#17 Mariano Rodriguez v.

Belgica

Facts

 This was originally a partition case, instituted in the Court of First Instance of Rizal, Quezon City
Branch. After a series of pleadings filed by the parties, and on one of the hearings held, the
defendants made a verbal offer to compromise. Pursuant to the said offer, the plaintiffs filed a
Motion Re-Offer to Compromise.
 The parties have discussed and considered the terms and conditions set forth in said Offer of
Compromise submitted by the attorney for the plaintiffs and as a result thereof they have arrived at
an amicable settlement.
 after the lapse of the seventy (70) day period stipulated in the compromise agreement, and upon the
failure of the defendants to pay, the plaintiffs presented a Motion praying that the defendants be
ordered to deliver to the plaintiffs the Certificates of Titles so that the 14 per cent of the property
pertaining to the defendants could be segregated.
 In the opposition, the defendants prayed that the plaintiffs be ordered to grant defendant Porfirio
Belgica the authority to negotiate the sale or mortgage of the 36 per cent.
 The lower court ordered the defendants to surrender to the Court the TCTs they withdrew. the
defendants filed a Motion to Compel Plaintiffs to Comply with the Conditions of the Judgment.

Issue

 Whether the denial of the motion to compel the plaintiffs to grant the authority is proper and legal,
would seem to be the dominant issue. 

Ruling

 Yes. Considering that a reciprocal obligation has been established by the compromise agreement,
the sequence in which the reciprocal obligations of the parties are to be performed, is quite clear.
The giving of the authority to sell or mortgage precedes the obligation of the defendants to pay
P35,000.00 (Martinez v. Cavives, 25 Phil., 581). Until this authority is granted by the plaintiffs, the 70-
day period for payment will not commence to run. The plaintiffs insinuated that defendants did not
ask for the authority. There was, however, a statement or allegation by the defendants to the effect
that they made verbal requests for such authority, but plaintiffs refused to give, a statement or
allegation discredited by the lower court. But even without a request, from the very nature of the
obligation assumed by plaintiffs, demand by defendants that it be performed, was not necessary
(Article 1169, par. 2, Civil Code). 
 The compromise agreement being onerous the doubt should be settled in favor of the greatest
reciprocity of interests. Without the authority in question, the obligation of the defendants to pay
the plaintiffs the sum of P35,000.00 cannot be considered as having matured, and the lapse of the
70-day period fixed in the decision can not be adjudged as having resulted in the forfeiture of their
right to repurchase their 36 per cent interest in the properties.
#20 Delgado Brothers v. CA

Facts

 Richard A. Kleeper brought this action before the Court of First Instance of Manila to recover the
sum of P6729.50 as damages allegedly sustained by his goods contained in a lift van which fell to
the ground while being unloaded from a ship owned and operated by the American President
Lines, Ltd. to the pier.
 The trial court rendered decision ordering the shipping company to pay plaintiff. The court
ordered that, once the judgement is satisfied, co-defendant Delgado Brother, Inc. should pay
the shipping company the same amounts by way of reimbursement.
 Both defendants appealed to the Court of Appeals which affirmed in toto the decision of the
trial court. Delgado Brothers, Inc. interposed the present petition for review.

Issue

 Whether petitioner may be held liable for the damage done to the goods of respondent Richard
A. Klepper subsidiarily to the liability attached to its co-defendant American President Lines, Ltd.
as held by the trial court and affirmed by the Court of Appeals.

Ruling

 No. The Court cannot agree with the finding that the phraseology employed in Exhibit 1 would
not "induce a conclusion that the American President Lines, Ltd. assumed responsibility for the
negligence of the crane operator who was employed by the other appellant, Delgado Brothers,
Inc." and that for that reason the latter should be blamed for the consequence of the negligent
act of its operator because in our opinion the phraseology thus employed conveys precisely that
conclusion. It should be noted that the clause determinative of the responsibility for the use of
the crane contain two parts, namely: one wherein the shipping company assumes full
responsibility for the use of the crane, and the other where said company agreed not to hold the
Delgado Brothers, Inc. liable in any way. While it may be admitted that under the first part
carrier may shift responsibility to petitioner when the damage caused arises from the negligence
of the crane operator because exemption from responsibility for negligence must be stated in
explicit terms, however, it cannot do so under the second part when it expressly agreed to
exempt petitioner from liability in any way it may arise, which is a clear case of assumption of
responsibility on the part of the carrier contrary to the conclusion reached by the Court of
Appeals. In other words, the contract in question fully satisfies the doctrines stressed by said
court that in order that exemption from liability arising from negligence may be granted, the
contract "must be so clear as to leave no room for the operation of the ordinary rule of liability
consecrated by experience and sanctioned by the express provisions of law."
#29 Nunelon Marquez v. Elisan Credit Corp.

