marcomarasigan

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Article 1307 of the Civil Code provides "Innominate contracts shall be regulated by the stipulations of the parties, by the provisions of Titles I and II of this Book, by the rules governing the most analogous nominate contracts, and by the customs of the place".

Four (4) Kinds of Innominate

1. Do ut des (I give that you may give)

2. Do ut facias (I give that you may do)

3. Facio ut des (I do that you may give)

4. Facio ut facias (I do that you may do)

For example:

Pedro' car broke down so he look for a mechanic. Later on, he found Juan and asked him to fix the car. Juan fixed the car. Pedro then thanked Juan and was about to leave when Juan asked for compensation. Pedro refused on the ground that they don't even have a contract to pay in the first place.

Question: Is Pedro correct?

Answer: No, Pedro is incorrect. He should compensate Juan as they entered into innominate contract of Facio ut des.

In other words, even in the absence of agreement to pay between them, the law presumes that Juan just fixed the car because he was expecting something in return from Pedro.

Art. 1308 of the Civil Code provides, the contract must bind both contracting parties; its validity or compliance cannot be left to the will of one of them.

The case of Floirendo vs Metrobank

Facts:

Reynaldo P. Floirendo, Jr. obtained a loan of P1,000,000.00 from Metropolitan Bank and Trust Company (Metrobank) for his real estate business.

Floirendo executed a real estate mortgage over his four parcels of land as security for the loan.

The loan was renewed for another year, and Floirendo signed a promissory note fixing the interest rate at "15.446% per annum for the first 30 days, subject to upward/downward adjustment every 30 days thereafter."

The promissory note allowed Metrobank to increase or decrease the interest rate without advance notice to Floirendo in the event of changes in the interest rate prescribed by law or the Monetary Board of the Central Bank of the Philippines.

Metrobank started imposing higher interest rates on Floirendo's loan, reaching as high as 30.244% in October 1997.

Floirendo negotiated for the renewal of his loan but was required to pay the arrears in interest.

Despite Floirendo's payment, Metrobank filed a petition for foreclosure of mortgage.

Floirendo filed a complaint for reformation of the real estate mortgage contract and promissory note, alleging that the increased interest rates imposed by Metrobank were illegal and unconscionable.

Issue:

Whether the mortgage contract and promissory note express the true agreement between the parties.

Ruling:

The Supreme Court ruled in favor of Floirendo.

The Court held that the increases in interest rates unilaterally imposed by Metrobank without Floirendo's consent violated the principle of mutuality of contracts.

The Court emphasized that a contract must bind both parties, and any stipulation regarding the validity or compliance of the contract that is left solely to the will of one party is invalid.

The provision in the promissory note allowing Metrobank to change the interest rate without advance notice to Floirendo violated the essence of mutuality of the contract.

The Court cited previous cases where it declared escalation clauses, which give one party the unbridled right to adjust the interest rate, as void for being violative of mutuality in contracts.

The Court further emphasized that any change in the contract must be mutually agreed upon, and the minds of all parties must meet as to the proposed modification.

The requisites for reformation of the mortgage contract and promissory note were present in this case.

There was a meeting of minds between the parties, but the documents did not express their true agreement on interest rates.

Metrobank acted in bad faith by unilaterally increasing the interest rate without Floirendo's knowledge and consent.

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[marcomarasigan]

Article 1279. In order that compensation may be proper, it is necessary:

That each one of the obligors be bound principally, and that he be at the same time a principal creditor of the other;

That both debts consist in a sum of money, or if the things due are consumable, they be of the same kind, and also of the same quality if the latter has been stated;

That the two debts be due;

That they be liquidated and demandable;

That over neither of them there be any retention or controversy, commenced by third persons and communicated in due time to the debtor.

To illustrate, here is the case of Mondragon vs Sola

FACTS:

Victoriano Sola entered into a contract agreement with Mondragon Inc, a company involves in the manufacturing of various commercial products. Under the contract, Victoriano oblidged himself to provide bodega facilities for the products manufactured by Mondragon, Inc. As a payment therefrom, Victoriano was entitled to a commission or service fees.

