CONDONATION

1. Velasco vs. Masa

Velasco alleged that on the 1st of July, 1898, Martin Masa received from him as a loan, in the
pueblo of San Remegio, the said amount, payable on the same day in July the following year.
The debt, he alleged, was set forth in a private document signed by the debtor, but that the
defendant, Masa, taking advantage of the conditions then prevailing on account of the late
revolution, and by means of coercion and trickeries exercised with respect to his wife, managed
to obtain possession of the document of indebtedness while the plaintiff was detained as a
prisoner in the jail at the capital of Antique; that one year and some months after the condition
of things had become normal, he filed his claim before the provost court for the robbery of the
said document, but, as said court considered that it had no jurisdiction in the premises, the
plaintiff presented an information to the Court of First Instance, a certified copy of whose
decision is annexed.
The defendant in his answer denied all the main points of the complaint, inasmuch as the
aforesaid document, which was the subject of the same, had been voluntarily handed over to
him through Luis Ocsea; that said document did not call for 2,804 pesos but for 1,000 pesos.
After the foregoing answer was presented the defendant demurred to the complaint and asked
that his motion be granted, and that the complaint be dismissed with costs against the plaintiff,
alleging that the judgment on robbery case against him rendered by the court on the 7th of
March, 1902, was, in the form of a certified copy, attached to the complaint as a part thereof.
Considering that the delivery of the document, made by the plaintiff's wife to the defendant
Masa, through Luis Ocsea, was approved, though tacitly, by the said plaintiff creditor, for the
reasons stated in the judgment appealed from, and no proof appearing in the record that the
delivery of the document was not voluntarily made, it appears from the whole of the
foregoing that the debt now claimed was remitted for reasons of gratitude and in
acknowledgment of the services rendered by the debtor to the plaintiff creditor, and that the
latter has implicitly waived its recovery, and if thereafter he filed a complaint against the
defendant it was evidently due to some trouble which subsequently arose between them,
thus putting an end to a long friendship which existed between them.

2. Lopez vs. Tambunting

Facts: These proceedings were brought to recover from the defendant the sum of P2,000, amount of the
fees, which, according to the complaint, are owing for professional medical services rendered by the plaintiff
to a daughter of the defendant from March 10 to July 15, 1913, which fees the defendant refused to pay,
notwithstanding the demands therefor made upon him by the plaintiff.

The defendant denied the allegations of the complaint, and furthermore alleged that the obligation which the
plaintiff endeavored to compel him to fulfill was already extinguished.

The Court of First Instance of Manila, after hearing the evidence introduced by both parties, rendered
judgment on December 17, 1913, ordering the defendant to pay to the plaintiff the sum of P700, without
express finding as to costs. The defendant, after entering a motion for a new trial, which was denied,
appealed from said judgment and forwarded to this court the proper bill of exceptions.
Issues:

The first question raised by this appeal relates to the amount or value of the fees which the
defendant was ordered to pay.
The second question raised by this appeal involves the question of whether the defendant has really
paid the plaintiff, as he claims to have done, the sum of P700 before mentioned, that is, whether
the obligation alleged in the complaint has already been extinguished.

Held:

After discussing the matter of the service rendered and after taking into account that the plaintiff,
as soon as he had finished rendering them, asked for compensation in the sum of P700 only, and
furthermore, holding that it was in no wise proven that, because said amount was not paid the
plaintiff was entitled to recover from the defendant, by means of these proceedings, the sum of
P2,000, held that the reasonable value of said services could only be worth said P700.
The court, after hearing the testimony, reached the conclusion that, notwithstanding that the
defendant was in possession of the receipt, the said P700 had not been paid to the plaintiff.
- Rationale:

No. 8 of section 334 of the Code of Civil Procedure provides as a legal presumption "that an
obligation delivered up to the debtor has been paid." Article 1188 of the Civil Code also provides
that the voluntary surrender by a creditor to his debtor, of a private instrument proving a
credit, implies the renunciation of the right of action against the debtor; and article 1189
prescribes that whenever the private instrument which evidences the debt is in the possession
of the debtor, it will be presumed that the creditor delivered it of his own free will, unless the
contrary is proven.

