BPI Investment Corporation vs. Court of Appeals and ALS Mgt. & Dev. Corp. BPI Investment Corporation vs. Court of Appeals and ALS Mgt. & Dev. Corp.
G.R. No. 133632
G.R. No. 133632|| Feb. 15, 2002Feb. 15, 2002
Facts:
Facts:Frank Roa obtained a loan with an interest rate of 16 ¼ % per annum from Ayala Investment and Development Corporation,Frank Roa obtained a loan with an interest rate of 16 ¼ % per annum from Ayala Investment and Development Corporation, pre
predecdecessessor or of of BPBPIIC. IIC. To To secsecure ure the the loaloan, n, RoaRoa's 's houhouse se and and lot lot werwere e mormortgatgagedged. . LatLater, er, Roa Roa solsold d the the houhouse se and and lot lot to to ALSALS and Antonio Litonjua, who assumed Roa's P500,000 debt with Ayala Investment. Ayala Investment, however, was unwilling to grant and Antonio Litonjua, who assumed Roa's P500,000 debt with Ayala Investment. Ayala Investment, however, was unwilling to grant ALS and Litonjua the same interest rate so they granted a new loan to be applied to Roa's debt, secured by the same property at a ALS and Litonjua the same interest rate so they granted a new loan to be applied to Roa's debt, secured by the same property at a different interest rate of 20% per annum. The amortization for this loan was to begin on May 1, 1981. In Aug. 1982, BPIIC applied the different interest rate of 20% per annum. The amortization for this loan was to begin on May 1, 1981. In Aug. 1982, BPIIC applied the loan of ALS and Litonjua to the balance of Roa’s debt, P457,204.90. However it was only on Sept. 13, 1982 that BPIIC released loan of ALS and Litonjua to the balance of Roa’s debt, P457,204.90. However it was only on Sept. 13, 1982 that BPIIC released P7,146.87, the balance of the loan after applying the proceeds to the full payment of Roa’s loan.
P7,146.87, the balance of the loan after applying the proceeds to the full payment of Roa’s loan.
In June 1984, BPIIC instituted the foreclosure of mortgage alleging that ALS and Litonjua failed to pay their debt from May 1, 1981 up In June 1984, BPIIC instituted the foreclosure of mortgage alleging that ALS and Litonjua failed to pay their debt from May 1, 1981 up to June 30, 1984.
to June 30, 1984.
On Feb. 28, 1985, ALS and Litonjua filed a civil case against BPIIC alleging that they were not in arrears in their payment, but they in On Feb. 28, 1985, ALS and Litonjua filed a civil case against BPIIC alleging that they were not in arrears in their payment, but they in fact made an overpayment as of June 30, 1984. They contend that they should not be made to pay amortization before the actual fact made an overpayment as of June 30, 1984. They contend that they should not be made to pay amortization before the actual release of the P500,000 loan in Aug. and Sept. 1982. And that out of the P500,000 loan, only the total amount of P464,351.77 was release of the P500,000 loan in Aug. and Sept. 1982. And that out of the P500,000 loan, only the total amount of P464,351.77 was released to them, thus, the balance of P35,648.23 should be applied to the initial monthly amortization for the loan.
released to them, thus, the balance of P35,648.23 should be applied to the initial monthly amortization for the loan.
The trial court rendered a judgment in favor of ALS and Litonjua holding that the amount of loan granted by BPI to ALS and Litonjua The trial court rendered a judgment in favor of ALS and Litonjua holding that the amount of loan granted by BPI to ALS and Litonjua was only in the principal sum of P464,351.77 and that suffered compensable damages when BPI caused their publication in a was only in the principal sum of P464,351.77 and that suffered compensable damages when BPI caused their publication in a newspaper of general circulation as defaulting debtors. This was affirmed by the CA which also ruled that a simple loan is perfected newspaper of general circulation as defaulting debtors. This was affirmed by the CA which also ruled that a simple loan is perfected upon the delivery of the object of the contract, thus, the loan contract in this case was
upon the delivery of the object of the contract, thus, the loan contract in this case was perfected only on Sept. 13, 1982.perfected only on Sept. 13, 1982.
BPIIC claims that a contract of loan is a consensual contract, and a loan contract is perfected at the time the contract of mortgage is BPIIC claims that a contract of loan is a consensual contract, and a loan contract is perfected at the time the contract of mortgage is executed.
executed.
Issue:
Issue:WON a contract of loan is a consensual contract?WON a contract of loan is a consensual contract? NO.NO.
Held:
Held: A loan contract is not a consensual contract but a real contract. It is perfected only upon the delivery of the object of theA loan contract is not a consensual contract but a real contract. It is perfected only upon the delivery of the object of the contract. Although a perfected consensual contract can give rise to an action for damages, it does not constitute a real contract contract. Although a perfected consensual contract can give rise to an action for damages, it does not constitute a real contract which requires delivery for perfection. A perfected real contract gives rise
which requires delivery for perfection. A perfected real contract gives rise only to obligations on the part of the borrower.only to obligations on the part of the borrower.
In this case, the loan contract was only perfected on Sept. 13, 1982, which was the second release of the loan. The payment of In this case, the loan contract was only perfected on Sept. 13, 1982, which was the second release of the loan. The payment of amortization should accrue from the time BPIIC released the loan amount to ALS and Litonjua because it was only at that time (the amortization should accrue from the time BPIIC released the loan amount to ALS and Litonjua because it was only at that time (the delivery of the amount -- the object of the contract) that the loan contract was perfected.
delivery of the amount -- the object of the contract) that the loan contract was perfected.
A contract of loan involves a reciprocal obligation, wherein the obligation or promise of each party is the consideration for that of the A contract of loan involves a reciprocal obligation, wherein the obligation or promise of each party is the consideration for that of the other. In reciprocal obligations neither party incurs in delay, if the o
other. In reciprocal obligations neither party incurs in delay, if the o ther does not comply or is not ready to comply in a proper ther does not comply or is not ready to comply in a proper mannermanner with what is incumbent upon him. It is only when a party has performed his part of the contract can he demand that the other party with what is incumbent upon him. It is only when a party has performed his part of the contract can he demand that the other party also fulfills his own obligation and if the latter fails, default sets in.
also fulfills his own obligation and if the latter fails, default sets in.
Thus, BPIIC could only demand payment of amortization after Sept. 13, 1982 for it was only then that it complied with its obligation Thus, BPIIC could only demand payment of amortization after Sept. 13, 1982 for it was only then that it complied with its obligation under the loan contract. Therefore, in computing the amount due as of the date when BPIIC extrajudicially caused the foreclosure of under the loan contract. Therefore, in computing the amount due as of the date when BPIIC extrajudicially caused the foreclosure of the mortgage, the starting date
Celestina Naguiat v. Court of Appeals, et al., Celestina Naguiat v. Court of Appeals, et al., G.R. No. 118375, 3 October 2003
G.R. No. 118375, 3 October 2003
FACTS: FACTS:
Queaño applied with Naguiat for a loan in the amount of P200,000.00, which Naguiat granted. Naguiat indorsed to Queaño Associated Queaño applied with Naguiat for a loan in the amount of P200,000.00, which Naguiat granted. Naguiat indorsed to Queaño Associated Bank Check No. 090990 for the amount of P95,000.00, which was earlier issued to Naguiat by the Corporate Resources Financing Bank Check No. 090990 for the amount of P95,000.00, which was earlier issued to Naguiat by the Corporate Resources Financing Corporation. She also issued her own Filmanbank Check No. 065314, to the order of Queaño, also dated 11 August 1980 and for the Corporation. She also issued her own Filmanbank Check No. 065314, to the order of Queaño, also dated 11 August 1980 and for the amount of P95,000.00. The proceeds of these checks were to constitute the loan granted by Naguiat to Queaño.
amount of P95,000.00. The proceeds of these checks were to constitute the loan granted by Naguiat to Queaño.