However, before the execution of the contract, it was found out that Lina Sola, the wife of Victoriano, was indebted to Mondragon Inc arising from Franchise Distributatory Agreement. This prompted Victoriano to sent a letter to Mondragon bound himself to be solidarily co-debtor for the debt of his wife Lina.

Despite that, Mondragon withheld the payment of service fees to Victoriano as partial payment for the debt of his wife. As a result, Victoriano closed and suspended the operations in his bodega facilities where the products of Mondragon stored. In addition to that, Victoriano filed a case for accounting and rescission of contract against Mondragon but the latter contended that legal compensation is applicable between them since Victoriano already obliged himself to pay the debt of his wife as manifested by the letter sent by him.

ISSUE:

The issue here is whether or not the rule on legal compensation is applicable between Mondragon and Victoriano considering that the latter is not the original or primary debtor for the debt of his wife.

HELD:

Yes, the rule in legal compensation can be applied between Mondragon and Victoriano. Accordingly, when Victoriano obliged himself to be a co-debtor for the debt of his wife, he becomes also a principal debtor to such debt.

Therefore, the Mondragon has a right to recompense against the service fees of Victoriano since they are already considered as both obligors and creditors to each other which is an essential requisite under Art. 1279.

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Article 1280 of the Civil Code provides:

Notwithstanding the provisions of the preceding article, the guarantor may set up compensation as regards what the creditor may owe the principal debtor.

In other words, despite the provisions under Art. 1279 which exclusively granted both parties a right for compensation provided that they are both debtors and creditos to each other, under Art 1280, the guarantor is also given a right to invoke compensation.

For instance, if A and B are mutually owe each other in the same amount of 100k, their respective guarantor, if any, has a right to compensate to the other party since both parties are both debtors and creditors in each other to the same amount of 100k.

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[marcomarasigan]

Lateral obligation, also known as an obligation to the co-owner, is a legal concept that requires co-owners of a property to respect each other's rights and interests in the shared property.

Under the Civil Code, co-owners have the obligation to refrain from acts that may impair the use and enjoyment of the property by the other co-owners.

An example of lateral obligation is when two individuals co-own a piece of land. One co-owner cannot build a structure on the land that would obstruct the access or view of the other co-owner without their consent. This is to ensure that each co-owner's rights and interests in the property are respected and maintained.

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[marcomarasigan]

Natural Obligation - refers to a moral obligation that cannot be enforced through legal action but may still be fulfilled voluntarily. It is an obligation based on equity, natural law, and social duty rather than on a contractual or legal agreement.

An example of a natural obligation is when a person voluntarily pays a debt that has already prescribed or expired under the statute of limitations. In this case, the debtor is not legally obligated to pay the debt, but they choose to do so out of a sense of moral duty.

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[marcomarasigan]

Article 1253 of the Civil Code provides: 

If the debt produces interest ,payment of the principal shall not be deemed to have been made until the interests have been covered.

Meaning to say, the rationale of this provision is that, when the payment should be first filed against the principal, there will be no more basis on the part of the interest to generate another interest because the latter actually based on the principal.

To further illustrate, cited below is the case of Marquez v Elisan Credit Corporation.

FACTS:

After paying his first loan, Marquez contracted a second loan from Elisan Credit Corporation payable in week installments. The same with his first loan, he made his motor vehicle as a chattel mortgage. However, when the second loan matured, there was still an unpaid balance. Because of that, Marquez requested the creditor to pay the unpaid balance by daily installments until the loan is paid. Later on, after several months, Marquez had already paid a total amount which is greater than the amount of the principal loan. Despite such, the creditor filed a complaint for foreclosure of the chattel mortgage on the ground that Marquez allegedly failed to pay the principal of the second loan despite demand. On the other hand, in his contention, he insisted that his daily payments should be deemed to have been credited against the principal because the official receipts issued by the creditor were silent with respect to the payment of interest and penalties.

