G.R. No.

3019 February 9, 1907

LA COMPAIA GENERAL DE TABACOS DE FILIPINA,Plaintiff-Appellee, vs. VICENTE
ARAZA,Defendant-Appellant.
T. L. McGirr for appellant.
Domingo Franco for appellee.
WILLARD, J.:
The plaintiff brought this action in the court below to foreclose a mortgage for 8,000 pesos
upon certain land in the Province of Leyte. A demurrer to the complaint was overruled, but to
the order overruling it the defendant did not except. The defendant answered, alleging that
the document, the basis of the plaintiff's claim, was executed through error on his part and
through fraud on the part of the plaintiff. A trial was had and judgment was entered for the
plaintiff as prayed for in its complaint. The defendant moved for a new trial on the ground that
the decision was not justified by the evidence, this motion was denied, to its denial the
defendant excepted, and he has brought the case here for
review.chanroblesvirtualawlibrary chanrobles virtual law library
Upon the questions of fact raised by the answer, the findings of the court below are sustained
by the evidence, in no event they can be said to be plainly and manifestly against the weight of
the evidence. Those findings include a finding that there was no fraud on the part of the
plaintiff, no mistake on the part of the defendant, and that there was a sufficient
consideration for the contract, As has been said, there was in the case to support all of these
conclusions.chanroblesvirtualawlibrary chanrobles virtual law library
Upon one point, however, we think that the judgment was erroneous. The contract send upon
was executed on the 11th day of June, 1901. By terms thereof the defendant promised to pay
the plaintiff 8,000 pesos as follows: 500 pesos on the 30th of June, 1901, and the remainder at
the rate of 100 pesos a month, payable on the 30th day of each month, until the entire 8,000
pesos was paid. The defendant paid 400 pesos and no
more.chanroblesvirtualawlibrary chanrobles virtual law library
This suit was commenced on the 12th day of June, 1903. There was no provision in the
contract by which, upon failure to pay one installment of the debt, the whole debt should
thereupon become at once payable. We are of the opinion that the obligation can be enforced
in this action for only the amount due and payable on the 12th day of June,
1903.chanroblesvirtualawlibrary chanrobles virtual law library
The court below gave no credit for the payment of 400 pesos admitted by the complaint to
have been received by the plaintiff. It is allowed interest upon the entire debt from the 1st day
of July, 1901. The contract does not provide for the payment of any interest. There is no

provision in it declaring expressly that the failure to pay when due should put the debtor in
default. There was therefore no default which would make him liable for interest until a
demand was made. (Civil Code, art. 1100; Manresa, Com. on Civil Code, vol 8, p. 56.) The
transaction did not constitute a mercantile loan and article 316 of the Code of Commerce is
not applicable. There was no evidence any demand prior to the presentation of the complaint.
The plaintiff is therefore entitled to interest only from the commencement of the
action.chanroblesvirtualawlibrary chanrobles virtual law library
The judgment is set aside and the case is remanded to the court below with directions to
determine the amount due in accordance with the views hereinbefore expressed and to enter
judgment for such amount. No costs will be allowed to either party in this court. So
ordered.chanroblesvirtualawlibrary chanrobles virtual law library

G.R. No. L-22359

November 28, 1924

JULIO DE LA ROSA, plaintiff-appellant,

vs.
THE BANK OF THE PHILIPPINE ISLANDS, defendant-appellant.
Ramon Sotelo for plaintiff-appellant.
Araneta and Zaragoza for defendant-appellant.

ROMUALDEZ, J.:
This action was instituted on June 11, 1923, by means of a complaint on the ground that the
defendant bank started a contest of designs and plans for the construction of a building,
announcing that the prizes would be awarded not later that on November 30, 1921; that the
plaintiff took part in said contest, having performed work and incurred expenses for that
purpose; that said bank refrained from naming judges and awarding the prizes in accordance
with the conditions stipulated. The plaintiff prays that judgment be rendered in his favor for
the sum of P30,000 as damages, with interest and the costs.

The defendant bank answered denying the facts contained in the second and following
paragraphs of the complaint.
After the trial, the court rendered judgment ordering the defendant bank to pay the plaintiff
an indemnity of P4,000 and the costs.
Both parties appealed from this judgment, the plaintiff assigning the following errors as
committed by the trial court:
1. In holding that the sum of P4,000 was a just and reasonable indemnity to the plaintiff.
2. In not ordering the defendant bank to pay the P30,000 prayed for in the complaint.
The defendant bank, in turn, assigned the following errors as committed by the trial court:
1. In holding that the date set for the award of prizes is essential in the contract.
2. In ordering that the sum of P4,000 be paid to the plaintiff.
The fundamental question on which the plaintiff's action depends is raised in the first
assignment of error made by the defendant bank, or, whether or not the date set for the
award of the prizes was essential in the contract and, therefore, whether or not the failure to
award the prizes on said date was breach of contract on the part of the defendant.
First of all, we find that due to the fact that the bank started and advertised the said contest,
offering prizes under certain conditions, and the plaintiff prepared, by labor and expense, and
took part in said contest, the bank is bound to comply with the promise made in the rules and
conditions prepared and advertised by it.
A binding obligation may even originate in advertisements addressed to the general
public. (6 R. C. L., 600.)
It is an elementary principle that where a party publishes an offer to the world, and
before it is withdrawn another acts upon it, the party making the offer is bound to
perform his promise. This principle is frequently applied in cases of the offer of rewards,
. . . (6 R. C. L., 607.)
What is to be determined is whether or not the defendant bank was in default in not awarding
the prizes on November, 30, 1921.
The plaintiff contends that it was, according to paragraph 2 of article 1100 of the Civil Code,
the complete text of which is as follows:

