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1. G.R. No. L-19190 November 29, 1922

THE PEOPLE OF THE PHILIPPINE ISLANDS, plaintiff-appellee, vs. VENANCIO CONCEPCION, defendant-appellant.

FACTS:

Venancio Concepcion, President of the Philippine National Bank, sent telegrams and a confirmation letter to the manager
of the Aparri branch of PNB, authorizing an extension of credit in favour of Puno y Concepcion, S. en C. in the amount of
P300,000.00. This special authorization limited the discretional power of the local manager of the Aparri branch to grant
loans and discount negotiable documents to P5,000, which in certain cases, could be increased to P10,000. Pursuant to
this authorization, credit aggregating P300,000 was granted to Puno y Concepcion, S. en C., the only security required
consisting of six demand notes. This Puno y Concepcion, S. en C., in reality is a copartnership capitalized at P100,000
wherein, Venancio Concepcion’s wife owns half of the copartnership. Venancio Concepcion was found guilty by the CFI
for violation of Section 354 of Act 2747 which provides that: : "The National Bank shall not, directly or indirectly, grant
loans to any of the members of the board of directors of the bank nor to agents of the branch banks."

ISSUES:

1. Whether or not the granting of a credit of P300,000 to the copartnership was a “loan” within the meaning of
Section 35 of Act No. 2747.

YES. The "credit" of an individual means his ability to borrow money by virtue of the confidence or trust reposed by a
lender that he will pay what he may promise. A "loan" means the delivery by one party and the receipt by the other party
of a given sum of money, upon an agreement, express or implied, to repay the sum loaned, with or without interest. The
concession of a "credit" necessarily involves the granting of "loans" up to the limit of the amount fixed in the "credit,"

2. Whether or not the granting of a credit of P300,000 to the copartnership was a “loan” or a “discount”.

LOAN. Discounts are favored by bankers because of their liquid nature, growing, as they do, out of an actual, live,
transaction. But in its last analysis, to discount a paper is only a mode of loaning money, with, however, these distinctions:
(1) In a discount, interest is deducted in advance, while in a loan, interest is taken at the expiration of a credit; (2) a
discount is always on double-name paper; a loan is generally on single-name paper.

Conceding, without deciding, the law covers loans and not discounts, yet the conclusion is inevitable that the demand
notes signed by the firm "Puno y Concepcion, S. en C." were not discount paper but were mere evidences of
indebtedness, because (1) interest was not deducted from the face of the notes, but was paid when the notes fell due;
and (2) they were single-name and not double-name paper.

3. Whether or not the granting of a credit of P300,000 to the copartnershop was an “indirect loan” within the meaning
of Section 35 of Act 2747.

YES. In the interpretation and construction of statutes, the primary rule is to ascertain and give effect to the intention of
the Legislature. In this instance, the purpose of the Legislature is plainly to erect a wall of safety against temptation for a
director of the bank. The prohibition against indirect loans is a recognition of the familiar maxim that no man may serve
two masters — that where personal interest clashes with fidelity to duty the latter almost always suffers. If, therefore, it is
shown that the husband is financially interested in the success or failure of his wife's business venture, a loan to
partnership of which the wife of a director is a member, falls within the prohibition.

Various provisions of the Civil serve to establish the familiar relationship called a conjugal partnership. (Articles 1315,
1393, 1401, 1407, 1408, and 1412 can be specially noted.) A loan, therefore, to a partnership of which the wife of a
director of a bank is a member, is an indirect loan to such director.

That it was the intention of the Legislature to prohibit exactly such an occurrence is shown by the acknowledged fact that
in this instance the defendant was tempted to mingle his personal and family affairs with his official duties, and to permit
the loan P300,000 to a partnership of no established reputation and without asking for collateral security.

2. Alonzo vs. IAC

GR Number + Date: G.R. No. 72873 May 28, 1987

Petition: Petition for review by way of certiorari: Appeal from a decision of the Intermediate Appellate Court

Petitioner: CARLOS ALONZO and CASIMIRA ALONZO

Respondent: INTERMEDIATE APPELLATE COURT and TECLA PADUA

Ponencia: Cruz, J.
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DOCTRINE: Statutory Construction: Legislative Intent: The spirit, rather than the letter of a statute determines its
construction, hence, a statute must be read according to its spirit or intent. For what is within the spirit is within the letter
but although it is not within the letter thereof, and that which is within the letter but not within the spirit is not within the
statute. Stated differently, a thing which is within the intent of the lawmaker is as much within the statute as if within the
letter; and a thing which is within the letter of the statute is not within the statute unless within the intent of the lawmakers.

