MAINE MARINE PHILIPPINES, INC.
AND/OR MISUGA KAJUN CO., LTD., AND/OR MA. CORAZON The Petition
GEUSE-SONGCUYA, Respondent.
The petitioner seeks the reversal of the CA's decision and resolution. He argues that he has fully paid his obligation.
G.R. No. 198543, April 15, 2015 - REPUBLIC OF THE Thus, the respondent has no right to foreclose the chattel mortgage.
PHILIPPINES, Petitioner, v. CESAR C. PASICOLAN AND
GREGORIO C. PASICOLAN, Respondent. The petitioner insists that his daily payments should be deemed to have been credited against the principal, as the
official receipts issued by the respondent were silent with respect to the payment of interest and penalties. He cites
G.R. No. 204646, April 15, 2015 - SMART COMMUNICATIONS,
INC., NAPOLEON L. NAZARENO, AND RICARDO P. ISLA,* Article 1176 of the Civil Code which ordains that [t]he receipt of the principal by the creditor without reservation with
Petitioners, v. JOSE LENI Z. SOLIDUM, Respondent. respect to the interest, shall give rise to the presumption that the interest has been paid. The petitioner invokes Article
1235 of the Civil Code which states that "[w]hen the obligee accepts the performance of an obligation, knowing its
G.R. No. 195203 [Formerly UDK No. 14435], April 20, 2015 - incompleteness or irregularity, and without expressing any protest or objection, the obligation is deemed fully complied
ANTONIO PAGARIGAN, Petitioner, v. ANGELITA YAGUE AND with."
SHIRLEY ASUNCION, Respondent.
The petitioner denies having stipulated upon and consented to the twenty-six per cent (26%) per annum interest charge,
G.R. No. 194702, April 20, 2015 - SAN LORENZO RUIZ ten percent (10%) monthly penalty and twenty-five percent (25%) attorney's fees. According to the petitioner, he signed
BUILDERS AND DEVELOPERS GROUP, INC. AND OSCAR the promissory note in blank.
VIOLAGO, Petitioners, v. MA. CRISTINA F. BAYANG,
Respondent.
The petitioner likewise disclaims receiving any demand letter from the respondent for the alleged balance of the second
G.R. No. 216098, April 21, 2015 - BISHOP BRODERICK S.
loan after he had paid fifty-six thousand four-hundred forty pesos (Php56,440.00) as of September 1994, and further
PABILLO, DD, PABLO R. MANALASTAS, JR., PHD, MARIA argues that the chattel mortgage could not cover the second loan as it was annulled and voided upon full payment of the
CORAZON AKOL, CONCEPCION B. REGALADO, HECTOR A. first loan.
BARRIOS, LEO Y. QUERUBIN, AUGUSTO C. LAGMAN, FELIX P.
MUGA, II, PHD, ATTY. GREGORIO T. FABROS, EVITA L. The Respondent's Case21
JIMENEZ, AND JAIME DL CARO, PHD, Petitioners, v.
COMMISSION ON ELECTIONS, EN BANC, REPRESENTED BY The respondent claims that the daily payments were properly credited against the interest and not against the principal
ACTING CHAIRPERSON CHRISTIAN ROBERT S. LIM, AND because the petitioner incurred delay in the full payment of the second loan.
SMARTMATIC-TIM CORPORATION, REPRESENTED BY
SMARTMATIC ASIA-PACIFIC PRESIDENT CESAR FLORES,
Respondents.; G.R. NO. 216562 - INTEGRATED BAR OF THE It argues that pursuant to the terms and conditions of the promissory note, the interest and penalties became due and
PHILIPPINES, Petitioner, v. COMMISSION ON ELECTIONS, demandable when the petitioner failed to pay in full upon maturity. The respondent relies on Article 1253 of the Civil
REPRESENTED BY ITS ACTING CHAIRPERSON ROBERT S. Code which provides that if the debt produces interest, payment of the principal shall not be deemed to have been made
LIM, AND SMARTMATIC-TIM CORPORATION, Respondent. until the interests have been covered.
G.R. No. 196592, April 06, 2015 - SPOUSES JUVY MARA�O
AND MARIA LUISA G. MARA�O, Petitioners, v. PRYCE GASES,
The respondent likewise maintains that the chattel mortgage could validly secure the second loan invoking its provision
INCORPORATED, Respondent. which provided that it covers "obligations...which may hereafter be incurred."

G.R. No. 198012, April 22, 2015 - PEOPLE OF THE Issues


PHILIPPINES, Plaintiff-Appellee, v. ANGEL MATEO Y JACINTO
AND VICENTA LAPIZ Y MEDINA, Accused-Appellants. The petitioner raises the following issues for our resolution: LawlibraryofCRAlaw

G.R. No. 202708, April 13, 2015 - PEOPLE OF THE I. "WHETHER THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE
PHILIPPINES, Plaintiff-Appellee, v. VICTORIANO VILLAR @ BOY, DECISION OF THE REGIONAL TRIAL COURT ORDERING THE PETITIONER TO PAY THE
Accused-Appellant. RESPONDENT THE AMOUNT OF PHP24,040.00 PLUS INTEREST AND PENALTY FROM
DUE DATE UNTIL FULLY PAID; AND
G.R. No. 203993, April 20, 2015 - PRISCILO B. PAZ, Petitioner,
v. NEW INTERNATIONAL ENVIRONMENTAL UNIVERSALITY,
INC., Respondent.
II. "WHETHER THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE
DECISION OF THE REGIONAL TRIAL COURT ORDERING THE FORECLOSURE AND SALE
G.R. No. 190112, April 22, 2015 - PRIMO CO, SR., EDGARDO OF THE MORTGAGED PROPERTY."22
CRUZ, FE LANNY L. ALEGADO, JESTER B. ONGCHUAN,
JOSEPH ONGCHUAN AND LUCIANNE CHAM, Petitioners, v. In simpler terms, did the respondent act lawfully when it credited the daily payments against the interest instead of the
THE PHILIPPINE CANINE CLUB, INC., Respondent. principal? Could the chattel mortgage cover the second loan?
G.R. No. 172637, April 22, 2015 - OFFICE OF THE The Court's Ruling
OMBUDSMAN-VISA YAS AND EMILY ROSE KO LIM CHAO,
Petitioners, v. MARY ANN T. CASTRO, Respondent. We find the petition partly meritorious.
G.R. No. 208163, April 20, 2015 - ROQUE B. BENITEZ AND
SANTA FE LABOR UNION-FEDERATION OF FREE WORKERS, We rule that: (1) the respondent acted pursuant to law and jurisprudence when it credited the daily payments against the
Petitioners, v. SANTA FE MOVING AND RELOCATION interest instead of the principal; and (2) the chattel mortgage could not cover the second loan.
SERVICES/VEDIT KURANGIL, Respondent.
Rebuttable presumptions; Article 1176 vis-a-vis Article 1253
A.C. No. 7250 [Formerly CBD Case No. 05-1448], April 20,
2015 - ATTY. RICARDO M. ESPINA, Complainant, v. ATTY. There is a need to analyze and harmonize Article 1176 and Article 1253 of the Civil Code to determine whether the daily
JESUS G. CHAVEZ, Respondent. payments made after the second loan's maturity should be credited against the interest or against the principal.
G.R. No. 207328, April 20, 2015 - WILHELMSEN-SMITH BELL Article 1176 provides that:
MANNING/WILHELMSEN SHIP MANAGEMENT, LTD./FAUSTO R.
LawlibraryofCRAlaw

