Tolentino vs.

Gonzalez Sy Chiam 50 Phil 558

Facts:Tolentino purchased land from Luzon Rice Mills for Php25,000 payable
in three installments. Tolentino defaulted on the balance so the owner sent a
letter of demand to him. To pay, Tolentino applied for loan from Gonzalez on
condition that he would execute a pacto de retro sale on the property in favor of
Gonzalez. Upon maturation of loan, Tolentino defaulted so Gonzalez is
demanding recovery of the land. Tolentino contends that the pacto de retro
sale is a mortgage and not an absolute sale.
Held:The Supreme Court held that upon its terms, the deed of pacto de retro
sale is an absolute sale with right of repurchase and not a mortgage. Thus,
Gonzalez is the owner of the land and Tolentino is only holding it as a tenant
by virtue of a contract of lease.
Mina v. Pascual, 25 Phil 540
Francisco is the owner of land and he allowed his brother, Andres, to erect a
warehouse in that lot. Both Francisco and Andres died and their children
became their respective heirs: Mina for Francisco and Pascual for Andres.
Pascual sold his share of the warehouse and lot. Mina opposed because the
lot is hers because her predecessor (Francisco) never parted with its
ownership when he let Andres construct a warehouse, hence, it was a contract
of commodatum. What is the nature of the contract between Francisco and
Andres?
The Supreme Court held that it was not a commodatum. It is an essential
feature of commodatum that the use of the thing belonging to another shall be
for a certain period. The parties never fixed a definite period during which
Andres could use the lot and afterwards return it.
Producers Bank of the Philippines v. CA, 397 SCRA 651 Doronilla is in the
process of incorporating his business and to comply with one of the
requirements of incorporation, he caused Vives to issue a check which was
then deposited in Doronillas savings account. It was agreed that Vives can
withdraw his money in a months time. However, what Doronilla did was to
open a current account and instructed the bank to debit from the savings
account and deposit it in his current account. So when Vives checked the
savings account, the money was gone. Is the contract a mutuum or
commodatum?

very same goods returned at the end of the period agreed upon, the loan is a
commodatum and not a mutuum.
THE CONSOLIDATED BANK and TRUST CORPORATION vs. COURT OF
APPEALS and L.C. DIAZ and COMPANY,
FACTS:In March 1976, L.C. Diaz opened a savings account with Solidbank.
On 14 August 1991, L.C. Diaz through its cashier, Mercedes Macaraya, filled
up a savings (cash) deposit slip for P990 and a savings (checks) deposit slip
for P50. Macaraya instructed the messenger of L.C. Diaz, Ismael Calapre, to
deposit the money with Solidbank. Macaraya also gave Calapre the Solidbank
passbook.
Calapre went to Solidbank and presented to Teller No. 6 the two deposit slips
and the passbook. The teller acknowledged the receipt of the deposit by
returning to Calapre the duplicate copies of the two deposit slips. Teller No. 6
stamped the deposit slips with the words DUPLICATE and SAVING TELLER
6 SOLIDBANK HEAD OFFICE. Since the transaction took time and Calapre
had to make another deposit for L.C. Diaz with Allied Bank, he left the
passbook with Solidbank. Calapre then went to Allied Bank. When Calapre
returned to Solidbank to retrieve the passbook, Teller No. 6 informed him that
somebody got the passbook. Calapre went back to L.C. Diaz and reported
the incident to Macaraya. Macaraya immediately prepared a deposit slip in
duplicate copies with a check of P200,000. Macaraya and Calapre went to
Solidbank and presented to Teller No. 6 the deposit slip and check. The teller
stamped the words DUPLICATE and SAVING TELLER 6 SOLIDBANK
HEAD OFFICE on the duplicate copy of the deposit slip. When Macaraya
asked for the passbook, Teller No. 6 told Macaraya that someone got the
passbook but she could not remember to whom she gave the passbook. When
Macaraya asked Teller No. 6 if Calapre got the passbook, Teller No. 6
answered that someone shorter than Calapre got the passbook. Calapre was
then standing beside Macaraya. The following day L.C. Diaz learned of the
unauthorized withdrawal the day before of P300,000 from its savings account.
The withdrawal slip for the P300,000 bore the signatures of the authorized
signatories of L.C. Diaz, namely Diaz and Rustico L. Murillo. The signatories,
however, denied signing the withdrawal slip. A certain Noel Tamayo received
the P300,000. L.C. Diaz demanded from Solidbank the return of its money.
Solidbank refused. L.C. Diaz filed a Complaint for Recovery of a Sum of Money
against Solidbank.
ISSUE:WON petitioner Solidbank is liable.

