Civil Law,  Legally Yours

Del Castillo Case Doctrines (Civil Law – Agency and Credit Transactions)

Del Castillo Case Doctrines

Summaries of case doctrines penned by Justice Del Castillo.

Civil Law Agency

Bucton v. Rural Bank of El Salvador
G.R. No. 179625, February 24, 2014

The mere fact that the agent was authorized to mortgage the property is not sufficient to bind the principal unless the agent indicates that the deed was executed and signed by the agent for and on behalf of his principal.

Civil Law Credit Transactions

Alano v. Planter’s Development Bank
G.R. No. 171628, June 13, 2011

The general rule that a mortgagee need not look beyond the title does not apply to banks and other financial institutions as greater care and due diligence is required of them. Failure to conduct an ocular inspection of the property offered to be mortgaged and to verify the genuineness of the title make them mortgages in bad faith.

De La Paz v. L & J Development Company
G.R. No. 183360, September 8, 2014

For an interest to be due and payable, two conditions must concur:
1) express stipulation for the payment of interest; and
2) the agreement to pay interest is reduced in writing.

The collection of interest without any stipulation in writing is prohibited by law and a voluntary payment does not make an unwritten stipulation on interest valid.

Estores v. Spouses Supangan
G.R. No. 175139, April 18, 2012

Forbearance of money, goods, or credits refer to arrangements other than loan agreements where a person acquiesces to the temporary use of his money, goods, or credit pending the happening of certain events or fulfillment of certain conditions. Thus, the stipulation requiring the seller to return the advance payment made by the buyer if the conditions in the contract are not fulfilled is considered as a forbearance of money.

Inutan v. Napar Contracting & Allied Services
G.R. No. 195654, November 25, 2015

A compromise agreement, once approved, has the effect of res judicata between the parties and should not be disturbed except for vices of consent, forgery, fraud, misrepresentation, and coercion. It is not appealable and is immediately executory, and can be enforced by a writ of execution.

Land Bank of the Philippines v. Onate

G.R. No. 197371, January 15, 2014

The unilateral offsetting of funds without legal justification and the undocumented withdrawals are tantamount to forbearance of money subject to the interest rate of 6% per annum.

Lim v. Development Bank of the Philippines
G.R. No. 177050, July 1, 2013

An internal banking policy which imposes unstipulated additional interests and penalties is void. Under Article 1956 of the New Civil Code, the payment of interests and penalties is allowed only if the parties agreed to it and is reduced in writing. The act of the bank in unilaterally changing the unstipulated interest rate is violative of the principle of mutuality of contracts under Article 1308.

Manila Insurance Company, Inc. v. Spouses Amurao
G.R. No. 179628, January 16, 2013

A surety is solidarily liable with the principal debtor but his liability is limited only to the amount stated in the bond, determined strictly by the terms of the contract of suretyship in relation to the principal contract between the obligor and the obligee.

Philippine National Bank v. Jumamoy
G.R. No. 169901, August 3, 2011

For banking institutions to be considered an innocent mortgagee for value, it must ascertain the status or condition of a property offered to it as a security for a loan.

Sonley v. Anchor Savings Bank
G.R. No. 205623, August 10, 2016

Under Article 2041 of the Civil Code, if one of the parties fails or refuses to abide by the compromise, the other party may either enforce the compromise or regard it as rescinded and insist upon his original demand. Thus, an action for rescission is not required before one can enforce a breached compromise or insist on his original demand.

Spouses Castro v. Tan
G.R. No. 168940, November 24, 2009

Stipulated interest rates may still be declared illegal by the court despite the suspension of the Usury Law. The 5% monthly interest rate is excessive, iniquitous, unconscionable, and exorbitant, contrary to morals and the law. It is therefore void ab initio for being violative of Article 1306 of the Civil Code.

Spouses Edralin v. Philippine Veterans Bank
G.R. No. 168523, March 9, 2011

There is no pactum commisorium when there is no power to automatically acquire or appropriate the mortgaged property upon the other party’s default.

Spouses Palada v. Solidbank Corporation
G.R. No. 172227, June 29, 2011

A notarized document of real estate mortgage enjoys the presumption of regularity and is conclusive as to the truthfulness of its contents absent any clear and convincing proof to the contrary. Moreover, any irregularity in the notarization or even the lack of notarization does not affect the validity of the document.

Toledo v. Hyden
G.R. No. 172139, December 8, 2010

The imposition of high-interest rate is not unconscionable if the debtor had full awareness of such. Thus, after years of benefitting from the proceeds of the loans bearing an interest rate of 6% to 7% per month and paying for the same, the debtor cannot now go to court to have the said interest rate annulled.

Union Bank of the Philippines v. Juniat
G.R. No. 171569, August 1, 2011

In case of doubt as to whether a transaction is one of pledge or dacion en pago, the presumption is that it is a pledge as this involves a lesser transmission of rights and interests.

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