PREYSLER, JR., Petitioners, v. ALLAN SUAREZ, Respondent.


"The receipt of the principal by the creditor, without reservation with respect to the interest, shall
G.R. No. 164594, April 22, 2015 - MICHAEL SEBASTIAN,
give rise to the presumption that said interest has been paid.
Petitioner, v. ANNABEL LAGMAY NG, REPRESENTED BY HER
ATTORNEY-IN-FACT, ANGELITA LAGMAY, Respondent. xxx."

G.R. No. 197712, April 20, 2015 - NONITO IMBO Y GAMORES, On the other hand, Article 1253 states: LawlibraryofCRAlaw

Petitioner, v. PEOPLE OF THE PHILIPPINES, Respondent.


"If the debt produces interest, payment of the principal shall not be deemed to have been made
G.R. No. 191667, April 22, 2015 - LAND BANK OF THE until the interests have been covered."
PHILIPPINES, Petitioner, v. EDUARDO M. CACAYURAN,
Respondent, MUNICIPALITY OF AGOO, LA UNION, Intervenor. The above provisions appear to be contradictory but they in fact support, and are in conformity with, each other. Both
provisions are also presumptions and, as such, lose their legal efficacy in the face of proof or evidence to the contrary.
G.R. No. 198465, April 22, 2015 - LITEX GLASS AND
ALUMINUM SUPPLY AND/OR RONALD ONG-SITCO, Petitioners, Thus, the settlement of the first issue depends on which of these presumptions prevails under the given facts of the
v. DOMINADOR B. SANCHEZ, Respondent. case.
G.R. Nos. 173148, April 06, 2015 - ELSA DEGAYO, Petitioner,
v. CECILIA MAGBANUA-DINGLASAN, JOHNNY DINGLASAN, There are two undisputed facts crucial in resolving the first issue: (1) the petitioner failed to pay the full amount of the
ASUNCION MAGBANUA-PORRAS, MARIANO PASCUALITO second loan upon maturity; and (2) the second loan was subject to interest, and in case of default, to penalty and
AND AMADO JR., ALL SURNAMED MAGBANUA, Respondent. attorney's fees.

G.R. No. 194061, April 20, 2015 - EMELIE L. BESAGA, But before proceeding any further, we first tackle the petitioner's denial of the genuineness and due execution of the
Petitioner, v. SPOUSES FELIPE ACOSTA AND LUZVIMINDA second promissory note. He denies that he stipulated upon and consented to the interest, penalty and attorney's fees
ACOSTA AND DIGNA MATALANG COCHING, Respondent. because he purportedly signed the promissory note in blank.23 redarclaw

G.R. No. 183587, April 20, 2015 - LEXBER, INC., Petitioner, v.


CAESAR M. AND CONCHITA B. DALMAN, Respondent. This allegation deserves scant consideration. It is self-serving and unsupported by evidence.

G.R. No. 193101, April 20, 2015 - NICANOR CERIOLA, As aptly observed by the RTC and the CA, the promissory notes securing the first and second loan contained exactly the
Petitioner, v. NAESS SHIPPING PHILIPPINES, INC., MIGUEL same terms and conditions. They were mirror-image of each other except for the date and amount of principal Thus, we
OCA AND/OR KUWAIT OIL TANKER, Respondent. see sufficient basis to believe that the petitioner knew or was aware of such terms and conditions even assuming that
the entries on the interest and penalty charges were in blank when he signed the promissory note.
G.R. No. 198356, April 20, 2015 - ESPERANZA SUPAPO AND
THE HEIRS OF ROMEO SUPAPO, NAMELY: ESPERANZA, REX Moreover, we find it significant that the petitioner does not deny the genuineness and due execution of the first
EDWARD, RONALD TROY, ROMEO, JR., SHEILA LORENCE, ALL promissory note. Only when he failed to pay the second loan did he impugn the validity of the interest, penalty and
SURNAMED SUPAPO, AND SHERYL FORTUNE SUPAPO- attorney's fees. The CA and the RTC also noted that the petitioner is a schooled individual, an engineer by profession,
SANDIGAN, Petitioners, v. SPOUSES ROBERTO AND SUSAN
DE JESUS, MACARIO BERNARDO, AND THOSE PERSONS who, because of these credentials, will not just sign a document in blank without appreciating the import of his action.24 redarclaw

CLAIMING RIGHTS UNDER THEM, Respondent.


