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VICTOR YAM v. CA

FACTS:

The parties in this case entered into a Loan Agreement with Assumption of Solidary Liability whereby petitioners were given a loan of P500,000.00 by private respondent. The loan was secured by a chattel mortgage on the printing machinery in petitioners' establishment. Subsequently, petitioners obtained a second loan of P300,000.00, also secured by a chattel mortgage. By April 2, 1985, petitioners had fully paid their first loan. On May 17, 1986, petitioners made a partial payment of P50,000.00 on the second loan. They later proposed to settle their obligation, but private respondent replied with a counter-offer. As of July 31, 1986, petitioners' total liability to private respondent was P727,001.35. On this date, petitioners paid P410,854.47, claiming it to be the full payment of the loan. However, private respondent demanded payment of the balance of P266,146.88 and filed a case for collection or foreclosure of the chattel mortgage. Petitioners argued that they had fully paid their obligation, claiming an oral agreement to waive the penalties and service charges. The lower court ruled in favor of private respondent, which was affirmed by the Court of Appeals and the Supreme Court.

ISSUES:

  1. Whether the petitioners are liable for the payment of the penalties and service charges on their loan.

  2. Whether the alleged agreement to condone the amount in question was reduced in writing.

RULING:

  1. The petitioners are liable for the payment of the penalties and service charges on their loan. The alleged agreement to condone the amount in question was not reduced in writing as required by law.

  2. The alleged agreement to condone the amount in question was not reduced in writing and therefore cannot be enforced.

PRINCIPLES:

  • Express condonation must comply with the forms of donation, which includes reducing the agreement in writing.

  • The donation and acceptance of a movable must be made in writing, otherwise it is void.

  • Obligations are considered movable property.

  • Notations in payment receipts do not bind the party receiving the payment unless it appears in a receipt issued by the party itself.

  • The authority of a corporation, its directors, and officers over its property and effects is suspended upon the appointment of a receiver.