Persons obliged to deliver or to do something are in default from the moment the
creditor demands of them judicially or extrajudicially the fulfillment of their obligation.
Nevertheless, the demand of the creditor shall not be necessary in order that the
default may arise
1. When the obligator or the law expressly so provides;
2. When by reason of the nature and circumstances of the obligation it shall
appear that the designation of the time at which the thing was to be delivered or
the service rendered was the principal inducement to the creation of the
obligation.
In reciprocal obligations neither of the obligators shall be in default if the other does not
fulfill or does not submit to the fulfillment of that which is incumbent upon him. From
the time on the obliges performs his obligation the default begins for the other party.
And the party plaintiff contends that the said date was the principal inducement because the
current cost of concrete buildings at the time was fixed. The fixation of said price cannot be
considered as the principal inducement of the contract, but undoubtedly only for the
uniformity of the designs to be presented and to secure greater justice in the appreciation of
the relative merits of each work submitted.
Such fixation of price, naturally, was not the principal inducement for the contestants. Neither
was it for the bank which could not certain that said price would continue to be current price
when it desired to construct the building designed.
We do not find sufficient reason for considering that the date set for the reward of the prizes
was the principal inducement to the creation of the obligation. And, taking into consideration
the criterion that must be followed in order to judge whether or not the time for the
performance of the obligation is the principal inducement in a given case, we hold that it was
not in the instant case.
The distinguished Manresa explains the matter in the following terms: 1awphi1.net
These words ("principal inducement" in paragraph 2 of article 1100 of the Civil Code)
whose special meaning in connection with this article and the circumstances of each
obligation does not permit of their being confused with the permanent general idea,
and the distinct clearness of consideration of contracts, may give rise to serious doubts
by reason of the breadth of expression, and must be judged in each particular case, it
being impossible to give a general rule to explain them. It will for instance, be
unquestionable that the hypothesis implied in this exception is affected when the
matter, for instance, is the delivery of things of the rendition of services to be employed

in agricultural work, and the time of said work has been designated as the date for the
fulfillment of the obligation; it will also exist when, for instance, fruits or any objects are
to be delivered which might be used by the creditor in industrial operations having a
determinate period for carrying them out and designated for their delivery; and, finally,
it will also assist whenever, as in these cases, it appears that the obligation would not
have been created for a date other than that fixed.
The defendant bank cannot be held to have been in default through the mere lapse of time.
For this judicial or extrajudicial demand was necessary for the performance of the obligation,
and it was not alleged here, nor does it appear that before bringing this action the plaintiff had
ever demanded it from the defendant bank in any manner whatsoever. The defendant bank,
therefore, was not in default.
The plaintiff's allegation that the defendant bank abstained from continuing the contest was
not proven. On the contrary, it was proved, and so stated in the decision appealed from, that
during the trial of this case in the Court of First Instance the designs were on the way to New
York where they were sent to a technical committee.
This committee, according to the new evidence before us presented by the defendant bank
and which we now hold admissibe and admit, was appointed by the defendant bank for the
study and determination of the designs presented and entitled to the prizes advertised, and
which rendered its report and awarded the prizes in accordance with the rules and conditions
of the contract, except in regard to the date of such award of prizes which, as we have found,
is not essential to the contract in question.
It appearing that the defendant bank was not in default it is needles to discuss the other
questions raised, all depending upon the existence of said default.
We find the plaintiff has no cause of action in this case,
The judgment appealed from is reversed and the defendant is entirely absolved from the
complaint, without any express finding as to costs. So ordered.

G.R. No. L-10801

February 28, 1961

MARIANO RODRIGUEZ and MARINA RODRIGUEZ, plaintiffs-appellees,

vs.
PORFIRIO BELGICA and EMMA BELGICA, defendants-appellants.
Ignacio M. Orendain for plaintiffs-appellees.
Arsenio M. Cabrera and Jose S. Fineza for defendants-appellants.
PAREDES, J.:
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,
on August 27, 1955, filed a "Motion re Offer to Compromise." What transpired afterwards is
best depicted in the following judgment of the lower court: .
"The above-entitled case was scheduled in the calendar of this Court today to consider
the "Motion re Offer of Compromise" as a result of the pre-trial held by the parties and
their respective Attorneys in this case.
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, the terms of which were dictated in open
court by the attorneys of both parties in the presence of their clients, with the exception
of plaintiffs Mariano Rodriguez and his wife Marina Rodriguez who were represented by
their son, Atty. Jose Rodriguez. The terms and conditions of said Compromise
Agreement are as follows: .
Atty. Fineza:
If your Honor please, as regards the Motion Re Offer of Compromise presented by the
plaintiffs dated August 26, 1955, we wish to inform this Honorable Court that with
regards to paragraph 1-A wherein the length of time given to the defendants to pay the
plaintiffs of P35,000.00 is thirty (30) days, we request that said period be seventy (70)
days counted from today, August 30, 1955. With regard to Paragraphs 1-B and 1-C, we
are agreeable to the terms and conditions therein stated: Court: .
Any objection to the said counter proposal of the defendants? .
Atty. Orendain: .
We have no objection, Your Honor.

Court: - (To defendant Mr. Porfirio Belgica).

Mr. Porfirio Belgica, have you heard what Atty. Fineza, your lawyer, have proposed to
the Court and are you agreeable to the same? .
Defendant Porfirio Belgica: .
Yes, Your Honor.
Atty. Fineza: .
Inasmuch as defendant Porfirio Belgica will have to negotiate a portion of the part
pertaining to him to raise the amount of P35,000.00 with which he will pay the plaintiffs,
we request that the plaintiffs make new selection of the portion they desire as per plan
Exhibit E.
Atty. Orendain:.
According to my clients, Your Honor, I was instructed to choose the portion which is
nearest to Quezon City, in other words, the portion in the bigger lot which is the
Southern portion as appears in Exhibit E and which is encircled in red pencil, subject to
relocation or readjustment after a survey is made.
That the plaintiffs will sign the necessary transfer of the 36% in favor of the defendants
upon payment of the P35,000.00.
That the plaintiffs agree to grant authority to defendant Porfirio Belgica to negotiate the
sale or mortgage of the 36% which is proposed to be conveyed to him, for the purpose
of raising the P35,000.00 to be paid to the plaintiffs.
That the Motion re Offer of Compromise is hereby made a part and parcel of the
Compromise Agreement, as modified.
Parties agree that in the event the defendants fail to pay to the plaintiffs said amount of
P35,000.00 within the period above fixed or stipulated, the plaintiffs will automatically
be the owners of the 36% of the two parcels of land, and that the 14% pertaining to the
defendants will be taken from the portion towards Caloocan, or more particularly in the
portion encircled in blue pencil, subject to the survey and relocation of a surveyor.
Court: .
Make of record that this Compromise Agreement was made in open court in the
presence of Atty. Jose Rodriguez, who is the son of the plaintiff Mariano Rodriguez, their
attorney Mr. Ignacio M. Orendain, the defendant Mr. Porfirio Belgica and his counsel
Atty. Jose S. Fineza.

