Professional Documents
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INSOLVENCY
DE BARRETO, ET. AL. v. VILLANUEVA, ET. AL., (1961)
Special Preferred Credits
(Important: See full text of the Resolution)
Facts: Rosario Cruzado sold all her right, title, and interest and that of her children
in the house and lot herein involved to Villanueva for P19K. The purchaser paid
P1,500 in advance, and executed a promissory note for the balance. However, the
buyer could only pay P5,500 On account of the note, for which reason the vendor
obtained judgment for the unpaid balance. In the meantime, the buyer Villanueva
was able to secure a clean certificate of title and mortgaged the property to
appellant Barretto to secure a loan of P30K, said mortgage having been duly
recorded.
Villanueva defaulted on the mortgage loan in favor of Barretto. The latter foreclosed
the mortgage in her favor, obtained judgment, and upon its becoming final asked
for execution. Cruzado filed a motion for recognition for her "vendor's lien"
invoking Articles 2242, 2243, and 2249 of the new Civil Code. After hearing, the
court below ordered the "lien" annotated on the back of the title, with the proviso
that in case of sale under the foreclosure decree the vendor's lien and the mortgage
credit of appellant Barretto should be paid pro rata from the proceeds.
Appellants insist that:
The vendor's lien, under Articles 2242 and 2243 of the new, Civil Code of the
Philippines, can only become effective in the event of insolvency of the vendee,
which has not been proved to exist in the instant case; and .
2.
That the Cruzado is not a true vendor of the foreclosed property.
1.
Article 2242 of the new Civil Code enumerates the claims, mortgage and liens that
constitute an encumbrance on specific immovable property, and among them are: .
(2) For the unpaid price of real property sold, upon the immovable sold; and
(5) Mortgage credits recorded in the Registry of Property."
Article 2249 of the same Code provides that "if there are two or more credits with
respect to the same specific real property or real rights, they shall be satisfied prorata after the payment of the taxes and assessment upon the immovable property
or real rights.
Held: Application of the above-quoted provisions to the case at bar would mean
that the herein appellee Rosario Cruzado as an unpaid vendor of the property in
question has the right to share pro-rata with the appellants the proceeds of the
foreclosure sale.
Issue: Appellants argument: inasmuch as the unpaid vendor's lien in this case was
not registered, it should not prejudice the said appellants' registered rights over the
property.
Held: There is nothing to this argument. Note must be taken of the fact that article
2242 of the new Civil Code enumerating the preferred claims, mortgages and liens
on immovables, specifically requires that. Unlike the unpaid price of real property
sold. mortgage credits, in order to be given preference, should be recorded in the
Registry of Property. If the legislative intent was to impose the same requirement in
the case of the vendor's lien, or the unpaid price of real property sold, the
lawmakers could have easily inserted the same qualification which now modifies the
mortgage credits. The law, however, does not make any distinction between
registered and unregistered vendor's lien, which only goes to show that any lien of
that kind enjoys the preferred credit status.
As to the point made that the articles of the Civil Code on concurrence and
preference of credits are applicable only to the insolvent debtor, suffice it to say
that nothing in the law shows any such limitation. If we are to interpret this portion
of the Code as intended only for insolvency cases, then other creditor-debtor
relationships where there are concurrence of credits would be left without any rules
to govern them, and it would render purposeless the special laws on insolvency.
Resolution on Motion to Consider (1962)
Appellants, spouses Barretto, have filed a motion vigorously urging that our decision
be reconsidered and set aside, and a new one entered declaring that their right as
mortgagees remain superior to the unrecorded claim of herein appellee for the
balance of the purchase price of her rights, title, and interests in the mortgaged
property.
We have reached the conclusion that our original decision must be reconsidered and
set aside:
Under the system of the Civil Code of the Philippines, only taxes enjoy a similar
absolute preference. All the remaining thirteen classes of preferred creditors under
Article 2242 enjoy no priority among themselves, but must be paid pro-rata i.e., in
proportion to the amount of the respective credits. Thus, Article 2249 provides:
If there are two or more credits with respect to the same specific real property or
real rights, they, shall be satisfied pro-rata after the payment of the taxes and
assessments upon the immovable property or real rights."
The full application of Articles 2249 and 2242 demands that there must be first
some proceedings where the claims of all the preferred creditors may be bindingly
adjudicated, such as:
1.
insolvency,
2.
the settlement of decedents estate under Rule 87 of the Rules of Court, or
3.
other liquidation proceedings of similar import.
This explains the rule of Article 2243 of the new Civil Code that
The claims or credits enumerated in the two preceding articles" shall be considered
as mortgages or pledges of real or personal property, or liens within the purview of
legal provisions governing insolvency.
