TELENGTAN BROTHERS and SONS v.UNITED STATES LINES G.R.No.

132284,February
28,2006
FACTS:
Petitioner is a domestic corporation while US Lines is a foreign corporation engaged in overseas
shipping. It was made applicable that consignees who fail to take delivery of their containerized
cargo within the 10-day free period are liable to pay demurrage charges. On June 22, 1981, US Lines
filed a suit against petitioner seeking payment of demurrage charges plus interest and damages.
Petitioner incurred P94,000 which the latter refused to pay despite repeated demands. Petitioner
disclaims liability alleging that it has never entered into a contract nor signed an agreement to be
bound by it. RTC ruled that petitioner is liable to respondent and all be computed as of the date of
payment in accordance with Article 1250 of the Civil Code. CA affirmed the decision.
ISSUE:
Whether the re-computation of the judgment award in accordance with Article 1250 of the Civil
Code proper
RULING:
The Supreme Court found as erroneous the trial courts decision as affirmed y the Court of Appeals.
The Court holds that there has been an extraordinary inflation within the meaning of Article 1250 of
the Civil Code. There is no reason for ordering the payment of an obligation in an amount different
from what has been agreed upon because of the purported supervention of an extraordinary inflation.
The assailed decision is affirmed with modification that the order for re-computation as of the date
of payment in accordance with the provisions of Article 1250 of New Civil Code is deleted.
EUFEMIA and ROMEL ALMEDA v. BATHALA MARKETING
G.R.No. 150806, January 28, 2008
FACTS:
In May 1997, Bathala Marketng, renewed its Contract of Lease with Ponciano Almeda. Under the
contract, Ponciano agreed to lease a porton of Almeda Compound for a monthly rental of
P1,107,348.69 for four years. On January 26, 1998, petitioner informed respondent that its monthly
rental be increased by 73% pursuant to the condition No. 7 of the contract and Article 1250.
Respondent refused the demand and insisted that there was no extraordinary inflation to warrant such
application. Respondent refused to pay the VAT and adjusted rentals as demanded by the petitioners
but continually paid the stipulated amount. RTC ruled in favor of the respondent and declared that
plaintiff is not liable for the payment of VAT and the adjustment rental, there being no extraordinary
inflation or devaluation. CA affirmed the decision deleting the amounts representing 10% VAT and
rental adjustment.
ISSUE:
Whether the amount of rentals due the petitioners should be adjusted by reason of extraordinary
inflation or devaluation

RULING: Petitioners are stopped from shifting to respondent the burden of paying the VAT. 6th
Condition states that respondent can only be held liable for new taxes imposed after the effectivity of
the contract of lease, after 1977, VAT cannot be considered a new tax. Neither can petitioners
legitimately demand rental adjustment because of extraordinary inflation or devaluation. Absent an
official pronouncement or declaration by competent authorities of its existence, its effects are not to
be applied.
Petition is denied. CA decision is affirmed.

JOSEPH TYPINGCO,
Petitioner,
vsLINA WONG LIM, JERRY SYCHINGHO, JACKSON SYCHINGHO, JOHNSON
SYCHINGHO, and FAR EAST BANK AND TRUST COMPANY,
Respondents
.CARPIO MORALES,
J.
October 23, 2009Facts:
Respondents-spouses Lina Wong Lim (Lina) and Johnson Sychingho (Johnson)
borrowed from petitioner Joseph Typingco (Typingco) the sum of US$600,000 which was later
restructured, payable on or before December 31, 1997, under a promissory note executed by the
spouses and co-signed by their children-co-respondents as sureties. Following their default in
payment, Lina, Jerry, and Jackson conveyed on January 29, 1998 to Typingco via
dacion en pago their house and lot in Greenhills, San Juan, covered by TCT No. 6259R, after first paying respondent Far East Bank and Trust Company (FEBTC) the
balance of a promissory note to clear the title of a Real Estate Mortgage annotated
thereon in favor of FEBTC. However, FEBTC refused to hand over the title, contending
that the respondent-Sychinghos had unsettled obligations as sureties.
Issue:
Whether or not respondent Sychinghos had the right to sell or convey title to the subject
property at the time of the dacion en pago
Ruling:
Sychinghos had the right to convey title. As there was no previous foreclosure of the
mortgage on the subject property, Sychinghos ownership thereof remained intact. Indeed,
a mortgage does not affect the ownership of the property as it is nothing more than a
lien thereon serving as security for a debt. The mortgagee does not acquire title thereto.
Whatever obligation the Sychinghos may still owe BPI (then FEBTC), this is not a
concern of petitioner as he is not a party to the loan documents covering it. Since
petitioner agreed to the full extinguishment of respondent-spouses then outstanding
obligation in view of the unconditional conveyance to him of the subject property, there is a
perfected and enforceable dacion en pago. He should thus enjoy full entitlement to the
subject property. However, surrender of the certificate of title will not impair any existing
mortgage on the subject property. It is an elementary principle in civil law that a real
estate mortgage subsists notwithstanding changes in ownership, and all subsequent
purchasers of the property must respect the mortgage.
Fallo:
WHEREFORE, the challenged Decision of the Court of Appeals is REVERSED and
SET ASIDE. Bank of the Philippine Islands, to which Far East Bank and Trust Company was
merged, is ordered to surrender the owners duplicate copy of TCT No. 6259-R to the Register of