Parties respectfully pray this Honorable Court to render judgment in accordance

therewith without costs.
The transcript of the notes taken by the Stenographer of the proceedings taken by the
parties before they arrived at an amicable settlement was signed by the parties and
their respective attorneys and submitted to this Court for corresponding decision.
IN VIEW OF THE FOREGOING, judgment is hereby rendered approving en toto the
foregoing Compromise Agreement and the parties are hereby ordered to abide by and
comply with the terms and conditions contained in said Compromise Agreement,
without pronouncement as to costs.
On September 3, 1955, the defendants filed a Motion for Withdrawal of Exhibits, particularly
the Certificates of Titles covering the lands, subject matter of the present controversy. Among
the reasons given in the motion was "the defendants have already taken steps to effect that
partition of the property for the purpose of delimiting the respectively portion which would
appertain to each, which delimitation has to be effected in order that defendants may have
the opportunity of negotiating their half or any portion thereof to raise the P35,000.00 which
he undertook to pay to plaintiffs. The above motion bore the conformity of counsel for the
plaintiffs.
On November 19, 1955, 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 the Titles so that 14% of the property pertaining to the defendant could be
segregated. An opposition was registered by the defendants, contending that the inability to
meet the obligation to pay the P35,000.00 was due to the deliberate refusal of the plaintiffs to
grant the authority to defendant Porfirio Belgica to negotiate the sale or mortgage of the 36%;
and that since the decision had created reciprocal obligations, the refusal or failure on the part
of one to comply did not make the other in default. 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%. the lower court, On November 26, 1955, ordered the defendants
to surrender to the Court the TCT's they withdrew, not latter than December 1, 1955. On this
date the defendants filed a "Motion to Compel Plaintiffs to Comply with the Conditions of the
Judgment", reiterating in substance, the reason they invoked in their previous oppositions. On
December 15, 1955, the trial court acting on the motion of the defendants, handed down the
following order, to wit:
"defendant Belgica's contention is that the plaintiffs Mariano Rodriguez has refused to
grant the authority adverted to. Said defendant, however, has not done anything, nor
has filed any petition with the Court regarding the alleged refusal of the plaintiff
Rodriguez to grant such authority before the expiration of the 70-day period fixed by
the parties within which to pay the said amount of P35,000.00. The petition to compel

the plaintiffs to comply with the conditions of the judgment, namely to command said
plaintiffs to grant the authority above referred to was only filed on December 1, 1955,
or after the expiration of 90 days. In the opinion of the Court, the decision rendered in
this case has already become final and executory under the terms and conditions
stipulated by the parties and upon which said decision was based.
IN VIEW OF THE FOREGOING, the said motion to compel the plaintiffs to comply with
the condition embodied in the judgment is hereby DENIED.".
The above ordered is now the subject to the present appeal, appellants contending in their
lone assignment of error that the lower court erred "in denying the motion of December 1,
1955 (to compel the plaintiffs to grant the authority), on the ground that because of the failure
of defendants-appelants to pay the plaintiffs-appelees the amount P35,000.00 within the
period of seventy days, the judgment of August 30,1955, has already become due and
executory.".
Whether the denial of the motion of compel the plaintiffs to grant the authority is proper and
legal, would seem to be the dominant issue..
On the plaintiffs-appellees was impose the obligation of granting to defendants-appellants the
requisite authority to negotiate either the sale or mortgage of the 36% interest in the
property. This is understandable, because on the face of the two certificates of the title
covering the properties, defendants owned only 14%, while plaintiffs owned 86%. Without
such authority executed by plaintiffs in favor of the defendants, it was difficult, not to say
impossible for the latter to affect a negotiation. This the plaintiffs the fully knew, because in
the compromise, they acknowledged that the amount of P35,000.00 due to them would be
paid within 70 days from the August 30, 1953, with money to be delivered from the sale of
mortgage of the property. It was, therefore, incumbent upon the plaintiffs "to grant authority"
to defendants to negotiate the sale or mortgage of the 36% of the property. Considering that
the 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 vs. Cavives, 25 Phil. 581). Until this authority is granted by the plaintiff,
the 70 day period for payment will not commence to run. The plaintiffs insinuated that
defendant did not ask for the authority. There was, however the statement or allegation by
the defendants to the effects that they made verbal request 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).
It is true that defendants' petition to compel the plaintiffs to grant the authority repeatedly
mentioned, was only filed on December 1, 1955, after the expiration of the 70-day period. It
should, however, be observed that the actuations or acts of the defendants have always been

lulled by a sense of an honest but insecure misunderstanding, as to the scope and extent of
the terms and conditions of the compromise. To show that defendants had not abandoned
their obligation to pay the sum of P35,000.00, on September 3, 1955, within the 70-day period
which expired on November 8, 1955, they filed a motion to withdraw documents and
certificates of title to delimit the respective portions, in order that they (defendants) might
have an opportunity of negotiating one-half or any portion to raise P35,000.00 to which
motion the plaintiffs agreed. While waiting for the grant of authority to descend, like manna
from Heaven, the defendants were surprised to receive, on November 19, 1955, plaintiffs'
motion to have the titles returned so that the defendants' 14% could be segregated, as they
(plaintiffs) wanted to remain with the 86% of the properties.
The lower court and with it, the plaintiffs-appellees had indulged in fine technicalities which in
this particular case, would work injustice to the defendants-appellants, more than anything
else. 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% interest in the
properties (Price, Inc. v. Rilloraza, et al.. No. L-8253, May 25, 1955).
The claim of the appellees that the appellants failed to comply with their initial obligation to
delimit the property, as stated by them in their motion to withdraw, is not supported by the
evidence. The delimitation or segregation of the property to be sold or mortgaged which
appellants should have done first so that the authority could have been granted, had long
been accomplished. This is clear from the words of appellees' counsel when he said,
"According to my clients, Your Honor, I was instructed to choose the portion which is nearest
to Quezon City . . .".
In view hereof, the resolution of the lower court dated December 15, 1955, is reversed, and
another entered, ordering the plaintiffs-appellees to execute in favor of the defendantsappellants the proper authority to sell or mortgage 36% of the properties in litigation within
30 days from notice of this decision and further directing the defendants-appellants to pay
unto the plaintiffs-appellees the sum of P35,000.00 within 30 days from the date such
authority is granted. Without special pronouncement as to costs.