These considerations strongly militate against the petitioner's claim that he did not consent to and stipulated on the
G.R. No. 206540, April 20, 2015 - ALICE G. AFRICA, interest and penalty charges of the second loan. Thus, he did not only fail to fully pay the second loan upon maturity; the
Petitioner, v. INSURANCE SAVINGS AND INVESTMENT loan was also subject to interest, penalty and attorney's fees.
AGENCY, INC. (ISIA) REPRESENTED BY ITS PRESIDENT, DELIA
DE BORJA; ACTING REGISTER OF DEEDS, LAS PINAS CITY, Article 1176 in relation to Article 1253
ATTY. ABRAHAM N. VERMUDEZ, Respondents.
Article 1176 falls under Chapter I (Nature and Effect of Obligations) while Article 1253 falls under Subsection I
G.R. No. 196357, April 20, 2015 - THE HEIRS OF THE LATE
(Application of Payments), Chapter IV (Extinguishment of Obligations) of Book IV (Obligations and Contracts) of the
DELFIN DELA CRUZ, REPRESENTED BY HIS SPOUSE,
CARMELITA DELA CRUZ, Petitioners, v. PHILIPPINE
Civil Code.
TRANSMARINE CARRIERS, INC., REPRESENTED BY MR.
CARLOS C. SALINAS AND/OR TECTO BELGIUM N.V., The structuring of these provisions, properly taken into account, means that Article 1176 should be treated as a general
Respondent. presumption subject to the more specific presumption under Article 1253. Article 1176 is relevant on questions pertaining
to the effects and nature of obligations in general, while Article 1253 is specifically pertinent on questions involving
G.R. No. 204171, April 15, 2015 - OFFICE OF THE application of payments and extinguishment of obligations.
OMBUDSMAN, Petitioner, v. WILFREDO B. AGUSTINO, RUDY G.
CANASTILLO, EDWARD G. CANASTILLO, CECIL C. CALIGAN, A textual analysis of the above provisions yields the results we discuss at length below: LawlibraryofCRAlaw

Respondent.
The presumption under Article 1176 does not resolve the question of whether the amount received by the creditor is a
G.R. No. 206020, April 14, 2015 - 1-UNITED TRANSPORT payment for the principal or interest. Under this article the amount received by the creditor is the payment for the
KOALISYON (1-UTAK), Petitioner, v. COMMISSION ON
ELECTIONS, Respondent.
principal, but a doubt arises on whether or not the interest is waived because the creditor accepts the payment for the
principal without reservation with respect to the interest. Article 1176 resolves this doubt by presuming that the creditor
G.R. No. 174202, April 07, 2015 - DYNAMIC BUILDERS & waives the payment of interest because he accepts payment for the principal without any reservation.
CONSTRUCTION CO. (PHIL.), INC., Petitioner, v. HON. RICARDO
P. PRESBITERO, JR., MAYOR AND HEAD OF PROCURING UNIT On the other hand, the presumption under Article 1253 resolves doubts involving payment of interest-bearing debts. It is
OF THE MUNICIPALITY OF VALLADOLID, NEGROS a given under this Article that the debt produces interest. The doubt pertains to the application of payment; the
OCCIDENTAL; BIDS AND AWARDS COMMITTEE, MUNICIPALITY uncertainty is on whether the amount received by the creditor is payment for the principal or the interest. Article 1253
OF VALLADOLID, NEGROS OCCIDENTAL; AND HENRY L. resolves this doubt by providing a hierarchy: payments shall first be applied to the interest; payment shall then be
JORDAN AND/OR HLJ CONSTRUCTION AND ENTERPRISE, applied to the principal only after the interest has been fully-paid.
Respondents.
Correlating the two provisions, the rule under Article 1253 that payments shall first be applied to the interest and not to
G.R. No. 208062, April 07, 2015 - SOCIAL WEATHER
STATIONS, INC. AND PULSE ASIA, INC., Petitioners, v.
the principal shall govern if two facts exist: (1) the debt produces interest (e.g., the payment of interest is expressly
COMMISSION ON ELECTIONS, Respondent. stipulated) and (2) the principal remains unpaid.

A.M. No. RTJ-14-2402 (Formerly OCA IPI No. 12-3910-RTJ), The exception is a situation covered under Article 1176, i.e., when the creditor waives payment of the interest despite
April 15, 2015 - JOSEFINA M. ONGCUANGCO TRADING the presence of (1) and (2) above. In such case, the payments shall obviously be credited to the principal.
CORPORATION, REPRESENTED BY JOSEFINA M.
ONGCUANGCO, Complainant, v. JUDGE RENATO D. PINLAC, Since the doubt in the present case pertains to the application of the daily payments, Article 1253 shall apply. Only when
REGIONAL TRIAL COURT, BRANCH 57, SAN CARLOS CITY, there is a waiver of interest shall Article 1176 become relevant.
PANGASINAN, Respondent.
Under this analysis, we rule that the respondent properly credited the daily payments to the interest and not to the
G.R. No. 211833, April 07, 2015 - FERDINAND R. principal because: (1) the debt produces interest, i.e., the promissory note securing the second loan provided for
VILLANUEVA, PRESIDING JUDGE, MCTC, COMPOSTELA-NEW
payment of interest; (2) a portion of the second loan remained unpaid upon maturity; and (3) the respondent did not
BATAAN, COMPOSTELA VALLEY PROVINCE, Petitioner, v.
JUDICIAL AND BAR COUNCIL, Respondent.
waive the payment of interest.

G. R. No. 171601, April 08, 2015 - SPOUSES BONIFACIO AND There was no waiver of interest
LUCIA PARAS, Petitioners, v. KIMWA CONSTRUCTION AND
DEVELOPMENT CORPORATION, Respondent. The fact that the official receipts did not indicate whether the payments were made for the principal or the interest does
not prove that the respondent waived the interest.
G.R. Nos. 194339-41, April 20, 2015 - TERESITA A. CIRON,
Petitioner, v. MA. MERCEDITAS N. GUTIERREZ, IN HER We reiterate that the petitioner made the daily payments after the second loan had already matured and a portion of the
OFFICIAL CAPACITY AS OMBUDSMAN, FLORIZA A. BRIONES principal remained unpaid. As stipulated, the principal is subject to 26% annual interest.
AND TERESITA P. BUTARDO- TACATA, IN THEIR OFFICIAL
CAPACITIES AS GRAFT INVESTIGATION & PROSECUTION
All these show that the petitioner was already in default of the principal when he started making the daily payments. The
OFFICER II OF THE OFFICE OF THE OMBUDSMAN, NONNA O.
BELTRAN, 2nd ASSISTANT CITY PROSECUTOR, RAUL E. stipulations providing for the 10% monthly penalty and the additional 25% attorney's fees on the unpaid amount also
CONTRERAS, CITY PROSECUTOR, BOTH OF NATIONAL became effective as a result of the petitioner's failure to pay in full upon maturity.
PROSECUTION OFFICE, IRIGA CITY, AND SANTIAGO D.
ORTEGA, JR., Respondent. In other words, the so-called interest for default25 (as distinguished from the stipulated monetary interest of 26% per
annum) in the form of the 10% monthly penalty accrued and became due and demandable. Thus, when the petitioner
G.R. No. 213214, April 20, 2015 - PEOPLE OF THE started making the daily payments, two types of interest were at the same time accruing, the 26% stipulated monetary
PHILIPPINES, Plaintiff-Appellee, v. EUGENE SAMUYA, Accused- interest and the interest for default in the form of the 10% monthly penalty.
Appellant.
Article 1253 covers both types of interest. As noted by learned civilist, Arturo M. Tolentino, no distinction should be made
G.R. No. 213216, April 20, 2015 - PEOPLE OF THE
PHILIPPINES, Plaintiff-Appellee, v. RICKY ARGUTA ALIAS because the law makes no such distinction. He explained: LawlibraryofCRAlaw

