Bar Q and A #34

Y Bank is correct. Art. 1287 of the Civil Code does not apply. All the requisites of Art. 1279, Civil Code are present. In the case of Gullas v. PNB (62 Phil. 519), the Supreme Court held: “The Civil Code contains provisions regarding compensation (set off) and deposit. These portions of Philippine Law provide that compensation shall take place when two persons are reciprocally creditor and debtor of each other. In this connection, it has been held that the relation existing between a depositor and a bank is that of creditor and debtor. xxx As a general rule, a bank has a right of set off of the deposits in its hands for the payment of any indebtedness to it on the part of a depositor.” Hence, compensation took place between the mutual obligations of X and Y Bank.

Guaranty and Suretyship distinguished:

1. The obligation in guaranty is secondary; whereas, in suretyship, it is primary.
2. In guaranty, the undertaking is to pay if the principal debtor cannot pay; whereas, in suretyship, the undertaking is to pay if the principal debtor does not pay.
3. In guaranty, the guarantor is entitled to the benefit of excussion; whereas, in suretyship the surety is not entitled.
4. Liability in guaranty depends upon an independent agreement to pay the obligations of the principal if he fails to do so; whereas, in suretyship, the surety assumes liability as a regular party.
5. The Guarantor insures the solvency of the principal debtor; whereas, the surety insures the debt.
6. In a guaranty, the guarantor is subsidiarily liable; whereas, in a suretyship, the surety binds himself solidarity with the principal debtor. (Art. 2047)

Yes, the complaint for the annulment of Catalino’s Title will prosper. In the first place, the second owner’s copy of the title secured by him form the Land Registration Court is void ab initio, the owner’s copy thereof having never been lost let alone the fact that said second owner’s copy of the title was fraudulently procured and improvidently issued by the Court. In the second place, the Transfer Certificate of Title procured by Catalino is equally null and void, it having been issued on the basis of a simulated or forged Deed of Sale. A forged deed is an absolute nullity and conveys no title.

The mortgage in favor of Desiderio is likewise null and void because the mortgagor is not the owner of the mortgaged property. While it may be true that under the “Mirror Principle” of the Torrens System of Land Registration, a buyer or mortgagee has the right to rely on what appears on the Certificate of Title, and in the absence of anything to excite suspicion, is under no obligation to look beyond the certificate and investigate the mortgagor’s title, this rule does not find application in the case at hand because here, Catalino’s title suffers from two fatal infirmities, namely:

1. The fact that it emanated from a forged deed of a simulated sale;
2. The fact that it was derived from a fraudulently procured or improvidently issued second owner’s copy, the real owner’s copy being still intact and in the possession of the true owner, Bruce.

The mortgage to Desiderio should be cancelled without prejudice to his right to go after Catalino and/or the government for compensation from the assurance fund.

No. Bilateral contracts cannot be changed unilaterally. A pledge is only a subsidiary contract, and Steve is still indebted to Danny for the amount of P400,000.00 despite the fall in the value of the stocks pledged.

In a contract of CHATTEL MORTGAGE, possession belongs to the creditor, while in a contract of PLEDGE, possession belongs to the debtor.

A chattel mortgage is a formal contract while a pledge is a real contract.

A contract of chattel mortgage must be recorded in a public instrument to bind third persons while a contract of pledge must be in a public instrument containing description of the thing pledged and the date thereof to bind third persons.

The equity of redemption is different from the right of redemption. EQUITY OF REDEMPTION is the right of the mortgagor after judgment in a judicial foreclosure proceedings, within a period of not less than 90 days, before the sale or confirmation of the sale, to pay into the court the amount of the judgment debt. On the other hand, RIGHT OF REDEMPTION is the right of the mortgagor, after the sale of the mortgaged property, to redeem the property by paying to the purchaser in the sale or for him to the sheriff who made the sale, the amount paid by him, with interest, within one year from the sale. There is no right of redemption, only equity of redemption, in a judicial foreclosure under the Rules of Court.

1. A contract of antichresis was entered into between Olivia and Peter. Under Art. 2132, by a contract of antichresis the creditor acquires the right to receive the fruits of an immovable of his debtor, with the obligation to apply them to the payment of the interest, and thereafter to the principal of his credit.

2. Peter must pay taxes and charges upon the land and bear the necessary expenses for preservation and repair which he may deduct from the fruits. (Art. 2135)

3. The amount of the principal and interest must be specified in writing, otherwise the antichresis will be void. (Art. 2134)

4. No. Art. 2136 specifically provides that the debtor cannot reacquire the enjoyment of the immovable without first having totally paid what he owes the creditor. However, it is potestative on the part of the creditor to do so in order to exempt him from his obligation under Art. 2135, the debtor cannot re-acquire the enjoyment unless Peter compels Olivia to enter again the enjoyment of the property.

No, Z’s demand is not valid. A building is immovable or real property whether it is erected by the owner of the land, by a usufructuary, or by a lessee. It may be treated as a movable by the parties to chattel mortgage but such is binding only between them and not on third parties. (Evangelista v.  Alto Surety Col, Inc., G.R. No. L- 11139, April 23, 1958) In this case, since the bank is not a party to the chattel mortgage, it is not bound by it, as far as the Bank is concerned, the chattel mortgage, does not exist. Moreover, the chattel mortgage is void because it was not registered. Assuming that it is valid, it does not bind the Bank because it was not annotated on the title of the land mortgaged to the bank. Z cannot demand that the Bank pay him the loan Z extended to X, because the Bank was not privy to such loan transaction.

1. The juridical relation is that of the quasi-contract of "negotiorum gestio". Y is the "gestor" or "officious manager" and X is the "owner." (Art. 2144)

2. Y must render an account of his operations and deliver to X the price he received for the sale of the harvested fish. (Art. 2145)

3. X must pay the loan obtained by Y from W because X must answer for obligations contracted with third persons in the interest of the owner. (Art. 2150)

4. Express ratification by X provides the effects of an express agency and X is liable to pay the commissions habitually received by the gestor as manager. (Art. .2149)