64.villaluz v. Land Bank of The Philippines, 814 SCRA 466

10/10/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 814

G.R. No. 192602. January 18, 2017.*

SPOUSES MAY S. VILLALUZ and JOHNNY VILLALUZ,
JR., petitioners, vs. LAND BANK OF THE PHILIPPINES
and the REGISTER OF DEEDS FOR DAVAO CITY,
respondents.
Civil Law; Agency; The law creates a presumption that an

agent has the power to appoint a substitute. The consequence of the
presumption is that, upon valid appointment of a substitute by the
agent, there ipso jure arises an agency relationship between the
principal and the substitute, i.e., the substitute becomes the agent
of the principal.—The law creates a presumption that an agent
has the power to appoint a substitute. The consequence of the
presumption is that, upon valid appointment of a substitute by
the agent, there ipso jure arises an agency relationship between
the principal and the substitute, i.e., the substitute becomes the
agent of the principal. As a result, the principal is bound by the
acts of the substitute as if these acts had been performed by the
principal’s appointed agent. Concomitantly, the substitute
assumes an agent’s obligations to act within the scope of
authority, to act in accordance with the principal’s instructions,
and to carry out the agency, among others. In order to make the
presumption inoperative and relieve himself from its effects, it is
incumbent upon the principal to prohibit the agent from
appointing a substitute.
Same; Sales; Under Articles 1461 and 1462, things having a
potential existence and “future goods,” i.e., those that are yet to be
manufactured, raised, or acquired, may be the objects of contracts
of sale.—Article 1347 provides that “[a]ll things which are not
outside the commerce of men, including future things, may be the
object of a contract.” Under Articles 1461 and 1462, things having
a potential existence and “future goods,” i.e., those that are yet to
be manufactured, raised, or acquired, may be the objects of
contracts of sale. The narrow interpretation advocated by the
Spouses Villaluz would create a dissonance between Articles
1347, 1461, and 1462, on the one hand, and Article 1409(3), on the
other. A literal interpretation
_______________
* THIRD DIVISION.

467
central.com.ph/sfsreader/session/000001751147e7c1a8c14a09003600fb002c009e/t/?o=False 1/13
VOL. 814, JANUARY 18, 2017 467

Villaluz vs. Land Bank of the Philippines
of the phrase “did not exist at the time of the transaction” in

Article 1409(3) would essentially defeat the clear intent and
purpose of Articles 1347, 1461, and 1462 to allow future things to
be the objects of contracts. To resolve this apparent conflict,
Justice J.B.L. Reyes commented that the phrase “did not exist”
should be interpreted as “could not come into existence” because
the object may legally be a future thing. We adopt this
interpretation.
Statutory Construction; In order to give effect to Articles 1347,
1461, and 1462, Article 1409(3) must be interpreted as referring to
contracts whose cause or object is impossible of existing at the time
of the transaction.—One of the basic rules in statutory
interpretation is that all parts of a statute are to be harmonized
and reconciled so that effect may be given to each and every part
thereof, and that conflicting intentions in the same statute are
never to be supposed or so regarded. Thus, in order to give effect
to Articles 1347, 1461, and 1462, Article 1409(3) must be
interpreted as referring to contracts whose cause or object is
impossible of existing at the time of the transaction.
Civil Law; Loans; In loan transactions, it is customary for the
lender to require the borrower to execute the security contracts
prior to initial drawdown.—In loan transactions, it is customary
for the lender to require the borrower to execute the security
contracts prior to initial drawdown. This is understandable since
a prudent lender would not want to release its funds without the
security agreements in place. On the other hand, the borrower
would not be prejudiced by mere execution of the security
contract, because unless the loan proceeds are delivered, the
obligations under the security contract will not arise. In other
words, the security contract — in this case, the Real Estate
Mortgage — is conditioned upon the release of the loan amount.
This suspensive condition was satisfied when Land Bank released
the first tranche of the P3,000,000 loan to Milflores Cooperative
on June 25, 1996, which consequently gave rise to the Spouses
Villaluz’s obligations under the Real Estate Mortgage.
Same; Extinguishment of Obligations; Dation in Payment;
Dation in payment extinguishes the obligation to the extent of the
value of the thing delivered, either as agreed upon by the parties or
as may be proved, unless the parties by agreement — express or
implied, or by their silence — consider the thing as equivalent to
the obligation, in

