EN BANC
G.R. No. L-21507 June 7, 1971
PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
NATIVIDAD FRANKLIN, accused, ASIAN SURETY & INSURANCE COMPANY, INC., bondsman-appellant.
Office of the Solicitor General Arturo A. Alafriz, Acting Solicitor General Isidro C. Borromeo and Solicitor
Antonio M. Consing for plaintiff-appellee.
Advincula, Astraquillo, Villa & Ramos for bondsman-appellant.
DIZON, J.:
Facts of the Case:
The Asian Surety & Insurance Company, Inc. appealed the decision of the Court of First Instance of
Pampanga which forfeited the bail bond they posted for the provisional release of Natividad Franklin. An
information was filed against Natividad Franklin in the Justice of the Peace Court of Angeles, Pampanga.
The lower court ordered the bondsman to produce the body of the accused but the latter failed to do so.
It was discovered that the accused was able to secure a Philippine passport and had already departed for
the United States. The lower court denied the surety company's motion for reduction of bail and its
motion for reconsideration.
Issue:
Whether or not the loss of the accused due to her departure to the United States constitutes a valid
reason for the non-fulfillment of the surety’s obligation.
Ruling of the Supreme Court:
The Supreme Court affirmed the decision of the lower court. The Supreme Court held that a surety
becomes the legal custodian and jailer of the accused and is obliged to keep the latter under surveillance
and to produce and surrender him to the court upon demand. The accused's ability to secure a
Philippine passport and leave the country was due to the surety company's fault. It was the surety
company's duty to prevent the departure by informing the Department of Foreign Affairs and other
government agencies about the case of the accused. Therefore, the surety's obligation to produce the
accused was not excused by the impossibility of performance.
FIRST DIVISION
G.R. No. L-44349 October 29, 1976
JESUS V. OCCENA and EFIGENIA C. OCCENA, petitioners,
vs.
HON. RAMON V. JABSON, Presiding Judge of the Court Of First Instance of Rizal, Branch XXVI; COURT
OF APPEALS and TROPICAL HOMES, INC., respondents.
Occena Law Office for petitioners.
Serrano, Diokno & Serrano for respondents.
TEEHANKEE, J.:
Facts of the Case:
On February 25, 1975, Tropical Homes, Inc. filed a complaint seeking modification of a subdivision
contract with petitioners, who were landowners of a 55,330 square meter parcel of land in Davao City.
The complaint alleged that the increase in oil prices and the resulting rise in prices of commodities had
drastically increased development costs, which was beyond the contemplation of the parties when the
agreement was made. Tropical Homes, Inc. contended that continued performance under the original
contract terms would unjustly enrich the petitioners and result in inequitable losses for them. Under the
subdivision contract, the petitioners' fixed share was 40% of all cash receipts from the sale of subdivision
lots. Tropical Homes, Inc. prayed that the court modify the contract to fix a proper share for the parties
from the gross proceeds of the subdivided lots. The petitioners moved to dismiss the complaint for lack
of cause of action, but their motion and subsequent motion for reconsideration were denied by the
lower court.
Issue:
Whether or not the Court is authorized to modify or revise the subdivision contract between the parties
or fix a different sharing ratio from that contractually stipulated with the force of law between the
parties due to the increase in the price of oil and its derivatives and the concomitant worldwide spiraling
of prices, which are not within the control of the plaintiff, of all commodities including basic raw
materials required for such development work, the cost of development has risen to levels which are
unanticipated, unimagined and not within the remotest contemplation of the parties at the time said
agreement was entered into.
Ruling of the Supreme Court:
The Supreme Court reversed the Court of Appeals' resolution. The Court held that while the Civil Code
authorizes the release of an obligor when the service has become so difficult as to be manifestly beyond
the contemplation of the parties, it does not authorize courts to modify or revise the subdivision
contract between the parties or fix a different sharing ratio from that contractually stipulated with the
force of law between the parties. The Supreme Court found that the private respondent's complaint for
modification of the contract manifestly has no basis in law and must therefore be dismissed for failure to
state a cause of action. The Supreme Court based its decision on Article 1267 of the Civil Code, stating
that the said article does not grant the courts the authority to remake, modify or revise the contract or
to fix the division of shares between the parties as contractually stipulated with the force of law
between the parties, so as to substitute its own terms for those covenanted by the parties themselves.
