Professional Documents
Culture Documents
DBP
G.R. No. L-24968 April 27, 1972
Facts: Saura Inc. applied to the Rehabilitation Finance Corp (before its conversion to
DBP) for a loan of 500k secured by a first mortgage of the factory building to finance
for the construction of a jute mill factory and purchase of factory implements. RFC
accepted and approved the loan application subject to some conditions which Saura
admitted it could not comply with. Without having received the amount being loaned,
and sensing that it could not at anyway obtain the full amount of loan, Saura Inc. then
asked for cancellation of the mortgage which RFC also approved. Nine years after the
cancellation of the mortgage, Saura sued RFC for damages for its non-fulfillment of
obligations arguing that there was indeed a perfected consensual contract between
them.
Issue: Was there a perfected consensual contract? Was there a real contract of loan
which would warrant recovery of damages arising out of breach of such contract?
Held: On the first issue, yes, there was indeed a perfected consensual contract, as
recognized in Article 1934 of the Civil Code. There was undoubtedly offer and
acceptance in this case: the application of Saura, Inc. for a loan of P500,000.00 was
approved by resolution of the defendant, and the corresponding mortgage was
executed and registered. But this fact alone falls short of resolving the second issue and
the basic claim that the defendant failed to fulfill its obligation and the plaintiff is
therefore entitled to recover damages. The action thus taken by both partiesSaura's
request for cancellation and RFC's subsequent approval of such cancellationwas in the
nature of mutual desistance what Manresa terms "mutuo disenso" which is a mode
of extinguishing obligations. It is a concept derived from the principle that since mutual
agreement can create a contract, mutual disagreement by the parties can cause its
extinguishment. In view of such extinguishment, said perfected consensual contract to
deliver did not constitute a real contract of loan.
2. Bonnevie v. CA
GR No. L-49101 October 24, 1983
Facts: Spouses Lozano mortgaged their property to secure the payment of a loan
amounting to 75K with private respondent Philippine Bank of Communication (PBCom).
The deed of mortgage was executed on 12-6-66, but the loan proceeeds were received
only on 12-12-66. Two days after the execution of the deed of mortgage, the spouses
sold the property to the petitioner Bonnevie for and in consideration of 100k25K of
which payable to the spouses and 75K as payment to PBCom. Afterwhich, Bonnevie
defaulted payments to PBCom prompting the latter to auction the property after
Bonnivie failed to settle despite subsequent demands, in order to recover the amount
loaned. The latter now assails the validity of the mortgage between Lozano and Pbcom
arguing that on the day the deed was executed there was yet no principal obligation to
secure as the loan of P75,000.00 was not received by the Lozano spouses, so that in
the absence of a principal obligation, there is want of consideration in the accessory
contract, which consequently impairs its validity and fatally affects its very existence.
Issue: Was there a perfected contract of loan?
Held: Yes. From the recitals of the mortgage deed itself, it is clearly seen that the
mortgage deed was executed for and on condition of the loan granted to the Lozano
spouses. The fact that the latter did not collect from the respondent Bank the
consideration of the mortgage on the date it was executed is immaterial. A contract of
loan being a consensual contract, the herein contract of loan was perfected at the same
time the contract of mortgage was executed. The promissory note executed on
December 12, 1966 is only an evidence of indebtedness and does not indicate lack of
consideration of the mortgage at the time of its execution.
4. Pajuyo v. CA
GR No. 146364 June 3, 2004
Facts: Pajuyo entrusted a house to Guevara for the latter's use provided he should
return the same upon demand and with the condition that Guevara should be
responsible of the maintenance of the property. Upon demand Guevara refused to
return the property to Pajuyo. The petitioner then filed an ejectment case against
Guevara with the MTC who ruled in favor of the petitioner. On appeal with the CA, the
appellate court reversed the judgment of the lower court on the ground that both
parties are illegal settlers on the property thus have no legal right so that the Court
should leave the present situation with respect to possession of the property as it is,
and ruling further that the contractual relationship of Pajuyo and Guevara was that of a
commodatum.
Issue: Is the contractual relationship of Pajuyo and Guevara that of a commodatum?
Held: No. The Court of Appeals theory that the Kasunduan is one of commodatum is
devoid of merit. In a contract of commodatum, one of the parties delivers to another
something not consumable so that the latter may use the same for a certain time and
return it. An essential feature of commodatum is that it is gratuitous. Another feature of
commodatum is that the use of the thing belonging to another is for a certain period.