ISSUE:

WON the daily payments made by the debtor should be applied to the interest and not to the principal.

RULING:

Yes, despite the fact that it was not indicated in the receipts if whether the payments were applied to the principal or the interesf, such failure should not be taken against the creditor.

The Court further ruled citing Art 1253 of the Civil Code which provides that if a debt that produces interests, the payment of the principal shall not be deemed to have been made until the interest have been covered.

Therefore, the Elisan Credit Corp has a right to deduct the payment from the interest first before starting to deduct from the principal

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[marcomarasigan]

Art. 1226. In obligations with a penal clause, the penalty shall substitute the indemnity for damages and the payment of interests in case of noncompliance, if there is no stipulation to the contrary. Nevertheless, damages shall be paid if the obligor refuses to pay the penalty or is guilty of fraud in the fulfillment of the obligation.

The penalty may be enforced only when it is demandable in accordance with the provisions of this Code.

Meaning to say, if a person obliged himself to do a certain obligation on a specific date or otherwise he will pay a certain amount to the creditor, then, if the obligor failed to fulfill his obligation, AS A GENERAL RULE, he will be only liable under the stipulated penalty and not to damages and payment of interest.

But, on the other hand, there are three (3) exceptions to the general rule

A. If the obligor refuses to pay the penalty

B. If the obligor is guilty of fraud in the fulfilmment of the obligation

C. If there is stipulation to the contrary

For the demonstration of the 3rd exception, the case of Buenaventura vs. Metropolitan Bank

FACTS:

Teresita Buenaventura contracted a loan with the Metropolitan Bank. Upon her failure ot pay the same, she executed Promissory Notes binding herself to pay an additional 18% per annum as a penalty in case of non- compliance. Moreover, under that PN, she also stated that she agreed to pay the bank IN ADDITION to the stipulated interest rate the said penalty of 18% per annum. Later on, she failed again to fulfill his obligation which prompted the bank to file a case against her with a prayer to held her liable for both stipulated interest rates and stipulated penalty charge. On the other hand, she contended thay under Art. 1226, she could only be held liable under the penal clause in lieu of the damages and interest.

ISSUE:

WON Buenaventura should be held liable for both stipulated interest rate and stipulated penalty charged.

RULING:

Yes. Because the PN was very clear on its terms. In fact, it says that she agreed to pay the bank IN ADDITION to the stipulated interest rate the said penalty of 18% per annum.

This case falls under the 3rd exception. "WHEN THERE IS STIPULATION TO THE CONTRARY"

The stipulation is the promissory note itself

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[marcomarasigan]

SECTION 3. - Alternative Obligations

Art. 1199. A person alternatively bound by different prestations shall completely perform one of them.

The creditor cannot be compelled to receive part of one and part of the other undertaking. (1131)

This article focuses on Alternative Obligations. In an alternative obligations, there is more than one prestations or object, but the fullfillment of one is sufficient to extinguish the obligation.

To demonstrate, here's the case of ARCO PULP vs Lim.

FACTS:

Lim is engaged in the business of supplying scrap papers, cartons and other raw materials to factories engage in paper mill business. In one of ita transactions, Lim delivered to Arco Pulp a scrap materials amounting to 7 million. Allegedly, they had an agreement of either to pay Lim in the amount of 7 million or to pay him through finished products with the equivalent value. Later on, Arci Pulp issued check in the amount of 1.4 million as initial payment to Lim.

Unknown to Lim, Arco Pulp entered into a MOA with another company citing Lim as the supplier. In other words, the obligation of paying Lim was transferred from Arco Pulp to the said company.

Hence, Lim sued ARCO Pulp.

The RTC ruled in favor of Arco Pulp. Accordingly, when ARCO Pulp entered into MOA with another company, novation took place.

The CA reversed the decision and ruled in favor of Lim. According to them, the obligation between the parties was alternative obligation.