To secure the loan, Queaño executed a Deed of Real Estate Mortgage. On the same day, the mortgage deed was notarized, and To secure the loan, Queaño executed a Deed of Real Estate Mortgage. On the same day, the mortgage deed was notarized, and Queaño issued to Naguiat a promissory note for the amount of P200,000.00, with interest at 12% per annum. Queaño also issued a Queaño issued to Naguiat a promissory note for the amount of P200,000.00, with interest at 12% per annum. Queaño also issued a check for the amount of P200,000.00 and payable to
check for the amount of P200,000.00 and payable to the order of Naguiat.the order of Naguiat.
Upon presentment on its maturity date, the P200,000 check was dishonored for insufficiency of funds. Queaño requested Security Upon presentment on its maturity date, the P200,000 check was dishonored for insufficiency of funds. Queaño requested Security Bank to stop payment of her postdated check, but the bank rejected the request pursuant to its policy not to honor such requests if Bank to stop payment of her postdated check, but the bank rejected the request pursuant to its policy not to honor such requests if the check is drawn against
the check is drawn against insufficient funds.insufficient funds.
Queaño received a letter from Naguiat’s lawyer, demanding settlement of the loan. Queaño told Naguiat that she did not receive the Queaño received a letter from Naguiat’s lawyer, demanding settlement of the loan. Queaño told Naguiat that she did not receive the proceeds of the loan, adding that the checks were retained by Ruebenfeldt, who purportedly was Naguiat’s agent.
proceeds of the loan, adding that the checks were retained by Ruebenfeldt, who purportedly was Naguiat’s agent.
Naguiat applied for the extrajudicial foreclosure of the mortgage. Three days before the scheduled sale, Queaño filed the case before Naguiat applied for the extrajudicial foreclosure of the mortgage. Three days before the scheduled sale, Queaño filed the case before the Pasay City RTC, seeking the annulment of the mortgage deed.
the Pasay City RTC, seeking the annulment of the mortgage deed. ISSUE:
ISSUE:
Whether or not the issuance of the checks did not result in the perfection of the contract of loan? Whether or not the issuance of the checks did not result in the perfection of the contract of loan? HELD:
HELD:
NO. Civil Code provides that the delivery of bills of exchange and mercantile documents such as checks shall produce the effect of NO. Civil Code provides that the delivery of bills of exchange and mercantile documents such as checks shall produce the effect of payment only when they have
payment only when they have been cashed.been cashed.2020It is only after the checks have produced the effect of payment that the contract of It is only after the checks have produced the effect of payment that the contract of loanloan
may be deemed perfected. Art. 1934 of the Civil Code provides: "An accepted promise to deliver something by way of commodatum may be deemed perfected. Art. 1934 of the Civil Code provides: "An accepted promise to deliver something by way of commodatum or simple loan is binding upon the parties, but the commodatum or simple loan itself shall not be perfected until the delivery of the or simple loan is binding upon the parties, but the commodatum or simple loan itself shall not be perfected until the delivery of the object of the contract."
object of the contract."
A loan contract is a real contract, not consensual, and, as such, is perfected only upon the delivery of the object of the contract. In A loan contract is a real contract, not consensual, and, as such, is perfected only upon the delivery of the object of the contract. In this case, the objects of the contract are the loan proceeds which Queaño would enjoy only upon the encashment of the checks this case, the objects of the contract are the loan proceeds which Queaño would enjoy only upon the encashment of the checks signed or indorsed by Naguiat. If indeed the checks were encashed or deposited, Naguiat would have certainly presented the signed or indorsed by Naguiat. If indeed the checks were encashed or deposited, Naguiat would have certainly presented the corresponding documentary evidence, such as the returned checks and the pertinent bank records. Since Naguiat presented no such corresponding documentary evidence, such as the returned checks and the pertinent bank records. Since Naguiat presented no such proof, it follows that the checks were not encashed or credited to
Celestina Naguiat v. Court of Appeals, et al., Celestina Naguiat v. Court of Appeals, et al., G.R. No. 118375, 3 October 2003
G.R. No. 118375, 3 October 2003
FACTS: FACTS:
Queaño applied with Naguiat for a loan in the amount of P200,000.00, which Naguiat granted. Naguiat indorsed to Queaño Associated Queaño applied with Naguiat for a loan in the amount of P200,000.00, which Naguiat granted. Naguiat indorsed to Queaño Associated Bank Check No. 090990 for the amount of P95,000.00, which was earlier issued to Naguiat by the Corporate Resources Financing Bank Check No. 090990 for the amount of P95,000.00, which was earlier issued to Naguiat by the Corporate Resources Financing Corporation. She also issued her own Filmanbank Check No. 065314, to the order of Queaño, also dated 11 August 1980 and for the Corporation. She also issued her own Filmanbank Check No. 065314, to the order of Queaño, also dated 11 August 1980 and for the amount of P95,000.00. The proceeds of these checks were to constitute the loan granted by Naguiat to Queaño.
amount of P95,000.00. The proceeds of these checks were to constitute the loan granted by Naguiat to Queaño.
To secure the loan, Queaño executed a Deed of Real Estate Mortgage. On the same day, the mortgage deed was notarized, and To secure the loan, Queaño executed a Deed of Real Estate Mortgage. On the same day, the mortgage deed was notarized, and Queaño issued to Naguiat a promissory note for the amount of P200,000.00, with interest at 12% per annum. Queaño also issued a Queaño issued to Naguiat a promissory note for the amount of P200,000.00, with interest at 12% per annum. Queaño also issued a check for the amount of P200,000.00 and payable to
check for the amount of P200,000.00 and payable to the order of Naguiat.the order of Naguiat.
Upon presentment on its maturity date, the P200,000 check was dishonored for insufficiency of funds. Queaño requested Security Upon presentment on its maturity date, the P200,000 check was dishonored for insufficiency of funds. Queaño requested Security Bank to stop payment of her postdated check, but the bank rejected the request pursuant to its policy not to honor such requests if Bank to stop payment of her postdated check, but the bank rejected the request pursuant to its policy not to honor such requests if the check is drawn against
the check is drawn against insufficient funds.insufficient funds.
Queaño received a letter from Naguiat’s lawyer, demanding settlement of the loan. Queaño told Naguiat that she did not receive the Queaño received a letter from Naguiat’s lawyer, demanding settlement of the loan. Queaño told Naguiat that she did not receive the proceeds of the loan, adding that the checks were retained by Ruebenfeldt, who purportedly was Naguiat’s agent.
proceeds of the loan, adding that the checks were retained by Ruebenfeldt, who purportedly was Naguiat’s agent.
