CASE 2: GSIS vs.

Court of Appeals (1986)

Ponente: Paras
FACTS: This is a petition for review on certiorari of the decision of
the Court of Appeals affirming the decision of the trial court, and at
the same time ordering the GSIS to reimburse the amount of
P9,580.00 as over-payment and to pay the spouses Nemencio R.
Medina and Josefina G. Medina P3,000.00 and P1,000.00 as
attorney's fees and litigation expenses.

GSIS filed an Application for Foreclosure of Mortgage with the Sheriff

of the City of Manila. The Medinas filed with the CFI of Manila a
complaint, praying a restraining order or writ of preliminary injunction
be issued to prevent the GSIS and the Sheriff of the City of Manila
from proceeding with the extra-judicial foreclosure of their mortgaged
properties. However, no restraining order or writ of preliminary
injunction was issued by the trial court. On April 25, 1975, the
Medinas made a last partial payment in the amount of P209,662.80.

In 1961, private respondents spouses Nemencio R. Medina and

Josefina G. Medina (Medinas for short) applied with petitioner GSIS
for a loan of P600,000.00. The GSIS Board of Trustees approved
only the amount of P350,000.00, subject to the following conditions:
that the rate of interest shall be 9% per annum compounded monthly;
repayable in ten (10) years at a monthly amortization of P4,433.65
including principal and interest, and that any installment or
amortization that remains due and unpaid shall bear interest at the
rate of 9%/12% per month. The Office of the Economic Coordinator,
in a 2nd Indorsement further reduced the approved amount to
P295,000.00. The Medinas accepting the reduced amount, executed
a promissory note and a real estate mortgage in favor of GSIS. Later,
the GSIS, and the Office of the Economic Coordinator both approved
the restoration of the amount of P350,000.00 (P295,000.00 +
P55,000.00) originally approved by the GSIS. In 1963, additional
loan of 230k was granted to the Medinas on the security of the same
mortgaged properties and the additional properties to bear interest at
9% per annum compounded monthly and repayable in 10 years.

Under an Auction, the properties of Medina were sold to GSIS for the
total amount of P440,080.00, and the corresponding Certificate of
Sale was executed by the Sheriff of Manila. the Medinas filed an
Amended Complaint with the trial court, praying for (a) the
declaration of nullity of their two real estate mortgage contracts with
the GSIS as well as of the extra-judicial foreclosure proceedings; and
(b) the refund of excess payments, plus damages and attorney's
fees. RTC and CA ruled in favor of Medina spouses. Hence this
petition.

Beginning 1965, the Medinas having defaulted in the payment of the

monthly amortization on their loan, the GSIS imposed 9%/12%
interest on all installments due and unpaid. In 1967, the Medinas
began defaulting in the payment of fire insurance premiums.
On May 3, 1974, the GSIS notified the Medinas that they had
arrearages in the aggregate amount of P575,652.42 as of April 18,
1974, and demanded payment within 7 days from notice thereof,
otherwise, it would foreclose the mortgage. On April 21, 1975, the

ISSUE: WON the amendment of the real estate mortgage

supersedes the original mortgage contract
RATIO: It is a basic and fundamental rule in the interpretation of
contract that if the terms thereof are clear and leave no doubt as to
the intention of the contracting parties, the literal meaning of the
stipulations shall control but when the words appear contrary to the
evident intention of the parties, the latter shall prevail over the
former. In order to judge the intention of the parties, their
contemporaneous and subsequent acts shall be principally
considered.
First, the title "Amendment of Real Estate Mortgage" recognizes the
existence and effectivity of the previous mortgage contract. Second,
nowhere in the aforesaid Amendment did the parties manifest their
intention to supersede the original contract. On the contrary in the
WHEREAS clauses, the existence of the previous mortgage contract
was fully recognized and the fact that the same was just being