FACTS:

1. 5 Brothers and Sisters inherited qual pro indiviso shares a parcel of land registered in 'the name of their deceased
parents.
2. One of them, through an absolute deed of sale, transferred to petitioners, his undivided share of the land. A year
later, his sister sold her share in a “Con Pacto de Retro Sale”.
3. Petitioners occupied the two fifths of the land representing the portions sold to them and thereafter enclosed it
with a fence.
4. The son of the petitioners, Eduaro Alonzo and his wife, then built a semi-concrete house with the consent of the
petitioners.
5. One of the heirs to the land sought to redeem the portions that were sold but was subsequently denied due to him
being an American citizen.
6. Another co-heir, filed her own complaint invoking the same right of redemption claimed by her brother.
7. The trial court also dismiss this complaint, now on the ground that the right had lapsed, not having been exercised
within thirty days from notice of the sales. Although there was no written notice, it was held that actual knowledge
of the sales by the co-heirs satisfied the requirement of the law.
8. IAC, in reversing the trial court, the respondent court declared that the notice required by the said article was
written notice and that actual notice would not suffice as a substitute.

ISSUES:
1. WoN actual knowledge satisfied the requirement of Article 1088 of the Civil Code.

PROVISIONS:

Art. 1088. Should any of the heirs sell his hereditary rights to a stranger before the partition, any or all of the co-heirs may
be subrogated to the rights of the purchaser by reimbursing him for the price of the sale, provided they do so within the
period of one month from the time they were notified in writing of the sale by the vendor.

RULING + RATIO:

1. Yes.
a. While we admittedly may not legislate, we nevertheless have the power to interpret the law in such a way as
to reflect the will of the legislature. While we may not read into the law a purpose that is not there, we
nevertheless have the right to read out of it the reason for its enactment. In doing so, we defer not to "the
letter that killeth" but to "the spirit that vivifieth," to give effect to the law maker's will.
b. Was there a valid notice? Granting that the law requires the notice to be written, would such notice be
necessary in this case? Assuming there was a valid notice although it was not in writing. would there be any
question that the 30-day period for redemption had expired long before the complaint was filed in 1977? In the
face of the established facts, we cannot accept the private respondents' pretense that they were unaware of
the sales made by their brother and sister in 1963 and 1964. By requiring written proof of such notice, we
would be closing our eyes to the obvious truth in favor of their palpably false claim of ignorance, thus exalting
the letter of the law over its purpose. The purpose is clear enough: to make sure that the redemptioners are
duly notified. We are satisfied that in this case the other brothers and sisters were actually informed, although
not in writing, of the sales made in 1963 and 1964, and that such notice was sufficient.
c. The co-heirs in this case were undeniably informed of the sales although no notice in writing was given them.
And there is no doubt either that the 30-day period began and ended during the 14 years between the sales in
question and the filing of the complaint for redemption in 1977, without the co-heirs exercising their right of
redemption. These are the justifications for this exception.

DISPOSITION

WHEREFORE, the petition is granted. The decision of the respondent court is REVERSED and that of the trial court is
reinstated, without any pronouncement as to costs. It is so ordered.

3. Ramos v. Court of Appeals G.R. No. L-53766

FACTS  The Municipality of Hagonoy, Bulacan, availed of the services of the law firm of Cruz Durian &
Academia (now Cruz Durian Agabin Atienza & Alday) in a case for land recovery against Maria C.
Ramos et al
 Provincial Fiscal of Bulacan and Municipal Attorney of Hagonoy entered their appearance as
supervising counsel in the case for land recovery
 Ramos moved to disqualify Cruz law firm from serving as counsel for the municipality
 Trial court denied motion to disqualify since it found that private counsel only wanted to serve his
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native town
 Ramos assailed said order by a petition for certoriari with the Court of Appeals, who sustained the
ruling of the trial court, thus the case is appealed to the Supreme Court