G.R. No. L-4874

March 2, 1909

MARIANO VELOSO, ET AL., plaintiffs-appellees,

vs.
ANICETA FONTANOSA, ET AL., defendants-appellants.
Martin M. Levering for appellants.
Rodriguez and Del Rosario for appellees.
ARELLANO, C.J.:
This case was brought by means of a bill of exceptions to this court for a revision of the facts
and evidence. The appeal being heard it appears:
That a complaint was filed with the Court of First Instance of Cebu as follows: (1) That Mariano
Veloso, Damiana Veloso, and Melchor Veloso are the sole lawful heirs of Gavino Veloso and
Buenaventura Veloso, their father and brother respectively; (2) that the defendants are
Aniceta Fontanosa, as widow of Roberto Ancajas, and Florentina, Leona, Maria, Juan,
Romualda, Vicenta, and Felix, all of the surname of Ancajas, the lawful children of the
deceased Roberto, and Estefania Fontanosa, mother and legal guardian of the minor Jose
Ancajas; (3) that at he death of Gavino Veloso, Roberto Ancajas owed him the sum of 5,065
pesos which he had borrowed prior to the year 1881; (4) that in the apportionment of the
estate, this debt of 5,065 pesos went to Buenaventura Veloso as his portion; (5) that in the
year 1882, Roberto Ancajas, after having acknowledged the transfer of his indebtedness by
inheritance to Buenaventura Veloso, continued to receive sums of money from the latter on
the same conditions, that is, as loans, and bound himself to make annual payments in sugar;
(6) that on the 11th of October, 1883, the debt of Roberto Ancajas amounted to 10,449.18
pesos, as shown by a liquidation of accounts made between them and ratified by Roberto
Ancajas in the said month on October, 1883; (7) that on August 4, 1884, this balance
amounted to 12,199.65 pesos; (8) that on May 31, 1887, it rose to 14,439.40 pesos, which
sum, however, was reduced to 12,365.20 pesos by the payment of 2,074.20 pesos on account;
(9) that up to the year 1893 the defendants made payments amounting to 642.27 pesos which
reduced the amount owing to 11,722.43 pesos; (10) that on the death of Buenaventura
Veloso, the defendants, as his sole and lawful heirs, inherited, and that same year divided
between them all his property with the exception of the above-mentioned credit, which is at
present held pro indiviso between them, and they, as the lawful heirs of Buenaventura Veloso,
the creditor, have repeatedly called upon the defendants to pay the said credit, but the latter
have constantly refused to do so, thus having rise to the filing of the complaint; (11) that on
account of their delinquency in payment they have caused the plaintiffs damages to the value
of 14,068.48 pesos; they therefore asked the court below to sentence the defendants to pay
both sums, with legal interest thereon from the time they ceased to make payments, and the
costs.

That the attorneys who answered the complaint, subscribed their answer: "Attorneys for
Aniceta Fontanosa, Maria, Juana, Romualda, Vicenta, and Felix, all surnamed Ancajas, and for
Estefania Fontanosa," having previously signed the receipt for the complaint in this manner:
"Attorneys for the defendants, with the exception of Florentina and Leona Ancajas."
That in the answer, in addition to the general of all the allegations in the complaint, there was
put forward as special defense: (1) That this supposed right of action had prescribed before
the action was instituted; (2) that Romualda Ancajas and some of the other general heirs of
Roberto Ancajas were not of age, at the time of the death of Roberto Ancajas, nor at the time
of the supposed acceptance of the inheritance, and that there was no judicial intervention in
said acceptance.
The trial judge in his findings of fact considers that, among other allegations of the complaint,
the following have been proven:
That Aniceta Ancajas is the wife of the said deceased and that with the exception of the
minor Jose Ancajas, who is represented in these proceedings by his legal guardian,
Estefania Fontanosa, and is the grandchild of the said deceased Roberto Ancajas, most
of the defendants are his children; that as heirs the said defendants took possession of
all the property of the said deceased after his death, and at the present time are in
possession as the undivided owners thereof. (B. of E., 12.)
And as conclusions of law he says:
That the defendants being the heirs of Roberto Ancajas, deceased, and having taken
possession of the latter's property from the time of his death to the present time, as
heirs of the said deceased, and exercising over the same all those acts which show
ownership, which, if they were not the heirs, they could not exercised, they have purely
and simply accepted the inheritance from their principal, and consequently, under
article 1003 of the Civil Code, they are liable for the encumbrances with which the
heritage is charged, not only with the property of their principal but also with their own;
that the defendants, as heirs of the late Roberto Ancajas, having acknowledged and
admitted the latter's debt to Buenaventura Veloso, the principal of the plaintiffs, which
acknowledgment was made expressly and by means of the payments made by them to
the creditor, have contracted the express obligation to pay it under the same terms as
their aforesaid principal; that the defendants are liable for the payment of the sum of
P11,722.43 to the plaintiffs, in their capacity of heirs, to Buenaventura Veloso, for the
debt contracted in his favor by their late principal Roberto Ancajas, and which debt was
acknowledged and admitted by them; that as the defendants have acknowledged and
admitted the said debt, toward the settlement of which they made the last payment in
the year 1893, the right of action for its recovery, by article 1964 of the Civil Code, and
in accordance with article 943 of the Code of Commerce, prescribes after the lapse of
fifteen years, and inasmuch as the period fifteen years from said date until the time the

complaint herein was presented, has not expired, the conclusion is that the said action
is enforceable and should be made effective; that, it being proven that Buenaventura
Veloso, the plaintiffs' principal, had brought suit against the defendants in the year 1896
for the payment of said debt, it must be concluded that the prescription of the action
for recovery has been legally interrupted, in conformity with the provisions of article
1973 of the Civil Code; that the debt of P11,722.43 is a credit which originated from a
mercantile contract, and as the interest due the plaintiffs can not be determined, they
are entitled to recover the legal interest on said amount from the defendants at the rate
of 6 per cent per annum from the month of September, 1893, until the full payment
thereof.
The defendants appealed from this judgment of the lower court, alleging the following errors:
1. The admission of the books marked as Exhibits A, B, and C as evidence, and the overruling of
the motion for their exclusion.
2. The admission of Exhibits D, E, F, and G as evidence.
3. The finding that the defendants are the heirs of the late Roberto Ancajas, and that they
purely and simply accepted the inheritance from the said deceased.
4. The overruling of the motion for a new trial.
With regard to the first and second errors, charged against the admission of the documentary
evidence of the appellees, the rulings of the court below are in accordance with the law. The
books marked as Exhibits A and B simply serve to show the origin and progress of the debt,
and they may be ignored from the moment there was entered on folio 88 of the book marked
Exhibit C a debit and credit account, of which Exhibit E is an exact copy, and which shows the
account maintained between Buenaventura Veloso and Roberto Ancajas as accepted by the
latter and signed by him in proof of his conformity with the balance of P10,449.18 appearing
therein. This acknowledgment by their principal must be decisive as to the heirs, and it must
be held to be proven that at least they are indebted in said sum of P10,449.18, since against
the admission and validity of Exhibit E nothing has been alleged by the appellants in this
instance.
As the successive liquidations which the trial court took into consideration until reaching the
one at bar are not specifically impugned, either in this instance or in the court below, they are
not now, therefore, subject to revision by this court.
As to the prescription of the right of action which is subsidiarily alleged in order to impugn the
obligation which, according to the judgment appealed from still exists, the appellants say that
"the debt had prescribed so far as the defendants are concerned, with the questionable
exception of the defendant Aniceta Fontanosa, widow of Roberto Ancajas, because it appears