Hence, the petition went to the Supreme Court.

ISSUES:

Weather or not the obligation between the parties was alternative obligation.

HELD.

The obligation between Lim and Arco Pulp was indeed an alternative obligations. This could be manifested in their agreement of either to pay Lim in the amount of 7 million or to pay him through finished products with the equivalent value.

Furthermore, Arci Pulp issuance of check in the amount of 1.4 million as initial payment to Lim waa a manifestation that they have opted to pay Lim in cash. Therefore, they are obliged to completely perform their chosen mode of payment pursuant to Article 1199 of the Civil Code.

Thus, the decision of Court of Appeals was AFFIRMED.

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[marcomarasigan]

Article 1172. Responsibility arising from negligence in the performance of every kind of obligation is also demandable, but such liability may be regulated by the courts, according to the circumstances.

Comparing this article to the previous article (Art 1171) which primarily focuses on Fraud or Dolo, Article 1172 only focuses on negligence. It is important to take note that the kind of negligence cited in Art 1172 is the simple negligence. Otherwise, if it is gross in nature amounting to badfaith, and such badfaith is tantamount to fraud or dolo, then the previous article applies.

Further, there are 3 kinds of negligence under Article 1172, to wit;

A. Contractual Negligence or Culpa Contractual.

Here, there is an existing contract between the parties, and the negligent act of one party resulted in the breach of such contract. This kind of negligence is governed by Art. 1170 of the Civil Code.

B. Civil Negligence or Quasi-delicts.

Here, the wrongful act, negligence or omission creates a legal tie between the parties, without prior contract or obligation between. It is governed by Art. 2176 of the Civil Code.

C. Criminal Negligence or Culpa Criminal

Here, the negligence resulted to a criminal offense. It is governed under Art. 365 of the RPC.

Now, it is important to note the rule on "no person shall recover civil damages twice from the same act or omission. Hence, if a person already invoked and won the civil aspect of a case under Art. 2176 of the Civil Code, he can no longer avail the civil aspect provided under Art. 365 of the RPC under the principle Unjust Enrichment.

Central Bank vs Citytrust Banking Corp

FACTS:

Pursuant to RA 625, the Citytrust Banking Corp. maintained a demand deposit account from the petitioner Central Bank.

As requires under the law, the Citytrust frunished the Central Bank the list of its authorized rouving tellers who are authorized to withdraw, sign a receipts and perform other transactions on behalf of it. For security reason, the petioner Central Bank issued identification cards to the authorized rouving tellers of Citytrust. One of whom was Flores.

In one of his transactions, Flores were able to encash two cash slips debited under the account of Citytrust. The said transaction was made fraudulently as Flores put a fictitious nmae in the transaction instead ot his. Unfortunately, this was not noticed by the Central Bank teller on duty.

After almost two years, the Citytrust discovered tne loss/theft committed by Flores and filed a case of Estafa against the latter while file a recovery of sum of money against the petitioner praying for it to restore the amount debited as the Centrak Bank negligently allowed the transaction despite the fact the Flores put a fictitious name in the transaction not one of the authorized persons to withdraw.

The RTC and the CA ruled that the plaintiff and the defendant are both equally negligent in the transaction. Therefore, they are equally liable.

Hence, a petition was filed in the SC.

ISSUE/S:

WON the petitioner is correct in its contention that the failure of the Citytrust to stricly supervise its personnel is the proximate cause of the fraud committed by Flores.

WON the Central Bank must shoulder the entire obligation arising from the fraud committed by Flores

RULING :

The petition is lack of merit. The fact that the Central Bank teller did not verify the signature of Flores because of a flimsy reason that Flores had previous transactions with them for a number of years cannot be just. That circumstance did not excuse her for focusing attention to or atleast glancing at Flores during the time the latter was signing. Would she have done that, she would be able to notice that Flores put a fictitious name in the transaction.

