Lessons Applicable: Simple Loan

Laws Applicable:

Facts:

December 6, 1966: Spouses Jose M. Lozano and Josefa P. Lozano secured their loan of P75K
from Philippine Bank of Commerce (PBC) by mortgaging their property
December 8, 1966: Executed Deed of Sale with Mortgage to Honesto Bonnevie where P75K is
payable to PBC and P25K is payable to Spouses Lanzano.
April 28, 1967 to July 12, 1968: Honesto Bonnevie paid a total of P18,944.22 to PBC
May 4, 1968: Honesto Bonnevie assigned all his rights under the Deed of Sale with Assumption
of Mortgage to his brother, intervenor Raoul Bonnevie
June 10, 1968: PBC applied for the foreclosure of the mortgage, and notice of sale was
published
January 26, 1971: Honesto Bonnevie filed in the CFI of Rizal against Philippine Bank of
Commerce for the annulment of the Deed of Mortgage dated December 6, 1966 as well as the
extrajudicial foreclosure made on September 4, 1968.
CFI: Dismissed the complaint with costs against the Bonnevies
CA: Affirmed
ISSUE: W/N the forclosure on the mortgage is validly executed.

HELD: YES. CA affirmed

A contract of loan being a consensual contract is 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.
Respondent Bank had every right to rely on the certificate of title. It was not bound to go behind
the same to look for flaws in the mortgagor's title, the doctrine of innocent purchaser for value
being applicable to an innocent mortgagee for value.
Thru certificate of sale in favor of appellee was registered on September 2, 1968 and the one
year redemption period expired on September 3, 1969. It was not until September 29, 1969 that
Honesto Bonnevie first wrote respondent and offered to redeem the property.
loan matured on December 26, 1967 so when respondent Bank applied for foreclosure, the loan
was already six months overdue. Payment of interest on July 12, 1968 does not make the earlier
act of PBC inequitous nor does it ipso facto result in the renewal of the loan. In order that a
renewal of a loan may be effected, not only the payment of the accrued interest is necessary but
also the payment of interest for the proposed period of renewal as well. Besides, whether or not
a loan may be renewed does not solely depend on the debtor but more so on the discretion of
the bank.

Carolyn M. Garcia
-vs-
Rica Marie S. Thio
GR No. 154878, 16 March 2007

FACTS
 Respondent Thio received from petitioner Garcia two crossed checks which
amount to US$100,000 and US$500,000, respectively, payable to the order of Marilou
Santiago. According to petitioner, respondent failed to pay the principal amounts of the
loans when they fell due and so she filed a complaint for sum of money and damages
with the RTC. Respondent denied that she contracted the two loans and countered that
it was Marilou Satiago to whom petitioner lent the money. She claimed she was merely
asked y petitioner to give the checks to Santiago. She issued the checks for P76,000
and P20,000 not as payment of interest but to accommodate petitioners request that
respondent use her own checks instead of Santiagos.

RTC ruled in favor of petitioner. CA reversed RTC and ruled that there was no
contract of loan between the parties.

ISSUE
(1) Whether or not there was a contract of loan between petitioner and respondent.
(2) Who borrowed money from petitioner, the respondent or Marilou Santiago?

HELD
(1) The Court held in the affirmative. A loan is a real contract, not
consensual, and as such I perfected only upon the delivery of the object of the
contract. Upon delivery of the contract of loan (in this case the money received by the
debtor when the checks were encashed) the debtor acquires ownership of such money
or loan proceeds and is bound to pay the creditor an equal amount. It is undisputed
that the checks were delivered to respondent.

(2) However, the checks were crossed and payable not to the order of the
respondent but to the order of a certain Marilou Santiago. Delivery is the act by which
the res or substance is thereof placed within the actual or constructive possession or
control of another. Although respondent did not physically receive the proceeds of the
checks, these instruments were placed in her control and possession under an
arrangement whereby she actually re-lent the amount to Santiago.

Petition granted; judgment and resolution reversed and set aside.

Saura Import vs DBP Credit Digest

Saura Import & Export Co., Inc.
-vs-
DBP
GR No. L-24968, 27 April 972
44 SCRA 445
FACTS
Saura applied to the Rehabilitation Finance Corporation (RFC), before its conversion into
DBP, for an industrial loan to be used for construction of factory building, for payment of the
balance of the purchase price of the jute machinery and equipment and as additional
working capital. In Resolution No.145, the loan application was approved to be secured first
by mortgage on the factory buildings, the land site, and machinery and equipment to be
installed.

