S.C. MEGAWORLD CONSTRUCTION VS. ENGR. LUIS U.

PARADA
G.R. NO. 183804 SEPTEMBER 11, 2013
Facts:
Petitioner bought electrical lighting materials from Genlite Industries, a sole proprietorship owned by
the respondent. The petitioner was unable to pay for the above purchase on due date, but blamed it on
its failure to collect under its sub-contract with the Enviro Kleen Technologies, Inc. It was however able
to persuade Enviro Kleen to agree to settle its above purchase, but after paying the respondent, Enviro
Kleen stopped making further payments. It also ignored the various demands of the respondent, who
then filed a suit in the RTC.

Issue:
Whether the CA erred in not declaring that there was a novation of the contract between the parties
through substitution of the debtor, which resulted in the release of the petitioner from its obligation to
pay the respondent the amount of its purchase.

Held:
No. Novation is never presumed but must be clearly and unequivocally shown. From the circumstances
obtaining in the case, we can infer no clear and unequivocal consent by the respondent to the release of
the petitioner from the obligation to pay the cost of the lighting materials. In fact, from the letters of the
respondent to Enviro Kleen, it can be said that he retained his option to go after the petitioner if Enviro
Kleen failed to settle the petitioner's debt.

EQUITABLE PCI BANK VS. NG SHEUNG NGOR

G.R. NO. 171545 DECEMBER 19, 2007
Facts:
Respondents filed an action for annulment and/or reformation of documents and contracts against the
petitioner. They claimed that Equitable induced them to avail of its peso and dollar credit facilities by
offering low interest rates so they accepted Equitable's proposal. They, however, were unaware that the
documents contained identical escalation clauses granting Equitable authority to increase interest rates
without their consent. Equitable, in its answer, asserted that respondents knowingly accepted all the
terms and conditions contained in the promissory notes. In fact, they continuously availed of and
benefited from Equitable's credit facilities for five years.

Issue:
Whether the assailed escalation clause violated the principle of mutuality of contracts.

Held:
Yes. Escalation clauses are not void per se. However, one which grants the creditor an unbridled right to
adjust the interest independently and upwardly, completely depriving the debtor of the right to assent
to an important modification in the agreement is void. Clauses of that nature violate the principle of
mutuality of contracts.

FINMAN GENERAL ASSURANCE CORPORATION VS. ABDULGANI SALIK

G.R. NO. 84084 AUGUST 20, 1990
Facts:
Private respondents, allegedly applied with Pan Pacific and were assured employment abroad. In
consideration thereof, they allegedly paid fees totalling P30,000.00. But despite numerous assurances of
employment abroad, they were not employed. Accordingly, they filed a joint complaint with the POEA
against Pan Pacific for Violation of Articles 32 and 34(a) of the Labor Code, as amended, with claims for
refund of a total amount of P30,000.00.

Issue:
Whether Secretary of Labor acted without or in excess of jurisdiction and with grave abuse of discretion
amounting to lack of jurisdiction in directing Finman to pay jointly and severally with Pan Pacific the
claims of private respondents on the basis of the suretyship agreement between Finman and Pan Pacific
and the POEA.

Held:
No. It remains uncontroverted that herein petitioner and Pan Pacific entered into a suretyship
agreement, with the former agreeing that the bond is conditioned upon the true and faithful
performance and observance of the bonded principal of its duties and obligations. It was also
understood that under the suretyship agreement, herein petitioner undertook itself to be jointly and
severally liable for all claims arising from recruitment violation of Pan Pacific, in keeping with Section 4,
Rule V, Book I of the Implementing Rules of the Labor Code.

THE COMMISSIONER OF CUSTOMS AND THE COLLECTOR OF CUSTOMS FOR THE PORT OF MANILA VS.
HON. FEDERICO C. ALIKPALA
G.R. NO. L-32542 NOVEMBER 26, 1970
Facts:
The Collector of Customs of the port of Manila issued several warrants of seizure and detention against
the cargo of the petitioners consisting of apples, lemons, oranges and grapes, on the ground that they
were imported in violation of Central Bank circulars in relation to Section 2530-F of the Tariff and
Customs Code. In due time, the petitioners were notified of the seizure, but before they could be heard,
respondent Collector of Customs issued a notice of sale of the imported fruits.

Issue:
Whether the bondsman can satisfy the liability of P513,865.46, which is the aggregate amount of the
bonds submitted.

Held:
The options presented in this case are few and clearcut: (1) to sell the imported fresh fruits at public
auction, as the petitioners due insist; (2) to release them to the private respondents upon the filing of
sufficient surety bonds, as respondent Court has directed; and (3) to require the private respondents to
file a cash bond instead. The objections of the petitioners as to capacity of the bondsman, has been
brushed aside by the lower court in its order, since the private respondents "have shown that the
bonding company obtained reinsurance on part of their liability for those bonds."