that said Aniceta Fontanosa was the only person who made any payment, and it is not possible
that an act performed by one of the defendants can prejudice the legal rights of the others."
(Brief, 5.)
The court below considered as proven: (1) The payments made by the heirs after the death of
Roberto Ancajas, the last of which was in 1893; (2) a judicial complaint filed against these
same defendants in 1896. From these facts the court below makes the following deductions:
First, that the right of action that existed in 1893 to demand the settlement of the debt which,
by article 1964 of the Civil Code should prescribe at the expiration of fifteen years, had not
prescribed in 1906, the time of filing the present complaint. Second, that in consequence of
the filing of the said complaint in 1896, the running of the statute was interrupted, as
prescribed by article 1973 of the Civil Code.
It has been proven that on the 11th of October, 1883, Roberto Ancajas acknowledged that a
balance of 10,449.18 pesos was standing against him; that since that time he has received and
paid amounts in connection with said obligation, the last payment being made "shortly before
his death in 1888," as stated by the appellants in their brief on page 5, that is, on May 5, 1888,
as appears at folio 223 of the book offered in evidence by the appellees as Exhibit C. It
therefore follows that in computing the time for prescription from said date it would be
necessary to take into consideration the fact that the Civil Code was not yet in force, as it did
not become effective until December 8, 1889, and that, at that time, the period for the
prescription of personal actions, such as the one at issue, by law 5, title 8, book 11, of
the Novisima Recopilacion, was twenty years, which period should expire in 1908, so that
when the complaint herein was presented in 1906, the term had not expired; therefore, we
have not to consider the legal interruption of a term which has not yet expired, as in the
present case the question is one of a period of prescription that commenced before the
enforcement of the Civil Code, which period, by the terms of the article 1939 of the said code,
must be governed by the laws then in force.
The Civil Code would only be applicable, if the whole period required thereby for prescription
had transpired after it was put in force, notwithstanding the fact that, under the old laws, a
longer lapse of time was necessary (art. 1939, Civil Code). And since the 8th of December,
1889, when the Civil Code went into effect, the fifteen years required by the provisions
thereof for the prescription of the right of personal actions have certainly elapsed. But in the
present case the court below has considered two forms of interruption of prescription of the
right, namely, the exercise thereof before the courts, and the act of the acknowledgment of
the debt by the debtor. The said court found that payments were made in the years 1891,
1892, and 1893 by the widow of the late Roberto Ancajas, and the period for the prescription
must be counted from the last-mentioned date, because the action could only have been
exercised thereafter. It is evident that since then the term required by article 1964 of the Civil
Code has not expired, and supposing that such payments had not been made, the court below
considered as proven that in 1896, an action was brought for the recovery of this debt, and

against this consideration no error of law or fact has been assigned. No judgment was
rendered by reason of the revolution that took place in 1898, and the record of the case was
lost through the same cause; facts which were agreed to between the contending parties at
this trial. And in conformity with the decision of the supreme court of Spain of July 5, 1904,
which interprets the right sense of the aforesaid article 1973, the action then instituted and
that now brought are one and the same.
Against the finding of the court below as to the first method of interruption of the
prescription, in so far as it considered that the payments made after the death of Roberto
Ancajas by his widow, Aniceta Fontanosa, were an acknowledgment of the debt, the
appellants allege "that an act performed by one of the defendants can not prejudice the legal
rights of the others." But, in accordance with article 1974, interruption of prescription of rights
of action in all kind of obligations of the heirs of the debtor, benefits or prejudices them all
alike, inasmuch as each and all of them represent the principal, and they jointly succeed him in
his rights and obligations.
For all the above reasons the judgment entered by the trial court "That payment shall be made
to plaintiffs of the sum of P11,722.43 with costs," is proper, for the reason that it is in
accordance with the law and the merits of the case.
But that the above-stated amount shall be in the Philippine pesos "(P11,722.43)," as
determined in the judgment, is not in accordance with the law or the merits. Even the latest
sum loaned on the 31st of May, 1887, according to the last liquidation considered in point 8 of
the complaint, was that current at the time, and certainly the unit was not then the Philippine
peso.
Neither is the sentence contained in the judgment appealed from, that "Legal interest on the
said sum at the rate of 6 per cent per annum shall be payable from the month of September,
1893," in accordance with the law. It is proper to sentence the defendants to pay the legal
interest of 6 per cent per annum by reason of the default incurred by the heirs of Ancajas (art.
1108, Civil Code), but such default can not date back of September, 1893, that is, from the
time of the last payment made by them or by Aniceta Fontanosa. Article 1100 of the Civil Code
reads:
Persons obliged . . . are in default from the moment when the creditor demands the
fulfillment of their obligation, judicially or extrajudicially,
And the judicial demand for the fulfillment of said obligation was only made in 1896; hence, as
the date of the complaint interposed in that year has not been fixed, the next amount claimed
therein should only commence to bear legal interest from the latter part of 1896, or rather
from the beginning of 1897. In a decision of December 3, 1902, the supreme court of Spain
held:

That it is a principle of law, acknowledged and sanctioned by article 1100, in relation to

article 1108 of the Civil Code, that interest upon default only becomes due from the
time of the judicial or extrajudicial notice by the creditor to the debtor, unless otherwise
expressly provided by law, or by virtue of a contract, or on account of special
circumstances depending upon the nature of the obligation.
As to the third and fourth errors, it is true that, in view of the evidence submitted with the bill
of exceptions, and because all the facts of the complaint have been generally denied by the
defendants, the following facts, which are stated in the judgment as resulting from the record,
have not been proven:
That the other defendants, apart from the widow of Ancajas, are the children of the
latter, and that Jose Ancajas is his grandchild, all of them being his only heirs; that
Estefania Fontanosa is the legal guardian of the minor Jose Ancajas; that as such heirs
they took possession of all the property of the deceased and hold the same pro indiviso.
And as a natural consequence, there is no ground for the most important conclusion of law in
the decision:
That, inasmuch as they took possession of the property of the late Roberto Ancajas, and
performed all those acts of ownership thereof which, without being heirs they could not
have performed, they purely and simply accepted the inheritance from their principal,
and have ever since become liable for his debt, not only with the property they received
from him, but also with their own property.
Florentina Ancajas is the only person who appeared as the daughter of Roberto Ancajas and
testified as a witness for the plaintiffs, but it does not appear that she, or another of the name
of Leona (often called Len), have ever been summoned and cited to appear or that they failed
to answer the complaint. It is certain that they have not answered it. From the testimony of
this witness it appears that it was Aniceta Fontanosa who, after the death of her husband,
Roberto Ancajas, made the three last payments on account of the latter's debt.
Thus, it is not proper that a sentence, rightly entered against the heirs or successors of
Roberto Ancajas, should particularly fall upon the persons named in the complaint, and to
whom the judgment refers, for no other reason than that they were designated as such heirs
in the complaint.
For the reasons above set forth we hold that the net amount due to the plaintiffs by such
persons as may turn out to be the lawful heirs of Roberto Ancajas, in addition to those who,
apart from the minor Jose Ancajas, appeared in this suit, has been rightly determined, that is,
the sum of 11,722.43 pesos, with legal interest thereon at the rate of 6 per cent, from the time
the suit was filed in 1896, with the costs of the first instance against the defendants who
answered the complaint. The judgment appealed from is hereby set aside in order that a new

trial may he held for the purpose of properly determining who are the heirs against whom
should be directed the order of payment, and what were the acts and form of acceptance of
the inheritance, and of the possession and method of possession of the property remaining at
the death of Roberto Ancajas; after which let a new judgment be rendered which shall include
a finding of the equivalent of the amount owing in Philippine currency at the time of such
decision. No special ruling is made as to the costs in this instance. So ordered.

G.R. No. L-45710 October 3, 1985

CENTRAL BANK OF THE PHILIPPINES and ACTING DIRECTOR ANTONIO T. CASTRO, JR. OF THE
DEPARTMENT OF COMMERCIAL AND SAVINGS BANK, in his capacity as statutory receiver of
Island Savings Bank, petitioners,
vs.
THE HONORABLE COURT OF APPEALS and SULPICIO M. TOLENTINO, respondents.
I.B. Regalado, Jr., Fabian S. Lombos and Marino E. Eslao for petitioners.
Antonio R. Tupaz for private respondent.
MAKASIAR, CJ.:
This is a petition for review on certiorari to set aside as null and void the decision of the Court
of Appeals, in C.A.-G.R. No. 52253-R dated February 11, 1977, modifying the decision dated
February 15, 1972 of the Court of First Instance of Agusan, which dismissed the petition of
respondent Sulpicio M. Tolentino for injunction, specific performance or rescission, and
damages with preliminary injunction.
On April 28, 1965, Island Savings Bank, upon favorable recommendation of its legal
department, approved the loan application for P80,000.00 of Sulpicio M. Tolentino, who, as a
security for the loan, executed on the same day a real estate mortgage over his 100-hectare
land located in Cubo, Las Nieves, Agusan, and covered by TCT No. T-305, and which mortgage
was annotated on the said title the next day. The approved loan application called for a lump
sum P80,000.00 loan, repayable in semi-annual installments for a period of 3 years, with 12%
annual interest. It was required that Sulpicio M. Tolentino shall use the loan proceeds solely as
an additional capital to develop his other property into a subdivision.

On May 22, 1965, a mere P17,000.00 partial release of the P80,000.00 loan was made by the
Bank; and Sulpicio M. Tolentino and his wife Edita Tolentino signed a promissory note for
P17,000.00 at 12% annual interest, payable within 3 years from the date of execution of the
contract at semi-annual installments of P3,459.00 (p. 64, rec.). An advance interest for the
P80,000.00 loan covering a 6-month period amounting to P4,800.00 was deducted from the
partial release of P17,000.00. But this pre-deducted interest was refunded to Sulpicio M.
Tolentino on July 23, 1965, after being informed by the Bank that there was no fund yet
available for the release of the P63,000.00 balance (p. 47, rec.). The Bank, thru its vicepresident and treasurer, promised repeatedly the release of the P63,000.00 balance (p. 113,
rec.).
On August 13, 1965, the Monetary Board of the Central Bank, after finding Island Savings Bank
was suffering liquidity problems, issued Resolution No. 1049, which provides:
In view of the chronic reserve deficiencies of the Island Savings Bank against its
deposit liabilities, the Board, by unanimous vote, decided as follows:
1) To prohibit the bank from making new loans and investments [except
investments in government securities] excluding extensions or renewals of
already approved loans, provided that such extensions or renewals shall be
subject to review by the Superintendent of Banks, who may impose such
limitations as may be necessary to insure correction of the bank's deficiency as
soon as possible;
xxx xxx xxx
(p. 46, rec.).
On June 14, 1968, the Monetary Board, after finding thatIsland Savings Bank failed to put up
the required capital to restore its solvency, issued Resolution No. 967 which prohibited Island
Savings Bank from doing business in the Philippines and instructed the Acting Superintendent
of Banks to take charge of the assets of Island Savings Bank (pp. 48-49, rec).
On August 1, 1968, Island Savings Bank, in view of non-payment of the P17,000.00 covered by
the promissory note, filed an application for the extra-judicial foreclosure of the real estate
mortgage covering the 100-hectare land of Sulpicio M. Tolentino; and the sheriff scheduled
the auction for January 22, 1969.
On January 20, 1969, Sulpicio M. Tolentino filed a petition with the Court of First Instance of
Agusan for injunction, specific performance or rescission and damages with preliminary
injunction, alleging that since Island Savings Bank failed to deliver the P63,000.00 balance of
the P80,000.00 loan, he is entitled to specific performance by ordering Island Savings Bank to