ISSUE WON the finding of the CA that it is legal for a private counsel to represent LGU is correct

RULING Overturned. As Justice Moreland observes, Where language is plain, subtle refinements which tinge
words so as to give them the color of a particular judicial theory are not only unnecessary but decidedly
harmful. That which has caused so much confusion in the law, which has made it so difficult for the
public to understand and know what the law is with respect to a given matter, is in considerable
measure the unwarranted interference by judicial tribunals with the English language as found in
statutes and contracts, cutting out words here and inserting them there, making them fit personal Ideas
of what the legislature ought to have done or what parties should have agreed upon, giving them
meanings which they do not ordinarily have, cutting, trimming, fitting, changing and coloring until
lawyers themselves are unable to advise their clients as to the meaning of a given statute or contract
until it has been submitted to some court for its 'interpretation and construction.

There are two specific laws prohibiting private counsels representing the government- Sec. 1683 of the
Revised Administrative Code states "the provincial fiscal shall represent the province and any
municipality or municipal district thereof in any court, except in cases whereof original jurisdiction is
vested in the Supreme Court or in cases where the municipality or municipal district in question is a
party adverse to the provincial government or to some other municipality or municipal district in the
same province. When the interests of a provincial government and of any political division thereof are
opposed, the provincial fiscal shall act on behalf of the province. When the provincial fiscal is
disqualified to serve any municipality or other political subdivision of a province, a special attorney may
be employed by its council.”

Another is Sec. 3 of Local Autonomy Act, Republic Act No. 2264, which provides that the municipal
attorney, as the head of the legal division or office of a municipality, "shall act as legal counsel of the
municipality and perform such duties and exercise such powers as may be assigned to him by the
council"

4. Tomas vs. Tomas, G.R. No. L-36897 | June 25, 1980

DE CASTRO, J.

Parties:
Plaintiffs-appellees: SPOUSES FLORENTINO S. TOMAS and FRANCISCA CARINO
Defendant-appellant: EUSEBIA TOMAS (defendant) PHILIPPINE NATIONAL BANK, SANTIAGO, ISABELA BRANCH
(defendant-appellant)

Nature: PETITION for certiorari to review the decision of the then Intermediate Appellate Court.

Keyword: Mortgaged property through fraudalent means, good faith

Summary: The parcel of land owned by Florentino Tomas which was obtain through a homestead patent was fraudulently
transferred to Eusebia Tomas, claiming that she was the heir of the former. She successfully cancelled the OCT of
Florentino Tomas and had a TCT issued under her name through an extra-judicial settlement. She then took a loan from
PNB mortgaging the questioned property. Upon the discovery of the original owner of the said fraudulent act, he filed an
action against Eusebia Tomas alleging that the mortgage be declared null and void, since the mortgagor (Eusebia) is not
the true owner of the property.

Facts: Plaintiff spouses, Florentino S. Tomas and Francisca Cariño, are the owners of a parcel of land located in
Malasian, Santiago, Isabela (now Saguday, Nueva Vizcaya) since 1929, which they obtained through a homestead patent
with Original Certificate of Title. Through fraud and misrepresentation, one Eusebia Tomas succeeded in having the said
OCT cancelled, and obtained another in her name, now TCT-360 Nueva Vizcaya, with which she obtained a loan from the
Philippine National Bank branch in Santiago, Isabela, as a security, mortgaging the land with the bank for the loan of
P2,500.00. Florentino Tomas discovered the fraudulent acts of Eusebia Tomas when he himself applied for a loan from
the Philippine National Bank, and offered as a collateral the same land already mortgaged by Eusebia Tomas to the bank.