FIRST DIVISION
G.R. No. L-69255 February 27, 1987
PHILIPPINE NATIONAL BANK, petitioner,
vs.
GLORIA G. VDA. DE ONG ACERO, ARNOLFO ONG ACERO & SOLEDAD ONG ACERO CHUA, respondents.
Leopoldo E. Petilla for respondents.
NARVASA, J.:
Facts of the Case:
Isabela Wood Construction & Development Corporation opened Savings Account No. 010-5878868-D
with the Philippine National Bank (PNB) on March 9, 1979, for P2 million. There were conflicting claims
to this account. One claim was by Gloria G. Vda. de Ong Acero, Arnolfo Ong Acero, and Soledad Ong
Acero-Chua (ACEROS), who were judgment creditors of Isabela and sought to enforce their judgment
against the savings account. The other claim was by PNB, asserting that Isabela was indebted to them
and that a mutual set-off had occurred, precluding the ACEROS' recourse to the deposit. The ACEROS’
claim was based on the garnishment of the deposit, following a partial judgment in their favor against
Isabela. PNB’s claim was based on an agreement where the deposit served as collateral for Isabela’s
debt, which PNB claimed it was authorized to apply to the unpaid debt.
Issue:
Whether or not compensation or set-off between Philippine National Bank (PNB) and Isabela Wood
Construction & Development Corporation had taken place to preclude the Acero’s claim on the deposit.
Ruling of the Supreme Court:
The Supreme Court affirmed the Intermediate Appellate Court's decision. The Court ruled that the legal
provisions on compensation could not be applied to PNB's advantage because PNB failed to provide
competent evidence that Isabela was indebted to them. The Court also found that the documents
presented by PNB did not establish an assignment of the deposit as collateral. Furthermore, the Court
noted that the application of the deposit by PNB was ineffectual because the deposit was already in
custodia legis due to the garnishment.
SECOND DIVISION
G.R. No. L-50638 July 25, 1983
LORETO J. SOLINAP, petitioner,
vs.
HON. AMELIA K. DEL ROSARIO, as Presiding Judge of Branch IV, Court of First Instance of Iloilo,
SPOUSES JUANITO and HARDEVI R. LUTERO, and THE PROVINCIAL SHERIFF OF ILOILO, respondents.
Espeleta & Orleans Law Office for petitioner.
Simplicia Magahum, Offemaria & Sixto Demaisip Law Office for private respondents.
ESCOLIN; J.:
Facts of the Case:
In 1970, spouses Tiburcio Lutero and Asuncion Magalona leased their Hacienda Tambal to petitioner
Loreto Solinap for ten years with an annual rental of P50,000. The lease agreement stipulated that
P25,000 of the annual rental would be paid by Solinap to the Philippine National Bank (PNB) to amortize
the Lutero spouses' indebtedness. After Tiburcio Lutero's death in 1971, his heirs initiated testate estate
proceedings. To protect the estate, the court authorized one of the heirs, Juanito Lutero, to pay the
unpaid obligations, including those to PNB, with the right of subrogation. Juanito Lutero and his wife,
Hardivi R. Lutero, paid P25,000 to PNB and sought reimbursement from Solinap.
Issue:
Whether or not the obligation of the petitioners to private respondents may be compensated or set-off
against the amount sought to be recovered in an action for a sum of money filed by the former against
the latter.
Ruling of the Supreme Court:
The Supreme Court held that the petition was devoid of merit. The Court ruled that compensation could
not take place in this instance because, under Article 1279 of the Civil Code, compensation can only
occur if both obligations are liquidated. In this case, the petitioner's claim against the respondent
Luteros was still pending determination by the court. The Court emphasized that a claim still under
litigation cannot be considered a liquidated credit suitable for set-off.