deliver the P63,000.00 with interest of 12% per annum from April 28, 1965, and if said balance
cannot be delivered, to rescind the real estate mortgage (pp. 32-43, rec.).
On January 21, 1969, the trial court, upon the filing of a P5,000.00 surety bond, issued a
temporary restraining order enjoining the Island Savings Bank from continuing with the
foreclosure of the mortgage (pp. 86-87, rec.).
On January 29, 1969, the trial court admitted the answer in intervention praying for the
dismissal of the petition of Sulpicio M. Tolentino and the setting aside of the restraining order,
filed by the Central Bank and by the Acting Superintendent of Banks (pp. 65-76, rec.).
On February 15, 1972, the trial court, after trial on the merits rendered its decision, finding
unmeritorious the petition of Sulpicio M. Tolentino, ordering him to pay Island Savings Bank
the amount of PI 7 000.00 plus legal interest and legal charges due thereon, and lifting the
restraining order so that the sheriff may proceed with the foreclosure (pp. 135-136. rec.
On February 11, 1977, the Court of Appeals, on appeal by Sulpicio M. Tolentino, modified the
Court of First Instance decision by affirming the dismissal of Sulpicio M. Tolentino's petition for
specific performance, but it ruled that Island Savings Bank can neither foreclose the real estate
mortgage nor collect the P17,000.00 loan pp. 30-:31. rec.).
Hence, this instant petition by the central Bank.
The issues are:
1. Can the action of Sulpicio M. Tolentino for specific performance prosper?
2. Is Sulpicio M. Tolentino liable to pay the P17,000.00 debt covered by the
promissory note?
3. If Sulpicio M. Tolentino's liability to pay the P17,000.00 subsists, can his real
estate mortgage be foreclosed to satisfy said amount?
When Island Savings Bank and Sulpicio M. Tolentino entered into an P80,000.00 loan
agreement on April 28, 1965, they undertook reciprocal obligations. In reciprocal obligations,
the obligation or promise of each party is the consideration for that of the other (Penaco vs.
Ruaya, 110 SCRA 46 [1981]; Vda. de Quirino vs, Pelarca 29 SCRA 1 [1969]); and when one party
has performed or is ready and willing to perform his part of the contract, the other party who
has not performed or is not ready and willing to perform incurs in delay (Art. 1169 of the Civil
Code). The promise of Sulpicio M. Tolentino to pay was the consideration for the obligation of
Island Savings Bank to furnish the P80,000.00 loan. When Sulpicio M. Tolentino executed a
real estate mortgage on April 28, 1965, he signified his willingness to pay the P80,000.00 loan.
From such date, the obligation of Island Savings Bank to furnish the P80,000.00 loan accrued.

Thus, the Bank's delay in furnishing the entire loan started on April 28, 1965, and lasted for a
period of 3 years or when the Monetary Board of the Central Bank issued Resolution No. 967
on June 14, 1968, which prohibited Island Savings Bank from doing further business. Such
prohibition made it legally impossible for Island Savings Bank to furnish the P63,000.00
balance of the P80,000.00 loan. The power of the Monetary Board to take over insolvent
banks for the protection of the public is recognized by Section 29 of R.A. No. 265, which took
effect on June 15, 1948, the validity of which is not in question.
The Board Resolution No. 1049 issued on August 13,1965 cannot interrupt the default of
Island Savings Bank in complying with its obligation of releasing the P63,000.00 balance
because said resolution merely prohibited the Bank from making new loans and investments,
and nowhere did it prohibit island Savings Bank from releasing the balance of loan agreements
previously contracted. Besides, the mere pecuniary inability to fulfill an engagement does not
discharge the obligation of the contract, nor does it constitute any defense to a decree of
specific performance (Gutierrez Repide vs. Afzelius and Afzelius, 39 Phil. 190 [1918]). And, the
mere fact of insolvency of a debtor is never an excuse for the non-fulfillment of an obligation
but 'instead it is taken as a breach of the contract by him (vol. 17A, 1974 ed., CJS p. 650)
The fact that Sulpicio M. Tolentino demanded and accepted the refund of the pre-deducted
interest amounting to P4,800.00 for the supposed P80,000.00 loan covering a 6-month period
cannot be taken as a waiver of his right to collect the P63,000.00 balance. The act of Island
Savings Bank, in asking the advance interest for 6 months on the supposed P80,000.00 loan,
was improper considering that only P17,000.00 out of the P80,000.00 loan was released. A
person cannot be legally charged interest for a non-existing debt. Thus, the receipt by Sulpicio
M. 'Tolentino of the pre-deducted interest was an exercise of his right to it, which right exist
independently of his right to demand the completion of the P80,000.00 loan. The exercise of
one right does not affect, much less neutralize, the exercise of the other.
The alleged discovery by Island Savings Bank of the over-valuation of the loan collateral cannot
exempt it from complying with its reciprocal obligation to furnish the entire P80,000.00 loan.
'This Court previously ruled that bank officials and employees are expected to exercise caution
and prudence in the discharge of their functions (Rural Bank of Caloocan, Inc. vs. C.A., 104
SCRA 151 [1981]). It is the obligation of the bank's officials and employees that before they
approve the loan application of their customers, they must investigate the existence and
evaluation of the properties being offered as a loan security. The recent rush of events where
collaterals for bank loans turn out to be non-existent or grossly over-valued underscore the
importance of this responsibility. The mere reliance by bank officials and employees on their
customer's representation regarding the loan collateral being offered as loan security is a
patent non-performance of this responsibility. If ever bank officials and employees totally reIy
on the representation of their customers as to the valuation of the loan collateral, the bank
shall bear the risk in case the collateral turn out to be over-valued. The representation made
by the customer is immaterial to the bank's responsibility to conduct its own investigation.

