PEOPLES GENERAL INSURANCE CORP. vs. COL. FELIX MATEO A. RUNES G.R. No. 212092 April 8, 201 Facts: Respondent filed an action for recovery a certain sum of money with damages against the Petitioner. The Trial Court and Court of Appeals ruled against the Petitioner. The Parties entered into a compromise agreement that the petitioner will issue twelve checks in f avor of the respondent and if should the petitioner default in at least two installments, the outstanding alance of the oligation if payment!s have een made, shall ecome due and demandale and the respondent shall forthwith e entitled to the issuance of a writ of e"ecution for the payment of the unpaid amount. #ssue: $%& the compromise agreement agreement is valid' Ruling: (es, the court ruled that a compromise agreement is valid if is not contrary to law, morals, good customs, pulic policy and pulic order.
NUNELON R. MAR!UE", v. ELISAN CRE#IT CORPORATION, G.R. No. 19$%$2 April 0%, 201 Facts: Petitioner otain to separate loan from the respondent. )use*uently, )use*uently, to further secure payment of the loan, the petitioner e"ecuted a chattel mortgage over a motor vehicle. The contract of chattel mortgage provided among others, that the motor vehicle shall stand as a security for the first loan and +all other oligations of every kind already incurred or which may hereafter e incurred. The promissory note covering the second loan contained e"actly the same terms and conditions as the first promissory note. -ue to li*uidity prolems, the petitioner asked the respondent if he could pay in daily installments daily payments until the second loan is paid. The respondent granted the petitioners re*uest. -espite the receipt of more than the amount of the principal, the respondent filed a complaint for /udicial foreclosure of the chattel mortgage ecause the petitioner allegedly failed to settle the alance of the second loan despite demand 0TC found for the petitioner and held that the second loan was fully e"tinguished ecause when an oligee accepts the performance or payment of an oligation, knowing its incompleteness or irregularity irregularity and without e"pressing any protest or o/ection, the oligation is deemed fully complied with. The 0TC noted that the respondent accepted the daily payments made y the petitioner without protest. RTC reversed the 0TC decision and cite Article 1234 of the Civil Code, it held that +if the det produces interest, payment of the principal shall not e deemed to have een made until the interests have een covered.+ #t also sustained the contention of the respondent that the chattel mortgage was revived when the petitioner e"ecuted the promissory note covering the second loan. The CA affirmed the RTCs ruling with modification. #ssue: 1. $%& the daily daily payments payments made after after the second loans loans maturity maturity should should e credited credited against against the interest or against the principal' 2. $%& the the the the e"cess e"cessive ive interest, interest, penalty penalty and and attorne attorneys ys fees' fees'
Ruling: 1 &o, respondent properly credited the daily payments to the interest and not to the principal ecause the det produces interest, i.e., the promissory note securing the second loan provided for payment of interest5 a portion of the second loan remained unpaid upon maturity5 and the respondent did not waive the payment of interest. The presumption under Article 1234 resolves douts involving payment of interest6earing dets. #t is a given under this Article that the det produces interest. The dout pertains to the application of payment5 the uncertainty is on whether the amount received y the creditor is payment for the principal or the interest. Article 1234 resolves this dout y providing a hierarchy: payments shall first e applied to t he interest5 payment shall then e applied to the principal only after the interest has een fully6 paid.The presumption under Article 1178 does not resolve the *uestion of whether the amount received y the creditor is a payment for the principal or interest. 9nder this article the amount received y the creditor is the payment for the principal, ut a dout arises on whether or not the interest is waived ecause the creditor accepts the payment for the principal without reservation with respect to the interest. Article 1178 resolves this dout y presuming that the creditor waives the payment of interest ecause he accepts payment for the principal without any reservation. There was no waiver of interest. The fact that the official receipts did not indicate whether the payments were made for the principal or the interest does not prove that the respondent waived the interest. Correlating the two provisions, the rule under Article 1234 that payments shall first e applied to the interest and not to the principal shall govern if two facts e"ist: 1; the det produces interest e.g., the payment of interest is e"pressly stipulated; and 2; the principal remains unpaid.The e"ception is a situation covered under Article 1178, i.e., when the creditor waives payment of the interest despite the presence of 1; and 2; aove. #n such case, the payments shall oviously e credited to the principal. 4. (es, stipulations imposing e"cessive rates of interest and penalty are void for eing contrary to morals, if not against the law. Article 122< of the Civil Code provides:=awliraryofCRAlaw+The /udge shall e*uitaly reduce the penalty when the principal oligation has een partly or irregularly complied with y the detor. >ven if there has een no performance, the penalty may also e reduced y the courts if it is ini*uitous or unconscionale. and Article 14?8 of the Civil Code is emphatic: The contracting parties may estalish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, pulic order, or pulic policy. The court reduced the stipulated rates as follows : the interest of 28@ per annum is reduced to 2@ per annum5 the penalty charge of 1?@ per month, or 12?@ per annum is reduced to 2@ per annum5 and the amount of attorneys fees from 23@ of the total amount due to 2@ of the total amount due.
S&'r&()r* o+ (& #&p)r(-&( o+ P/li' ors )3 4i56)*s )3 #is(ri'( E5i&&r C&l&s(io R. Co(r&r)s vs.Spo/s&s 4&r)'l&o )3 R)-o) T&'so G.R. No. 179$ /l* 1, 201 Facts: Respondents filed an action for recovery of possession with damages against petitioners. #t revolves around the taking of the su/ect lot y petitioners for the construction of the 0acArthur ighway. There is taking when the e"propriator enters private property not only for a momentary period ut for a permanent duration, or for the purpose of devoting the property to pulic use in such a manner as to oust the owner and deprive him of all eneficial en/oyment thereof. After the lapse of more than fifty years, the property owners sought recovery of the possession of their property. #ssue: $%& T> action arred y prescription or laches' Ruling: &o, the court ruled that the action is not arred y prescription or laches ecause =aches is principally a doctrine of e*uity which is applied to avoid recogniBing a right when to do so would
result in a clearly ine*uitale situation or in an in/ustice. This doctrine finds no application in this case, since there is nothing ine*uitale in giving due course to respondents claim. Doth e*uity and the law direct that a property owner should e compensated if his property is taken for pulic use. &either shall prescription ar respondents claim following the long6standing rule +that where private property is taken y the Eovernment for pulic use without first ac*uiring title thereto either through e"propriation or negotiated sale, the owners action to recover the land or the value thereof does not prescrie.