In the action plaintiffs filed on April 14, 1964 to declare TCT-350, Nueva Vizcaya, null and void, against Eusebia Tomas, it
was found by the court (Court of First Instance of Nueva Vizcaya) that Eusebia Tomas succeeded in having plaintiffs’
OCT No. I-4620 (Isabela)1 cancelled and having TCT No. 8779 (Isabela)2 issued in her name, by executing a deed of
extra-judicial settlement3 in which she made it appear that she is the lone heir of the registered owner, Florentino Tomas,
to whom she was not even known before, and who was at the time very much alive. She then petitioned for the issuance
of another owner’s duplicate of OCT No. I-4620, alleging loss of said owner’s duplicate. On Order of the court (Court of
First Instance of Isabela) where the petition was filed, a new owner’s duplicate was issued to Eusebia Tomas as the
petitioner. Upon the registration of the deed of extra-judicial settlement (Exhibit “J”), OCT No. I-4620 was cancelled, and
TCT No. 8779, now TCT-350 Nueva Vizcaya was issued in the name of Eusebia Tomas on March 14, 1957.
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In the same action, the Philippine National Bank was made a co-defendant as the mortgagee of the land, the plaintiffs
alleging that the mortgage is null and void, the mortgagor not being the owner of the property mortgaged. After trial in
which Eusebia Tomas never appeared to present any evidence, the court a quo rendered judgment declaring the CTC of
Eusebia Tomas null and void as well as declaring the mortgage in favor of the Philippine National Bank without force and
effect against the plaintiffs

Issue:

a. Whether the mortgage of the land in favor of the appellant bank is valid or not as against appellees

b. Whether the appellant is a mortgagee in good faith and for value, for if it is, and without anything to excite suspension
as it claims, it is protected in the same way as a purchaser in good faith and for value is protected under Section 39 of Act
496, otherwise known as the Land Registration Act.

Held:

a. The SC find no error in the holding of the court a quo that the mortgage executed by Eusebia Tomas, appellant’s co-
defendant in favor of said appellant bank over the land in question which the former never owned, I [sic] without effect as
against appellees herein

b. The SC find more weight and vigor in a doctrine which recognizes a better right for the innocent original registered
owner who obtained his certificate of title through perfectly legal and regular proceedings, than one who obtains his
certificate from a totally void one, as to prevail over judicial pronouncements to the effect that one dealing with a
registered land, such as a purchaser, is under no obligation to look beyond the certificate of title of the vendor, for in the
latter case, good faith has yet to be established by the vendee or transferee, being the most essential condition, coupled
with valuable consideration, to entitle him to respect for his newly acquired title even as against the holder of an earlier
and perfectly valid title. There might be circumstances apparent on the face of the certificate of title which could excite
suspicion as to prompt inquiry, such as when the transfer is not by virtue of a voluntary act of the original registered
owner, as in the instant case, where it was by means of a self-executed deed of extra-judicial settlement, a fact which
should be noted on the face of Eusebia Tomas’ certificate of title. Failing to make such inquiry would hardly be consistent
with any pretense of good faith, which the appellant bank invokes to claim the right to be protected as a mortgagee, and
for the reversal of the judgment rendered against it by the lower court.

Ratio: In claiming good faith as a mortgagee, and for value, appellant bank claims that no proof to the contrary was
presented by appellees in the trial court.7 It is a fact, however, that incontrovertible proofs have seen adduced showing
that Eusebia Tomas, the mortgagor, was not the owner of the property mortgaged. This is all that appellees had to prove
that would place appellant bank on obligation to show good faith, as in fact, it was the bank that alleged good faith as its
defense.8 It would be more legally correct, therefore, to say that it was incumbent on appellant to prove its
affirmative allegation of good faith rather than appellee to show the contrary.

Ruling: WHEREFORE, the judgment appealed from is hereby affirmed, without pronouncement as to costs. SO
ORDERED.

Notes: The owner of the building is equitably entitled to reimbursement of the cost of improvements made on public land
lot granted to another. (Manila Pencil Company, Inc. vs. Trazo, 77 SCRA 181).

A petition for quieting of title on the ground of fraud although essentially an action for reconveyance should not be
dismissed on the ground of prescription where the petition contains an averment that “the malicious and illegal acts
committed by the defendants were known to the plaintiffs only during this year 1977.” (Heirs of Segundo Uberas vs. Court
of First Instance of Negros Occidental, 86 SCRA 145).

If the vendor failed to redeem the property mortgaged equitably within the period agreed upon, the vendee’s title becomes
irrevocable by the mere registration of an affidavit of consolidation. (Labasan vs. Lacuesta, 86 SCRA 16).

The remedy of a realty owner whose property was erroneously registered in another’s name is to recover from the
Assurance Fund the losses as damages he had sustained. (Frias vs. Esquivel, 67 SCRA 487).