Naguiat applied for the extrajudicial foreclosure of the mortgage. Three days before the scheduled sale, Queaño filed the case before Naguiat applied for the extrajudicial foreclosure of the mortgage. Three days before the scheduled sale, Queaño filed the case before the Pasay City RTC, seeking the annulment of the mortgage deed.
the Pasay City RTC, seeking the annulment of the mortgage deed. ISSUE:
ISSUE:
Whether or not the issuance of the checks did not result in the perfection of the contract of loan? Whether or not the issuance of the checks did not result in the perfection of the contract of loan? HELD:
HELD:
NO. Civil Code provides that the delivery of bills of exchange and mercantile documents such as checks shall produce the effect of NO. Civil Code provides that the delivery of bills of exchange and mercantile documents such as checks shall produce the effect of payment only when they have
payment only when they have been cashed.been cashed.2020It is only after the checks have produced the effect of payment that the contract of It is only after the checks have produced the effect of payment that the contract of loanloan
may be deemed perfected. Art. 1934 of the Civil Code provides: "An accepted promise to deliver something by way of commodatum may be deemed perfected. Art. 1934 of the Civil Code provides: "An accepted promise to deliver something by way of commodatum or simple loan is binding upon the parties, but the commodatum or simple loan itself shall not be perfected until the delivery of the or simple loan is binding upon the parties, but the commodatum or simple loan itself shall not be perfected until the delivery of the object of the contract."
object of the contract."
A loan contract is a real contract, not consensual, and, as such, is perfected only upon the delivery of the object of the contract. In A loan contract is a real contract, not consensual, and, as such, is perfected only upon the delivery of the object of the contract. In this case, the objects of the contract are the loan proceeds which Queaño would enjoy only upon the encashment of the checks this case, the objects of the contract are the loan proceeds which Queaño would enjoy only upon the encashment of the checks signed or indorsed by Naguiat. If indeed the checks were encashed or deposited, Naguiat would have certainly presented the signed or indorsed by Naguiat. If indeed the checks were encashed or deposited, Naguiat would have certainly presented the corresponding documentary evidence, such as the returned checks and the pertinent bank records. Since Naguiat presented no such corresponding documentary evidence, such as the returned checks and the pertinent bank records. Since Naguiat presented no such proof, it follows that the checks were not encashed or credited to
Cosme vs People Cosme vs People
Facts
Facts: Accused Miguel Cosme received i: Accused Miguel Cosme received i n trust from complainant Paul P.A. Bunda the n trust from complainant Paul P.A. Bunda the sum of P1,600,000.00, under the expresssum of P1,600,000.00, under the express obligation on the part of the said accused to settle and clear
obligation on the part of the said accused to settle and clear the accrued real estate taxes of the land which complainant sought tothe accrued real estate taxes of the land which complainant sought to purchase.
purchase.
Accused, however, did not use the money for the payment of the accrued real estate taxes on the property in question, but Accused, however, did not use the money for the payment of the accrued real estate taxes on the property in question, but instead misappropriated it for his own use and benefit.
instead misappropriated it for his own use and benefit.
The trial court rendered a decision convicting Miguel Cosme of the crime of Estafa ordering to pay the complainant actual The trial court rendered a decision convicting Miguel Cosme of the crime of Estafa ordering to pay the complainant actual damages in the total amount of P1,800,000.00 with interest thereon at
damages in the total amount of P1,800,000.00 with interest thereon at the legal rate from date of filing of this action untilthe legal rate from date of filing of this action until fully paid.
fully paid. However, the CA modified the decision which held accused to be civilly liable for P1,600,000 with legal interest. AccusedHowever, the CA modified the decision which held accused to be civilly liable for P1,600,000 with legal interest. Accused appealed before the Supreme Court.
appealed before the Supreme Court.
Issue
Issue: W/N the judgment of the lower courts on the accused civil liability : W/N the judgment of the lower courts on the accused civil liability is correct.is correct.
Held:
Held:No. The Supreme Court affirmed the decision of the lower courts and modified the penalty No. The Supreme Court affirmed the decision of the lower courts and modified the penalty of accused and his civil liability.of accused and his civil liability.
The guidelines laid down in
The guidelines laid down in Eastern Shipping lines, Inc. v. Court of AppealsEastern Shipping lines, Inc. v. Court of Appeals are applicable to the present case, to wit:are applicable to the present case, to wit: I.
I. When When an oblan obligatioigation, regan, regardless rdless of its sof its sourceource, i.e., i.e., law co, law contracntracts, quts, quasi-coasi-contractntracts, dels, delicts or icts or quasiquasi-delic-delicts is bts is breachereached, thd, thee contravenor can be held liable for damages. The provisions under Tile XVIII on "Damages" of the
contravenor can be held liable for damages. The provisions under Tile XVIII on "Damages" of the Civil Code govern inCivil Code govern in determining the measure of recoverable damages.
determining the measure of recoverable damages. II.
II. With rWith regard pegard particuarticularly tlarly to an awao an award of inrd of interest iterest in the cn the conceponcept of act of actual atual and comnd compensapensatory datory damagesmages, the r, the rate of inate of interest, terest, asas well as the accrual thereof, is imposed, as follows:
well as the accrual thereof, is imposed, as follows: 1.
1. When thWhen the obligate obligation is breacion is breached, and ihed, and it consist consists in the payts in the payment of a sum of mment of a sum of money, i.oney, i.e., a loan or forbe., a loan or forbearancearance of moneye of money, the, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is j
interest from the time it is j udicially demanded. In the absence of stipulation, the rate of interest shall be 12% per udicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum toannum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.
the Civil Code.
2.
2.
When an obligation, not constituting a loan When an obligation, not constituting a loan or forbearance of money, is breached, an interest on or forbearance of money, is breached, an interest on the amountthe amount of damages awarded may be imposed at the discretion of theof damages awarded may be imposed at the discretion of the court at the rate court at the rate of 6% per annum.of 6% per annum.No interest,No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or
from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be soextrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall
reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably
the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). Theascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.
actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.
3.
3.
When the judgment of the court When the judgment of the court awarding a sum of money becomes final and executory, the awarding a sum of money becomes final and executory, the rate of legalrate of legal interest, whether the caseinterest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from suchannum from such finality until its s
finality until its s atisfaction, this interim period being deemed to be by thatisfaction, this interim period being deemed to be by th en an equivalent to a forbearance of en an equivalent to a forbearance of credit.
credit.
Applying the aforesaid guidelines above the Court held that Miguel Cosme is held civilly liable to return to private Applying the aforesaid guidelines above the Court held that Miguel Cosme is held civilly liable to return to private complainant Paul P.A. Bunda the amount of P1,600,
until finality of the judgment. After the judgment becomes final and executory, the amount due shall further earn interest at 12% per until finality of the judgment. After the judgment becomes final and executory, the amount due shall further earn interest at 12% per year until the obligation is fully satisfied.