The Court further added that the law recognizes the fiduciary nature of banking as it requires a highest standard of integrity and performance

In other words, the bank has an obligation to observe meticulous care when dealing with their clients, always bear in mind their fiduciary nature of relationship.

However, the Citytrust failure to timely examine the checks, cancel the checks and the delay of its report on the loss/theft should mitigate the petitioner's liability.

And that is in accordance with Art. 2179 of the Civil Code which provides that if the plaintiff's negligende was only contributory and the immediate and proximate cause of the injury was the defendant's lack of due care, the plantiff may still recover damages but the court shall mitigate the damages to be awarded.

With that, the Court ruled partly infavor to both parties on a ratio of 60/40. 60% for the petitioner and 40% for the plaintiff.

Therefore, the rulings of RTC and CA were AFFIRMED with MODIFICATIONS.

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[marcomarasigan]

Art 152 of the Family Code provides "The family home, constituted jointly by the husband and the wife or by an unmarried head of a family, is the dwelling house where they and their family reside, and the land on which it is situated".

Art. 153 of the Family Code provides "The family home is deemed constituted on a house and lot from the time it is occupied as a family residence. From the time of its constitution and so long as any of its beneficiaries actually resides therein, the family home continues to be such and is exempt from execution, forced sale or attachment except as hereinafter provided and to the extent of the value allowed by law".

The Case of Simeon Cabang, et al VS. Mr. and Mrs. Guillermo Basay

FACTS:

The case started in the year 1987 when the spouses Basay purchased a parcel of land from the heirs of Felix Odong for the amount of 8,000 pesos. However, they did not occupy nor took possession of the said land after the purchased.

Not knowing to them, the Cabang Familiy was occupying the land since 1956 on an honest belief that they own that land. On the contrary, their owned land was already used by the government for contruction of roads.

Hence, petition was filed for the recovery of the said parcel of land

ISSUE:

WON the petitioner is correct in invoking the right against execution of a family home under Art 153 of the Family Code

RULING:

No. The SC ruled that a family cannot be established on the property of another person or third party. Therefore, the petitioner cannot invoke the right contemplated under Art 153 of the Family Code. However, considering that they have already made improvements on the said parcel of land on an honest belief that it is owned by them, the case was remanded to the CFI for the sole purpose of determing their certain rights under the Family Code for reimbursement.

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[marcomarasigan]

Paraphernal Property is property that solely belongs to either the husband or the wife only. Paraphernal Property is not part of the conjugal property or absolute community property.

If the property regime of the husband and wife is complete separation of property, all properties brought and acquired by each of the spouses before and during the marriage belongs only to either the husband or the wife and not by both of them.

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[marcomarasigan]

Art. 119 of the Family Code provides "whenever an amount or credit payable within a period of time belongs to one of the spouses, the sums which may be collected during the marriage in partial payments or by installments on the principal shall be the exclusive property of the spouse. However, interests falling due during the marriage on the principal shall belong to the conjugal partnership". (156a, 157a)

Meaning to say, if the person lends his friend a certain amount of money, with an agreement of 10% interest. When after the agreement the creditor married a woman, the sums to be collected from him friend to cover the capital, will be his exclusive property. However, the 10% interest to be collected during the marriage, will be included as part of the conjugal partnership.

On the other hand, Art. 121 of the Family Code provides, the conjugal partnership shall be liable for:

(1) The support of the spouse, their common children, and the legitimate children of either spouse; however, the support of illegitimate children shall be governed by the provisions of this Code on Support;

(2) All debts and obligations contracted during the marriage by the designated administrator-spouse for the benefit of the conjugal partnership of gains, or by both spouses or by one of them with the consent of the other;

(3) Debts and obligations contracted by either spouse without the consent of the other to the extent that the family may have benefited;

(4) All taxes, liens, charges, and expenses, including major or minor repairs upon the conjugal partnership property;

(5) All taxes and expenses for mere preservation made during the marriage upon the separate property of either spouse;

(6) Expenses to enable either spouse to commence or complete a professional, vocational, or other activity for self-improvement;

(7) Ante-nuptial debts of either spouse insofar as they have redounded to the benefit of the family;

(8) The value of what is donated or promised by both spouses in favor of their common legitimate children for the exclusive purpose of commencing or completing a professional or vocational course or other activity for self-improvement; and

(9) Expenses of litigation between the spouses unless the suit is found to groundless.