CHINA BANKING CORPORATION VS. COURT OF APPEALS

G.R. NO. 121158 DECEMBER 5, 1996
Facts:
China Bank extended several loans to Native West and to So Ching, Native Wests president. Native West
in turn executed promissory notes in favor of China Bank. So Ching, with the marital consent of his wife,
Cristina So, additionally executed two mortgages over their properties. The promissory notes matured
and despite due demands by China Bank neither private respondents Native West nor So Ching paid.
Pursuant to a provision embodied in the two mortgage contracts, China Bank filed petitions for the
extra-judicial foreclosure of the mortgaged properties. After due notice and publication, the notaries
public scheduled the foreclosure sale of the spouses real estate propertie. Eight days before the
foreclosure sale, however, private respondents filed a complaint with the RTC for accounting with
damages and with temporary restraining order against petitioners.

Issue:
Whether or not petitioners can extrajudicially foreclose the properties subject of the mortgages.

Held:
Yes. In their complaint for accounting with damages pending with the trial court, private respondents
averred certain facts, which allegations are a clear admission that they were unable to settle to the
fullest their obligation. Foreclosure is valid where the debtors, as in this case, are in default in the
payment of their obligation. The essence of a contract of mortgage indebtedness is that a property has
been identified or set apart from the mass of the property of the debtor-mortgagor as security for the
payment of money or the fulfillment of an obligation to answer the amount of indebtedness, in case of
default of payment.

LUIS CASTRO, JR. VS. HON. COURT OF APPEALS

G.R. NO. 97401 DECEMBER 6, 1995
Facts:
Cabanatuan City Colleges obtained a loan from the Bancom Development Corporation. In order to
secure the indebtedness, the college mortgaged to Bancom two parcels of land. The parcels were both
within the school site. While the mortgage was subsisting, the college board of directors agreed to lease
to petitioners a portion of the encumbered property on which the latter, eventually, built a residential
house. Bancom, the mortgagee, was duly advised of the matter.
The school defaulted in the due payment of the loan. Private respondent filed with the RTC an ex-parte
motion for the issuance of a writ of possession not only over the land and school buildings but also the
residential house constructed by petitioners.

Issue:
Whether the residential building was included in the writ of possession pursuant to Article 2127 of the
Civil Code.

Held:
No. This article extends the effects of the real estate mortgage to accessions and accessories found on
the hypothecated property when the secured obligation becomes due. The law is predicated on an
assumption that the ownership of such accessions and accessories also belongs to the mortgagor as the
owner of the principal. The rationale should be clear enough — in the event of default on the secured
obligation, the foreclosure sale of the property would naturally be the next step that can expectedly
follow.

DEVELOPMENT BANK OF THE PHILIPPINES VS. GUARIÑA AGRICULTURAL AND REALTY DEVELOPMENT
CORPORATION
G.R. NO. 160758 JANUARY 15, 2014
Facts:
Guariña Corporation applied for a loan from DBP to finance the development of its resort complex. The
loan was approved and Guariña Corporation executed a promissory note. Guariña Corporation executed
a mortgages in favor of DBP as security for the repayment of the loan. The loan was released in several
instalments. Guariña Corporation demanded the release of the balance of the loan, but DBP refused.
DBP found upon inspection of the resort project, its developments and improvements that Guariña
Corporation had not completed the construction works. DBP applied for the issuance of a writ of
possession by the RTC.
Issue:
Whether the foreclosure proceedings premature and improper.

Held:
Yes. The agreement between DBP and Guariña Corporation was a loan. The properties which stood as
security for the loan were foreclosed without any demand having been made on the principal obligation.
For an obligation to become due, there must generally be a demand. Default generally begins from the
moment the creditor demands the performance of the obligation. Without such demand, judicial or
extrajudicial, the effects of default will not arise.

MARIA BARRETTO VS. LEONA REYES

G.R. NO. 4300 MARCH 21, 1908
Facts:
Defendant and Marcelo Dominguez, the plaintiff's intestate, executed an agreement. The defendant had
in reality received from Dominguez not palay but money, estimated according to a standard not shown,
as the equivalent of the palay mentioned, the result of a settlement of previous transactions between
them. During the absence of Dominguez from the province, he left his affairs in charge of an agent,
whose powers included the carrying out of this contract. The defendant made delivery on account,
leaving a balance undelivered, the defendant offered in writing to settle at 2 pesos a cavan.

Issue:
Whether the transaction is a deposit.

Held:
No. This peculiar contract, locally known as bulbulauen, presents difficulties of construction but is not
necessarily unconscionable, although its event is at the risk of the market. There is, in fact, no deposit
and such is not the true nature of the transaction. The distant capitalist contributes his money with
which the local merchant is to buy a stock of palay, having the entire season ahead in which to take
advantage of the fluctuations in the market and the necessities of the local growers before the amount
due in palay is delivered or its value is liquidated, with an additional season in which to make himself
good in the amount ascertained by the liquidation.