G.R. No. L-4150 February 10, 1910
FELIX DE LOS SANTOS vs. AGUSTINA JARRA, administratrix of the estate of Magdaleno Jimenea, deceased
Facts: Jimenea borrowed and obtained from de los Santos ten first-class carabaos to be used at the animal-power mill of his hacienda under the sole condition that they should be returned to the latter as soon as the work at the mill was terminated. Four of these died of rinderpest. Jimenea, however, did not return the remaining carabaos, notwithstanding the fact that de los Santos claimed their return after the work at the mill was finished. Jimenea died and Jarra, the defendant herein was appointed by the Court as the administratrix of his estate. De los Santos demanded return of the six carabaos, but Jarra rejected his claim. Now, de los Santos prayed that judgment be entered against the administratrix of the estate of Jimenea, ordering her to return the first-class carabaos loaned to the late Jimenea, or their present value, and to pay the costs.
Issue: Whether or not Jarra as the administratrix is under the obligation to indemnify de los Santos paying him the value of the carabaos.
Held: Yes. There is no doubt that Jarra is under obligation to indemnify the owner of the carabaos by paying him their value as these were not returned upon demand.
Article 1101 of the Civil Code reads:
Those who in fulfilling their obligations are guilty of fraud, negligence, or delay, and those who in any manner whatsoever act in contravention of the stipulations of the same, shall be subjected to indemnify for the losses and damages caused thereby.
The obligation of the bailee or of his successors to return either the thing loaned or its value, is sustained by the supreme tribunal of Sapin. In its decision of March 21, 1895, it sets out with precision the legal doctrine touching commodatum as follows:
Although it is true that in a contract of commodatum the bailor retains the ownership of the thing loaned, and at the expiration of the period, or after the use for which it was loaned has been accomplished, it is the imperative duty of the bailee to return the thing itself to its owner, or to pay him damages if through the fault of the bailee the thing should have been lost or injured, it is clear that where public securities are involved, the trial court, in deferring to the claim of the bailor that the amount loaned be returned him by the bailee in bonds of the same class as those which constituted the contract, thereby properly applies law 9 of title 11 of partida 5.
Also, the Civil Code, in dealing with loans in general, from which generic denomination the specific one of commodatum is derived, establishes prescriptions in relation to the last-mentioned contract by the following arti cles:
ART. 1740. By the contract of loan, one of the parties delivers to the other, either anything not perishable, in order that the latter may use it during a certain period and return it to the former, in which case it is called commodatum, or money or any other perishable thing, under the condition to return an equal amount of the same kind and quality, in which case it is merely called a loan.
Commodatum is essentially gratuitous.
A simple loan may be gratuitous, or made under a stipulation to pay interest.
ART. 1741. The bailee acquires retains the ownership of the thing loaned. The bailee acquires the use thereof, but not its fruits; if any compensation is involved, to be paid by the person requiring the use, the agreement ceases to be a commodatum.
ART. 1742. The obligations and rights which arise from the commodatum pass to the heirs of both contracting parties, unless the loan has been in consideration for the person of the bailee, in which case his heirs shall not have the right to continue using the thing loaned.
I.
Intention of parties is important in determining whether or not a contract is commodatum or mutuum Producers Bank of the Philippines (First International Bank) vs. Court of Appeals, et al.,G.R. No. 115324. February 19, 2003
FACTS:
In 1979, respondent Vives was invited Angeles Sanchez to help one Doronilla, in incorporating his business, Sterela Marketing and Services. Sanchez asked private respondent to deposit in a bank a certain amount of money in the bank account of Sterela for purposes of its incorporation. She assured private respondent that he could withdraw his money from said account within a month’s time. Respondent asked Sanchez to bring Doronilla to their house so that they could discuss Sanchez’s request. On 9th of May of the same year, respondent, issued a check in the amount of Two Hundred Thousand Pesos (P200,000.00) in favor of Sterela after. Respondent instructed his wife, Mrs. Inocencia Vives, to accompany Doronilla and Sanchez in opening a savings account in the name of Sterela in the Buendia, Makati branch of Producers Bank of the Philippines. However, only Sanchez, Mrs. Vives and Dumagpi went to the bank to deposit the check. They had with them an authorization letter from Doronilla authorizing Sanchez and her companions, "in coordination with Mr. Rufo Atienza," to open an account for Sterela Marketing Services in the amount of P200,000.00. In opening the account, the authorized signatories were Inocencia Vives and/or Angeles Sanchez. A passbook for Savings Account No. 10-1567 was thereafter issued to Mrs. Vives.
Consequently respondent learned that Sterela was no longer holding office in the address previously given to him. He and his wife went to the Bank to check if their money was still compact. Mr. Rufo Atienza, the assistant manager, who informed them that part of the money in Savings Account No. 10-1567 had been withdrawn by Doronilla, and that only P90,000.00 remained therein. Respondent tried to get in touch with Doronilla through Sanchez. On June 29, 1979, he received a letter from Doronilla, assuring him that his money was intact and would be returned to him. On August 13, 1979, Doronilla issued a postdated check for Two Hundred Twelve Thousand Pesos (P212,000.00) in favor of respondent. However the check was dishonored. Doronilla requested private
respondent to present the same check on September 15, 1979 but when the latter presented the check, it was again dishonored.
After written demand upon Doronilla for the return of the money. Doronilla issued another check for P212,000.00 in private respondent’s favor but the check was again dishonored for insufficiency of funds. Private respondent instituted an action for recovery of sum of money in the Regional Trial Court (RTC) in Pasig, Metro Manila against
Doronilla, Sanchez, Dumagpi and petitioner.
Judgment was rendered sentencing defendants Arturo J. Doronila, Estrella Dumagpi and Producers Bank of the Philippines to pay plaintiff Franklin Vives jointly and severally.
ISSUE: Whether or not the transaction was one of mutuum or commodatum.
RULING:
Petitioner contends that the transaction between private respondent and Doronilla is a simple loan (mutuum) since all the elements of a mutuum are present: first, what was delivered by private respondent to Doronilla was money, a consumable thing; and second, the transaction was onerous as Doronilla was obliged to pay interest, as evidenced by the check issued by Doronilla in the amount of P212,000.00, or P12,000 more than what private respondent deposited in Sterela’s bank account. Private respondent, on the other hand, argues that the transaction between him and Doronilla is not a mutuum but an accommodation, since he did not actually part with the ownership of his P200,000.00 and in fact asked his wife to deposit said amount in the account of Sterela so that a certification can be issued to the effect that Sterela had sufficient funds for purposes of its incorporation but at the same time, he retained some degree of control over his money through his wife who was made a signatory to the savings account and in whose possession the savings account passbook was given. No error was committed by the Court of Appeals when it ruled that the transaction between private respondent and Doronilla was a commodatum and not a mutuum. A circumspect examination of the records reveals that the transaction between them was a commodatum. Article 1933 of the Civil Code distinguishes between the two kinds of loans in this wise: By the contract of loan, one of the parties delivers to another, either something not consumable so that the latter may use the same for a certain time and return it, in which case the contract is called a commodatum; or money or other consumable thing, upon the condition that the same amount of the same kind and quality shall be paid, in which case the contract is simply called a loan or mutuum.
