NUNELON R. MARQUEZ, v.

ELISAN CREDIT CORPORATION,

G.R. No. 194642
April 06, 2015
Facts:
Petitioner obtain to separate loan from the respondent. Subsequently, to further secure payment of
the loan, the petitioner executed a chattel mortgage 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. The
promissory note covering the second loan contained exactly the same terms and conditions as the
first promissory note. 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.
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
MTC found for the petitioner and held that the second loan was fully extinguished because 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. The MTC noted that the respondent accepted the daily payments made by the petitioner
without protest.
RTC reversed the MTC decision and cite Article 1253 of the Civil Code, it 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 when the petitioner executed the promissory note covering the second loan.
The CA affirmed the RTC's ruling with modification.
Issue:
1. WON the daily payments made after the second loan's maturity should be credited against the
interest or against the principal?
2. WON the the excessive interest, penalty and attorney's fees?

Ruling:
1

No, respondent properly credited the daily payments to the interest and not to the principal
because the debt produces interest, i.e., the promissory note securing the second loan
provided for payment of interest; a portion of the second loan remained unpaid upon maturity;
and the respondent did not waive the payment of interest. The presumption under Article 1253
resolves doubts involving payment of interest-bearing debts. It is a given under this Article that
the debt produces interest. The doubt pertains to the application of payment; the uncertainty is
on whether the amount received by the creditor is payment for the principal or the interest.
Article 1253 resolves this doubt by providing a hierarchy: payments shall first be applied to the
interest; payment shall then be applied to the principal only after the interest has been fullypaid.The presumption under Article 1176 does not resolve the question of whether the amount
received by the creditor is a payment for the principal or interest. Under this article the amount
received by the creditor is the payment for the 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 waives the payment of interest because he accepts payment for the principal without
any reservation. There was no waiver of interest. 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. Correlating the two provisions, the rule under Article 1253
that payments shall first be applied to the interest and not to the principal shall govern if two
facts exist: (1) the debt produces interest (e.g., the payment of interest is expressly stipulated)
and (2) the principal remains unpaid.The exception is a situation covered under Article 1176,
i.e., when the creditor waives payment of the interest despite the presence of (1) and (2)
above. In such case, the payments shall obviously be credited to the principal.

3. Yes, stipulations imposing excessive rates of interest and penalty are void for being contrary to
morals, if not against the law. Article 1229 of the Civil Code provides:LawlibraryofCRAlaw"The
judge shall equitably reduce the penalty when the principal obligation has been partly or
irregularly complied with by the debtor. Even if there has been no performance, the penalty
may also be reduced by the courts if it is iniquitous or unconscionable. and Article 1306 of the
Civil Code is emphatic: The contracting parties may establish such stipulations, clauses, terms
and conditions as they may deem convenient, provided they are not contrary to law, morals,
good customs, public order, or public policy. The court reduced the stipulated rates as follows :
the interest of 26% per annum is reduced to 2% per annum; the penalty charge of 10% per
month, or 120% per annum is reduced to 2% per annum; and the amount of attorney's fees
from 25% of the total amount due to 2% of the total amount due.

PEOPLES GENERAL INSURANCE CORP. vs. COL. FELIX MATEO A. RUNES

G.R. No. 212092
April 8, 2015

Facts: Respondent filed an action for recovery a certain sum of money with damages against the
Petitioner. The Trial Court and Court of Appeals ruled against the Petitioner. The Parties entered
into a compromise agreement that the petitioner will issue twelve checks in favor of the respondent
and if should the petitioner default in at least two installments, the outstanding balance of the
obligation if payment/s have been made, shall become due and demandable and the respondent
shall forthwith be entitled to the issuance of a writ of execution for the payment of the unpaid
amount.
Issue: WON the compromise agreement is valid?
Ruling: Yes, the court ruled that a compromise agreement is valid if is not contrary to law, morals,
good customs, public policy and public order.

Secretary of the Department of Public Works and Highways and District Engineer Celestino
R. Contreras vs.Spouses Heracleo and Ramona Tecson
G.R. No. 179334
April 21, 2015
Facts: Respondents filed an action for recovery of possession with damages against petitioners. It
revolves around the taking of the subject lot by petitioners for the construction of the MacArthur
Highway. There is taking when the expropriator enters private property not only for a momentary
period but for a permanent duration, or for the purpose of devoting the property to public use in
such a manner as to oust the owner and deprive him of all beneficial enjoyment thereof. After the
lapse of more than fifty years, the property owners sought recovery of the possession of their
property.
Issue: WON THE action barred by prescription or laches?
Ruling: No, the court ruled that the action is not barred by prescription or laches because Laches is
principally a doctrine of equity which is applied to avoid recognizing a right when to do so would
result in a clearly inequitable situation or in an injustice. This doctrine finds no application in this
case, since there is nothing inequitable in giving due course to respondents claim. Both equity and
the law direct that a property owner should be compensated if his property is taken for public use.
Neither shall prescription bar respondents claim following the long-standing rule "that where
private property is taken by the Government for public use without first acquiring title thereto either
through expropriation or negotiated sale, the owners action to recover the land or the value thereof
does not prescribe.

RESIDENT MARINE MAMMALS OF THE PROTECTED SEASCAPE TAON STRAIT V.

SECRETARY ANGELO REYES
G.R. No. 180771
April 21, 2015

Facts : Two sets of petitioners filed separate cases challenging the legality of Service
Contract No. 46 (SC-46) awarded to Japan Petroleum Exploration Co. (JAPEX). The
Government of the Philippines, acting through the Department of Energy (DOE),
entered into a Geophysical Survey and Exploration Contract-102 (GSEC-102) with
JAPEX. The service contract allowed JAPEX to conduct oil exploration in the Taon Strait
during which it performed seismic surveys and drilled one exploration well. JAPEX,
assisted by DOE, also conducted geophysical and satellite surveys, as well as oil and
gas sampling in Taon Strait. The petitioners filed their cases in 2007, shortly after
JAPEX began drilling in the strait Protesting about the adverse ecological impact of
JAPEX's oil exploration activities in the Taon Strait. They attribute this "reduced fish
catch" to the destruction of the "payao" also known as the "fish aggregating device" or
"artificial reef." And contending that such contract is contrary to law. However the
respondents contends that the service contract and oil exploration activities were
mutually terminated by JAPEX and the Government in 2008.

Issue: whether or not the service contract entered into by JAPEX and the DOE is contrary to law.

Ruling: Yes, the service contract no. 46 is considered to be contrary to law under article 1306 of the
Civil Code of the Philippines, The contracting parties may establish such stipulations, clauses,
terms and conditions as they may deem convenient, provided they are not contrary to law, morals,
good customs, public order, or public policy. While the Court finds that Presidential Decree No. 87
is sufficient to satisfy the requirement of a general law, the absence of the two other conditions,
that the President be a signatory to SC-46, and that Congress be notified of such contract, renders
it null and void. Although SC-46 was authorized by the Presidential Decree No. 87,on oil extraction,
it did not fulfill some requirements given by the constitution for a service contract, Section 2 Article
XII of the 1987 Constitution requires a service contract for oil exploration and extraction to be
signed by the president and reported to congress. Because the JAPEX contract was executed
solely by the Energy Secretary, and not reported to the Philippine congress, the Court held that it
was unconstitutional.