The mortgage was registered and documents for the promissory note were executed. The
cancellation of the mortgage was requested to make way for the registration of a mortgage
contract over the same property in favor of Prudential Bank and Trust Co., the latter having
issued Saura letter of credit for the release of the jute machinery. As security, Saura
execute a trust receipt in favor of the Prudential. For failure of Saura to pay said obligation,
Prudential sued Saura.

After 9 years after the mortgage was cancelled, Saura sued RFc alleging failure to comply
with tits obligations to release the loan proceeds, thereby prevented it from paying the
obligation to Prudential Bank.

The trial court ruled in favor of Saura, ruling that there was a perfected contract between
the parties ad that the RFC was guilty of breach thereof.

ISSUE
Whether or not there was a perfected contract between the parties.

HELD
The Court held in the affirmative. Article 1934 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 delivery of the object of the
contract.

There was undoubtedly offer and acceptance in the case. When an application for a loan of
money was approved by resolution of the respondent corporation and the responding
mortgage was executed and registered, there arises a perfected consensual contract.

Credit Transactions Case Digest: BPI

Investment Corp V. CA (2002)
G.R. No. 133632 February 15, 2002

Lessons Applicable: Simple Loan

Laws Applicable:

Facts:

Frank Roa obtained a loan with interest rate of 16 1/4%/annum from Ayala Investment and
Development Corporation (AIDC), the predecessor of BPI Investment Corp. (BPIIC), for the
construction of a house on his lot in New Alabang Village, Muntinlupa.
He mortgaged the house and lot to AIDC as security for the loan.
1980: Roa sold the house and lot to ALS Management & Development Corp. and Antonio
Litonjua for P850K who paid P350K in cash and assumed the P500K indebtness of ROA with
AIDC.
AIDC proposed to grant ALS and Litonjua a new loan for P500K with interested rate of
20%/annum and service fee of 1%/annum on the outstanding balance payable within 10 years
through equal monthly amortization of P9,996.58 and penalty interest of 21%/annum/day from
the date the amortization becomes due and payable.
March 1981: ALS and Litonjua executed a mortgage deed containing the new stipulation with the
provision that the monthly amortization will commence on May 1, 1981
August 13, 1982: ALS and Litonjua paid BPIIC P190,601.35 reducing the P500K principal loan
to P457,204.90.
September 13, 1982: BPIIC released to ALS and Litonjua P7,146.87, purporting to be what was
left of their loan after full payment of Roas loan
June 1984: BPIIC instituted foreclosure proceedings against ALS and Litonjua on the ground
that they failed to pay the mortgage indebtedness which from May 1, 1981 to June 30, 1984
amounting to P475,585.31
August 13, 1984: Notice of sheriff's sale was published
February 28, 1985: ALS and Litonjua filed Civil Case No. 52093 against BPIIC alleging that they
are not in arrears and instead they made an overpayment as of June 30, 1984 since the P500K
loan was only released September 13, 1982 which marked the start of the amortization and
since only P464,351.77 was released applying legal compensation the balance of P35,648.23
should be applied to the monthly amortizations
RTC: in favor of ALS and Litonjua and against BPIIC that the loan granted by BPI to ALS and
Litonjua was only in the principal sum of P464,351.77 and awarding moral damages, exemplary
damages and attorneys fees for the publication
CA: Affirmed reasoning that a simple loan is perfected upon delivery of the object of the contract
which is on September 13, 1982
ISSUE: W/N the contract of loan was perfected only on September 13, 1982 or the second release of the loan?
HELD: YES. AFFIRMED WITH MODIFICATION as to the award of damages. The award of moral and
exemplary damages in favor of private respondents is DELETED, but the award to them of attorneys fees in
the amount of P50,000 is UPHELD. Additionally, petitioner is ORDERED to pay private respondents P25,000
as nominal damages. Costs against petitioner.

obligation to pay commenced only on October 13, 1982, a month after the perfection of the contract
contract of loan involves a reciprocal obligation, wherein the obligation or promise of each party is the
consideration for that of the other. It is a basic principle in reciprocal obligations that neither party incurs
in delay, if the other does not comply or is not ready to comply in a proper manner with what is incumbent
upon him. Consequently, petitioner could only demand for the payment of the monthly amortization after
September 13, 1982 for it was only then when it complied with its obligation under the loan contract.
BPIIC was negligent in relying merely on the entries found in the deed of mortgage, without checking and
correspondingly adjusting its records on the amount actually released and the date when it was
released. Such negligence resulted in damage for which an award of nominal damages should be given
SSS where we awarded attorneys fees because private respondents were compelled to litigate, we sustain
the award of P50,000 in favor of private respondents as attorneys fees

PANTALEON VS AMERICAN EXPRESS

Posted by kaye lee on 11:30 PM

G.R. No. 174269, May 8 2009 [Credit Transaction]

FACTS:

After the Amsterdam incident that happened involving the delay of American Express Card to approve his credit
card purchases worth US$13,826.00 at the Coster store, Pantaleon commenced a complaint for moral and exemplary
damages before the RTC against American Express. He said that he and his family experienced inconvenience and
humiliation due to the delays in credit authorization. RTC rendered a decision in favor of Pantaleon. CA reversed
the award of damages in favor of Pantaleon, holding that AmEx had not breached its obligations to Pantaleon, as the
purchase at Coster deviated from Pantaleon's established charge purchase pattern.