Supreme Court held that the contract is a commodatum. Although in a

commodatum, the object is a non-consumable thing, there are instances where
a consumable thing may be the object of a commodatum, such as when the
purpose is not for consumption of the object but merely for exhibition (Art.
1936). 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

RULING:Yes. Solidbank is liable for breach of contract due to negligence, or

culpa contractual. The contract between the bank and its depositor is governed
by the provisions of the Civil Code on simple loan. Article 1980 of the Civil
Code expressly provides that x x x savings x x x deposits of money in banks
and similar institutions shall be governed by the provisions concerning simple

loan. There is a debtor-creditor relationship between the bank and its

depositor. The bank is the debtor and the depositor is the creditor. The
depositor lends the bank money and the bank agrees to pay the depositor on
demand. The savings deposit agreement between the bank and the depositor
is the contract that determines the rights and obligations of the parties.
COLINARES VS CA
- Colinares et al., applied for a commercial letter of credit with the Philippine Banking
Corporation (PBC) in favor of CM builders for the purchased of various construction
supplies. PBC approved the letter of credit to cover the fullinvoice value of the
goods and subsequently signed a prom-forma trust receipt as security.-PBC wrote a
demand letter to petitioner demanding the amount be paid within
seven days but instance of complying they confessed that they cant pay and
requested a grace period to settle the account.-Colinares et al., proposed to modify the
payment of the loan.-Colinares et al., were charged with estafa.-During trial, petitioner
Veloso insisted that the transaction was a clean loan. He and petitioner
Colinares signedthe documents without reading the fine print, and learning that the trust
receipt was merely a formality.
Whether the transaction is a simple loan or a trust receipt agreement.
-A thorough examination of the facts obtaining in the case at bar reveals that the transaction
intended by the partieswas a simple loan, not a trust receipt agreement
. The Trust Receipts Law does not seek to enforce payment of theloan, rather it punishes the
dishonesty and abuse of confidence in the handling of money or goods to the prejudiceof
another regardless of whether the latter is the owner. Here, it is crystal clear
that on the part of Colinares et althere was neither dishonesty nor abuse of confidence
in the handling of money to the prejudice of PBC. Colinares etal continually endeavored
to meet their obligations, as shown by several receipts issued by PBC
acknowledgingpayment of the loan.-There are two possible situations in a trust receipt
transaction. The first is covered by the provision which refers to
money
received under the obligation involving the duty to deliver it (entregarla) to the
owner of the merchandisesold. The second is covered by the provision which refers to
merchandise received under the obligation to return it(devolvera) to the owner.-Failure of
the entrustee to turn over the proceeds of the sale of the goods, covered by the
trust receipt to theentruster or to return said goods if they were not disposed of in
accordance with the terms of the trust receipt shallbe punishable as estafa under Article 315 (1)
of the Revised Penal Code, without need of proving intent to defraud.Colinares et al
received the merchandise from CM Builders Centre on 30 October 1979. On
that day, ownershipover the merchandise was already transferred to Colinares et al who
were to use the materials for their constructionproject. It was only a day later, 31
October 1979, that they went to the bank to apply for a loan to pay
for themerchandise.