Where the petitioner and the respondent agreed “to give and to do” certain rights and obligations respecting the land and
mortgage debts of the petitioner, but partaking the nature of antichresis, the agreement entered into is an innominate
contract. (Dizon vs. Gaborro, 83 SCRA 688).

A mortgage on the land includes the improvements found thereon. (Manahan vs. Cruz, 61 SCRA 137).

Same Same: Land Registration; Between the mortgagee in good faith who extended a mortgage loan to a person who
claimed to be the registered owner of the collateral as per the submitted Transfer Certificate of Title and the innocent
original registered owner, the latter deserves better protection.—We, indeed, find more weight and vigor in a doctrine
which recognizes a better right for the innocent original registered owner who obtained his certificate of title through
perfectly legal and regular proceedings, than one who obtains his certificate from a totally void one, as to prevail over
judicial pronouncements to the effect that one dealing with a registered land, such as a purchaser, is under no obligation
to look beyond the certificate of title of the vendor, for in the latter case, good faith has yet to be established by the vendee
or transferee, being the most essential condition, coupled with valuable consideration, to entitle him to respect for his
newly acquired title even as against the holder of an earlier and perfectly valid title. There might be circumstances
apparent on the face of the certificate of title which could could excite suspicion as to prompt inquiry, such as when the
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transfer is not by virtue of a voluntary act of the original registered owner, as in the instant case, where it was by means of
a self-executed deed of extra-judicial settlement, a fact which should be noted on the face of Eusebia Tomas’ certificate of
title. Failing to make such inquiry would hardly be consistent with any pretense of good faith, which the appellant bank
invokes to claim the right to be protected as a mortgagee, and for the reversal of the judgment rendered against it by the
lower court.

5. PERPETUA VDA. DE APE vs. COURT OF APPEALS G.R. No. 133638, April 15, 2005

Fact: Private respondent instituted a case for “Specific Performance of a Deed of Sale with Damages” against Fortunato
and his wife Petitioner.  It was alleged in the complaint that on 11 April 1971, private respondent and Fortunato entered
into a contract of sale of land under which for a consideration of P5,000.00, Fortunato agreed to sell his share in Lot No.
2319 to private respondent.  The agreement was contained in a receipt prepared by private respondent’s son-in-law,
Andres Flores, at her behest. Fortunato and petitioner denied the material allegations of the complaint and claimed that
Fortunato never sold his share in Lot No. 2319 to private respondent and that his signature appearing on the purported
receipt was forged. She also stated in her testimony that her husband was an illiterate and only learned how to write his
name in order to be employed in a sugar central.

Issue: Whether a contract of sale exist between the Petitioner and Defendant?

Held: No, A contract of sale is a consensual contract, thus, it is perfected by mere consent of the parties.  It is born from
the moment there is a meeting of minds upon the thing which is the object of the sale and upon the price. Upon its
perfection, the parties may reciprocally demand performance, that is, the vendee may compel the transfer of the
ownership and to deliver the object of the sale while the vendor may demand the vendee to pay the thing sold. For there
to be a perfected contract of sale, however, the following elements must be present: consent, object, and price in money
or its equivalent.   In this case, as private respondent is the one seeking to enforce the claimed contract of sale, she bears
the burden of proving that the terms of the agreement were fully explained to Fortunato Ape who was an illiterate.  This
she failed to do.  While she claimed in her testimony that the contents of the receipt were made clear to Fortunato, such
allegation was debunked by Andres Flores himself when the latter took the witness stand.  As can be gleaned from
Flores’s testimony, while he was very much aware of Fortunato’s inability to read and write in the English language, he did
not bother to fully explain to the latter the substance of the receipt.  He even dismissed the idea of asking somebody else
to assist Fortunato considering that a measly sum of thirty pesos was involved.  Evidently, it did not occur to Flores that
the document he himself prepared pertains to the transfer altogether of Fortunato’s property to his mother-in-law.  It is
precisely in situations such as this when the wisdom of Article 1332 of the Civil Code readily becomes apparent which is
“to protect a party to a contract disadvantaged by illiteracy, ignorance, mental weakness or some other handicap.  The
Court annulled the contract of sale between Fortunato and private respondent on the ground of vitiated consent.

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