amended as to amount and amortization is fully established as to

obviate any doubt. Third, the Amendment of Real Estate Mortgage
dated July 6, 1962 does not embody the act of conveyancing the
subject properties by way of mortgage. In fact the intention of the
parties to be bound by the unaffected provisions of the mortgage
contract of April 4, 1962 expressed in unmistakable language is
clearly evident in the last provision of the Amendment of Real Estate
Mortgage
A review of prior, contemporaneous, and subsequent acts supports
the conclusion that both contracts are fully subsisting insofar as the
latter is not inconsistent with the former. The fact is the GSIS, as a
matter of policy, imposes uniform terms and conditions for all its real
estate loans, particularly with respect to compounding of interest. As
shown in the case at bar, the original mortgage contract embodies
the same terms and conditions as in the additional loan while the
amendment carries the provision that it shall be subject to the same
terms and conditions as the real estate mortgage of April 4, 1962
except as to amount and amortization.
Furthermore, it would be contrary to human experience and to
ordinary practice for the mortgagee to impose less onerous
conditions on an increased loan by the deletion of compound interest
exacted on a lesser loan.
CASE 5: The ROMAN CATHOLIC BISHOP OF JARO vs. De La
Pea(1913)
Ponente: Moreland
FACTS: The plaintiff is the trustee of a charitable bequest made for
the construction of a leper hospital and that father Agustin de la
Pea was the duly authorized representative of the plaintiff to receive
the legacy. The defendant is the administrator of the estate of Father
Dela Pea. In the year 1898 the books Father De la Pea, as
trustee, showed that he had on hand as such trustee the sum of
P6,641, collected by him for the charitable purposes. In the same
year he deposited in his personal account P19,000 in the Hongkong

and Shanghai Bank at Iloilo. Shortly thereafter and during the war of
the revolution, Father De la Pea was arrested by the military
authorities as a political prisoner, and while thus detained made an
order on said bank in favor of the United States Army officer under
whose charge he then was for the sum thus deposited in said bank.
The arrest of Father De la Pea and the confiscation of the funds in
the bank were the result of the claim of the military authorities that he
was an insurgent and that the funds thus deposited had been
collected by him for revolutionary purposes. The money was taken
from the bank by the military authorities by virtue of such order was
confiscated and turned over to the Government. While there is
considerable dispute in the case over the question whether the
P6,641 of trust funds was included in the P19,000 deposited as
aforesaid, nevertheless, a careful examination of the case leads us
to the conclusion that said trust funds were a part of the funds
deposited and which were removed and confiscated by the military
authorities of the United States.
ISSUE: WON Father de la Pea is liable for the loss of the money
under his trust
HELD: No, he is not liable.
RATIO: The court finds and declares that the money which is the
subject matter of this action was deposited by Father De la Pea in
the Hongkong and Shanghai Banking Corporation of Iloilo; that said
money was forcibly taken from the bank by the armed forces of the
United States during the war of the insurrection; and that said Father
De la Pea was not responsible for its loss. Father De la Pea's
liability is determined by those portions of the Civil Code which relate
to obligations.(Book 4, Title 1.) Although the Civil Code states that "a
person obliged to give something is also bound to preserve it with the
diligence pertaining to a good father of a family" (art.1094), it also
provides, following the principle of the Roman law, major casus est,
cui humanainfirmitasresistere non potest , that "no one shall be liable
for events which could not be foreseen, or which having been
foreseen were inevitable, with the exception of the cases expressly

mentioned in the law or those in which the obligation so declares."