And the rule is further clarified in the Report of the Code Commission, as follows:
The question as to whether the Civil Code and the insolvency Law can be
harmonized is settled by Article 2243. The preferences named in Articles 2261 and
2262 (now 2241 and 2242) are to be enforced in accordance with the Insolvency
Law."
Rule
Thus, it becomes evident that one preferred creditor's third-party claim to the
proceeds of a foreclosure sale (as in the case now before us) is not the proceeding
contemplated by law for the enforcement of preferences under Article 2242, unless
the claimant were enforcing a credit for taxes that enjoy absolute priority. If none of
the claims is for taxes, a dispute between two creditors will not enable the Court to
ascertain the pro-rata dividend corresponding to each, because the rights of the
other creditors likewise" enjoying preference under Article 2242 can not be
ascertained.
Held: There being no insolvency or liquidation, the claim of the appellee, as unpaid
vendor, did not require the character and rank of a statutory lien co-equal to the
mortgagee's recorded encumbrance, and must remain subordinate to the latter.
SPS. FELINO S. SAMATRA and CHARLITA ISIDRO, petitioners, vs. RITA S.
VDA. DE PARIAS, respondent.
DECISION
PUNO, J.:
The case at bar originated from an agrarian case involving two (2) agricultural
lots with an aggregate area of 28,375 square meters and a homelot ii with an area of
472 square meters, all situated in Sto. Domingo, Nueva Ecija. These lots were
originally owned by spouses Donato Samatra and Macaria Sana. Petitioner FELINO
SAMATRA and respondent RITA S. VDA. DE PARIAS are their legitimate children.
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On March 20, 1972, the spouses mortgaged one of the agricultural lots and the
homelot to the Rural Bank of Sto. Domingo (N.E.) Inc. to secure their P2,500.00 loan
that would mature on August 25, 1975. A year later, or on September 21, 1973, the
spouses constituted another real estate mortgage over the other lot in favor of the
same bank to secure their second loan of P1,300.00. This loan was to mature on
April 3, 1975.
On January 3, 1975, while the mortgages were still subsisting, mortgagor
Donato Samatra executed a Kasunduang Buwisan sa Sakahaniii constituting his
daughter, respondent Rita S. Vda. de Parias, as agricultural lessee over the
mortgaged lots, without the consent of the mortgagee bank.
When the mortgagors-spouses failed to pay their loans upon maturity, the
mortgagee bank extrajudicially foreclosed the mortgages over the subject lots. At a
public auction, the lots were sold to the mortgagee bank as the sole and highest
bidder. The corresponding certificates of sale were issued in its favor and
registered with the Register of Deeds of Nueva Ecija on May 27, 1976. As the
mortgagors-spouses failed to redeem the lots within a year from its
registration, the mortgagee bank consolidated its ownership over the
subject lots. Nonetheless, respondent continued in possession of the lands.
lessee.xi
In the case at bar, the resolution of the second issue involves proof of the fifth
element, i.e., personal cultivation of the lands by respondent as to constitute her a
bonafide agricultural lessee thereof. While the trial court found that respondent was
not a bonafide tenant, the Court of Appeals declared that she is but she failed to
exercise her right to redeem the lands within the required period. As a result, both
the trial court and the Court of Appeals decreed that the sale of the lands to
petitioners is valid although they disagreed on the fact of personal cultivation by
respondent as to constitute her a bonafide lessee. Thus, the petitioners now seek a
declaration from this Court that the respondent has no right to further possess the
disputed lands as she is not a bonafide agricultural lessee thereof.
On this aspect, we find for the petitioners.
In support of her claim of legitimate tenancy, respondent presented the
following documents: (1) the Kasunduang Buwisan sa Sakahan, dated January 3,
1975; (2) the certificate of the Ministry of Agrarian Reform (MAR) District Officer
Eugenio B. Bernardo; and (3) the October 4, 1984 affidavit of Ponciano Alejo,
President of the Malayang Samahang Nayon. We find, however, that these
documents are insufficient to support respondents claim of tenancy.
First, the Kasunduang Buwisan sa Sakahan entered into by the original owners
and the respondent does not per se prove that respondent is a bonafide lessee. The
five (5) elements of agricultural leasehold relationship are still required to be
established. In the case at bar, the element of personal cultivation by the
respondent was not adequately proved. This is fatal to respondents cause as
without the element of personal cultivation, a person cannot be
considered a tenant even if he is so designated in the written agreement
of the parties.xii
Second, the Certification issued by MAR District Officer Bernardo is likewise
insufficient to prove that respondent is a bonafide lessee as it did not make a
finding that respondent personally cultivated the land either by herself or through
farm laborers. The Certification simply made a general conclusion that
respondent is a registered agricultural lessee of the lands per records of
their office, as the Kasunduang Buwisan sa Sakahan was registered there.