Commodatum is essentially gratuitous.
Simple loan may be gratuitous or with a stipulation to pay interest. In commodatum, the bailor retains the ownership of the thing loaned, while in simple loan, ownership passes to the borrower. The foregoing provision seems to imply that if the subject of the contract is a consumable thing, such as money, the contract would be a mutuum. However, there are some instances where a commodatum may have for its object a consumable thing. Article 1936 of
is merely for exhibition. Thus, if consumable goods are loaned only for purposes of exhibition, or when the intention of the parties is to lend consumable
goods and to have the very same goods returned at the end of the period agreed upon, the loan is a commodatum and not a mutuum.
The rule is that the intention of the parties thereto shall be accorded primordial consideration in determining the actual character of a contract. In case of doubt, the contemporaneous and subsequent acts of the parties shall be considered in such determination. As correctly pointed out by both the Court of Appeals and the trial court, the evidence shows that private respondent agreed to deposit his money in the savings account of Sterela specifically for the purpose of making it appear "that said firm had sufficient capitalization for incorporation, with the promise that the amount shall be returned within thirty (30) days." Private respondent merely "accommodated" Doronilla by lending his money without consideration, as a favor to his good friend Sanchez. It was however clear to the parties to the transaction that the money would not be removed from Sterela’s savings account and would be returned to
private respondent after thirty (30) days.
Doronilla’s attempts to return to private respondent the amount of P200,000.00 which the latter deposited in Sterela’s account together with an additional P12,000.00, allegedly representing interest on the mutuum, did not convert the transaction from a commodatum into a mutuum because such was not the intent of the parties and because the additional P12,000.00 corresponds to the fruits of the lending of the P200,000.00. Article 1935 of the Civil Code expressly states that "[t]he bailee in commodatum acquires the use of the thing loaned but not its fruits." Hence, it was only proper for Doronilla to remit to private respondent the interest accruing to the latter’s money deposited with petitioner.
II.
Difference between loan and discounting of paper Francisco Herrera vs. Petrophil CorporationDecember 29, 1986 FACTS:
Plaintiff and defendant entered into an contract of lease whereby the former agreed to leased portion of his property for a perio d of 20 years. One of the stipulation provides that, the lessor is paid 8 years advance based on the agreed rental amount at 12% per annum. In short there was a discount. Pursuant to the contract, the defendant paid 8 years in advance subtracting therefrom the discounted amount. The plaintiff sued the defendant claiming that the interest was in violation of the usury law.
ISSUE: Whether or not the contention of plaintiff is tenable? RULING:
The contract was denominated as LEASE CONTRACT. Nowhere in the contract showing that the parties intended a loan rather than a lease. There was no usury because there was no money given by the defendant to the plaintiff for the latter to use. It was only a discount for paying the 8 years advance. The difference between a discount and loan or forbearance is that the former does not have to be paid. The latter is subject to repayment and therefor governed by usury law. It should be of money or something circulating; it must be repayable in all events; and it is in excess allowed by law.
III.
Difference between loan and irregular deposit ROGERS vs. SMITH, BELL & CO.G.R No. L-4347; March 9, 1908
FACTS:
Respondents executed document No. 1418, which is the subject of this case. The said document was delivered to the petitioner. The document contained the following details:
No. 1418. $12,000.
The sum of pesos twelve thousand has been deposited with us, received from Jose Rogers, which sum we will pay on the last day of the six months after the presentation of this document, to the order of Mr. Jose Rogers.
Manila, February 17, 1876.
The said sum of twelve thousand pesos shall bear interest at the rate of eight per centum (8%) per annum from this date, February 17, 1876.
SMITH, BELL & CO.
When this document was delivered 12,000 pesos in silver were worth more than 12,000 pesos in gold. The plaintiff delivered it to the defendants in consideration of the execution of the document 12,000 in gold. The defendants remitted the interest to him every three months at the rate of 8 % per annum until January 30, 1888, when they notified him that thereafter the interest would be 6 per cent. The plaintiff accepted this reduction and the interest at that rate were remitted to him by the defendants until the February 10, 1904. The plaintiff received this payments in silver without any protest whatever until the 10th day of February, 1904. Subsequently, in a letter, he called the attention of the defendants about the new American law in force in the Philippines regarding the gold standard had been introduced and that by reason thereof he was entitled to receive his interest in gold, and in view of the fact that when he delivered the money to the defendants in 1876 he delivered it in gold coin.
The plaintiff claimed that, having paid to the defendants 12,000 pesos in gold coin, he is now entitled to receive from them the value of 12,000 pesos in gold coin; that is to say, 24,000 pesos in silver. The trial court held that he was entitled to recover only 12,000 pesos, and the defendants having deposited that amount the trial court rendered judgment in favor of the respondents. Then, the petitioner appealed the trial court’s judgment.
ISSUE: Whether or not the document is evidence of an ordinary loan or an irregular deposit?
HELD:
It is an ordinary loan.
Manresa, in his Commentaries on the Civil Code (vol. 11, p. 664), states that there are three points of difference between a loan and an irregular deposit. The first difference which he points out consists in the fact that in an irregular deposit the only benefit is that which accrues to the depositor, while in loan the essential cause for the transaction is the necessity of the borrower. The contract in question does not fulfill this requirement of an irregular deposit. It is very apparent that is was not for the sole benefit of Rogers. It like any other loan of money was for the benefit of both parties. The benefit which Smith, Bell & Co . received was the use of the money; the benefit which Rogers received was the interest of his money. In the letter which Smith, Bell & Co. on the 30th of June, 1888, notified the plaintiff of the reduction of the interest, they said: "We call your attention to this matter in order that you may if you think best employ your money in some other place."
Nor does the contract in question fulfill the third requisite indicated by Manresa, which is, in an irregular deposit, the depositor can demand the return of the article at any time, while a lender is bound by the provisions of the contract and cannot seek restitution until the time for payment, as provided in the contract, has arisen. It is apparent from the terms of this document that the plaintiff could not demand his money at any time. He was bound to give notice of his desire for its return and then to wait for six months before he could insist upon payment.
The second difference which exists, according to Manresa, between an irregular deposit and a loan lies in the fact that in an irregular deposit the depositor has a preference over other creditors in the distribution of the debtor's property. It is apparent, therefore, that this document does not state those requisites which are essential to an irregular deposit.
It seems clear from these citations that the document in question is evidence of an ordinary loan and created between the plaintiff and defendants the relation of debtor and creditor. The two judgments of the supreme court of Spain cited by the appellant in his brief have no bearing upon the question. In that of the 9th of July, 1889, it appeared that the Bank of Havana returned to the plaintiff the same kind of money which it had received from him. The other judgment, of the 7th of February, 1891, simply held that a servant who had left her money with her master and had taken a written obligation from him to pay the same was not, in the distribution of his property, entitled to preference over other creditors on the ground that her debt was for personal labor.
Compania Agricola de Ultramar v. Nepomuceno 55 Phil. 283, November 14, 1930
FACTS:
On March 17, 1927, the registered partnerships, Mariano Velasco & Co., Mariano Velasco, Sons, & Co., and Mariano Velasco & Co., Inc., were declared insolvent by the Court of First Instance of Manila.