468
468 SUPREME COURT REPORTS ANNOTATED

which case the obligation is totally extinguished.—The

assignment was for the express purpose of “securing the payment
of the Line/Loan, interest and charges thereon.” Nowhere in the
deed can it be reasonably deduced that the collaterals assigned by
Milflores Cooperative were intended to substitute the payment of
sum of money under the loan. It was an accessory obligation to
secure the principal loan obligation. The assignment, being
intended to be a mere security rather than a satisfaction of
indebtedness, is not a dation in payment under Article 1245 and
did not extinguish the loan obligation. “Dation in payment
extinguishes the obligation to the extent of the value of the thing
delivered, either as agreed upon by the parties or as may be
proved, unless the parties by agreement — express or implied, or
by their silence — consider the thing as equivalent to the
obligation, in which case the obligation is totally extinguished.”
As stated in the second condition of the Deed of Assignment, the
“Assignment shall in no way release the ASSIGNOR from liability
to pay the Line/Loan and other obligations, except only up to the
extent of any amount actually collected and paid to ASSIGNEE by
virtue of or under this Assignment.” Clearly, the assignment was
not intended to substitute the payment of sums of money. It is the
delivery of cash proceeds, not the execution of the Deed of
Assignment, that is considered as payment. Absent any proof of
delivery of such proceeds to Land Bank, the Spouses Villaluz’s
claim of payment is without basis.
PETITION for review on certiorari of the decision and

resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Oscar R. Gonzales for petitioners.
JARDELEZA, J.:

The Civil Code sets the default rule that an agent may
appoint a substitute if the principal has not prohibited him
from doing so. The issue in this petition for review on
certiorari,1
_______________
1 Rollo, pp. 30-44.

469
VOL. 814, JANUARY 18, 2017 469

which seeks to set aside the Decision2 dated September 22,

2009 and Resolution3 dated May 26, 2010 of the Court of
Appeals (CA) in C.A.-G.R. CV No. 01307, is whether the
mortgage contract executed by the substitute is valid and
binding upon the principal.

I

Sometime in 1996, Paula Agbisit (Agbisit), mother of
petitioner May S. Villaluz (May), requested the latter to
provide her with collateral for a loan. At the time, Agbisit
was the chairperson of Milflores Cooperative and she
needed P600,000 to P650,000 for the expansion of her
backyard cut flowers business.4 May convinced her
husband, Johnny Villaluz (collectively, the Spouses
Villaluz), to allow Agbisit to use their land, located in
Calinan, Davao City and covered by Transfer Certificate of
Title (TCT) No. T-202276, as collateral.5 On March 25,
1996, the Spouses Villaluz executed a Special Power of
Attorney6 in favor of Agbisit authorizing her to, among
others, “negotiate for the sale, mortgage, or other forms of
disposition a parcel of land covered by Transfer Certificate
of Title No. T-202276” and “sign in our behalf all
documents relating to the sale, loan or mortgage, or other
disposition of the aforementioned property.”7 The one-page
power of attorney neither specified the conditions under
which the special powers may be exercised nor stated the
amounts for which the subject land may be sold or
mortgaged.
_______________
2 Id., at pp. 10-18. Penned by Associate Justice Leoncia R. Dimagiba,

with Associate Justices Edgardo A. Camello and Edgardo T. Lloren,
concurring.
3 Id., at p. 19.
4 Id., at p. 11.
5 Id.
6 Id., at p. 55.
7 Id.

470

On June 19, 1996, Agbisit executed her own Special

Power of Attorney,8 appointing Milflores Cooperative as
attorney-in-fact in obtaining a loan from and executing a
real mortgage in favor of Land Bank of the Philippines
(Land Bank). On June 21, 1996, Milflores Cooperative, in a
representative capacity, executed a Real Estate Mortgage9
in favor of Land Bank in consideration of the P3,000,000
loan to be extended by the latter. On June 24, 1996,
Milflores Cooperative also executed a Deed of Assignment
of the Produce/Inventory10 as additional collateral for the
loan. Land Bank partially released one-third of the total
loan amount, or P995,500, to Milflores Cooperative on June