"JOEL" AND WILSON CAHIPE ALIAS "SIWIT," Accused-


Appellants. "Furthermore, the interest for default arises because of non-performance by the debtor, and to allow
him to apply payment to the capital without first satisfying such interest, would be to place him
A.C. No. 10303, April 22, 2015 - JOY A. GIMENO, in a better position than a debtor who has not incurred in delay. The delay should worsen, not
Complainant, v. ATTY. PAUL CENTILLAS ZAIDE, Respondent. improve, the position of a debtor."26 [Emphasis supplied.]
G.R. No. 203530, April 13, 2015 - LUZON DEVELOPMENT The petitioner failed to specify which of the two types of interest the respondent allegedly waived. The respondent
BANK, TOMAS CLEMENTE, JR., AND OSCAR RAMIREZ, waived neither.
Petitioners, v. ERLINDA KRISHNAN, Respondent.

A.M. No. RTJ-12-2325 (Formerly A.M. No. 12-7-132-RTC), April In Swagman Hotels and Travel Inc. v. Court of Appeals,27 we applied Article 1253 of the Civil Code in resolving whether
14, 2015 - OFFICE OF THE COURT ADMINISTRATOR, the debtor has waived the payments of interest when he issued receipts describing the payments as "capital repayment."
Complainant, v. JUDGE ALAN L. FLORES, PRESIDING JUDGE, We held that,
REGIONAL TRIAL COURT, BRANCH 7, TUBOD, LANAO DEL
NORTE AND FORMER ACTING PRESIDING JUDGE, REGIONAL "Under Article 1253 of the Civil Code, if the debt produces interest, payment of the principal shall not be
TRIAL COURT, BRANCH 21, KAPATAGAN, LANAO DEL NORTE, deemed to have been made until the interest has been covered. In this case, the private respondent
Respondent.; A.M. No. RTJ-15-2419 (FORMERLY A.M. OCA IPI would not have signed the receipts describing the payments made by the petitioner as "capital
No. 11-3649-RTJ) - PROSECUTOR DIOSDADO D. CABRERA, repayment" if the obligation to pay the interest was still subsisting.
Complainant, v. JUDGE ALAN L. FLORES, PRESIDING JUDGE,
REGIONAL TRIAL COURT, BRANCH 7, TUBOD, LANAO DEL "There was therefore a novation of the terms of the three promissory notes in that the interest was
NORTE AND FORMER ACTING PRESIDING JUDGE, REGIONAL
TRIAL COURT, BRANCH 21, KAPATAGAN, LANAO DEL NORTE, waived..."28 [Emphasis supplied.]
Respondent.
The same ruling was made in an older case29 where the creditor issued a receipt which specifically identified the
G.R. No. 189649, April 20, 2015 - ADORACION CAROLINO payment as referring to the principal. We held that the interest allegedly due cannot be recovered, in conformity with
(SPOUSE AND IN SUBSTITUTION OF THE DECEASED Article 1110 of the Old Civil Code, a receipt from the creditor for the principal, that contains no stipulation regarding
JEREMIAS A. CAROLINO), Petitioner, v. GEN. GENEROSO interest, extinguishes the obligation of the debtor with regard thereto when the receipt issued by the creditor showed that
SENGA, AS CHIEF OF STAFF OF THE ARMED FORCES OF THE no reservation whatever was made with respect to the interest.
PHILIPPINES (AFP); BRIG. GEN. FERNANDO ZABAT, AS CHIEF
OF THE AFP FINANCE CENTER; COMMO. REYNALDO BASILIO,
In both of these cases, it was clearly established that the creditors accepted the payment of the principal. The creditors
AS CHIEF OF THE AFP-GHQ MANAGEMENT AND FISCAL
OFFICE; AND COMMO. EMILIO MARAYAG, PENSION AND
were deemed to have waived the payment of interest because they issued receipts expressly referring to the payment of
GRATUITY OFFICER, PENSION AND GRATUITY MANAGEMENT the principal without any reservation with respect to the interest. As a result, the interests due were deemed waived. It
CENTER, AFP FINANCE CENTER, Respondent. was immaterial whether the creditors intended to waive the interest or not. The law presumed such waiver because the
creditors accepted the payment of the principal without reservation with respect to the interest.
G.R. No. 183641, April 22, 2015 - BENJAMIN GUERRERO,
Petitioner, v. DIRECTOR, LAND MANAGEMENT BUREAU, In the present case, it was not proven that the respondent accepted the payment of the principal. The silence of the
FLORANTE EDWARD R. BENITEZ, PROJECT EVALUATION receipts on whether the daily payments were credited against the unpaid balance of the principal or the accrued interest
OFFICER III, LEGAL DIVISION; AND HEIRS OF MARCELO does not mean that the respondent waived the payment of interest. There is no presumption of waiver of interest without
BUSTAMANTE, REPRESENTED BY CORA Z. BUSTAMANTE, any evidence showing that the respondent accepted the daily installments as payments for the principal.
Respondent.
Ideally, the respondent could have been more specific by indicating on the receipts that the daily payments were being
G.R. No. 205188, April 22, 2015 - REPUBLIC OF THE
PHILIPPINES, REPRESENTED BY HONORABLE LOURDES M.
credited against the interest. Its failure to do so, however, should not be taken against it. The respondent had the right to
TRASMONTE IN HER CAPACITY AS UNDERSECRETARY OF credit the daily payments against the interest applying Article 1253.
THE DEPARTMENT OF LABOR AND EMPLOYMENT, AND
AHONORABLE JENNIFER JARDIN-MANALILI, IN HER It bears stressing that the petitioner was already in default. Under the promissory note, the petitioner waived demand in
CAPACITY AS THEN PHILIPPINE OVERSEAS EMPLOYMENT case of non-payment upon due date.30 The stipulated interest and interest for default have both accrued. The only
ADMINISTRATOR, Petitioner, v. HUMANLINK MANPOWER logical result, following Article 1253 of the Civil Code, is that the daily payments were first applied against either or both
CONSULTANTS, INC. (FORMERLY MHY NEW RECRUITMENT the stipulated interest and interest for default.
INTERNATIONAL, INC.), Respondent.
Moreover, Article 1253 is viewed as having an obligatory character and not merely suppletory. It cannot be dispensed
G.R. No. 182805, April 22, 2015 - HEIRS OF SERAPIO
MABBORANG: LAURIANO MABBORANG, DOMINGO
with except by mutual agreement. The creditor may oppose an application of payment made by the debtor contrary to
MABBORANG, ENCARNACION MABBORANG, FELIX this rule.31 redarclaw