Thus, the bailor cannot demand the return of the thing loaned until after expiration of
the period stipulated, or after accomplishment of the use for which the commodatum is
constituted. If the bailor should have urgent need of the thing, he may demand its
return for temporary use. If the use of the thing is merely tolerated by the bailor, he
can demand the return of the thing at will, in which case the contractual relation is
called a precarium. Under the Civil Code, precarium is a kind of commodatum. The
Kasunduan reveals that the accommodation accorded by Pajuyo to Guevarra was not
essentially gratuitous. While the Kasunduan did not require Guevarra to pay rent, it
obligated him to maintain the property in good condition. The imposition of this
obligation makes the Kasunduan a contract different from a commodatum. The effects
of the Kasunduan are also different from that of a commodatum. Case law on ejectment
has treated relationship based on tolerance as one that is akin to a landlord-tenant
relationship where the withdrawal of permission would result in the termination of the
lease. The tenants withholding of the property would then be unlawful.
Issue: Could the interest rate being agreed upon by parties be considered as excessive?
Held: No. Elementary is the rule that 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. Here, the Bautistas agreed to
a 20% interest rate per annum to be applied on top of their loan principal.
The stipulated interest rate of 20% per annum was not excessive, iniquitous,
unconscionable, or in any way exorbitant. There are already cases where the Supreme
Court validated even a higher rate of stipulated interest. It is important to note that the
Bautistas freely agreed on the rate of interest that would govern their contract of loan.
Parties to a contract of loan like in any other contracts are essentially free to stipulate
on the terms of their undertaking. If their debt increased considerably, it is because
they had been in default for a long time.
Applying the stipulated interest rate on the loan, the Court believes that re-computed
amount of P1,889,829 is fairly reasonable considering that more than six years have
passed since the last payment of the Bautistas was recorded. It is to be considered that
the computation was made right in front of the Bautistas who could have easily
protested if there was any mistake or irregularity in the procedure. Instead, the
Bautistas again acknowledged the amount.
It is the opinion of the Court that when the relation is purely that of debtor and creditor,
the debtor can not be held liable for the crime of estafa, under said article, by merely
refusing to pay or by denying the indebtedness.
It appeared that respondent judge failed to appreciate the distinction between the two
types of loan, mutuum and commodatum, when he performed the questioned acts. He
mistook the transaction between petitioners and private respondents to be
commodatum wherein the borrower does not acquire ownership over the thing
borrowed and has the duty to return the same thing to the lender.
8. Francisco v. Gregorio
GR No. L-59519 July 20, 1982
Facts: Petitioner Francisco, through her daughter, agreed to lease a piece of land where
a building should be constructed by the former. The contract provided, among others:
the deposit to the account of the lessor-petitioner the amount of 150k representing 30K
goodwill money and 120K advanced rental and a stipulation that in case the parties will
not agree as to the terms and conditions of the final contract of lease, the pre-lease
contract shall be declared null and void and the petitioner shall return the deposit plus
legal interest. Before final occupancy, the petitioner declared the pre-lease contract null
and void, leased the premises to another lessee and offered to return the 150K deposit.
Private respondents refused to accept so that petitioner was prompted to make a
consignation of the money with the Court. Private respondents then filed a complaint,
hence respondent judge ruled in their favor with an order to pay the amount of deposit
plus compensatory interests.
Issue: Is the petitioner liable for payment of interest despite tender of payment before
demand?
Held: No. The award for interests in an action for the recovery of a sum of money
partakes of a nature of an award for damages. Thus, Article 2209 of the Civil Code
provides: Art. 2209. 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 the interest agreed upon, and in the absence of
stipulation, the legal interest, which is six percent per annum. Clearly, the indemnity
for interest on a monetary obligation attaches only when the obligor incurs delay, that
is, when he is in default, it being a fundamental principle of law that: Those obliged to
deliver or to do something incur in delay from the time the obligee judicially or
extrajudicially demands from them the fulfillment of their obligation. (Art. 1169, Civil
Code.)
In the case at bar, it is not disputed that no demands, judicial or extrajudicial, were
made by private respondents on defendant Boiser (Francisco) for the return of the
amount of P150,000.00. There could not have been any because of the nature of the
action filed by private respondents, which is for specific performance. Hence, there is no
delay of the latter's obligation, assuming that she be eventually required in the decision
of the Court to return the same. Thus, no interest is due where there was tender of
payment prior to any demand to pay or perform the agreed act.