On the 16th day of April, 1927, the Compania Agricola de Ultramar filed a claim against one of the insolvents Mariano Velasco & Co., claiming the sum of P10,000, with the agreed interest thereon at the rate of 6 per cent per annum from April 5, 1918, until its full payment was a deposit with said Mariano Velasco & Co. and asked the court to declare it a preferred claim.
The assignee of the insolvency answered the claim by interposing a general denial. On September 23, 1929, the court rendered a decision declaring that the alleged deposit was a preferred claim for the sum mentioned, with interest at 6 per cent per annum from April 5, 1918, until paid. From this decision the assignee appealed.
The evidence presented by the claimant Compania Agricola de Ultramar consisted of a receipt in writing, and the testimony of Jose Velasco who was manager of Mariano Velasco & Co. at the time the note was executed. The receipt reads as follows:
MANILA, P. I., April 5, 1918.
Received from the "Compania Agricola de Ultramar" the sum of ten thousand Philippine pesos as a deposit at the interest of six per cent annually, for the term of three months from date.
In witness thereof, I sign the present.
MARIANO VELASCO & CO. By (Sgd.) JOSE VELASCO
Manager. P10,000.00.
In his testimony, Jose Velasco stated that his signature on the receipt was authentic and that he received the said sum of P10,000 from the appellee and deposited it with the bank in the current account of Mariano Velasco & Co.
ISSUE: Whether or not the contract between Mariano Velasco & Co., Inc and Compania Agricola de Ultramar was a contract of deposit.
RULING:
The Supreme Court ruled that the CFI erred in finding that the claim of the appellee should be considered a deposit. Article 1767 of the Civil Code provides that —
"The depository cannot make use of the thing deposited without the express permission of the depositor." "Otherwise he shall be liable for losses and damages."
Article 1768 also provides that —
"When the depository has permission to make use of the thing deposited, the contract loses the character of a deposit and becomes a loan or bailment."
"The permission not be presumed, and its existence must be proven.
It was sufficiently shown that the ten thousand pesos delivered by the appellee to Mariano Velasco & Co. cannot de regarded as a technical deposit. But the appellee argues that it is at least an "irregular deposit." This argument is, we think, sufficiently answered in the case of Rogers vs. Smith, Bell & Co. (10 Phil., 319). There this court said:
. . . Manresa, in his Commentaries on the Civil Code (vol. 11, p. 664), states that there are three points of difference between a loan and an irregular deposit. The first difference which he points out consists in the fact that in an irregular deposit the only benefit is that which accrues to the depositor, while in a loan the essential cause for the transaction is the necessity of the borrower. The contract in question does not fulfill this requirement of an irregular deposit. It is very apparent that it was not for the sole benefit of Rogers. It, like any other loan of money, was for the benefit of both parties. The benefit which Smith, Bell & Co. received was the use of the money; the benefit which Rogers received was the interest on his money. In the letter in which Smith, Bell & Co. on the 30th of June, 1888, notified the plaintiff of the reduction of the interest, they said: "We call your attention to this matter in order that you may if you think best employ your money in some other place."
Nor does the contract in question fulfill the third requisite indicated by Manresa, which is, that in an irregular deposit, the depositor can demand the return of the article at any time, while a lender is bound by the provisions of the contract and cannot seek restitution until the time for payment, as provided in the contract, has arisen. It is apparent from the terms of this documents that the plaintiff could not demand his money at any time. He was bound to give notice of his desire for its return and then to wait for six months before he could insist upon payment.
In the present case the transaction in question was clearly not for the sole benefit of the Compania Agricola de Ultramar; it was evidently for the benefit of both parties. Neither could the alleged depositor demand payment until the expiration of the term of three months.
IV.
Bank deposits are in the nature or irregular depositsTEOFISTO GUINGONA, JR., ANTONIO I. MARTIN, and TERESITA SANTOS vs. THE CITY FISCAL OF MANILA, HON. JOSE B. FLAMINIANO, ASST. CITY FISCAL FELIZARDO N. LOTA and CLE MENT DAVID, G.R. No. L-60033 April 4, 1984
FACTS:
Clemente David invested with the Nation Savings and Loan Association, I nc. (NSLA) from March 20, 1979 to march 1981the following: o Nine deposits with a sum total of P1,145,546.20;
o Joint Savings account with his sister, Denise Kuhne, P13,531.94; o Time deposit, US$10,000.00;
o US$15,000.00 under a receipt and guarantee of payment;
o US$50,000.00 under a receipt dated June 8, 1980 (jointly with Denise Kuhne.)
However, On March 21, 1981, NSLA was placed under receivership by the Central Bank. Hence, David filed claims for his investments and those of his sister. On July 22, 1981, David received a report from the Central Bank that only P305,821.92 of those investments were entered in the records of NSLA. Thereafter, David demanded for the remaining balances of his investments but Guingona Jr., who was then NSLA President, paid only P200,000.00.
On December 23,1981, private respondent David filed an action charging the directors and officers of NSLA with estafa for misappropriating the balance of the investments, at the same time violating Central Bank Circular No. 364 and related Central Bank
regulations on foreign exchange transactions;
The NSLA officers, Martin and Santos, filed a joint counter-affidavit in which they stated the following: Due to insufficiency of bank funds, David’s investments were treated as special- accounts with interest above the legal rate, and was recorded in separate confidential documents only a portion of which were to be reported because David did not want the Australian government to tax his total earnings (nor) to know his total investments; that all transactions with David were recorded except the
sum of US$15,000.00 which was a personal loan of Santos;
David's check for US$50,000.00 was cleared through Guingona, Jr.'s dollar account because NSLA did not have one; that a draft of US$30,000.00 was placed in the name of one Paz Roces because of a pending transaction with her; Moreover, the Philippine Deposit Insurance Corporation had already reimbursed David within the legal limits;
After NSLA was placed under receivership, Martin executed a promissory note in David's favor and caused the transfer to him of a nine and on behalf (9 1/2) carat diamond ring with a net value of P510,000.00;
And that the liabilities of NSLA to David were civil in nature.
On the other hand, Guingona, Jr., filed a counter-affidavit alleging that he had resigned as NSLA president in March 1978, or prior to those transactions, but assumed thereafter a portion of the liabilities of NSLA as per David’s insistence by binding himself to pay David the sums of P668.307.01 and US$37,500.00 in stated installments through Promissory Note dated June 17, 1981 secured with mortgages over two (2) parcels of land in which it was provided that the mortgage over one (1) parcel shall be cancelled upon payment of one-half of the obligation to David. Guingona, Jr. further alleged that he paid P200,000.00 and tendered another P300,000.00 which David refused to accept. Hence, a Civil Case was filed by Guingona to effect the release of the mortgage over one (1) of the two parcels of land conveyed to David under second mortgages. At the inception of the preliminary investigation, The NSLO officers moved to dismiss the charges against them for lack of jurisdiction because David's claims allegedly comprised a purely civil obligation which was itself novated, but was denied. But, after the presentation of David's principal witness, petitioners filed the instant petition because: (a) the production of the Promisory Notes, Banker's Acceptance, Certificates of Time Deposits and Savings Account allegedly showed
that the transactions between David and NSLA were simple loans.