In the case of BA Finance Corporation Vs The Spouses of Augusto Yulo and Lily Yulo

FACTS:

In 1975, the respondent husband Augusto Yulo secured a loan from BA Finance Corp. in the amount of 500 thousands as evidenced by the promissory note he signed in his own behalf and as a representative of A.L Industries, the company under the name of his wife. He also presented an alleged Special Power of Attorney signed by his wife who manages and under whose name the company is registered. However, 2 months prior to the loan, he had already left his wife and children and abandoned their conjugal home. When the obligation became due and demandable, he failed to pay the same. This prompted BA Finance Corp. to file a complaint to enforce the obligation by the husband against his conjugal partnership with his wife.

ISSUE:

WON the conjugal partnership can be held liable in the obligation acquired by the husband

RULING:

The SC ruled that eventhough there is no doubt that the company was indeed part of the conjugal partnership, since it was actually established during the marriage. However, in order for the conjugal partnership to be held liable, the husband atleast contracted the said loan on the benefit of the conjugal property. Unfortunately, what was proven is that he contracted the loan for his personal gain as evidenced of his abandonement of his wife and children and their conjugal home.

Therefore, the conjugal partnership cannot be held liable pursuant to Art 121 of the Family Code and Art 161 of the Civil Code

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[marcomarasigan]

What is Presumptive Legitimes?

An advance on the legitime given to the children upon the termination of the parents’ marriage by annulment or declaration of void marriages under Article 43 in relation to Article 44, which consists of one-half of the value of the conjugal property of the spouses as of the date of the final judgment of their presumptive legitimes.

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[marcomarasigan]

Extrinsic Validity VS Intrinsic Validity

EXTRINSIC VALIDITY of a contract refers to formalities and solemnities which must be followed under the law, while INTRINSIC VALIDITY refers to the legality of the contract.

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[marcomarasigan]

Art. 87. Every donation or grant of gratuitous advantage, direct or indirect, between the spouses during the marriage shall be void, except moderate gifts which the spouses may give each other on the occasion of any family rejoicing. The prohibition shall also apply to persons living together as husband and wife without a valid marriage. (133a)

In the case of Erlinda Agapay Vs. Carlina Palang and Herminia Dela Cruz

FACTS:

Miguel Palang and Carlina got married in the year 1949. A year after, Miguel went to Hawaii. Hermina was born in the year 1950. The trial court found evident that Miguel tried to divorce Carlina in Hawai. Also, there are several instances that Miguel went back to the Philippines for a vacation, but he chose to stay with his brother instead of his wife and child.

Finally, when Miguel decided to retire in 1972, he went back in the Phil but again, chosen not to live with his wife and child.

Subsequently, he contracted another marriage with a 20 year old woman named Erlinda Agapay, the petitioner. Two months earlier, a parcel of agircultural land was purchased and put the names of the two as the co owner. Aside from that, a house and lot was also purchased but this time, placing Erlinda Agapay's name ay the sole buyer.

Carline filed a criminal case of concubinage against the two that eventually resulted in conviction. Two years after conviction, Miguel died.

Carline and his daughter filed a petition for the recovery of ownership with a prayer to award them the 2 properties

ISSUE:

WON the two properties should be awarded to Erlinda Agapay

HELD:

In the parcel of agricultural land, the court applied the Art. 148 of the NCC. Since the marriage between Miguel and Erlinda is void for a reason that the marriage between him and Carline is still existing when he contracted another marriage with Erlinda. The SC ruled that in order to award Erlinda the agricultural land, she must proved her actual joint contribution in the purchased of that land. Erlinda failed to convince the Court since during those times, Erlinda was just 20 years old owning a sari-sari store compare to Miguel who was a pensioner of US Govt.