25, 1996. On the same day, Agbisit borrowed the amount of
P604,750 from Milflores Cooperative. Land Bank released
the remaining loan amount of P2,000,500 to Milflores
Cooperative on October 4, 1996.11
Unfortunately, Milflores Cooperative was unable to pay
its obligations to Land Bank. Thus, Land Bank filed a
petition for extrajudicial foreclosure sale with the Office of
the Clerk of Court of Davao City. Sometime in August
2003, the Spouses Villaluz learned that an auction sale
covering their land had been set for October 2, 2003. Land
Bank won the auction sale as the sole bidder.12
The Spouses Villaluz filed a complaint with the Regional
Trial Court (RTC) of Davao City seeking the annulment of
the foreclosure sale. The sole question presented before the
RTC was whether Agbisit could have validly delegated her
authority as attorney-in-fact to Milflores Cooperative.
Citing Article 1892 of the Civil Code, the RTC held that the
delegation was valid since the Special Power of Attorney
executed by the Spouses Villaluz had no specific prohibition
against Agbisit
_______________
8 Id., at pp. 56-57.

9 Id., at pp. 58-61.
10 Id., at pp. 62-66.
11 Id., at p. 13.
12 Id.

471
VOL. 814, JANUARY 18, 2017 471

appointing a substitute. Accordingly, the RTC dismissed

the complaint.13
On appeal, the CA affirmed the RTC Decision. In its
Decision14 dated September 22, 2009, the CA similarly
found Article 1892 to be squarely applicable. According to
the CA, the rule is that an agent is allowed to appoint a
subagent in the absence of an express agreement to the
contrary and that “a scrutiny of the Special Power of
Attorney dated March 25, 1996 executed by appellants in
favor of [Agbisit] contained no prohibition for the latter to
appoint a subagent.”15 Therefore, Agbisit was allowed to
appoint Milflores Cooperative as her subagent.
After the CA denied their motion for reconsideration, the
Spouses Villaluz filed this petition for review. They argue
that the Real Estate Mortgage was void because there was
no loan yet when the mortgage contract was executed and
that the Special Power of Attorney was extinguished when
Milflores Cooperative assigned its produce and inventory to

Land Bank as additional collateral.16 In response, Land
Bank maintains that the CA and RTC did not err in
applying Article 1892, that the Real Estate Mortgage can
only be extinguished after the amount of the secured loan
has been paid, and that the additional collateral was
executed because the deed of assignment was meant to
cover any deficiency in the Real Estate Mortgage.17

II

Articles 1892 and 1893 of the Civil Code provide the
rules regarding the appointment of a substitute by an
agent:
_______________
13 Id., at pp. 69-72.

14 Id., at pp. 10-18.
15 Id., at pp. 14-15.
16 Id., at pp. 37-39.
17 Id., at pp. 93-105.

472

Art. 1892. The agent may appoint a substitute if the

principal has not prohibited him from doing so; but he shall be
responsible for the acts of the substitute:
(1) When he was not given the power to appoint one;
(2) When he was given such power, but without designating
the person, and the person appointed was notoriously
incompetent or insolvent.
All acts of the substitute appointed against the prohibition of
the principal shall be void.
Art. 1893. In the cases mentioned in Nos. 1 and 2 of the
preceding article, the principal may furthermore bring an action
against the substitute with respect to the obligations which the
latter has contracted under the substitution.

The law creates a presumption that an agent has the
power to appoint a substitute. The consequence of the
presumption is that, upon valid appointment of a
substitute by the agent, there ipso jure arises an agency
relationship between the principal and the substitute, i.e.,
the substitute becomes the agent of the principal. As a
result, the principal is bound by the acts of the substitute
as if these acts had been performed by the principal’s
appointed agent. Concomitantly, the substitute assumes an
agent’s obligations to act within the scope of authority,18 to

act in accordance with the principal’s instructions,19 and to
carry out the agency,20 among others. In order to make the
presumption inoperative and relieve himself from its
effects, it is incumbent upon the principal to prohibit the
agent from appointing a substitute.
_______________
18 CIVIL CODE, Art. 1881.

