Case # 20

VILLANUEVA VS PNB
(Dec. 6, 2006)
FACTS:
Philippine National Bank (PNB) issued an advertisement for the sale of its two
lots, thru bedding, covering Lot 17 and Lot 19 in the amount of P1, 409, 000.00 and
P 2, 268,000.00 respectively. Reynaldo Villanueva offered, thru letter, to purchase
both lots in the amount of P 3, 677, 000.00. Upon receipt of the letter-offer, the PNB
through its Vice-President informed Villanueva that only Lot 19 is available and that
the price is now P 2, 883, 000.00 but the sale shall be subject to PNB Board of
Directors approval and to the other terms and conditions imposed by the bank.
Villanueva confirmed the price of P 2, 883, 000.00 and offered to make a down
payment of P 600, 000.00 and the balance payable in 2-year at quarterly
amortization. Villanueva deposited an amount of P 200, 000.00 and later the bank
debited P380, 000.00 from his account with the PNB. However, the Vice President,
upon order of the Board, conducted another appraisal and public bidding over Lot
19 and deferring negotiations with Villanueva and returning his deposits of P 580,
000.00. Undaunted, Villanueva deposited a checks covering his balance but the
bank refused the same. Consequently, he filed a suit before the RTC for specific
performance and damages.
RTC ruled that there was a perfected Contract of Sale as the down payment
was in the nature of earnest money acceptance of which by PNB signified that there
was already a sale.
On appeal to the CA, it reversed and set aside the RTCs decision as there
was no perfected contract of sale. The letter of PNB Vice-President with a statement
that the sale shall be subject to the Boards approval and to other terms and
conditions constitutes a qualified acceptance on the offer of Villanueva. Villanueva
filed a motion for reconsideration but the same was denied hence, this appeal.
ISSSUE:
Was there a perfected contract of sale by and between Villanueva and PNB?
DECISION:
There was no perfected contract of sale. Contract of sale are perfected by
mutual consent whereby the seller obligates himself for, a price certain, to deliver
and transfer ownership of a specific thing or right to the buyer over which the latter
agrees. An acceptance of an offer which agrees to the rate but varies the term is
ineffective. The amounts paid by Villanueva were not in the nature of earnest
money but were mere deposits or proof of his interest to purchase the Lot.
Acceptance of said amounts by PNB does not presuppose perfection of any contract.
humbly prepared by PTA jr

Case # 21
LIM VS DEVELOPMENT BANK OF THE PHILIPPINES
(700 SCRA 210; July 1, 2013)
FACTS:

Sometime in 1969, Petitioners (Lim et al.) obtained a loan of P 40,000.00

from Development Bank of the Philippines (DBP). In 1970, they obtained again
another loan of P 960, 000. 00 from the same bank which to be payable on or before
Aug 22, 1982. To secure their loans, they mortgaged 10 parcels of land embraced
and covered by 10 Transfer Certificate of Titles (TCTs) under their names. In 1978,
petitioner made a partial payment of P 902, 800.00. Just only in 1989, Petitioners
requested for Statement of Account. The bank granted and issued their request. Not
satisfied with the computation of the bank, petitioner requested again an amended
Statement of Account claiming that they made a partial payment. The bank, thru its
branch manager, proposed a restructuring agreement proposing to petitioners to
pay 10% down payment and the remaining balance be paid in 36 monthly
installments. Petitioners happily agreed and paid the down payment. Unfortunately,
the Regional Credit Committee of the bank rejected the proposal. Petitioner, now, is
asking for the restoration of the previous agreement. Fortunately, the committee
considered and approved the previous Restructuring Agreement. However,
Petitioner later failed to comply. Consequently, the mortgages were scheduled for
auction but it was stopped as the petitioners asked for an extension. Petitioner
again asked for the Restructuring Agreement and the bank issued the same.
However, it was later cancelled by the bank due to failure by Petitioners again to
comply with the terms within a reasonable time. In effect, the foreclosure took
place. Petitioner, now, filed an action to annul the foreclosure with prayer for
issuance of Temporary Restraining Order before the RTC.
RTC ruled in favor of the Petitioner. On appeal to the CA, the appellate court
reversed and set aside the RTCs decision. Hence, petitioner constrained to elevate
the case to SC.
On appeal, Petitioner argued that their obligation is extinguished. The
cancellation of the restructuring agreement justifies the extinguishment of their
loan obligation under the principle of Constructive fulfillment found in Art 1186 of
the Civil Code.
ISSUE:
Whether the loan obligation is extinguished under the principle of
constructive fulfillment as provided by the art 1186 of the civil code?
HELD:
Article 1186 which states that the condition shall be deemed fulfilled when
the obligor voluntarily prevents its fulfillment does not apply in this case. To apply,
the three requisites must concur: (1) The condition is suspensive; (2) the obligor
actually prevents the fulfillment of the condition; and (3); he acts voluntarily.
It will be irrational for any bank to provide a suspensive condition in the
promissory note or restructuring agreement that will allow the debtor-promissor to
be freed from the duty to pay the loan without paying it. Besides, petitioners have
no one to blame but themselves for the cancellation of the Restructuring
agreement. The Regional committee reconsidered petitioners proposal to
restructure the loan but they failed to comply with its term. DBP, therefore, had
reason to cancel the restructuring agreement. Moreover, since the restructuring
agreement was cancelled, it could have not novated or extinguished Petitioners
loan obligation.
humbly prepared by PTA jr