Sources and related content
SECOND DIVISION
G.R. No. L-69560 June 30, 1988
THE INTERNATIONAL CORPORATE BANK INC., petitioner,
vs.
THE IMMEDIATE APPELLATE COURT, HON. ZOILO AGUINALDO, as presiding Judge of the Regional Trial
Court of Makati, Branch 143, NATIVIDAD M. FAJARDO, and SILVINO R. PASTRANA, as Deputy and
Special Sheriff, respondents.
PARAS, J.:
Facts of the Case:
In the early part of 1980, Natividad M. Fajardo secured a loan from International Corporate Bank’s
predecessors for P50,000,000, mortgaging properties in Manila and Bulacan as security. Only
P20,000,000 of the loan was released, which was used to pay off Fajardo's other obligations, leading to
her claim that she received nothing from the loan. On September 11, 1980, Fajardo made a money
market placement with ATRIUM for P1,046,253.77. When Fajardo allegedly failed to pay her mortgage
debt, the bank refused to release the money market proceeds, applying it to the deficiency after
foreclosing the mortgaged properties, which it won for only P20,000,000. Fajardo then filed a complaint
against the bank for the annulment of the foreclosure sale, release of the remaining loan balance,
recovery of the money market proceeds, and damages.
Issue:
Whether or not the circumstances of the case allow legal compensation or set-off between the money
market claim of Natividad M. Fajardo and the bank’s deficiency claim after the foreclosure of the
mortgage.
Ruling of the Supreme Court:
The Supreme Court affirmed the Court of Appeals' decision. The Court ruled that legal compensation
could not take place in this case. The Court explained that compensation requires that both debts be
liquidated and demandable. In this case, the question of whether Fajardo owed the bank the deficiency
balance was still in dispute. Therefore, the bank's claim was not yet a liquidated debt that could be
legally compensated with Fajardo's money market placement.
SECOND DIVISION
G.R. No. 191555 January 20, 2014
UNION BANK OF THE PHILIPPINES, Petitioner,
vs.
DEVELOPMENT BANK OF THE PHILIPPINES, Respondent.
DECISION
PERLAS-BERNABE, J.:
Facts of the Case:
Foodmasters, Inc. (FI) had loan obligations with Union Bank's predecessor, Bancom Development
Corporation, and with Development Bank of the Philippines (DBP). On May 21, 1979, FI and DBP entered
into a Deed of Cession of Property in Payment of Debt, where FI ceded certain properties to DBP,
including a processing plant in Marilao, Bulacan, to settle FI's loan obligations to DBP. As part of the
agreement, DBP assumed FI's obligations to Bancom amounting to P17,000,000.00. DBP then leased the
processing plant back to FI, with FI obliged to pay monthly rentals. DBP also agreed with Bancom to
remit up to 30% of the rentals from FI to Bancom to pay for the assumed obligations.
Issue:
Whether or not the Court of Appeals correctly upheld the denial of Union Bank's motion to affirm legal
compensation.
Ruling of the Supreme Court:
The Supreme Court denied the petition. The Court ruled that legal compensation could not have taken
place between Union Bank and DBP because the requisites under Article 1279 of the Civil Code were not
present. Specifically, DBP's obligation to Union Bank was contingent on FI's payment of lease rentals to
DBP, and the exact amount of DBP's obligation could not be determined until after FI's obligations were
satisfied. Therefore, the debts were not yet due or liquidated and demandable as required for legal
compensation. The Court cited Article 1279 and 1290 of the Civil Code as the legal basis for its decision.
THIRD DIVISION
G.R. No. 170141 April 22, 2008
JAPAN AIRLINES, petitioner,
vs.
JESUS SIMANGAN, respondent.