19 Id., Art. 1887.
20 Id., Art. 1884.
473
VOL. 814, JANUARY 18, 2017 473

Although the law presumes that the agent is authorized

to appoint a substitute, it also imposes an obligation upon
the agent to exercise this power conscientiously. To protect
the principal, Article 1892 allocates responsibility to the
agent for the acts of the substitute when the agent was not
expressly authorized by the principal to appoint a
substitute; and, if so authorized but a specific person is not
designated, the agent appoints a substitute who is
notoriously incompetent or insolvent. In these instances,
the principal has a right of action against both the agent
and the substitute if the latter commits acts prejudicial to
the principal.
The case of Escueta v. Lim21 illustrates the prevailing
rule. In that case, the father, through a special power of
attorney, appointed his daughter as his attorney-in-fact for
the purpose of selling real properties. The daughter then
appointed a substitute or subagent to sell the properties.
After the properties were sold, the father sought to nullify
the sale effected by the subagent on the ground that he did
not authorize his daughter to appoint a subagent. We
refused to nullify the sale because it is clear from the
special power of attorney executed by the father that the
daughter is not prohibited from appointing a substitute.
Applying Article 1892, we held that the daughter “merely
acted within the limits of the authority given by her father,
but she will have to be ‘responsible for the acts of the
subagent,’ among which is precisely the sale of the subject
properties in favor of respondent.”22
In the present case, the Special Power of Attorney
executed by the Spouses Villaluz contains no restrictive
language indicative of an intention to prohibit Agbisit from
appointing a substitute or subagent. Thus, we agree with
the findings of the CA and the RTC that Agbisit’s
appointment of Milflores Cooperative was valid.
_______________
21 G.R. No. 137162, January 4, 2007, 512 SCRA 411.

22 Id., at pp. 423-424. (Citation omitted)

474

III

Perhaps recognizing the correctness of the CA and the
RTC’s legal position, the Spouses Villaluz float a new
theory in their petition before us. They now seek to
invalidate the Real Estate Mortgage for want of
consideration. Citing Article 1409(3), which provides that
obligations “whose cause or object did not exist at the time
of the transaction” are void ab initio, the Spouses Villaluz
posit that the mortgage was void because the loan was not
yet existent when the mortgage was executed on June 21,
1996. Since the loan was released only on June 25, 1996,
the mortgage executed four days earlier was without
valuable consideration.
Article 1347 provides that “[a]ll things which are not
outside the commerce of men, including future things, may
be the object of a contract.” Under Articles 1461 and 1462,
things having a potential existence and “future goods,” i.e.,
those that are yet to be manufactured, raised, or acquired,
may be the objects of contracts of sale. The narrow
interpretation advocated by the Spouses Villaluz would
create a dissonance between Articles 1347, 1461, and 1462,
on the one hand, and Article 1409(3), on the other. A literal
interpretation of the phrase “did not exist at the time of the
transaction” in Article 1409(3) would essentially defeat the
clear intent and purpose of Articles 1347, 1461, and 1462 to
allow future things to be the objects of contracts. To resolve
this apparent conflict, Justice J.B.L. Reyes commented that
the phrase “did not exist” should be interpreted as “could
not come into existence” because the object may legally be a
future thing.23 We adopt this interpretation.
_______________
23 The Lawyers Journal, Vol. XVI, January 31, 1951, p. 50, Tolentino,
Commentaries and Jurisprudence on the Civil Code of the Philippines, Vol.
IV, p. 629 (1991); and Paras, Civil Code of the Philippines Annotated, Vol.
IV, p. 818 (2012).

475
VOL. 814, JANUARY 18, 2017 475

One of the basic rules in statutory interpretation is that

all parts of a statute are to be harmonized and reconciled
so that effect may be given to each and every part thereof,
and that conflicting intentions in the same statute are
never to be supposed or so regarded.24 Thus, in order to
give effect to Articles 1347, 1461, and 1462, Article 1409(3)
must be interpreted as referring to contracts whose cause
or object is impossible of existing at the time of the
transaction.25
The cause of the disputed Real Estate Mortgage is the
loan to be obtained by Milflores Cooperative. This is clear
from the terms of the mortgage document, which expressly
provides that it is being executed in “consideration of
certain loans, advances, credit lines, and other credit
facilities or accommodations obtained from [Land Bank by
Milflores Cooperative] x x x in the principal amount of
[P3,000,000].”26 The consideration is certainly not an
impossible one because Land Bank was capable of granting
the P3,000,000 loan, as it in fact released one-third of the
loan a couple of days later.
Although the validity of the Real Estate Mortgage is
dependent upon the validity of the loan,27 what is essential
is that the loan contract intended to be secured is actually
perfected,28 not at the time of the execution of the mortgage
contract vis-à-vis the loan contract. In loan transactions, it
is customary for the lender to require the borrower to
execute the security contracts prior to initial drawdown.
This is understandable since a prudent lender would not
want to release its funds without the security agreements
in place. On
_______________
24 People v. Garcia, 85 Phil. 651, 654-655 (1950).