Case # 22
METROPOLITAN BANK AND TRUST COMPANY vs WONG
(359 SCRA 608; June 26, 2001)
FACTS:
Mindanao Grains Inc., (MGI for brevity), obtained a loan from petitioner
Metropolitan Bank and Trust company. To secure the loan, respondent Wong
executed a real estate mortgage over his parcel of land registered. In the Real
estate mortgage, the parties agreed that all correspondence relative to the
mortgage including demand letter, summonses, subpoenas, or notification of any
judicial or extrajudicial action shall be sent to the mortgagor. Due to the failure of
MGI to pay the loan, petitioner applied for an extrajudicial foreclosure. A publication
was made in a newspaper of general circulation for three consecutive weeks.
However, no posting of such notice of extrajudicial foreclosure was posted in at
least three public places where the property is situated. Likewise, no personal notice
was given to the mortgagor. After the publication, the mortgage was extrajudicially
foreclosed and the petitioner was declared as the highest bidder. Thereafter, the
title was consolidated in the name of the petitioner after the expiration of the one
year redemption.
Unaware of the foreclosure, respondent Wong applied for a loan with the
Producers Bank of the Philippines. It was only then when he learned that his land
was already foreclosed and no longer in his name. Respondent, now, filed an action
for reconveyance and damages against petitioner. Petitioner averred that the noncompliance of the posting of the notice of foreclosure in three public places is not
sufficient to nullify the extrajudicial foreclosure proceeding on the basis of the case
of Olizon vs. CA.
The RTC, on its ruling, nullified the foreclosure. On appeal to CA, it affirmed
the trial courts resolution. Hence, this appeal.
ISSUES:
1. Whether personal notice to the mortgagor a condition sine qua non for
the validity of the foreclosure proceeding?
2. Whether the non-compliance with the posting requirement fatal to the
validity of the foreclosure proceedings?
HELD:
1. In resolving the first query, we resort to the fundamental principle that a
contract is the
law between the parties and, that absent any showing that its provisions are wholly
or in part contrary to law, morals, good customs, public order, or public policy, it
shall be enforced to the letter by the courts. Act 3135 only requires (1) the posting
of notices of sale in three public places, and (2) the publication of the same in a
newspaper of general circulation. Nevertheless, the parties to the mortgage
contract are not precluded from exacting additional requirements. When the
petitioner failed to send the notice of foreclosure sale to respondent, he committed
a contractual breach sufficient to render the foreclosure sale null and void.
2. The second query must be answered in the affirmative. An incisive
scrutiny in the

case of Olizon vs CA shows that the court has not actually dispensed with the
posting requirement under Act 3135. However, due to the unusual nature of the
attendant facts and the peculiarity of the confluent circumstances, the court ruled
otherwise. It bears stressing that in the said case (Olizon case), the extrajudicial
foreclosure was sought to be annulled was conducted more than 15 years ago, thus,
even on the ground of laches, the olizons action for annulment of foreclosure and
certificate of sale was bound to fail.
humbly prepared by PTA jr

Case # 23
ASSET PRIVATIZATION TRUST vs CA
(300 SCRA 579; Dec. 29, 1998)
FACTS:
The government, by virtue of the law passed by congress, granted
Marinduque Mining and Industrial Corporation (MMIC) the exclusive right to explore,
develop and exploit nickel, cobalt, and other minerals in the Surigao mineral
reservation. To support the financing of MMIC in its operation, the government
purchased MMICs debenture bonds and extension of guarantees. It also extends
loans to MMIC through Development Bank of the Philippines (DBP) and Philippine
National Bank (PNB). To that effect, MMIC executed a mortgage over its assets, both
real and chattel, in favor of DBP and PNB. As the various loans and advances made
by DBP and PNB had become over due, it decided to exercise their right to
extrajudicial foreclose the mortgage. The foreclosed assets were sold to PNB as the
lone bidder. These assets were then transferred to Asset Privatization Trust (APT)
which is now the successor of DBP and PNB. Against the foreclosure, the MMICs
President and other stockholders filed a derivative suit against APT to annul the
foreclosure. In the course of the trial, the parties mutually agreed to submit their
case to arbitration. In their compromise agreement, the parties agreed to limit their
issues only on the capacity of the plaintiffs to institute a derivative suit on behalf of
MMIC and the validity of the foreclosure proceedings. This compromise and
arbitration agreement was duly approved by the trial court.
The Arbitration Committee, in its order, ordered APT to pay the plaintiffs
moral and exemplary damages aside from the declaration of the irregularity of the
extrajudicial foreclosure proceedings. Dissatisfied with the decision, APT filed a
motion for reconsideration on the ground that the arbitration award sought to be
confirmed has far exceeded the issues submitted and even granted moral damages.
The trial court denied the motion. Appealed to the CA, but it dismissed the appeal.
Hence this instant petition for certiorari.
ISSUE:
Whether the Arbitration Committee can resolve issues not submitted for
arbitration.
HELD:
The Arbitrators cannot resolve issues beyond the scope of the submission
agreement. The parties to such an agreement are bound by the arbitrators award
only to the extent and in the manner prescribed by the contract and only if the
award is rendered in conformity thereto.

humbly prepared by PTA jr.