Third, the 1984 Affidavit of Alejo,xiii the President of the Malayang Samahang
Nayon likewise deserves scant consideration. Its contents leave much to be desired
insofar as proof that respondent is a bonafide lessee of the subject lots. Its
ambiguous and sweeping statements cannot support respondents claim of
legitimate tenancy. Consider these statements:
2. That on July 2, 1984, I issued a certification that one MR.
DONATO SAMATRA, of Barangay Malaya, Sto. Domingo, Nueva Ecija
is the owner, and at the same time the actual tiller of two (2)
parcels of agricultural land situated thereat, with a combined area
of 26,746 square meters, more or less including a residential
portion, without carefully verifying the facts.
3. That it now appears that I was misled into believing, and thus
certifying, that said landholding was not tenanted but is actually
being tilled by the registered owner DONATO SAMATRA;
have personally cultivated the lands, she could have been helped by farm laborers
in the care of the plants as this is allowed by law. To be sure, there is a dearth of
evidence on record to show that respondent personally cultivated the lands, much
less that she was assisted by hired personnel in her farm work.
Prescinding from these premises, we affirm the conclusion of the trial court that
respondent is not a bonafide agricultural lessee of the subject lands for failure
to prove the important element of personal cultivation.
Finally, we affirm the award of actual damages to petitioners in the
form of unrealized income from the lands in view of respondents refusal to
surrender the disputed lands to them. The actual amount thereof should be
recomputed by the trial court based on the total expected harvest from the date the
lots were sold to petitioners in 1984 until finality of the decision. However, we
affirm the deletion of the award of attorneys fees and litigation expenses
as the trial court failed to discuss in its Decision the reasons for their grant. The
settled rule is that the matter of attorneys fees cannot be mentioned only in
the dispositive portion of the decision.xvii The same goes for the award of
litigation expenses. They must be clearly explained and justified by the trial court in
the body of its decision for the general rule is that attorneys fees and expenses of
litigation cannot be recovered in the absence of stipulation. xviii
IN VIEW WHEREOF, the impugned Decision of the Court of Appeals in CA-G.R.
CV No. 51831, dated March 12, 1999, is SET ASIDE. The Decision of the Regional
Trial Court, Branch 37, Sto. Domingo, Nueva Ecija, dated October 17, 1994, in
Agrarian Case No. 113/Civil Case No. SD-1194, is REINSTATED, with the
modifications that the awards of attorneys fees and litigation expenses to
petitioners are deleted. The records of the case are remanded to the court a quo for
recomputation of the proper amount of actual damages to be paid by respondent
Rita S. Vda. de Parias to petitioners Felino Samatra and Charlita Isidro.
SO ORDERED.
Davide, Jr., C.J., (Chairman), and Austria-Martinez, JJ., concur.
Kapunan, and Ynares-Santiago, on official leave.
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Systems Control, Inc. [Bancom] and that the loan be secured by a mortgage.
-The mortgage was not registered.
-Bancom and its directors/ officers mismanaged and misspent the loan.
-Bancom resigned with the approval of DBP even before the expiration of the management
contract, leaving Filipinas Marble desolate and devastated.
-Machineries arrived in the Philippines but alleged not delivered to Filipinas Marble.
-Also, instead of helping Filipinas Marble get back on its feet, DBP completely abandoned Filipinas
Marbles project and proceeded to foreclose the properties mortgage without previous demand or
notice.
-In essence, the Filipinas Marble seeks the annulment of the deeds of mortgage and deed of
assignment because there was no loan at all to secure since what DBP "lent" to Filipinas Marble
with its right hand, it also got back with its left hand; and that, there was failure of consideration
with regard to the execution of said deeds as the loan was never delivered to the Filipinas Marble.
-The Filipinas Marble further prayed that pending the trial on the merits of the case, the trial court
immediately issue a restraining order and then a writ of preliminary injunction against the sheriffs
to enjoin the latter from proceeding with the foreclosure and sale of the Filipinas Marbles
properties in Metro Manila and in Romblon.
DBPs DEFENSE:
-opposed the issuance of a writ of preliminary injunction stating that under Presidential Decree No.
385, DBP's right to foreclose is mandatory as the arrearages of petitioner had already amounted to
P123,801,265.82 as against its total obligation of P151,957,641.72; that under the same decree,
no court can issue any restraining order or injunction against it to stop the foreclosure since
Filipinas Marble's arrearages had already reached at least twenty percent of its total obligations;
that the alleged non-receipt of the loan proceeds by the petitioner could, at best, be accepted only
in a technical sense because the money was received by the officers of the petitioner acting in
such
capacity and, therefore, irrespective of whoever is responsible for placing them in their positions.