Facts

 This is a petition for review on certiorari assailing the May 17, 2010 decision and the November 25,
2010 resolution of the Court of Appeals (CA).
 Nunelon R. Marquez (petitioner) obtained a (first loan) from Elisan Credit Corporation (respondent)
for fifty-three thousand pesos (Php 53,000.00) payable in one-hundred eighty (180) days. The
petitioner signed a promissory note which provided that it is payable in weekly installments and
subject to twenty-six percent (26%) annual interest. In case of non-payment, the petitioner agreed to
pay ten percent (10%) monthly penalty based on the total amount unpaid.
 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."
 Both the petitioner and respondent acknowledged the full payment of the first loan.
 Subsequently, the petitioner obtained another loan (second loan) from the respondent evidenced by
a promissory note and a cash voucher. The promissory note covering the second loan
contained exactly the same terms and conditions as the first promissory note.
 When the second loan matured, the petitioner had onlypaid twenty-nine thousand nine hundred
sixty pesos (P29,960.00), leaving an unpaid balance of twenty five thousand forty pesos (P25,040.00).
 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. Thus,
as of September 1994 or twenty-one (21) months after the second loan's maturity, the petitioner
had already paid a total of fifty-six thousand four-hundred forty pesos (P56,440.00), an amount
greater than the principal.
 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.

Issue

 Whether the honorable court of appeals erred in affirming the decision of the regional trial court
ordering the petitioner to pay the respondent the amount of php24,040.00 plus interest and penalty
from due date until fully paid;
 Whether the honorable court of appeals erred in affirming the decision of the regional trial court
ordering the foreclosure and sale of the mortgaged property.

Ruling

 The Court finds the petition partly meritorious.The Court ruled that: (1) the respondent acted
pursuant to law and jurisprudence when it credited the daily payments against the interest instead
of the principal; and (2) the chattel mortgage could not cover the second loan. Rebuttable
presumptions; Article 1176 vis-a-vis Article 1253
 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.
 Since the doubt in the present case pertains to the application of the daily payments, Article 1253
shall apply. Only when there is a waiver of interest shall Article 1176 become relevant.
 Under this analysis, we rule that the respondent properly credited the daily payments to the interest
and not to the principal because: (1) the debt produces interest, i.e., the promissory note securing
the second loan provided for payment of interest; (2) a portion of the second loan remained unpaid
upon maturity; and (3) the respondent did not waive the payment of interest.
#30 Estate of Hernandez v. Luzon Surety Co.

Facts

 Luzon Surety Co., Inc. (Luzon) was a surety to some 20 indemnity agreements. KH Hemedy executed
counterbonds in favor of Luzon whereby he was made a surety solidary guarantor in all of the indemnity
agreements entered into by the latter. This means that Hemedy will indemnify Luzon in case the latter
was made to pay. Hemedy died.
 Luzon filed a claims against the estate of Hemedy, pertaining to contingent claims for the value of the 20
bonds.
 The lower court dismissed the claim on the ground that upon Hemady’s death, his obligation as a surety.
It justified such ruling by essentially saying that the obligation of a guarantor is strictly personal. Hence,
terminated upon the death of said guarantor and not transmitted to his heirs.
 The SC reversed this decision saying that the liability of a surety or guarantor is not strictly personal.
Hence, transmitted to his heirs upon his death. The contingent claims against the estate were therefore
allowed.

Issue

 May the obligations of a decedent as a surety or guarantor be transmitted to his heirs?

Ruling

 Yes, The heirs succeed not only to the rights of the deceased but also to his obligations (Arts.
774 anb 776 NCC). Contracts take effect only as between the parties, their assigns and heirs,
except in the case where the rights and obligations arising from the contract are not
transmissible by their nature, or by stipulation or by provision of law (Art. 1257 NCC). When a
party enters into a contract, he is deemed to have contracted for himself and his heirs and
assigns. The binding effect of the contract upon the heirs is not altered by the requirements
under the Rules of Court (Rule 89) saying that money claims against the estate shall be settled
first before distribution of the same to the heirs may be made. The reason is that, the payment
for those claims against the estate were ultimately payments made by the heirs since the
amounts so paid constitute diminution or reduction in the eventual share of the heirs in the
estate.
 The obligation of a surety or guarantor does not fall in any of the exceptions provided for under
Art. 1257.

— As to the nature of the obligation. The obligation of a Hemady is to reimburse sum of money

paid by Luzon. It is an obligation to give. It is not relevant whether the payment was made by
Hemady himself or by another person so long as the payment was made.
— As to the stipulation of the parties.  Failure to expressly provide in the contract that the
obligations arising therefrom shall transmit to the heirs upon the death of Hemady does not
show of the intent of the parties to have such obligation termination upon Hemady’s death. In
fine, such need not be provided for as the law already expressly provided for the same.

— As to the provision of law. The provisions of the civil code regulating guaranty and suretyship
do not provide that the obligation shall of a surety or guarantor shall be extinguished upon his
death.