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.
cases involving the loan or forbearance of money. However, in Eastern Shipping Lines,
Inc., we held that when the judgment awarding a sum of money becomes final and
executory, the monetary award shall earn interest at 12% per annum from the date of
such finality until its satisfaction, regardless of whether the case involves a loan or
forbearance of money. The reason is that this interim period is deemed to be by then
equivalent to a forbearance of credit.
13. PNB v. CA
GR No. 107569 November 8, 1994
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.
continuation of payment of monthly rentals by the lessee-buyers until the full amount is
paid, and an stipulation that the contracts would be subject to rescision in the event the
lessee-buyers would default in the payment of the agreed priceupon rescision, the
supposed lessee-buyers should return the amount advanced to the lessor-sellers while
the former vacates the property. The petitioners defaulted payments so the parties
rescinded the contract but could not however agree as to the amount. The lesseebuyers asked for 24% per annum interests on the amount advanced by them to the coowners, while the latter, on the other hand, asked for the additional rentals for another
portion of the property which the petitioner had already been using since the execution
of the contract, these issues was however raised after judgment had been entered and
writ of execution issued.
Issue: Should awards by courts be subject to legal interests however the judgment did
not provide for such?
Held: No. Anent the Ruizes' claim of interest as aforementioned, it has been held in the
case of Santulan v. Fule, 133 SCRA 762 (1984) that where the court judgment which
did not provide for interest is already final, there is no reason to add interest in the
judgment. Interest was not demanded by the Ruizes when the case was pending before
the lower court, hence, there is no reason for Supreme Court to grant such claim. As
ruled by the Court, such claim is groundless since the decision and orders sought to be
enforced do not direct the payment of interest and have long become final (Canonizado
v. Ordoez-Benitez, 149 SCRA 555 [1987]).
Finally, as to Sangalang's claim for P1,500.00 as monthly rental for Door No. 2, the
records show that such claim was never raised in the trial court. The issue of additional
rentals was brought up by Sangalang only when the motion for execution of par. 3 of
the dispositive portion of the decision was filed by the Ruiz spouses (Rollo, p. 189). It is
a basic rule that an issue which was not raised in the court below cannot be raised for
the first time on appeal as it would be offensive to the basic rules of fair play, justice
and due process.
18% shall also earn the legal interest of 12%. On appeal, CA affirmed RTC's decision as
to interests but clarified that the mortgage could only cover those loans contracts that
were expressly stating so, and that payment of the principal obligation 18% per annum
shall discharge the property mortgage.
Issue: 1. Are the courts correct in compounding the interests and adding a legal
interest over the stipulated interest?
2. Should the subsequent loans be covered by the mortgage however absent the
stipulations?
3. Shall payment of the principal plus the stipulated interest discharge the property
mortgaged?
Held: On the first issue, Yes, the courts did not erred in applying the rules in application
of interest enunciated in Eastern Shipping Lines, Inc v. CA which states in paragraph 1,
When an 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.
Applying the rules in Eastern Shipping case, the Court laid down the follwoing formula:
TOTAL AMOUNT DUE = [principal + interest + interest on interest] - partial payments
made
Interest = principal x 18 % per annum x no. of years from due date until finality of
judgment
Interest on interest = Interest computed as of the filing of the complaint (September
10, 1997) x 12% x no. of years until finality of judgment
Total amount due as of the date of finality of judgment will earn an interest of 12% per
annum until fully paid.
On the 2nd issue, As a general rule, a mortgage liability is usually limited to the amount
mentioned in the contract. An obligation is not secured by a mortgage unless it comes
fairly within the terms of the mortgage contract. It is clear from a perusal of the
aforequoted real estate mortgage that there is no stipulation that the mortgaged realty
shall also secure future loans and advancements. Thus, what applies is the general rule
above stated.
On the last issue, no discharge of the mortgage until the satisfaction of the debt and
other incidental costs. Section 2, Rule 68 of the Rules of Court provides that If upon
the trial in such action (foreclosure for payment or sale) the court shall find the facts
set forth in the complaint to be true, it shall ascertain the amount due to the plaintiff
upon the mortgage debt or obligation, including interest and other charges as approved
by the court, and costs, and shall render judgment for the sum so found due and order
that the same be paid to the court or to the judgment obligee within a period of not less
than ninety (90) days nor more than one hundred twenty (120) days from the entry of
judgment, and that in default of such payment the property shall be sold at public
auction to satisfy the judgment.
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.