On the other hand, in the house of lot, the court gave credit to the testimony of Atty. Sagun, the lawyer who prepared the deed of sale, claiming that the money was came from Miguel and he was just directed by the latter to make Erlinda as the sole buyer of the property.

In addition, applying the Art 738 of the Civil Code, a donation made between persons who are guilty of Adultery or Concubinage is void

Moreover, under Art 87 of the NCC, the prohition on donations between husband and wife during their marriage is now also applies to persons living together without a valid marriage

Hence, the two properties were awarded to the first wife Carlina

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[marcomarasigan]

Art. 85. Donations by reason of marriage of property subject to encumbrances shall be valid. In case of foreclosure of the encumbrance and the property is sold for less than the total amount of the obligation secured, the donee shall not be liable for the deficiency. If the property is sold for more than the total amount of said obligation, the donee shall be entitled to the excess

ILLUSTRATION:

A, due to his upcoming marriage with B, decided to donate his house and lot to the latter. Not knowing to B, the property was used by A as a security for the loan he have acquired months ago.

A, due to some unfortunate events, failed to complied his obligations to the loan. As a result, the Bank foreclosed the property. The bank set up a bidding to sell the property

Under Art 85 of the NCC, assuming that the property of A and the loan he acquired is worth 1 million, and the propery is sold for only 800k, B as the donee, will not be held liable for the deficiency. On the other hand, if the property is sold for 1.2 million, B will be entitled to the excess of 200k.

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[marcomarasigan]

Art 50 of the New Civil Code Provides that "The effects provided for by paragraphs (2), (3), (4) and (5) of Article 43 and by Article 44 shall also apply in the proper cases to marriages which are declared ab initio or annulled by final judgment under Articles 40 and 45.

The final judgment in such cases shall provide for the liquidation, partition and distribution of the properties of the spouses, the custody and support of the common children, and the delivery of third presumptive legitimes, unless such matters had been adjudicated in previous judicial proceedings.

All creditors of the spouses as well as of the absolute community or the conjugal partnership shall be notified of the proceedings for liquidation.

In the partition, the conjugal dwelling and the lot on which it is situated, shall be adjudicated in accordance with the provisions of Articles 102 and 129.

In the Case of Eric Jonathan Yu VS. Caroline Yu,

FACTS: The husband filed a petition for habeas corpus against his estranged wife alleging that the latter was unlawfully withheld from him the custody of their only child named Bianca.

Subsequently, the wife filed a petition for declaration of nullity of marriage against his husband. The petition was later withdrawn for a reason of change of residence. Thereafter, the husband initiated a case of declaration of nullity of marriage which prompted the wife to file also a petition for habeas corpus

ISSUE:

WON any or both of the parties can file a petition for habeas corpus to acquire the custody of the child

HELD:

Neither of them can file a petition for writ of habeas corpus. According to the SC, the issue on the custody of the common children is deemed pleaded in the case of declaration of nullity of marriage. Thus, no need to fiel a separate petition

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[marcomarasigan]

VELAYO VS SHELL

FACTS:

Because of being in the point of bankruptsy, the Commercial Airlines, Inc (CALI) and his creditors agreed for the division of CALI's assets in lieu for the payment. The assets include C-54 plane located then in the California. One of the creditors, the Shell Company, upon knowing the news, decided to took advantage by sending a telegraphic assignment of its credit in favor of its sister company in California. As a result, the other creditors were deprived of its value.

ISSUE:

Weather or not the Shell Company in the Philippines should be held liable for damages

RULING:

Yes. The SC ruled that the act of Shell Company did not show goodfaith and honesty as mandated by the Art. 19 of the NCC. Article 19 of the NCC provides that "every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe HONESTY AND GOODFAITH"

The greedy act of the Shell Company in its transfer of credit to a sister company in California violated the above-mentioned provisions.

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