25 CIVIL CODE, Art. 1348 provides: Impossible things or services cannot
be the object of contracts.
26 Rollo, p. 58.
27 CIVIL CODE, Art. 2086.
28 A loan contract is a real contract, not consensual, and, as such, is
perfected only upon the delivery of the object of the contract. See Naguiat
v. Court of Appeals, G.R. No. 118375, October 3, 2003, 412 SCRA 591, 597.

476

the other hand, the borrower would not be prejudiced by

mere execution of the security contract, because unless the
loan proceeds are delivered, the obligations under the

security contract will not arise.29 In other words, the
security contract — in this case, the Real Estate Mortgage
— is conditioned upon the release of the loan amount. This
suspensive condition was satisfied when Land Bank
released the first tranche of the P3,000,000 loan to
Milflores Cooperative on June 25, 1996, which
consequently gave rise to the Spouses Villaluz’s obligations
under the Real Estate Mortgage.

IV

The Spouses Villaluz claim that the Special Power of
Attorney they issued was mooted by the execution of the
Deed of Assignment of the Produce/Inventory by Milflores
Cooperative in favor of Land Bank. Their theory is that the
additional security on the same loan extinguished the
agency because the Deed of Assignment “served as
payment of the loan of the [Milflores] Cooperative.”30
The assignment was for the express purpose of “securing
the payment of the Line/Loan, interest and charges
thereon.”31 Nowhere in the deed can it be reasonably
deduced that the collaterals assigned by Milflores
Cooperative were intended to substitute the payment of
sum of money under the loan. It was an accessory
obligation to secure the principal loan obligation.
The assignment, being intended to be a mere security
rather than a satisfaction of indebtedness, is not a dation
in payment under Article 124532 and did not extinguish the
loan
_______________
29 Id., at p. 599.
30 Rollo, pp. 38-39.
31 Id., at p. 62.
32 Art. 1245. Dation in payment, whereby property is alienated to
the creditor in satisfaction of a debt in money, shall be governed by the
law of sales.

477
VOL. 814, JANUARY 18, 2017 477

obligation.33 “Dation in payment extinguishes the

obligation to the extent of the value of the thing delivered,
either as agreed upon by the parties or as may be proved,
unless the parties by agreement — express or implied, or
by their silence — consider the thing as equivalent to the
obligation, in which case the obligation is totally
extinguished.”34 As stated in the second condition of the
Deed of Assignment, the “Assignment shall in no way

release the ASSIGNOR from liability to pay the Line/Loan
and other obligations, except only up to the extent of any
amount actually collected and paid to ASSIGNEE by virtue
of or under this Assignment.”35 Clearly, the assignment
was not intended to substitute the payment of sums of
money. It is the delivery of cash proceeds, not the execution
of the Deed of Assignment, that is considered as payment.
Absent any proof of delivery of such proceeds to Land
Bank, the Spouses Villaluz’s claim of payment is without
basis.
Neither could the assignment have constituted payment
by cession under Article 125536 for the plain and simple
reason that there was only one creditor, Land Bank. Article
1255 contemplates the existence of two or more creditors
and involves the assignment of all the debtor’s property.37
_______________
33 Development Bank of the Philippines v. Court of Appeals, G.R. No.

118342, January 5, 1998, 284 SCRA 14, 25.
34 Philippine National Bank v. Dee, G.R. No. 182128, February 19,
2014, 717 SCRA 14, 27-28.
35 Rollo, p. 63.
36 Art. 1255. The debtor may cede or assign his property to his
creditors in payment of his debts. This cession, unless there is stipulation
to the contrary, shall only release the debtor from responsibility for the
net proceeds of the thing assigned. The agreements which, on the effect of
the cession, are made between the debtor and his creditors shall be
governed by special laws.
37 Yulim International Company Ltd. v. International Exchange Bank
(now Union Bank of the Philippines), G.R. No. 203133, February 18, 2015,
751 SCRA 129, 143. (Citation omitted)