Case # 24
GOTESCO PROPERTIES, INC VS FAJARDO
(692 SCRA 319; Feb. 19, 2013)
FACTS:
Spouses Fajardo entered into a contract to sell with petitioner over the titled
100 sq. m. lot. They agreed in their contract to sell that spouses Fajardo shall pay its
value along with the interest for a period of 10-year. On the other hand, petitioner
shall execute a final deed of sale and deliver the corresponding title upon full
payment. Unfortunately, petitioner failed to execute a deed of sale and to deliver
the title despite full payment of the purchase price. Stubbornly failed to comply
after several demands, spouses Fajardo filed a case for specific performance or
rescission of contracts with damages before the Housing and Land Use Regulatory
Board-Expanded National Capital Region Field Office (HLURB-ENCRFO). Petitioner
averred that the non-delivery of the title to spouses Fajardo was beyond their
control. While PGIs petition for inscription of the technical description on the said
lot was granted by the RTC, the same was reversed by the Court of Appeals. That
causes the delay in the subdivision of the property into individual lots with
individual titles. For this incident, their non-fulfillment of their obligation was beyond
their control and thus, rescission is improper.
HLURB-ENCRFO ruled in favor of spouses Fajardo. The failure of GPI to
execute a deed and to deliver the corresponding title constitutes substantial breach
which warrants rescission. Appealed to HLURB of Commissioners but affirmed the
appealed decision requiring petitioner to refund the payments. Appealed again to
the Office of the President but denied. Not yet satisfied, petitioner appealed to the
Court of Appeals. The appealed decision was still affirmed. Hence, this appeal.
ISSUE:
Whether there is a substantial breach to warrant rescission?
HELD:
There is substantial breach to warrant rescission. A perusal of the records
shows that GPI acquired the subject property on March 10, 1992 through a Deed of
Partition and Exchange executed between it and Andres Pacheco, the former
registered owner. GPI was issued TCT on March 16, 1992 but the same did not bear
any technical description. However, no plausible explanation was advanced by the
Petitioner as to why the Petition for inscription was filed only for almost 8 years from
the acquisition of the subject property. Neither did petitioners sufficiently explain
why GPI took no positive action to cause the inscription within a reasonable time.
Clearly, the long delay in the performance of petitioners obligation from date of
demand was unreasonable and unjustified. It cannot therefore be denied that
petitioner substantially breached its contract to sell with spouses Fajardo which
thereby accords the latter the right to rescind the same pursuant to Art 1191 of the
Code.
humbly prepared by PTA jr

Case # 25
LAPERAL vs SOLID HOMES Inc
(460 SCRA 375; JUNE 21, 2005)
FACTS:
Laperal and Solid Homes (registered subdivision developer) entered into an
Agreement. Solid Homes undertook at its expense to convert the parcel of lands of
Laperal into first class subdivision. In their agreement, they agreed that solid Homes
will sell those residential houses to any interested buyer and give to Laperal their
shares. Unfortunately, Laperal notified Solid Homes for the rescission of their
agreement particularly on the ground of non-payment of their agreed shares with a
demand to vacate the subject lands and yield possession to them. Solid Homes,
now, filed an action for reformation of their agreement that their contract failed to
express the true intent of the parties with prayer for the issuance of TRO and writ of
Preliminary injunction to prevent Laperal from exercising their rights as owners of
the subject parcel of lands.
The RTC dismissed the complaint for reformation. Solid homes, now, appealed
to the CA. The CA affirmed the trial courts decision with modification that Laperal
are ordered to reimburse Solid homes the actual cost of the development and the
completed improvements on the project. Against the reimbursement, Laperal
constrained to appeal the case to the SC.
In its appeal, it asserted that the rescission was made pursuant to art 1191 of
the civil code. Therefore, the provision of art 1385 of the code which requires
mutual restitution, should not apply because art 1385 applies only if the rescission
is made under the instances enumerated in art 1381 of the same code.

ISSUE:
Whether Laperal oblige to reimburse Solid Homes even the rescission was
based on art 1191.

HELD:
The court does not agree with the Petitioner. Mutual restitution is required in
cases involving rescission under art 1191. Again, since art 1385 of the civil code
expressly and clearly states that rescission creates the obligation to return the
thing which were the object of the contract, together with their fruits and the price
with its interest, the court finds no justification to sustain petitioners position that
said art 1385 does not apply to rescission under art 1191.

humbly prepared by PTA jr