(Art. 1105.)
By placing the money in the bank and mixing it with his personal
funds De la Pea did not thereby assume an obligation different from
that under which he would have lain if such deposit had not been
made, nor did he thereby make himself liable to repay the money at
all hazards. If the money had been forcibly taken from his pocket or
from his house by the military forces of one of the combatants during
a state of war, it is clear that under the provisions of the Civil Code
he would have been exempt from responsibility. The fact that he
placed the trust fund in the bank in his personal account does not
add to his responsibility. Such deposit did not make him a debtor
who must respond at all hazards.
CASE 8: YHT Realty v. CA (2005)
Ponente: Tinga
FACTS: Respondent McLoughlin would stay at Tropicana Hotel
every time he is here in the Philippines and would rent a safety
deposit box. The safety deposit box could only be opened through
the use of 2 keys, one of which is given to the registered guest, and
the other remaining in the possession of the management of the
hotel. McLoughlin allegedly placed the following in his safety deposit
box Fifteen Thousand US Dollars (US$15,000.00) which he placed
in two envelopes, one envelope containing Ten Thousand US
Dollars (US$10,000.00) and the other envelope Five Thousand US
Dollars (US$5,000.00); Ten Thousand Australian Dollars
(AUS$10,000.00) which he also placed in another envelope; 2 other
envelopes containing letters and credit cards; 2 bankbooks; and a
checkbook, arranged side by side inside the safety deposit box.
When he went abroad, a few dollars were missing and the jewelry he
bought was likewise missing. Eventually, he confronted Lainez and
Paiyam who admitted that Tan opened the safety deposit box with
the key assigned to him. McLoughlin went up to his room where Tan
was staying and confronted her. Tan admitted that she had stolen
McLouglins key and was able to open the safety deposit box with the

assistance of Lopez, Paiyam and Lainez. Lopez alsto told

McLoughlin that Tan stole the key assigned to McLouglin while the
latter was asleep.McLoughlin insisted that it must be the hotel who
must assume responsibility for the loss he suffered.Lopez refused to
accept responsibility relying on the conditions for renting the safety
deposit box entitled Undertaking For the Use of Safety Deposit Box
which provides: 2. To release and hold free and blameless
TROPICANA APARTMENT HOTEL from any liability arising from
any loss in the contents and/or use of the said deposit box for any
cause whatsoever, including but not limited to the presentation or
use thereof by any other person should the key be lost; 4. To return
the key and execute the RELEASE in favor of TROPICANA
APARTMENT HOTEL upon giving up the use of the box
ISSUE: WON the hotels Undertaking is valid
HELD: NO it is not valid.
RATIO:Article 2003 was incorporated in the New Civil Code as an
expression of public policy precisely to apply to situations such as
that presented in this case. The hotel business like the common
carriers business is imbued with public interest. Catering to the
public, hotelkeepers are bound to provide not only lodging for hotel
guests and security to their persons and belongings. The twin duty
constitutes the essence of the business. The law in turn does not
allow such duty to the public to be negated or diluted by any contrary
stipulation in so-called undertakings that ordinarily appear in
prepared forms imposed by hotel keepers on guests for their
signature.
In an early case (De Los Santos v. Tan Khey), CA ruled that to hold
hotelkeepers or innkeeper liable for the effects of their guests, it is
not necessary that they be actually delivered to the innkeepers or
their employees. It is enough that such effects are within the hotel or
inn. With greater reason should the liability of the hotelkeeper be
enforced when the missing items are taken without the guests
knowledge and consent from a safety deposit box provided by the
hotel itself, as in this case.