MABBORANG, FAUSTINA MABBORANG, ELIAS MABBORANG,


ALBERTA MABBORANG; HEIRS OF REGINO MABBORANG: In any case, the promissory note provided that "interest not paid when due shall be added to, and become part of the
JOSE MABBORANG, DIONICIA MABBORANG, SOTERA principal and shall likewise bear interest at the same rate, compounded monthly."32 redarclaw

MABBORANG, MARIANO MABBORANG; HEIRS OF SUSANA


MABBORANG: CECILIA UBINA-OCAB AND CANDIDA U.
Hence, even if we assume that the daily payments were applied against the principal, the principal had also increased by
TAGUIGA; SEGUNDA MABBORANG; HEIRS OF VICTORINO
MABBORANG: JUAN MABBORANG, JR., SERVANDO
the amount of unpaid interest and the interest on such unpaid interest. Even under this assumption, it is doubtful whether
MABBORANG; AND HEIRS OF VICENTE MABBORANG: the petitioner had indeed fully paid the second loan.
MARIANO MABBORANG, MARTIN MABBORANG, LUZ
MABBORANG-CARILLO, Petitioners, v. HERMOGENES Excessive interest, penalty and attorney's fees
MABBORANG AND BENJAMIN MABBORANG, Respondent.
Notwithstanding the foregoing, we find the stipulated rates of interest, penalty and attorney's fees to be exorbitant,
A.M. No. P-12-3092 (Formerly A.M. No. 12-7-54-MTC), April 14, iniquitous, unconscionable and excessive. The courts can and should reduce such astronomical rates as reason and
2015 - OFFICE OF THE COURT ADMINISTRATOR, Complainant, equity demand.
v. REMEDIOS R. VIESCA, CLERK OF COURT II, MUNICIPAL
TRIAL COURT OF SAN ANTONIO, NUEVA ECIJA, Respondent. Article 1229 of the Civil Code provides: LawlibraryofCRAlaw

G.R. Nos. 211933 & 211960, April 15, 2015 - ROBERTA S.


"The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly
SALDARIEGA, Petitioner, v. HON. ELVIRA D.C. PANGANIBAN,
PRESIDING JUDGE, BRANCH 227, REGIONAL TRIAL COURT,
complied with by the debtor. Even if there has been no performance, the penalty may also be reduced
NATIONAL CAPITAL REGION, QUEZON CITY AND PEOPLE OF by the courts if it is iniquitous or unconscionable."
THE PHILIPPINES, Respondent.
Article 2227 of the Civil Code ordains:LawlibraryofCRAlaw

G.R. No. 179334, April 21, 2015 - SECRETARY OF THE


DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS AND "Liquidated damages, whether intended as an indemnity or a penalty, shall be equitably reduced if they
DISTRICT ENGINEER CELESTINO R. CONTRERAS, Petitioners, are iniquitous or unconscionable.
v. SPOUSES HERACLEO AND RAMONA TECSON, Respondents.
More importantly, Article 1306 of the Civil Code is emphatic: LawlibraryofCRAlaw

G.R. No. 201146, April 15, 2015 - PEOPLE OF THE


PHILIPPINES, Appellee, v. MICHAEL ROS Y ORTEGA, RODOLFO "The contracting parties may establish such stipulations, clauses, terms and conditions as they may
JUSTO, JR. Y CALIFLORES, AND DAVID NAVARRO Y MINAS, deem convenient, provided they are not contrary to law, morals, good customs, public order, or public
Appellants. policy."
A.C. No. 9868 [formerly CBD Case No. 05-1617], April 22, Thus, stipulations imposing excessive rates of interest and penalty are void for being contrary to morals, if not against
2015 - ATTY. ALFREDO L. VILLAMOR, JR., Complainant, v.
ATTYS. E. HANS A. SANTOS AND AGNES H. MARANAN, the law.33redarclaw

Respondents.
Further, we have repeatedly held that while Central Bank Circular No. 905-82, which took effect on January 1, 1983,
G.R. No. 200465, April 20, 2015 - JOCELYN ASISTIO Y effectively removed the ceiling on interest rates for both secured and unsecured loans, regardless of maturity, nothing in
CONSINO, Petitioner, v. PEOPLE OF THE PHILIPPINES AND the said circular could possibly be read as granting carte blanche authority to lenders to raise interest rates to levels that
MONICA NEALIGA, Respondent.
would be unduly burdensome, to the point of oppression on their borrowers.34 redarclaw

G.R. Nos. 192698-99, April 22, 2015 - RAYMUNDO E.