DECISION
REYES R.T., J.:
Facts of the Case:
In 1991, Jesus Simangan decided to donate a kidney to his cousin, Loreto Simangan, at UCLA School of
Medicine in Los Angeles, California. He undertook tests at the National Kidney Institute, which showed
his blood and tissue type were compatible. To travel to the U.S., UCLA helped him obtain an emergency
U.S. visa, and he purchased a round trip ticket from Japan Airlines (JAL). On the day of his flight, JAL
allowed him to check in and board the plane. However, while on board, JAL crew suspected his travel
documents were falsified and made him deplane. Despite his protests and valid documents, he was
removed from the flight.
Issue:
Whether or not the Court of Appeals erred in not giving credence to JAL's argument that its original
obligation to carry the respondent to Narita and Los Angeles was extinguished by novation when the
respondent agreed to take JAL's flight to Narita the following day.
Ruling of the Supreme Court:
The Supreme Court affirmed the decision of the Court of Appeals. The Court ruled that JAL's argument of
novation was inappropriate. The Court stated that questions not taken up during the trial cannot be
raised for the first time on appeal. The Court emphasized that the offer to rebook the respondent on the
following day did not absolve JAL of its liability for breaching the contract of carriage.
EN BANC
G.R. No. L-29981 April 30, 1971
EUSEBIO S. MILLAR, petitioner,
vs.
THE HON. COURT OF APPEALS and ANTONIO P. GABRIEL, respondents.
Fernandez Law Office and Millar and Esguerra for petitioner.
Francisco de la Fuente for respondents.
CASTRO, J.:
Facts of the Case:
Eusebio S. Millar obtained a favorable judgment against Antonio P. Gabriel in the Court of First Instance
of Manila on February 11, 1956, for P1,746.98 with interest, attorney's fees, and costs. After the Court of
Appeals dismissed Gabriel's appeal, Millar moved for a writ of execution, and the sheriff seized Gabriel's
jeep. However, Gabriel pleaded with Millar to release the jeep and offered to mortgage it to secure the
debt, to which Millar agreed. On February 22, 1957, they executed a chattel mortgage for P1,700,
payable in two installments.
Issue:
Whether or not the subsequent agreement of the parties as embodied in the deed of chattel mortgage
impliedly novated the judgment obligation in civil case 27116.
Ruling of the Supreme Court:
The Supreme Court set aside the Court of Appeals' decision and affirmed the lower court's order. The
Court ruled that the chattel mortgage did not novate the judgment obligation. The Court reasoned that
the reduction in the amount due was explained by partial payments, and the discrepancies in payment
terms and attorney's fees did not constitute substantial incompatibility. The chattel mortgage was merely
a security for the existing judgment debt and did not replace it. The Supreme Court emphasized that
novation requires clear and convincing proof of complete incompatibility, which was not present in this
case.
FIRST DIVISION
June 28, 2016
G.R. No. 213582
NYMPHA ODIAMAR,1 Petitioner
vs.
LINDA ODIAMAR VALEN CIA, Respondent
DECISION
PERLAS-BERNABE, J.:
Facts of the Case:
Linda Odiamar Valencia filed a complaint against Nympha Odiamar for sum of money and damages,
claiming Nympha owed her P2,100,000.00. Nympha allegedly issued a check for this amount, but it was
dishonored. Nympha argued that the debt was her deceased parents' and should be filed in their estate
proceedings. However, Linda countered that Nympha also personally borrowed money, evidenced by the
check. The Regional Trial Court ruled in favor of Linda, ordering Nympha to pay the unpaid portion of the
debt. The Court of Appeals affirmed this decision.
Issue:
Whether or not novation by substitution of the debtor took place so as to release the estates of the
petitioner's deceased parents from their obligation, which, thus, rendered petitioner solely liable for the
entire P2,100,000.00 debt.
Ruling of the Supreme Court:
The Supreme Court partially granted the petition. The Court ruled that while Nympha admitted to
settling her deceased parents' debt, there was no proof that the estates were released from liability. The
Court emphasized that for novation by substitution of debtor to occur, the former debtor must be
expressly released from the obligation. Since there was no showing that the estates of Nympha’s
deceased parents were expressly released from the debt, no novation took place. Therefore, Nympha
was only liable for the portion of the debt she personally incurred.