Deeds of San Juan, Metro Manila in order to process the issuance of a new title over
the subject property in the name of petitioner, JosephTypingco.SO ORDERED.
LO VS. COURT OF APPEALS
G.R. No. 141434, September 23, 2003
411 SCRA 523
FACTS:
Antonio Lo acquired two parcels of land with an office constructed thereon in an auction sale on
November 9,1995 from the Land Bank of the Philippines. At variance, private respondent National
Onion Growers Cooperative Marketing Association, Inc. was the occupant of the parcels of land
under a subsisting contract of lease with Land Bank. The lease was valid until December 31,1995.
Upon the expiration of the lease contract, Lo demanded that private respondent vacate the leased
premises and surrender its possession to him. The agricultural cooperative refused on the ground of a
contest against petitioners acquisition of the parcels of land in an action for annulment of sale,
redemption and damages.
On February 23,1996, petitioner filed an action for ejectment and subsequently asked for imposition
of the contractually stipulated penalty of P5, 000 per day of delay in surrendering the possession of
the property. Thereafter, the trial court decided the case in favor of petitioner. Private respondent was
ordered to vacate the leased premises. On appeal to the Regional Trial Court, the MTC decision was
affirmed in toto. The agricultural cooperative then elevated the case to the court of Appeals that
affirmed the lower courts decision but modified that the penalty to be imposed must be reduced to
P1, 000.
Unsatisfied with the decision of the CA, Lo filed the instant petition for review.
ISSUE:
The issue raised by the petitioner is whether or not the Court of Appeals has the authority to reduce
the penalty awarded by the trial court, the same having been stipulated by the parties in their Contract
of Lease.
RULING:
YES, the Court of Appeals has the authority to do so. While courts are not at liberty to ignore the
freedom of the parties to agree on such terms and conditions as they see fit as long as they are not
contrary to law, morals, good customs, public order or public policy, courts may equitably reduce a
stipulated penalty if it is iniquitous or unconscionable, or if the principal obligation has been partly
or irregularly complied with. This power of the courts is explicitly sanctioned by Article 1229 of the
Civil Code which provides that the judge shall equitably reduce the penalty when the principal
obligation has been partly or irregularly complied with by the debtor. Even if there has been no
performance, the penalty may also be reduced by courts if it is iniquitous or unconscionable.

CASENT REALTY DEVELOPMENT CORP., Petitioner, versus PHILBANKING

The bank demanded payment based on the promissory notes issued by Casent Realty
Corp to Rare Realty by virtue of the deed of assignment. On a separate loan with
Philbanking, Casent Realty satisfied its obligation by executing a Dacion en pago.
Philbanking filed for a complaint for the collection of payment against Casent based on
the promissory notes. Casent Realty, in its answer, raised that a Dacion en pago was
already executed which extinguished its obligation. Philbanking failed to file a reply.
Casent Realty points out that the defense of Dacion and Confirmation Statement, which
were submitted in the Answer, should have been specifically denied under oath
by respondent in accordance with Rule 8, Section 8 of the Rules of Court. Its failure
constituted an admission on the part of the bank. Philbanking claimed that even though
it failed to file a Reply, all the new matters alleged in the Answer are deemed
controverted anyway, pursuant to Rule 6, Section 10: Section 10. Reply.--A reply is a
pleading, the office or function of which is to deny, or allege facts in denial or avoidance
of new matters alleged by way of defense in the answer and thereby join or make issue
as to such new matters. If a party does not file such reply, all the new matters alleged in
the answer are deemed controverted.
UNITED PLANTERS MILLING CO. V. CA
GR No. 126890; April 2, 2009
FACTS:
In 1987, the Republic of the Philippines lost around 1.5 Billion Pesos after it had waived its right to
collect on an outstanding indebtedness from petitioner, by virtue of a so-called friendly foreclosure
agreement that ultimately was friendly only to petitioner.
Petitioner United Planters Sugar Milling Co. (UPSUMCO) was engaged in the business of milling
sugar. In 1974, as UPSUMCO commenced operations, it obtained a set of loans from respondent
Philippine National Bank (PNB). The loans were secured over two parcels of land where the milling
plant stood and chattel mortgages over the machineries and equipment.
On 27 February 1987, through a Deed of Transfer, PNB assigned to the Government its rights,
titles and interests over UPSUMCO, among several other assets.[6] The Deed of Transfer
acknowledged that said assignment was being undertaken in compliance with Presidential
Proclamation No. 50. The Government subsequently transferred these rights, titles and interests
over UPSUMCO to the respondent Asset and Privatization Trust (APT).
ISSUE:
Whether or not there was compensation in the present case.
RULING:
The right of PNB to set-off payments from UPSUMCO arose out of conventional compensation
rather than legal compensation, even though all of the requisites for legal compensation were present
as between those two parties. The determinative factor is the mutual agreement between PNB and
UPSUMCO to set-off payments. Even without an express agreement stipulating compensation, PNB
and UPSUMCO would have been entitled to set-off of payments, as the legal requisites for
compensation under Article 1279 were present.
As soon as PNB assigned its credit to APT, the mutual creditor-debtor relation between PNB and
UPSUMCO ceased to exist. However, PNB and UPSUMCO had agreed to a conventional
compensation, a relationship which does not require the presence of all the requisites under Article
1279. And PNB too had assigned all its rights as creditor to APT, including its rights under
conventional compensation. The absence of the mutual creditor-debtor relation between the new

creditor APT and UPSUMCO cannot negate the conventional compensation. Accordingly, APT, as
the assignee of credit of PNB, had the right to set-off the outstanding obligations of UPSUMCO on
the basis of conventional compensation before the condonation took effect on 3 September 1987.