ZAPANTA, Petitioner, v. PEOPLE OF THE PHILIPPINES, In exercising this power to determine what is iniquitous and unconscionable, courts must consider the circumstances of
Respondent. each case since what may be iniquitous and unconscionable in one may be totally just and equitable in another.35 redarclaw

G.R. No. 197597, April 08, 2015 - IN THE MATTER OF THE In the recent case of MCMP Construction Corp. v. Monark Equipment Corp.,36
we reduced the interest rate of twenty-
PETITION FOR HABEAS CORPUS OF DATUKAN MALANG
four percent (24%) per annum to twelve percent (12%) per annum; the penalty and collection charge of three percent
SALIBO, DATUKAN MALANG SALIBO, Petitioner, v. WARDEN,
QUEZON CITY JAIL ANNEX, BJMP BUILDING, CAMP BAGONG
(3%) per month, or thirty-six percent (36%) per annum, to six percent (6%) per annum; and the amount of attorney's fees
DIWA, TAGUIG CITY AND ALL OTHER PERSONS ACTING ON from twenty-five percent (25%) of the total amount due to five percent (5%).
HIS BEHALF AND/OR HAVING CUSTODY OF DATUKAN
MALANG SALIBO, Respondents. Applying the foregoing principles, we hereby reduce the stipulated rates as follows: the interest of twenty-six percent
(26%) per annum is reduced to two percent (2%) per annum; the penalty charge of ten percent (10%) per month, or one-
G.R. No. 159611, April 22, 2015 - HEIRS OF ANTERO SOLIVA, hundred twenty percent (120%) per annum is reduced to two percent (2%) per annum; and the amount of attorney's fees
Petitioner, v. SEVERINO, JOEL, GRACE, CENON, JR., RENATO, from twenty-five percent (25%) of the total amount due to two percent (2%) of the total amount due.
EDUARDO, HILARIO, ALL SURNAMED SOLIVA, ROGELIO V.
ROLEDA, AND SANVIC ENTERPRISES, INC., REPRESENTED We believe the markedly reduced rates are reasonable, equitable and just under the circumstances.
BY ITS MANAGER, SANTOS PORAQUE, Respondents.
It is not entirely the petitioner's fault that he honestly, albeit wrongly, believed that the second loan had been fully paid.
G.R. No. 212381, April 22, 2015 - REYNALDO M. JACOMILLE,
Petitioner, v. HON. JOSEPH EMILIO A. ABAYA, IN HIS CAPACITY
The respondent is partly to blame for issuing receipts not indicating that the daily payments were being applied against
AS SECRETARY OF TRANSPORTATION AND the interest.
COMMUNICATIONS (DOTC); ATTY. ALFONSO V. TAN, JR., IN HIS
CAPACITY AS ASSISTANT SECRETARY OF THE LAND Moreover, the reduction of the rates is justified in the context of its computation period. In Trade & Investment Dev't
TRANSPORTATION OFFICE (LTO); HON. FLORENCIO ABAD, IN Corp. of the Phil. v. Roblett Industrial Construction Corp.,37 we equitably reduced the interest rate because the case was
HIS CAPACITY AS SECRETARY OF BUDGET AND decided with finality sixteen years after the filing of the complaint. We noted that the amount of the loan swelled to a
MANAGEMENT (DBM); HON. ARSENIO M. BALISACAN, IN HIS considerably disproportionate sum, far exceeding the principal debt.
CAPACITY AS DIRECTOR GENERAL OF THE NATIONAL
ECONOMIC AND DEVELOPMENT AUTHORITY (NEDA); HON.
MARIA GRACIA M. PULIDO TAN, IN HER CAPACITY AS It is the same in the present case where the complaint was filed almost twenty-years ago.38 redarclaw

CHAIRPERSON OF THE COMMISSION ON AUDIT (COA) AND


POWER PLATES DEVELOPMENT CONCEPTS, INC.,/J. The Chattel Mortgage could not cover the second loan.
KNIERIEM B.V. GOES (JKG) (JOINT VENTURE) REPRESENTED
BY ITS MANAGING DIRECTOR, CHRISTIAN S. CALALANG, The chattel mortgage could not validly cover the second loan. The order for foreclosure was without legal and factual
Respondents. basis.
G.R. No. 202331, April 22, 2015 - THE PROVINCIAL
In Acme Shoe, Rubber and Plastic Corp. v. Court of Appeals,39 the debtor executed a chattel mortgage, which had a
GOVERNMENT OF AURORA, Petitioner, v. HILARIO M. MARCO,
Respondents.
provision to this effect: LawlibraryofCRAlaw

G.R. No. 197562, April 20, 2015 - AURORA ENGSON "In case the MORTGAGOR executes subsequent promissory note or notes either as a renewal of the
FRANSDILLA, Petitioner, v. PEOPLE OF THE PHILIPPINES, former note, as an extension thereof, or as a new loan, or is given any other kind of accommodations
Respondent. such as overdrafts, letters of credit, acceptances and bills of exchange, releases of import shipments on
Trust Receipts, etc., this mortgage shall also stand as security for the payment of the said promissory
G.R. No. 180771, April 21, 2015 - RESIDENT MARINE note or notes and/or accommodations without the necessity of executing a new contract and this
MAMMALS OF THE PROTECTED SEASCAPE TANON STRAIT, mortgage shall have the same force and effect as if the said promissory note or notes and/or
E.G., TOOTHED WHALES, DOLPHINS, PORPOISES, AND accommodations were existing on the date thereof."40 [Emphasis supplied.]
OTHER CETACEAN SPECIES, JOINED IN AND REPRESENTED
HEREIN BY HUMAN BEINGS GLORIA ESTENZO RAMOS AND
In due time, the debtor settled the loan covered by the chattel mortgage. Subsequently, the debtor again borrowed from
ROSE-LIZA EISMA-OSORIO, IN THEIR CAPACITY AS LEGAL
GUARDIANS OF THE LESSER LIFE-FORMS AND AS
the creditor. Due to financial constraints, the subsequent loan was not settled at maturity.
RESPONSIBLE STEWARDS OF GOD'S CREATIONS, Petitioners,
v. SECRETARY ANGELO REYES, IN HIS CAPACITY AS On the issue whether the chattel mortgage could be foreclosed due to the debtor's failure to settle the subsequent loan,
SECRETARY OF THE DEPARTMENT OF ENERGY (DOE), we held that,
SECRETARY JOSE L. ATIENZA, IN HIS CAPACITY AS
SECRETARY OF THE DEPARTMENT OF ENVIRONMENT AND "[c]ontracts of security are either personal or real, x x x In contracts of real security, such as a pledge, a
NATURAL RESOURCES (DENR), LEONARDO R. SIBBALUCA, mortgage or an antichresis, that fulfillment is secured by an encumbrance of property � in pledge, the
DENR REGIONAL DIRECTOR-REGION VII AND IN HIS placing of movable property in the possession of the creditor; in chattel mortgage, by the execution of
CAPACITY AS CHAIRPERSON OF THE TANON STRAIT the corresponding deed substantially in the form prescribed by law; x x x � upon the essential condition
PROTECTED SEASCAPE MANAGEMENT BOARD, BUREAU OF
that if the principal obligation becomes due and the debtor defaults, then the property encumbered can
FISHERIES AND AQUATIC RESOURCES (BFAR), DIRECTOR
MALCOLM I. SARMIENTO, JR., BFAR REGIONAL DIRECTOR
be alienated for the payment of the obligation, but that should the obligation be duly paid, then the
FOR REGION VII ANDRES M. BOJOS, JAPAN PETROLEUM contract is automatically extinguished proceeding from the accessory character of the
EXPLORATION CO., LTD. (JAPEX), AS REPRESENTED BY ITS agreement. As the law so puts it, once the obligation is complied with, then the contract of
PHILIPPINE AGENT, SUPPLY OILFIELD SERVICES, INC., security becomes, ipso facto, null and void."41 redarclaw