478

The Spouses Villaluz understandably feel shorthanded

because their property was foreclosed by reason of another
person’s inability to pay. However, they were not coerced to
grant a special power of attorney in favor of Agbisit. Nor
were they prohibited from prescribing conditions on how
such power may be exercised. Absent such express
limitations, the law recognizes Land Bank’s right to rely on
the terms of the power of attorney as written.38 “Courts
cannot follow one every step of his life and extricate him
from bad bargains, protect him from unwise investments,
relieve him from one-sided contracts, or annul the effects of
[unwise] acts.”39 The remedy afforded by the Civil Code to
the Spouses Villaluz is to proceed against the agent and the

substitute in accordance with Articles 1892 and 1893.
WHEREFORE, the petition is DENIED. The Decision
dated September 22, 2009 and Resolution dated May 26,
2010 of the Court of Appeals in C.A.-G.R. CV No. 01307 are
AFFIRMED.
SO ORDERED.
Velasco, Jr. (Chairperson), Bersamin, Reyes and

Caguioa,** JJ., concur.
Petition denied, judgment and resolution affirmed.
_______________
38 Art. 1900. So far as third persons are concerned, an act is deemed

to have been performed within the scope of the agent’s authority, if such
act is within the terms of the power of attorney, as written, even if the
agent has in fact exceeded the limits of his authority according to an
understanding between the principal and the agent.
39 Vales v. Villa, 35 Phil. 769, 788 (1916).
** Designated as fifth member of the Third Division per Special Order
No. 2417 dated January 4, 2017.

479
VOL. 814, JANUARY 18, 2017 479

Notes.—Dation in payment extinguishes the obligation

to the extent of the value of the thing delivered, either as
agreed upon by the parties or as may be proved, unless the
parties by agreement — express or implied, or by their
silence — consider the thing as equivalent to the
obligation, in which case the obligation is totally
extinguished. (Philippine National Bank vs. Dee, 717 SCRA
14 [2014])
In agency, the agent binds himself to render some
service or to do something in representation or on behalf of
the principal, with the consent or authority of the latter.
(Jusayan vs. Sombilla, 746 SCRA 437 [2015])

——o0o——
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10/10/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 814

G.R. No. 192602. January 18, 2017.*

Civil Law; Agency; The law creates a presumption that an

VOL. 814, JANUARY 18, 2017 467

of the phrase “did not exist at the time of the transaction” in

468 SUPREME COURT REPORTS ANNOTATED

which case the obligation is totally extinguished.—The

PETITION for review on certiorari of the decision and

1 Rollo, pp. 30-44.

VOL. 814, JANUARY 18, 2017 469

which seeks to set aside the Decision2 dated September 22,

2 Id., at pp. 10-18. Penned by Associate Justice Leoncia R. Dimagiba,

470 SUPREME COURT REPORTS ANNOTATED

On June 19, 1996, Agbisit executed her own Special

loan amount, or P995,500, to Milflores Cooperative on June

8 Id., at pp. 56-57.

VOL. 814, JANUARY 18, 2017 471

appointing a substitute. Accordingly, the RTC dismissed

Milflores Cooperative assigned its produce and inventory to

13 Id., at pp. 69-72.

472 SUPREME COURT REPORTS ANNOTATED

Art. 1892. The agent may appoint a substitute if the

agent’s obligations to act within the scope of authority,18 to

18 CIVIL CODE, Art. 1881.

VOL. 814, JANUARY 18, 2017 473

Although the law presumes that the agent is authorized

21 G.R. No. 137162, January 4, 2007, 512 SCRA 411.

474 SUPREME COURT REPORTS ANNOTATED

VOL. 814, JANUARY 18, 2017 475

One of the basic rules in statutory interpretation is that

24 People v. Garcia, 85 Phil. 651, 654-655 (1950).

476 SUPREME COURT REPORTS ANNOTATED

the other hand, the borrower would not be prejudiced by

loan proceeds are delivered, the obligations under the

VOL. 814, JANUARY 18, 2017 477

obligation.33 “Dation in payment extinguishes the

Deed of Assignment, the “Assignment shall in no way

33 Development Bank of the Philippines v. Court of Appeals, G.R. No.

478 SUPREME COURT REPORTS ANNOTATED

The Spouses Villaluz understandably feel shorthanded

the Spouses Villaluz is to proceed against the agent and the

Velasco, Jr. (Chairperson), Bersamin, Reyes and

Petition denied, judgment and resolution affirmed.

38 Art. 1900. So far as third persons are concerned, an act is deemed

VOL. 814, JANUARY 18, 2017 479

Notes.—Dation in payment extinguishes the obligation

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