In the case at bar the trial court correctly held that there was sufficient evidence to the
contrary, it cannot be said that these circumstances concurred, inasmuch as when the plaintiff
sent the receipt to the defendant for the purpose of collecting his fee, it was not his intention
that that document should remain in the possession of the defendant if the latter did not
forthwith pay the amount specified therein.

CONFUSION or MERGER OF RIGHTS

1. Sochayseng vs. Trujillo

Facts:

On November 14, 1911, Paulina Sochayseng filed a written complaint wherein she alleges that
the defendant is the widower of her daughter, Marcela Yatco y Sochayseng; that the later died on June
25, 1911, without leaving any legitimate heir other than the plaintiff; that her said daughter, five months
prior to her death and while sick, left her husband's house, with his knowledge and consent, and
removed to that of the plaintiff for the purpose of being attended by the latter during her sickness; that
the attendance, care, and subsistence of Marcela Yatco, during her stay in plaintiff's house, cost the
latter the sum of P410, and that upon her death, her burial expenses amounted to P320, both of which
were paid by plaintiff; that at the time of the death of Marcela Yatco, the conjugal partnership between
her and the defendant was the owner of a piece of real estate valued at P1,000, which property is now
in defendant's possession; that defendant was not paid plaintiff the whole nor any part of the P730
which the latter expended for the purposes above specified; and that, despite the time that has elapsed
since the death of Marcela Yatco, the defendant has not liquidated the affairs of the conjugal
partnership. For the foregoing reasons plaintiff prayed that defendant be sentenced to pay her the sum
of P730, with the costs of the suit, and, furthermore, that he be ordered to proceed with the settlement
and partition of the conjugal partnership estate.

The defendant set forth that his wife left his house without his knowledge or consent; that he
requested her on several occasions to return and live with him again, but did not succeed in persuading
her so to do on account of plaintiff's opposition; and that, during the time his wife was living in her
mother's house, he sent her P12 a month for her support. In a cross-complaint defendant demanded
that plaintiff deliver to him certain articles belonging to the conjugal partnership, valued at P615.
Subsequently defendant filed an additional answer wherein he alleged that the claim for P730,
presented by plaintiff, should have been made to the commissioners of appraisal appointed in the
proceedings for the settlement of the intestate estate of Marcela Yatco.

On March 11, 1912, the lower court rendered judgment in which it held that the causes of
action therein set forth should have been presented in the proceedings for the administration and
distribution of the estate of Marcela Yatco, and dismissed the complaint.

By an order of April 20, 1912, the court quashed its aforesaid ruling and directed that the
defendant proceed with the settlement of the conjugal partnership affairs in accordance with section 7,
title 3, book 4 of the Civil Code. The defendant entered an exception to this order (p. 46 of the record).

On May 11, 1912, defendant filed with the court a copy of the inventory which, as administrator
of the intestate estate of Marcela Yatco, he had presented in the proceedings relative to the
administration and distribution of the said estate. This inventory appears on pages 12 and 13 of the bill
of exceptions.

On August 2 the court ordered defendant to file an inventory of the property of the conjugal
partnership in conformity with article 1419 of the Civil Code. To this ruling defendant excepted.

On December 14, 1912, the court rendered final judgment in the case wherein he held that the
total value of the conjugal partnership property amounted to P1,615, and said: "From this sum of P1,615
there must first be paid the value of the property brought into the partnership by Marcela Yatco at her
marriage, which, as we have seen, amount to P1,490. Once this sum of P1,490 has been paid, there will
remain of the property of the conjugal partnership only the sum of P125, and out of this the debt,
charges and obligation of the conjugal partnership will be paid, in accordance with article 1422 of the
Civil Code. After payment of the said debts, charges and obligations, should there still be anything left,
the capital brought in by the husband at marriage shall be paid, pursuance to article 1423 of the same
Code and what remains, if any, will be the conjugal property, which shall be divided in accordance with
the laws governing the subject."

Issue: From where should the subsistence and funeral expenses of Yatco be paid, and was any of the
defendants obligations extinguished by reason of confusion of rights?