Respondents.; G.R. No. 181527 - CENTRAL VISAYAS


FISHERFOLK DEVELOPMENT CENTER (FIDEC), CERILO D. While a pledge, real estate mortgage, or antichresis may exceptionally secure after-incurred obligations
ENGARCIAL, RAMON YANONG, FRANCISCO LABID, IN THEIR so long as these future debts are accurately described, a chattel mortgage, however, can only cover
PERSONAL CAPACITY AND AS REPRESENTATIVES OF THE obligations existing at the time the mortgage is constituted. Although a promise expressed in a
SUBSISTENCE FISHERFOLKS OF THE MUNICIPALITIES OF
chattel mortgage to include debts that are yet to be contracted can be a binding commitment
ALOGUINSAN AND PINAMUNGAJAN, CEBU, AND THEIR
FAMILIES, AND THE PRESENT AND FUTURE GENERATIONS OF
that can be compelled upon, the security itself, however, does not come into existence or arise
FILIPINOS WHOSE RIGHTS ARE SIMILARLY AFFECTED, until after a chattel mortgage agreement covering the newly contracted debt is executed either
Petitioners, v. SECRETARY ANGELO REYES, IN HIS CAPACITY by concluding a fresh chattel mortgage or by amending the old contract conformably with the
AS SECRETARY OF THE DEPARTMENT OF ENERGY (DOE), form prescribed by the Chattel Mortgage Law. Refusal on the part of the borrower to execute the
JOSE L. ATIENZA, IN HIS CAPACITY AS SECRETARY OF THE agreement so as to cover the after-incurred obligation can constitute an act of default on the part of the
DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES borrower of the financing agreement whereon the promise is written but, of course, the remedy of
(DENR), LEONARDO R. SIBBALUCA, IN HIS CAPACITY AS foreclosure can only cover the debts extant at the time of constitution and during the life of the chattel
DENR REGIONAL DIRECTOR-REGION VII AND AS mortgage sought to be foreclosed."42 [Emphasis supplied.]
CHAIRPERSON OF THE TA�ON STRAIT PROTECTED
SEASCAPE MANAGEMENT BOARD, ALAN ARRANGUEZ, IN HIS
CAPACITY AS DIRECTOR ENVIRONMENTAL MANAGEMENT We noted that the Chattel Mortgage Law43 requires the parties to the contract to attach an affidavit of good faith and
BUREAU-REGION VII, DOE REGIONAL DIRECTOR FOR REGION execute an oath that -
VIII1 ANTONIO LABIOS, JAPAN PETROLEUM EXPLORATION
CO., LTD. (JAPEX), AS REPRESENTED BY ITS PHILIPPINE " x x x (the) mortgage is made for the purpose of securing the obligation specified in the conditions
AGENT, SUPPLY OILFIELD SERVICES, INC., Respondent. thereof, and for no other purposes, and that the same is a just and valid obligation, and one not
entered into for the purposes of fraud."44
G.R. No. 202950, April 06, 2015 - BALTAZAR IBOT, Petitioner,
v. HEIRS OF FRANCISCO TAYCO, REPRESENTED BY FLORA It is obvious therefore that the debt referred in the law is a current, not an obligation that is yet merely
TAYCO, WILLY TAYCO AND MERLYN T. BULANTE,
Respondents. contemplated.45

G.R. No. 187013, April 22, 2015 - SPOUSES MAGDALINO AND "x x x in consideration of the credit accommodation granted by the MORTGAGEE to the
CLEOFE BADILLA, Petitioners, v. FE BRAGAT, Respondent. MORTGAGOR(S) in the amount of FIFTY-THREE THOUSAND ONLY PESOS (P53,000.00) xxx and all
other obligations of every kind already incurred or which may hereafter be incurred, for or
G.R. No. 194642, April 06, 2015 - NUNELON R. MARQUEZ, accommodation of the MORTGAGOR(S), as well as the faithful performance of the terms and
Petitioner, v. ELISAN CREDIT CORPORATION, Respondents. conditions of this mortgage x x x."46 [Emphasis supplied.]
A.M. No. 07-11-14-SC, April 14, 2015 - RE: LETTER OF The only obligation specified in the chattel mortgage contract was the first loan which the petitioner later fully paid. By
ERLINDA ILUSORIO-BILDNER, POTC, PHILCOMSAT,
REQUESTING INVESTIGATION OF CERTAIN MEMBERS OF THE virtue of Section 3 of the Chattel Mortgage Law,47 the payment of the obligation automatically rendered the chattel
JUDICIARY mortgage terminated; the chattel mortgage had ceased to exist upon full payment of the first loan. Being merely an
accessory in nature, it cannot exist independently of the principal obligation.
G.R. No. 209331, April 24, 2015 - DEPARTMENT OF FINANCE,
REPRESENTED BY HON. CESAR V. PURISIMA IN HIS OFFICIAL The parties did not execute a fresh chattel mortgage nor did they amend the chattel mortgage to comply with the Chattel
CAPACITY AS SECRETARY, AND THE BUREAU OF CUSTOMS, Mortgage Law which requires that the obligation must be specified in the affidavit of good faith. Simply put, there no
REPRESENTED BY HON. ROZZANO RUFINO B. BIAZON, IN HIS longer was any chattel mortgage that could cover the second loan upon full payment of the first loan. The order to
OFFICIAL CAPACITY AS COMMISSIONER OF CUSTOMS, foreclose the motor vehicle therefore had no legal basis.
Petitioners, v. HON. MARINO M. DELA CRUZ, JR., IN HIS
CAPACITY AS EXECUTIVE JUDGE, REGIONAL TRIAL COURT, WHEREFORE, in view of the foregoing findings and legal premises, we PARTIALLY GRANT the petition. We MODIFY
MANILA, HON. FELICITAS O. LARON-CACANINDIN, IN HER
the May 17, 2010 Decision and the November 25, 2010 Resolution of the Court of Appeals in CA G.R. SP No. 102144.
CAPACITY AS PRESIDING JUDGE, REGIONAL TRIAL COURT,
MANILA, BRANCH 17, RONNIE C. SILVESTRE, EDWARD P.
DELA CUESTA, ROGEL C. GATCHALIAN, IMELDA D.CRUZ, ACCORDINGLY, petitioner Nunelon R. Marquez is ORDERED to pay: LawlibraryofCRAlaw