Furthermore, the lower court, on objections of' Sulpicio M. Tolentino, had enjoined petitioners
from presenting proof on the alleged over-valuation because of their failure to raise the same
in their pleadings (pp. 198-199, t.s.n. Sept. 15. 1971). The lower court's action is sanctioned by
the Rules of Court, Section 2, Rule 9, which states that "defenses and objections not pleaded
either in a motion to dismiss or in the answer are deemed waived." Petitioners, thus, cannot
raise the same issue before the Supreme Court.
Since Island Savings Bank was in default in fulfilling its reciprocal obligation under their loan
agreement, Sulpicio M. Tolentino, under Article 1191 of the Civil Code, may choose between
specific performance or rescission with damages in either case. But since Island Savings Bank is
now prohibited from doing further business by Monetary Board Resolution No. 967, WE
cannot grant specific performance in favor of Sulpicio M, Tolentino.
Rescission is the only alternative remedy left. WE rule, however, that rescission is only for the
P63,000.00 balance of the P80,000.00 loan, because the bank is in default only insofar as such
amount is concerned, as there is no doubt that the bank failed to give the P63,000.00. As far as
the partial release of P17,000.00, which Sulpicio M. Tolentino accepted and executed a
promissory note to cover it, the bank was deemed to have complied with its reciprocal
obligation to furnish a P17,000.00 loan. The promissory note gave rise to Sulpicio M.
Tolentino's reciprocal obligation to pay the P17,000.00 loan when it falls due. His failure to pay
the overdue amortizations under the promissory note made him a party in default, hence not
entitled to rescission (Article 1191 of the Civil Code). If there is a right to rescind the
promissory note, it shall belong to the aggrieved party, that is, Island Savings Bank. If Tolentino
had not signed a promissory note setting the date for payment of P17,000.00 within 3 years,
he would be entitled to ask for rescission of the entire loan because he cannot possibly be in
default as there was no date for him to perform his reciprocal obligation to pay.
Since both parties were in default in the performance of their respective reciprocal
obligations, that is, Island Savings Bank failed to comply with its obligation to furnish the entire
loan and Sulpicio M. Tolentino failed to comply with his obligation to pay his P17,000.00 debt
within 3 years as stipulated, they are both liable for damages.
Article 1192 of the Civil Code provides that in case both parties have committed a breach of
their reciprocal obligations, the liability of the first infractor shall be equitably tempered by the
courts. WE rule that the liability of Island Savings Bank for damages in not furnishing the entire
loan is offset by the liability of Sulpicio M. Tolentino for damages, in the form of penalties and
surcharges, for not paying his overdue P17,000.00 debt. The liability of Sulpicio M. Tolentino
for interest on his PI 7,000.00 debt shall not be included in offsetting the liabilities of both
parties. Since Sulpicio M. Tolentino derived some benefit for his use of the P17,000.00, it is
just that he should account for the interest thereon.
WE hold, however, that the real estate mortgage of Sulpicio M. Tolentino cannot be entirely
foreclosed to satisfy his P 17,000.00 debt.

The consideration of the accessory contract of real estate mortgage is the same as that of the
principal contract (Banco de Oro vs. Bayuga, 93 SCRA 443 [1979]). For the debtor, the
consideration of his obligation to pay is the existence of a debt. Thus, in the accessory contract
of real estate mortgage, the consideration of the debtor in furnishing the mortgage is the
existence of a valid, voidable, or unenforceable debt (Art. 2086, in relation to Art, 2052, of the
Civil Code).
The fact that when Sulpicio M. 'Tolentino executed his real estate mortgage, no consideration
was then in existence, as there was no debt yet because Island Savings Bank had not made any
release on the loan, does not make the real estate mortgage void for lack of consideration. It is
not necessary that any consideration should pass at the time of the execution of the contract
of real mortgage (Bonnevie vs. C.A., 125 SCRA 122 [1983]). lt may either be a prior or
subsequent matter. But when the consideration is subsequent to the mortgage, the mortgage
can take effect only when the debt secured by it is created as a binding contract to pay (Parks
vs, Sherman, Vol. 176 N.W. p. 583, cited in the 8th ed., Jones on Mortgage, Vol. 2, pp. 5-6).
And, when there is partial failure of consideration, the mortgage becomes unenforceable to
the extent of such failure (Dow. et al. vs. Poore, Vol. 172 N.E. p. 82, cited in Vol. 59, 1974 ed.
CJS, p. 138). Where the indebtedness actually owing to the holder of the mortgage is less than
the sum named in the mortgage, the mortgage cannot be enforced for more than the actual
sum due (Metropolitan Life Ins. Co. vs. Peterson, Vol. 19, F(2d) p. 88, cited in 5th ed., Wiltsie
on Mortgage, Vol. 1, P. 180).
Since Island Savings Bank failed to furnish the P63,000.00 balance of the P8O,000.00 loan, the
real estate mortgage of Sulpicio M. Tolentino became unenforceable to such extent.
P63,000.00 is 78.75% of P80,000.00, hence the real estate mortgage covering 100 hectares is
unenforceable to the extent of 78.75 hectares. The mortgage covering the remainder of 21.25
hectares subsists as a security for the P17,000.00 debt. 21.25 hectares is more than sufficient
to secure a P17,000.00 debt.
The rule of indivisibility of a real estate mortgage provided for by Article 2089 of the Civil Code
is inapplicable to the facts of this case.
Article 2089 provides:
A pledge or mortgage is indivisible even though the debt may be divided among
the successors in interest of the debtor or creditor.
Therefore, the debtor's heirs who has paid a part of the debt can not ask for the
proportionate extinguishment of the pledge or mortgage as long as the debt is
not completely satisfied.

Neither can the creditor's heir who have received his share of the debt return the
pledge or cancel the mortgage, to the prejudice of other heirs who have not been
paid.
The rule of indivisibility of the mortgage as outlined by Article 2089 above-quoted
presupposes several heirs of the debtor or creditor which does not obtain in this case. Hence,
the rule of indivisibility of a mortgage cannot apply
WHEREFORE, THE DECISION OF THE COURT OF APPEALS DATED FEBRUARY 11, 1977 IS HEREBY
MODIFIED, AND
1. SULPICIO M. TOLENTINO IS HEREBY ORDERED TO PAY IN FAVOR OF HEREIN PETITIONERS
THE SUM OF P17.000.00, PLUS P41,210.00 REPRESENTING 12% INTEREST PER ANNUM
COVERING THE PERIOD FROM MAY 22, 1965 TO AUGUST 22, 1985, AND 12% INTEREST ON
THE TOTAL AMOUNT COUNTED FROM AUGUST 22, 1985 UNTIL PAID;
2. IN CASE SULPICIO M. TOLENTINO FAILS TO PAY, HIS REAL ESTATE MORTGAGE COVERING
21.25 HECTARES SHALL BE FORECLOSED TO SATISFY HIS TOTAL INDEBTEDNESS; AND
3. THE REAL ESTATE MORTGAGE COVERING 78.75 HECTARES IS HEREBY DECLARED UNEN
FORCEABLE AND IS HEREBY ORDERED RELEASED IN FAVOR OF SULPICIO M. TOLENTINO.
NO COSTS. SO ORDERED.