-This situation belies what normally obtains in a pure trust receipt transaction where goods are
owned by the bank and only released to the importer in trust subsequent to the grant of the
loan
. The bank acquires a security interest in the goods as holder of a security
title for the advances it had made to the entrustee. The ownership
of themerchandise continues to be vested in the person who had advanced
payment until he has been paid in full, or if the merchandise has already been sold,
the proceeds of the sale should be turned over to him by the importer or byhis representative or
successor in interest. To secure that the bank shall be paid, it takes full title to the goods at
thevery beginning and continues to hold that title as his indispensable security until the goods
are sold and the vendeeis called upon to pay for them; hence, the import er
has never owned the goods and is not able to deliver possession.
In a certain manner, trust receipts partake of the nature of a
conditional sale where the importer becomes absolute owner of the imported
merchandise as soon as he has paid its price
Tio Khe Chio v. CA
Facts: Petitioner shipped bags of imported fishmeals and insured the same
with respondent insurance company Eastern Assurance & Surety Corp
(EASCO). During transit, the bags were found out to be damaged thus
rendering the fishmeals useless. Petitioner filed a claim before the EASCO
which denied the same, prompting the former to sue the latter at CFI Cebu who
ordered EASCO to pay the petitioner's claim for insurance with damages. Upon
execution, respondent filed a petition for certiorari with the CA who set aside
the lower court's decision arguing that the latter has erred in fixing the legal
interest on 12% per annum rather than the mandated 6%.
Issue: What should the legal interest be for damages arising from loss of
property?
Held: The applicable law is Article 2209 of the Civil Code which reads that if the
obligation consists in the payment of a sum of money and the debtor incurs in
delay, the indemnity for damages, there being no stipulation to the contrary,
shall be the payment of interest agreed upon, and in the absence of stipulation,
the legal interest which is 6% per annum.
The adjusted rate mentioned in the Circular No. 416, from which the CFI based
its decision, refers only to loans or forbearances of money, goods or credits
and court judgments thereon but not to court judgments for damages arising
from injury to persons and loss of property which does not involve a loan.
PNB v. CA
Facts: Private respondents, who are owners of a NACIDA-registered
enterprise, obtained from petitioner PNB a loan initially pegged at 12% per
annum interest. The contract agreement includes, among others, a clause
which allows PNB to raise the rate of interest depending onn the bank's future

policies. During the term of the agreement, PNB on several occasions imposed
subsequent raises to the applicable rate ranging from the original 12% up to
42%, imposing also a 6% penalty per annum.
Issue: Can a creditor raise the rate of interest based solely on a certain clause
in the contract and without consent from the debtor as to the amount and rate
of increase?
Held: No. It is basic that there can be no contract in the true sense in the
absence of the element of agreement, or of mutual assent of the parties. If this
assent is wanting on the part of the one who contracts, his act has no more
efficacy than if it had been done under duress or by a person of unsound mind.
Similarly, contract changes must be made with the consent of the contracting
parties. The minds of all the parties must meet as to the proposed modification,
especially when it affects an important aspect of the agreement. In the case of
loan contracts, it cannot be gainsaid that the rate of interest is always a vital
component, for it can make or break a capital venture. Thus, any change must
be mutuallya greed upon, otherwise, it is bereft of any binding effect. The Court
cannot countenance petitioner bank's posturing that the escalation clause at
bench gives it unbridled right tounilaterally upwardly adjust the interest on
private respondents' loan. That would completely take away from private
respondents the right to assent to an important modification in their agreement,
and would negate the element of mutuality in contracts.
Eastern Shipping Lines v. CA
Facts: Petitioner-defendant was consigned to deliver a cargo. Upon
embarkment, the cargo was found to be damaged while on transit. Private
respondent-plaintiff, Mercantile Insurance, paid the consignee the amount of
damage based on a marine insurance policy. Mercantile consquently sued the
petitioner for recovery of damages it paid to the consignee. The court a quo
decided in favor of the plaintiff and further stressing the amount paid by the
insurance company to the consignee be paid and with the present legal interest
of 12% per annum commencing on the date of filing of the complaint, until fully
paid. The petitioner now constests the ruling particularly on the issue of
interest.
Issue: When should the reckoning period be for the computation of the
payment of legal interest on an award for loss or damage? What is the
applicable rate of interest?
Held: The Court laid down the following rules of thumb for guidance in cases
like that of the above:
I. When an obligation, regardless of its source, i.e., law, contracts, quasicontracts, 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 annum to 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 annum from such finality
until its satisfaction, this interim period being deemed to be by then an
equivalent to a forbearance of credit.