LILIBETH S. SANDAG, RAYMOND P. VENTURA, MA. LIZA S.


TORRES, ARNEL C. ALCARAZ, MA. LOURDES V. MANGAOANG, 1. Twenty-five thousand forty pesos (P25,040.00) representing the amount of the unpaid balance of the second
FRANCIS AGUSTIN Y. ERPE, CARLOS T. SO, MARIETTA D. loan;chanRoblesvirtualLawlibrary
ZAMORANOS, CARMELITA M. TALUSAN,1 AREFILES H.
CARREON,2 AND ROMALINO G. VALDEZ, Respondents. 2. Interest of two percent (2%) per annum on the unpaid balance to be computed from December 15, 199248 until
full payment;
3. Penalty of two percent (2%) per annum on the unpaid balance to be computed from December 15, 1992; chanRoblesvirtualLawlibrary

4. Attorney's Fees of two percent (2%) of the total amount to be recovered.

The total amount to be recovered shall further be subject to the legal interest rate of six percent (6 %) per annum from
the finality of this Decision until fully paid.49 redarclaw

Respondent Elisan Credit Corporation, on the other hand, is ORDERED to return/deliver the seized motor vehicle with
Plate No. UV-TDF-193, subject of the chattel mortgage, to the possession of the petitioner; in the event its delivery is no
longer possible, to pay the petitioner the amount of P30,000.00 corresponding to the value of the said vehicle.

No pronouncement as to costs.

SO ORDERED. cralawlawlibrary

Carpio, (Chairperson), Del Castillo, Mendoza, and Leonen, JJ., concur.

Endnotes:

1Rollo, pp. 10-30. The petition is filed under Rule 45 of the Rules of Court.

2Id. at 32-42. Penned by Associate Justice Rodil V. Zalameda and concurred in by Associate Justice
Mario L. Guarifia III and Associate Justice Apolinario D. Bruselas, Jr.

3Id. at 44-45. Penned by Associate Justice Rodil V. Zalameda and concurred in by Associate Justice
Mario L. Guarifia III and Associate Justice Apolinario D. Bruselas, Jr.

4The CA affirmed the May 7, 2007 order of the Regional Trial Court (RTC) Branch 222 - Quezon City,
which reversed and set aside the February 20, 2004 decision of the Metropolitan Trial Court (MTC),
Branch 43 - Quezon City.
5Supra note 1, at 2.

6Rollo, p.79.

7 Id. at 81. The chattel mortgage was duly registered in the Office of the Registry of Deeds in
Novaliches, Quezon City.

8Supra note 1, at 12. Emphasis supplied.


9Rollo, pp. 12, 168.
10 Id. at 82.

11 Id. at 83.

12 Id. at 13, 169.


13 Id. at 14, 168.
14 Id. at 71-77.

15 Id. at 171.
16Supra note 2, at 34.
17Rollo, pp. 57-61.

18 Id. at 60. Article 1235, Civil Code.


19 Id. at 62-70.

20Supra note 2.

21Rollo, pp. 164-172.


22Supra note 1, at 19.

23Supra note 1, at 13.

24Supra note 2, at 39.


25 ARTURO M. TOLENTINO, CIVIL CODE OF THE PHILIPPINES Vol. IV, 313 (1960).

26 Id.

27 495 Phil. 161 (2005).


28 Id. at 175. Emphasis supplied.

29Hill v. Veloso, 31 Phil. 160 (1915).


30Supra note 10.

31Supra note 25, citing Manresa.

32Supra note 10.


33Planters Development Bank v. Spouses Lopez, G.R. No. 186332, October 23, 2013, 708 SCRA 481,
citing Imperial v. Jaucian, 471 Phil. 484, 494-495 (2004); and Castro v. Tan, G.R. No. 168940,
November 24, 2009, 605 SCRA 231, 237-238.

34Macalinao v. Bank of the Philippine Islands, G.R. No. 175490, September 17, 2009, 600 SCRA 67,
76-78, citing Imperial v. Jaucian, G.R. 149004, April 14, 2004, 427 SCRA 517, Tongoy v. Court of
Appeals, No. L-45645, June 28, 1983, 123 SCRA 99.

35 Id.

36 G.R. No. 201001, November 10, 2014.


37 523 Phil. 362, 367 (2006), cited in Planters Development Bank v. Spouses Lopez, supra note 33.
38Supra note 14. The complaint was filed on August 16, 1995.

39 329 Phil 531 (1996).

40 Id. at 536.

41 Id. at 538-539.
42 Id. at 539.

43 Act 1508 as amended dated July 2, 1906.

44Supra note 39, at p. 540.


45 Id.

46Supra note 7.

47Sec. 3. Chattel mortgage defined. � A chattel mortgage is a conditional sale of personal property as
security for the payment of a debt, or the performance of some other obligation specified therein, the
condition being that the sale shall be void upon the seller paying to the purchaser a sum of money or
doing some other act named. If the condition is performed according to its terms the mortgage
and sale immediately become void, and the mortgagee is thereby divested of his title. [Emphasis
supplied.]
48 The maturity date of the second loan.

49 Section 1 of BSP Circular No. 799 dated July 1, 2013.

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1989 1990 1991 1992 1993 1994 1995 1996
1997 1998 1999 2000 2001 2002 2003 2004
2005 2006 2007 2008 2009 2010 2011 2012
2013 2014 2015 2016 2017 2018

Main Indices of the Library ---> Go!

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