Held:

The record shows that the property acquired during the marriage amounts to P2,603, according
to the inventory presented by the husband, and to this plaintiff agrees (p. 76 of the record);
that, in accordance with the inventory, the wife's paraphernal property is valued at P1,490 (p.
73); that plaintiff is willing that from this total a deduction be made of P615, "the value of the
property which the deceased Marcela Yatco took away with her upon leaving the conjugal
home". Hence, the paraphernal property whole estate, worth P2,603, there remains the sum of
P1,728.
As the deceased left property of her own, it is improper to deduct the P320 demanded for
funeral expenses. So, as this sum cannot be paid out of the remaining funds, which amount to
P1,318, this remainder "shall constitute the assets of the conjugal partnership." (Civil Code,
art .1424.)
It is this remainder that should be divided equally between the wife, now deceased, and the
surviving husband, the share of each spouse being P659.
The important feature of this case is the part thereof which relates to the other demand for the
settlement of the legal conjugal partnership and the collection of a debt owed by the same. The
trial court held that there was an amount payable for subsistence furnished by plaintiff to
defendant's deceased wife. This credit, which is admitted in this decision, must be paid by the
defendant.
In the present action final judgment should be rendered decreeing that defendant pay to the
plaintiff (a) P875, as the paraphernal property of his deceased wife, Marcela Yatco; (b) P659, as
her one-half of the community property; and P410, as the debt owed by him as the legal
administrator of the community property for the cost of the subsistence to which the deceased
was entitled, making a total of P1,944. In other words, plaintiff will collect the P410 under her
personal right as a creditor of the defendant, like any third person who might have furnished
that subsistence, and the remaining P1,534 as the legitimate heir of the deceased Marcela
Yatco, from which the 320 funeral expenses should be paid. No merger of rights here, hence
obligation is not extinguished.

2. Yek Ton Lin Fire & Marine Insurance Co. vs. Yusingco

Facts:

plaintiff, Yek Tong Lin Fire & Marine Insurance Co., Ltd and defendant V.M. appealed from the
judgment of CFI
 Pelagio Yusingco authorized Yu Seguioc to administer his properties and mortgaged the steamship to
Yek Tong Lin Fire & Marine Insurance Co (P45k) loaned from China Bank, in favour of said bank was a
guaranty worth P20k

A year and some months later, the ship needed some repairs and thus was repaired by Earnshaw
Docks & Honolulu Iron Works and Vicente Madrigal was the guarantor and was asked to pay the P8k

Because plaintiff wasnt able to pay Madrigal, a judicial proceeding was instituted assigning the rights
to V.M. to sell the steamship, while the steamship was in possession of the plaintiffs

Plaintiff filed a 3rd-party claim as it was mortgaged to him, however auction was done and plaintiff
itself was the winning bidder

Lower court: Defendant Pelgio Yusingco has to pay P17k to Madrigal while Madrigal has to turn over
the money received by him to the sheriff (was absolved) of Surigao

Issues:

WON preference of credits belong to the creditor-assignee(Madrigal) or to the creditor-

mortgagee (Plaintiff)
WON there was merger of rights on the part of the plaintiff

Held:

The defendant and appellant V. M. enjoys preference in the payment of his judgment credit with the
proceeds of the sale of the steamship Yusingco, by virtue of the assignment to him, because it is so
provided not only in article 1922 of the Civil code but also in article 1926, rule 4, which provides that
credits secured by a pledge exclude all others to the extent of the value of the thing pledged.

Even if mortgage contains a clause to the effect that if the proceeds of the sale of the steamship
Yusingco, in case it is sold by reason of default in the performance of the conditions thereof, should be
insufficient, the plaintiff could collect its credit on other property of the debtors,

plaintiffs only right with respect to said vessel was to sell it judicially or extrajudicially in accordance
with law, upon default in the performance of the conditions of the mortgage contract entered into
between it and the owners thereof, in order to apply the proceeds of the sale to its mortgage credit
against said owners, or at least against P. Y., if such proceeds are sufficient (Bachrach Motor co. vs.
summers, 42 Phil., 3), and if insufficient, to collect the balance thereof on other property belonging to
said defendants, under the circumstances, it could neither take possession thereof nor sell it pursuant to
the conditions of its mortgage contract.
 After the steamship Yusingco had been sold by virtue of the judicial writ issued in civil case No. 41654
for the execution of the judgment rendered in favor of Madrigal, the only right left to the plaintiff was to
collect its mortgage credit from the purchaser thereof at public auction, inasmuch as the rule is that a
mortgage directly and immediately subjects the property on which it is imposed, whoever its possessor
may be, to the fulfillment of the obligation for the security of which it was created (article 1876, Civil
Code); but it so happens that it cannot take such steps now because it was the purchaser of the
steamship Yusingco at public auction, and it was so with full knowledge that it had a mortgage credit
on said vessel. Obligations are extinguished by the merger of the rights of the creditor and debtor
(articles 1156 and 11922, Civil Code).