(b) David's principal witness allegedly testified that the duplicate originals of the aforesaid instruments of indebtedness were all on file with NSLA, contrary to David's claim that some of his investments were not record.
ISSUE:Whether or not the transactions between David and NSLA were simple loans which are civil in nature, and not estafa. RULING:
There is merit in the contention of the petitioners that their liability is civil in nature and therefore, public respondents have no jurisdiction over the charge of estafa. It must be pointed out that when private respondent David invested his money with the aforesaid bank, the contract that was perfected was a contract of simple loan or mutuum and not a contract of deposit. Thus, Article 1980 of the New Civil Code provides that: Article 1980. Fixed, savings, and current deposits of-money in banks and similar institutions
This Court also declared in the recent case of Serrano vs. Central Bank of the Philippines (96 SCRA 102 [1980]) that: Bank deposits are in the nature of irregular deposits. They are really 'loans because they earn interest. All kinds of bank deposits, whether fixed, savings, or current are to be treated as loans and are to be covered by the law on loans (Art. 1980 Civil Code Gullas vs. Phil. National Bank, 62 Phil. 519). Current and saving deposits, are loans to a bank because it can use the same. The petitioner here in making time deposits that earn interests will respondent Overseas Bank of Manila was in reality a creditor of the respondent Bank and not a depositor. The respondent Bank was in turn a debtor of petitioner. Failure of the respondent Bank to honor the time deposit is failure to pay its obligation as a debtor and not a breach of trust arising from a depositary's failure to return the subject matter of the deposit.
Hence, the relationship between the private respondent and the NSLA is that of creditor and debtor; consequently, the ownership of the amount deposited was transmitted to the Bank upon the perfection of the contract and it can make use of the amount deposited for its banking operations, such as to pay interests on deposits and to pay withdrawals. While the Bank has the obligation to return the amount deposited, it has, however, no obligation to return or deliver the same money that was deposited. And, the failure of the Bank to return the amount deposited will not constitute estafa through misappropriation punishable under Article 315, par. l(b) of the Revised Penal Code, but it will only give rise to civil liability over which the public respondents have no- jurisdiction.
But even granting that the failure of the bank to pay the time and savings deposits of private respondent David would constitute a violation of paragraph 1(b) of Article 315 of the Revised Penal Code, nevertheless any incipient criminal liability was deemed avoided, because when the aforesaid bank was placed under receivership by the Central Bank, petitioners Guingona and Martin assumed the obligation of the bank to private respondent David, thereby resulting in the novation of the original contractual obligation arising from deposit into a contract of loan and converting the original trust relation between the bank and private respondent David into an ordinary debtor-creditor relation between the petitioners and private respondent. Consequently, the failure of the bank or petitioners Guingona and Martin to pay the deposits of private r espondent would not constitute a breach of trust but would merely be a failure to
pay the obligation as a debtor.
Moreover, while it is true that novation does not extinguish criminal liability, it may however, prevent the rise of criminal liability as long as it occurs prior to the filing of the criminal information in court. In the case at bar, there is no dispute that petitioners Guingona and Martin executed a promissory note on June 17, 1981 assuming the obligation of the bank to private respondent David; while the criminal complaint for estafa was filed on December 23, 1981 with the Office of the City Fiscal. Hence, it is clear that novation occurred long before the filing of the criminal complaint with the Office of the City Fiscal. Consequently, as aforestated, any incipient criminal liability would be avoided but there will still be a civil liability on the part of petitioners Guingona and Martin to pay the
assumed obligation.
Petitioners herein were likewise charged with violation of Section 3 of CB Circular No. 364 and other related regulations regarding foreign exchange transactions by accepting foreign currency deposit in the amount of US$75,000.00 without authority from the Central Bank. They contend however, that the US dollars intended by respondent David for deposit were all converted into Philippine currency before acceptance and deposit into Nation Savings and Loan Association.
In conclusion, considering that the liability of the petitioners is purely civil in nature and that there is no clear showing that they engaged in foreign exchange transactions, We hold that the public respondents acted without jurisdiction when they investigated the charges against the petitioners. Consequently, public respondents should be restrained from further proceeding with the criminal case for to allow the case to continue, even if the petitioners could have appealed to the Ministry of Justice, would work great injustice to petitioners and would render meaningless the proper administration of justice.
EASTERN SHIPPING LINES, INC., petitioner, vs.CAAND MERCANTILE INSURANCE COMPANY, INC., respondents.
December 4, 1981, two fiber drums of riboflavin were shipped from Yokohama, Japan for delivery vessel "SS EASTERN COMET"owned by defendant Eastern Shipping Lines. The shipment was insured under plaintiff's Marine Insurance Policy No. 81/01177 for P36,382,466.38. Upon arrival of the shipment in Manila on December 12, 1981, it was discharged unto the custody of defendant Metro Port Service, Inc. The latter excepted to one drum, said to be in bad order, which damage was unknown to plaintiff. On January 7, 1982 defendant Allied Brokerage Corporation received the shipment from defendant Metro Port Service, Inc., one drum opened and without seal. On January 8 and 14, 1982, defendant Allied Brokerage Corporation made deliveries of the shipment to the consignee's warehouse. The latter excepted to one drum which contained spillages, while the rest of the contents was adulterated/fake. Plaintiff contended that due to the losses/damage sustained by said drum, the consignee suffered losses totaling P19,032.95, due to the fault and negligence of defendants. Claims were presented against defendants who failed and refused to pay the same
As a consequence of the losses sustained, plaintiff was compelled to pay the consignee P19,032.95 under the aforestated marine insurance policy, so that it became subrogated to all the rights of action of said consignee against defendants.
ISSUE:a) whether the payment of legal interest on an award for loss or damage is to be computed from the time the complaint is filed or from the date the decision appealed from is rendered; and (b) whether the applicable rate of interest, referred to above, is twelve percent (12%) or six percent (6%).
The legal interest to be paid is (6%) on the amount due computed from the decision dated 03 February 1988. A 12% interest, in lieu of (6%), shall be imposed on such amount upon finality of this decision until the payment thereof.
Eastern Shipping Lines being the carrier and not having been able to rebut the presumption of fault, is, in any event, to be held liable in this case.
The factual circumstances may have called for different applications, guided by the rule that the courts are vested with discretion, depending on the equities of each case, on the award of interest. By way of clarification and reconciliation, the following are rules of thumb for future guidance.
I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasi-delicts is breached, the contravenor can be held liable for damages. The provisions under Title XVIII on "Damages"of the Civil Code govern in determining the measure of recoverable damages.
II. With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:
1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing.Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded.In the absence of stipulation, the rate of interest shall be 12% per annumto be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty.Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annumfrom such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.