TC AND CA:
-While evidence of Filipinas Marble Corporation appears persuasive, still it cannot enjoin DBP from
complying with the mandatory provisions of PD 385.
ISSUES:
Page 4 of 33/Comia, A.T.
SPCL Chattel Mortgage
If there was no valid contract of loan for failure of consideration, whether or not the mortgage can
exist or stand by itself being a mere accessory contract.
Whether or not the non-registration of the Chattel Mortgage affects its validity.
HELD:
- Presidential Decree No. 385 was issued primarily to see to it that government financial
institutions are not denied substantial cash inflows, which are necessary to finance development
projects all over the country, by large borrowers who, when they become delinquent, resort to
court actions in order to prevent or delay the government's collection of their debts and loans.
-The government, however, is bound by basic principles of fairness and decency under the due
process clause of the Bill of Rights. P.D. 385 was never meant to protect officials of government
lending institutions who take over the management of a borrower corporation, lead that
corporation to bankruptcy through mismanagement or misappropriation of its funds, and who,
after ruining it, use the mandatory provisions of the decree to avoid the consequences of their
misdeeds.
-The designated officers of the government financing institution cannot simply walk away and then
state that since the loans were obtained in the corporation's name, then P.D. 385 must be
peremptorily applied and that there is no way the borrower corporation can prevent the automatic
foreclosure of the mortgage on its properties once the arrearages reach twenty percent (20%) of
the total obligation no matter who was responsible.
-In the case at bar, the respondents try to impress upon this Court that the $5,000,000.00 loan
was actually granted and released to the petitioner corporation and whatever the composition of
the management which received the loan is of no moment because this management was acting
in behalf of the corporation. The respondents also argue that since the loan was extended to the
corporation, the releases had to be made to the then officers of that borrower corporation.
-Precisely, what the petitioner is trying to point out is that the DBP and Bancom people who
managed Filipinas Marble misspent the proceeds of the loan by taking advantage of the positions
that they were occupying in the corporation which resulted in the latter's devastation instead of its
rehabilitation. The petitioner does not question the authority under which the loan was delivered
but stresses that it is precisely this authority which enabled the DBP and Bancom people to
misspend and misappropriate the proceeds of the loan thereby defeating its very purpose, that is,
to develop the projects of the corporation. Therefore, it is as if the loan was never delivered to it
and thus, there was failure on the part of the respondent DBP to deliver the consideration for
which the mortgage and the assignment of deed were executed.
- Article 2125 of the Civil Code clearly provides that the non-registration of the mortgage does not
affect the immediate parties. It states:
Art. 2125. In addition to the requisites stated in article 2085, it is indispensable, in order that a
mortgage may be validly constituted that the document in which it appears be recorded in the
Registry of Property. If the instrument is not recorded, the mortgage is nevertheless binding
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xBonnevie v. CA
consignee be paid and with the present legal interest of 12% per annum
commencing on the date of filing of the complaint, until fully paid. The petitioner
now constests the ruling particularly on the issue of interest.
Issue: When should the reckoning period be for the computation of the payment
of legal interest on an award for loss or damage? What is the applicable rate of
interest?
Held: The Court laid down the following rules of thumb for guidance in cases like
that of the above:
I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts,
delicts or quasi-delicts is breached, the contravenor can be held liable for
damages. The provisions under Title XVIII on "Damages" of the Civil Code govern
in determining the measure of recoverable damages.
II. With regard particularly to an award of interest in the concept of actual and
compensatory damages, the rate of interest, as well as the accrual thereof, is
imposed, as follows:
1. When the obligation is breached, and it consists in the payment of a sum of
money, i.e., a loan or forbearance of money, the interest due should be that which
may have been stipulated in writing. Furthermore, the interest due shall itself earn
legal interest from the time it is judicially demanded. In the absence of stipulation,
the rate of interest shall be 12% per annum to be computed from default, i.e.,
from judicial or extrajudicial demand under and subject to the provisions of Article
1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is
breached, an interest on the amount of damages awarded may be imposed at the
discretion of the court at the rate of 6% per annum. No interest, however, shall be
adjudged on unliquidated claims or damages except when or until the demand
can be established with reasonable certainty. Accordingly, where the demand is
established with reasonable certainty, the interest shall begin to run from the time
the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such
certainty cannot be so reasonably established at the time the demand is made,
the interest shall begin to run only from the date the judgment of the court is
made (at which time the quantification of damages may be deemed to have been
reasonably ascertained). The actual base for the computation of legal interest
shall, in any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes final and
executory, the rate of legal interest, whether the case falls under paragraph 1 or
paragraph 2, above, shall be 12% per annum from such finality until its
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