ISSUE:

1. Whether or not AmEx had committed a breach of its obligations to Pantaleon.

2. Whether or not AmEx is liable for damages.
RULING:

1. Yes. The popular notion that credit card purchases are approved within seconds, there really is no strict, legally
determinative point of demarcation on how long must it take for a credit card company to approve or disapprove a
customers purchase, much less one specifically contracted upon by the parties. One hour appears to be patently
unreasonable length of time to approve or disapprove a credit card purchase.

The culpable failure of AmEx herein is not the failure to timely approve petitioners purchase, but the more
elemental failure to timely act on the same, whether favorably or unfavorably. Even assuming that AmExs credit
authorizers did not have sufficient basis on hand to make a judgment, we see no reason why it could not have
promptly informed Pantaleon the reason for the delay, and duly advised him that resolving the same could take some
time.

2. Yes. The reason why Pantaleon is entitled to damages is not simply because AmEx incurred delay, but because
the delay, for which culpability lies under Article 1170, led to the particular injuries under Article 2217 of the Civil
Code for which moral damages are remunerative. The somewhat unusual attending circumstances to the purchase at
Coster that there was a deadline for the completion of that purchase by petitioner before any delay would redound
to the injury of his several traveling companions gave rise to the moral shock, mental anguish, serious anxiety,
wounded feelings and social humiliation sustained by Pantaleon, as concluded by the RTC.

Naguiat vs CA Credit Digest

Naguiat vs CA and Queao

GR No. 118375, 03 October 2003

412 SCRA 591

FACTS

Queao applied with Naguiat a loan for P200,000, which the latter granted. Naguiat
indorsed to Queao Associated bank Check No. 090990 for the amount of P95,000
and issued also her own Filmanbank Check to the order of Queao for the amount
of P95,000. The proceeds of these checks were to constitute the loan granted by
Naguiat to Queao. To secure the loan, Queao executed a Deed of Real Estate
Mortgage in favor of Naguiat, and surrendered the owners duplicates of titles of the
mortgaged properties. The deed was notarized and Queao issued to Naguiat a
promissory note for the amount of P200,000. Queao also issued a post-dated
check amounting to P200,000 payable to the order of Naguait. The check was
dishonoured for insufficiency of funds. Demand was sent to Queao. Shortly,
Queao, and one Ruby Reubenfeldt met with Naguiat. Queao told Naguiat that she
did not receive the loan proceeds, adding that the checks were retained by
Reubenfeldt, who purportedly was Naguiats agent.

Naguiat applied for extrajudicial foreclosure of the mortgage. RTC declared the
Deed as null and void and ordered Naguiat to return to Queao the owners
duplicates of titles of the mortgaged lots.

ISSUE

Whether or not the issuance of check resulted in the perfection of the loan contract.

HELD

The Court held in the negative. No evidence was submitted by Naguiat that the
checks she issued or endorsed were actually encashed or deposited. The mere
issuance of the checks did not result in the perfection of the contract of loan. The
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 been
cashed. It is only after the checks have been produced the effect of payment that
the contract of loan may have been perfected.

Article 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 itsel shall not be perfected until the delivery of the
object of the contract. A loan contract is a real contract, not consensual, and as
such, is perfected only upon the delivery of the objects of the contract.

Delos Santos v. Jarra Digest

G.R. No. L-4150 February 10, 1910 Facts: The Plaintiff Felix delos Santos filed this suit
against Agustina Jarra. Jarra was the administratix of the estate of Jimenea. Plaintiff alleged
that he owned 10 1st class carabaos which he lent to his father-in-law Jimenea to be used in
the animal-power mill without compensation. This was done on the condition of their
return after the work at the latters mill is terminated. When delos Santos demanded the
return of the animals Jimenea refused, hence this suit. Issue: W/N the contracts is one of a
commodatum Ruling: YES. The carabaos were given on commodatum as these were
delivered to be used by defendant. Upon failure of defendant to return the cattle upon
demand, he is under the obligation to indemnify the plaintiff by paying him their value.
Since the 6 carabaos were not the property of the deceased or of any of his descendants, it
is the duty of the administratrix of the estate to either return them or indemnify the owner
thereof of their value.