Ramos vs Central Bank of the Phil. G R No. L-29352
Facts:
Petitioners are the majority and controlling stockholders of the Overseas Bank of Manila (OBM). The OBM was opened for business on January 6, 1964 with authorized capital of 30 million, 10 million subscribed and 8 million thereof paid, but had been suspended by respondent from clearing with the Central Bank and from lending operations for various violations of the banking laws and implementing regulations. Petitioners charged that the OBM became financially distressed because of this suspension and deprivation by the CB of all the usual credit facilities and accommodations accorded to the other banks. Resolution No.1290 was issued to grant the authority to the OBM Board of Directors to suspend operation thereof. Before the issuance of the said resolution, OBM made an advances and loans during its closure from Aug 2 1968 to Jan 8 1981.
Issue: W/N the OBM is liable to the CB on the loans and advances made during its closure.
Ruling:
No. Respondents have failed to adduce any cogent argument to persuade the Court to reconsider its Resolution at bar that the Tapia ruling as reaffirmed by the aforecited cases is fully applicable to the non-payment of interest, during the period of the bank's forcible closure, on loans and advances made by respondent Central Bank. Respondent Central Bank itself when it was then managing the Overseas Bank of Manila (now Commercial Bank of Manila) under a holding trust agreement, held the same position in Id elfonso D. Yap vs. OBM and CB (CA-G.R. No. 48887-R) wherein it argued in its brief that "(I)n a suit against the receiver of a national bank for money loaned to the Bank while it was a going concern, it was error to permit plaintiff to recover interest on the loan after the bank's suspension" (citing Zollman Banks and Banking). In Pablo R. Roman et al vs. Central Bank (CA-G.R. No. 49144-R, October 18, 1973, per then Court of Appeals Justice Hermogenes Concepcion, Jr.), the appellate court by final judgment affirmed the trial court's judgment ordering appellant Central Bank to condone all interests on Central Bank loans to the Republic Bank, as well as penalties imposed on it which would be tantamount "to force the Republic Bank to liquidate as an insolvent." It should be further noted that the respondent Central Bank when called upon to deal with commercial banks and extend to them emergency loans and advances, deals with them not as an ordinary creditor engaged in business, but as the ultimate monetary authority of government charged with the supervision and preservation of the banking system.
GOPOCO GROCERY (GOPOCO), ET AL. vs. PACIFIC COAST BISCUIT CO., ET AL. G.R. Nos. L-43697 and L-442200 March 31, 1938
Art. 1980. Fixed, savings, and current deposits of money in banks and similar institutions shall be governed by the provisions concerning simple loan.
Facts:
Mercantile Bank of China was declared in liquidation as it could not continue operating as such without running the risk of suffering losses and prejudice its depositors and customers. Gopoco Grocery, Et Al alleged that they deposited sum of money in the bank under liquidation on current account.
To resolve these claims, Fulgencio Borromeo was appointed as commissioner and referee to receive the evidence which the interested parties may desire to present. Borromeo resolved the claims by recommending that the same be considered as an ordinary credit only, and not as a preferred credit as Gopoco Grocery, Et Al wanted, because they were at the same time debtors of the bank.
Gopoco Grocery, Et Al contends that they are preferred credits because they are deposits in contemplation of law, and as such should be returned with the corr esponding interest thereon.
Issue:Whether or not deposits on current account in the bank now under liquidation be considered preferred credits or should they be considered ordinary credits only?
Ruling:
Deposits on current account in the bank now under liquidation are considered ordinary credits only.
Gopoco Grocery, Et Al themselves admit that the bank owes them interest which should have been paid to them before it was declared in a state of liquidation. This fact undoubtedly destroys the character which they nullifies their contention that the same be considered as irregular deposits, because the payment of interest only takes place in the case of loans.
The so-called current account and savings deposits have lost their character of deposits and are convertible into simple commercial loans because, in cases of such deposits, the bank has made use thereof in the ordinary course of its transactions as an institution engaged in the banking business, not because it so wishes, but precisely because of the authority deemed to have been granted to it by Gopoco Grocery, Et Al to enable them to collect the interest which they had been and they are now collecting, and by virtue further of the authority granted to it by Corporation Law and Banking Law.
Wherefore, deposits on current account of Gopoco Grocery, Et Al in the bank under liquidation, with the right on their part to collect interest, have not created and could not create a juridical relation between them except that of creditors and debtor, they being the creditors and the bank the debtor.
Karen Mae M. Maliones Credit Transactions
Pogi Boy’s Squad (Project No. 1)
HERRERA VS. PETROPHIL CORPORATION No. L-48349, December 29, 1968
146 SCRA 385
Facts:
Francisco Herrera and ESSO Standard Eastern. Inc., (later substituted by Petrophil Corporation) entered into a "Lease Agreement" whereby Herrera leased to the latter a portion of his property for a period of twenty (20) years.
The “Lease Agreement” contained a stipulation to the interest which state that the Lessor is paid 8 years advance rental based on P2, 930.70 per month discounted at 12% interest per annum or a total net amount of P130, 288.47 before registration of lease.
Petrophil paid to Herrera advance rentals for the first eight years, subtracting there from the amount of P101,010.73, the amount it computed as constituting the interest or discount for the first eight years, in the total sum P180,288.47, however explaining that there has been mistake in computation in the additional sum of P2,182.70, Petrophil paid to the appellant the amount of only P98,828.03.
Herrera sued Petrophil for the sum of P98,828.03, with interest, claiming this had been illegally deducted from him in violation of the Usury Law. Petrophil argued that the amount deducted was not usurious interest but a given to it for paying the rentals in advance for eight years. The Trial Court rendered Judgment in favor of Petrophil.
Issue:
Whether or not the interest was excessive and violative of the Usury Law?
Ruling:
Herrera argued that the interest collected by defendant out of the rentals for the first eight years was excessive and beyond that allowable by law, because the total interest on the said amount is only P33,755.90 at P4,219.4880 per yearly rental; and considering that the interest should be computed excluding the first year rental because at the time the amount of P281, 199.20 was paid it was already due under the lease contract hence no interest should be collected from the rental for the first year, the amount of P29,536.42 only as the total interest should have been deducted by defendant from the sum of P281,299.20.
The elements of usury are (1) a loan, express or implied; (2) an understanding between the parties that the money lent shall or may be returned; (3) that for such loan a greater rate or interest that is allowed by law shall be paid, or agreed to be paid, as the case may be; and (4) a corrupt intent to take more than the legal rate for the use of money loaned.Unless these four things concur in every transaction, it is safe to affirm that no case of usury can be declared.
The contract between the parties is one of lease and not of loan. It is clearly denominated a "LEASE AGREEMENT." Nowhere in the contract is there any showing that the parties intended a loan rather than a lease. The provision for the payment of rentals in advance cannot be construed as a repayment of a loan because there was no grant or forbearance of money as to constitute
There is no usury in this case because no money was given by the defendant-appellee to the plaintiff-appellant, nor did it allow him to use its money already in his possession. There was neither loan nor forbearance but a mere discount which the plaintiff-appellant allowed the defendant-appellee to deduct from the total payments because they were being made in advance for eight years. The discount was in effect a reduction of the rentals which the lessor had the right to determine, and any reduction thereof, by any amount, would not contravene the Usury Law.
To constitute usury, "there must be loan or forbearance; the loan must be of money or something circulating as money; it must be repayable absolutely and in all events; and something must be exacted for the use of the money in excess of and in a ddition to interest allowed by law."