COMPENSATION

1. Silahis Mktg. Corp. vs. IAC

Furthermore, here is no evidence on record from which it can be inferred that there was any agreement
between the petitioner and private respondent prohibiting the latter from selling directly to Dole
Philippines, Incorporated. Definitely, it cannot be asserted that the debit memo was a contract binding
between the parties considering that the same, as correctly found by the appellate court, was not signed
by private respondent nor was there any mention therein of any commitment by the latter to pay any
commission to the former involving the sale of sprockets to Dole Philippines, Inc. in the amount of P
111,000.00. Indeed, such document can be taken as self-serving with no probative value absent a
showing or at the very least an inference, that the party sought to be bound assented to its contents or
showed conformity thereto.

2. BPI vs. CA, et. al., 255 SCRA 571

Facts:

Private respondent Edvin F. Reyes opened Savings Account No. 3 185-0172-56 at petitioner Bank
of the Philippine Islands (BPI) Cubao, Shopping Center Branch. It is a joint AND/OR account with
his wife, Sonia S. Reyes.
Private respondent also held a joint AND/OR Savings Account No. 3185-0128-82 with his
grandmother, Emeteria M. Fernandez, opened3 on February 11, 1986 at the same BPI branch.
He regularly deposited in this account the U.S. Treasury Warrants payable to the order of
Emeteria M. Fernandez as her monthly pension.
Emeteria died on December 28, 1989 without the knowledge of the U.S. Treasury Department.
She was still sent U.S. Treasury Warrant No. 21667302 dated January 1, 1990 in the amount of
U.S. $377.003 or P10,556.00. Private respondent deposited the said U.S. treasury check of
Fernandez in his other Savings Account. The U.S. Veterans Administration Office in Manila
conditionally cleared the check.4 The check was then sent to the United States for further
clearing.
Two months after or on March 8, 1990, private respondent closed Savings Account No. 3 185-
0128-82 and transferred its funds amounting to P13,112.91 to Savings Account No. 3 185-0172-
56, the joint account with his wife.

On January 16, 1991, U.S. Treasury Warrant No. 21667302 was dishonored as it was discovered
that Fernandez died three (3) days prior to its issuance. The U.S. Department of Treasury
requested petitioner bank for a refund.6 For the first time petitioner bank came to know of the
death of Fernandez.
Respondent called the bank and he was informed that the treasury check was the subject of a
claim by Citibank NA, correspondent of petitioner bank. He assured petitioners that he would
drop by the bank to look into the matter. He also verbally authorized them to debit from his
other joint account the amount stated in the dishonored U.S. Treasury Warrant. On the same
day, petitioner bank debited the amount of P10,556.00 from private respondents other
Savings Account.
 Surprisingly, private respondent demanded from petitioner bank restitution of the debited
amount. He claimed that because of the debit, he failed to withdraw his money when he
needed them. He then filed a suit for moral damages.
Petitioners contested the complaint and counter-claimed for moral and exemplary damages.
Trial court dismissed the complaint of private respondent for lack of cause of action, but IAC
reversed the decision.

Issue: WON there was compensation between petitioner bank and respondent

Held: NO. We are not disposed to believe private respondents allegation that he did not give any verbal
authorization. His testimony is uncorroborated. Nor does he inspire credence. His past and fraudulent
conduct is an evidence against him.

Compensation takes place ipso jure, its effects arise on the very day on which all its requisites
concur. When used as a defense, it retroacts to the date when its requisites are fulfilled.
The elements of legal compensation are all present in the case at bar. The obligors bound
principally are at the same time creditors of each other. Petitioner bank stands as a debtor of
the private respondent, a depositor. At the same time, said bank is the creditor of the private
respondent with respect to the dishonored U.S. Treasury Warrant which the latter illegally
transferred to his joint account. The debts involved consist of a sum of money. They are due,
liquidated, and demandable. They are not claimed by a third person.