Paragraphs (2) and (4) of the undertaking manifestly contravene

Article 2003, CC for they allow Tropicana to be released from liability
arising from any loss in the contents and/or use of the safety deposit
box for any cause whatsoever. Evidently, the undertaking was
intended to bar any claim against Tropicana for any loss of the
contents of the safety deposit box whether or not negligence was
incurred by Tropicana or its employees.
In the case at bar, the responsibility of securing the safety deposit
box was shared not only by the guest himself but also by the
management since two keys are necessary to open the safety
deposit box. Without the assistance of hotel employees, the loss
would not have occurred. Thus, Tropicana was guilty of concurrent
negligence in allowing Tan, who was not the registered guest, to
open the safety deposit box of McLoughlin, even assuming that the
latter was also guilty of negligence in allowing another person to use
his key. To rule otherwise would result in undermining the safety of
the safety deposit boxes in hotels for the management will be given
imprimatur to allow any person, under the pretense of being a family
member or a visitor of the guest, to have access to the safety deposit
box without fear of any liability that will attach thereafter in case such
person turns out to be a complete stranger. This will allow the hotel
to evade responsibility for any liability incurred by its employees in
conspiracy with the guests relatives and visitors.
CASE 11: RCBC vs. ARFA RTW (2001)
Ponente: SANDOVAL-GUTIERREZ
FACTS:On March 12, 1982, Rizal Banking Corporation (RCBC) filed
with the RTC of Makati, a civil case, for a sum of money against Alfa
RTW Manufacturing Corporation, Johnny Teng, Ramon Lee, Antonio
Lacdao, Ramon Luy and Alfa Integrated Textile Mills. The trial court
rendered judgment on August 19, 1991, the dispositive portion,
which reads: Order the defendants to pay, jointly and severally, to
plaintiff the amount of Eighteen Million Nine Hundred Sixty-one
Thousand Three Hundred Seventy-two Pesos and Forty-three
Centavos (P18,961,372.43), Philippine Currency, (inclusive of

interest, service charges, litigation expenses and attorneys fees),

with interest thereon at the legal rate from February 15, 1988 until
fully paid. On appeal, the CA affirmed with modification of the RTC
decision, thus: WHEREFORE, with the modification that instead of
P18,961,372.43, all the defendants are hereby ordered to pay, jointly
and severally to plaintiff the amount of P3,060,406.25, Philippine
Currency, inclusive of stipulated interest, service charges, litigation
expenses and attorneys fees, with interest thereon at the legal rate
from February 15, 1988, until fully paid.
ISSUE: WONCA can deviate from the provisions of the contract,
which itself is the law between the parties
HELD: No. The general rule is it cannot
RATIO:The rule is well settled that the jurisdiction of the Court of
Appeals via Rule 45 of the 1997 Rules of Civil Procedure, as
amended, is limited to reviewing errors of law. Findings of fact of the
said Court are conclusive, except in a number of instances. Where in
the case at bar, exception n0. 6 stated in Siguan vs Lim (318 SCRA
725) is present to wit: (6) when the Court of Appeals, in making its
findings, went beyond the issues of the case and the same is to the
admissions of both the appellant and appelle Herein lies the
reversible error on the part of the Court of Appeals.
When it ruled that only P3,060,406.25 should be awarded to
petitioner RCBC, the Appellate Court disregarded the parties
stipulations in their contracts of loan, more specifically, those
pertaining to the agreed (1) Interest rates, (2) service charge and (3)
penalties in case of any breach thereof. The CA failed to apply the
honoured doctrine That which is agreed to in a contract is the law
between the parties. Thus, obligations arising from contracts have
the force of law between the contracting parties and should be
complied with in good faith. The court cannot vary the terms and
conditions therein stipulated unless such stipulation is contrary to
law, morals, good customs, public order or public policy.

In the determination and computation of interest of payment, this

court, in Eastern Shipping Lines, Inc. vs Court of Appeals held: When
the obligation is breached and it consist in the payment of a sum of
money (i.e., loan or forbearance of money), the interest due should
be that which may be have stipulated in writing. Furthermore, the
interest due shall itself earn legal interest from the time it is judicially
demanded. In the absence of stipulation, the rate of interest shall be
12% per annum to be computed from default i.e., from judicial or
extrajudicial demand under and subject to the provisions of Article
169 of the Civil Code
When the obligation, not constituting a loan or forbearance of money,
is breached, and interest on the amount of damages awarded may
be imposed at the discretion of the court at the rate of 6% per
annum. No interest, however, shall be adjudged on unliquidated
claims or damages except when or until the demand can be
established with reasonable certainty.
The award to petitioner RCBC of P3,0606,406.25 is SET ASIDE and
substituted with an amount to be computed by the trial court, upon
finality of this Decision