Republic v.

Bagtas Facts: - Jose Bagtas borrowed from the Bureau of Animal Industry 3 bulls for 1 year for breeding purposes - upon the expiration of the contract, Bagtas asked for a renewal for another year !he renewal granted was only for 1 bull - Bagtas offered to buy the bulls at book "alue less depreciation, but the Bureau told him that he should either return the bulls or pay for their book "alue - Bagtas failed to pay the book "alue, and so the #epublic commenced an action with the $%I &anila to order the return of the bulls of the payment of book "alue - %elicidad Bagtas, the sur"i"ing spouse and administratrix of the decedent's estate, stated that the ( bulls ha"e already been returned in 1)*(, and that the remaining one died of gunshot during a +uk raid - As regards the two bulls, is was pro"en that they were returned and thus, there is no more obligation on the part of the appellant As to the bull not returned, %elicidad contends that the obligation is extinguished since the contract is that of a commodatum and that the loss through fortuitous e"ent should be borne by the owner Issue: ,-., depending on the nature of the contract, the respondent is liable for the death of the bull Held: A contract of commodatum is essentially gratuitous If the breeding fee be considered a compensation, then the contract would be a lease of the bull /nder article 1011 of the $i"il $ode the lessee would be sub2ect to the responsibilities of a possessor in bad faith, because she had continued possession of the bull after the expiry of the contract And e"en if the contract be commodatum, still the appellant is liable, because article 1)3( of the $i"il $ode pro"ides that a bailee in a contract of commodatum is liable for loss of the things, e"en if it should be through a fortuitous e"ent4 5(6 If he keeps it longer than the period stipulated 536 If the thing loaned has been deli"ered with appraisal of its "alue, unless there is a stipulation exempting the bailee from responsibility in case of a fortuitous e"ent7 !he loan of one bull was renewed for another period of one year to end on 8 &ay 1)*9 But the appellant kept and used the bull until .o"ember 1)*3 when during a +uk raid it was killed by stray bullets %urthermore, when lent and deli"ered to the deceased husband of the appellant the bulls had each an appraised book "alue It was not stipulated that in case of loss of the bull due to fortuitous e"ent the late husband of the appellant would be exempt from liability :pecial proceedings for the administration and settlement of the estate of the deceased Jose ; Bagtas ha"ing been instituted in the $ourt of %irst Instance of #i<al 5=-(996, the money 2udgment rendered in fa"or of the appellee cannot be enforced

by means of a writ of execution but must be presented to the probate court for payment by the appellant, the administratrix appointed by the court

2. Garcia vs Thio
10 &arch (991 J $orona
FACTS: Petitioner Garcia Respondent Thio In February 1995, Thio received from Garcia a crossed chec amountin! to "1##,### payab$e to the order of %ari$ou &antia!o' o Garcia the received from Thio "(,### for ) months and P*+,5## on ,u$y, -u!ust, &eptember and .ctober /Representin! interest due0 In ,une 1995, Thio received a!ain from Garcia P5##,### o Garcia the received from Thio P1#,### on -u!ust, &eptember .ctober and 2ovember' /Represent interest due0 -ccordin! to Garcia, Thio fai$ed to pay the "1##,### and P5##,### amount optin! him to fi$e a case for sum of money and dama!es' 3oth $oans are not covered by a promissory note as the t4o are c$ose friends Thio countered that it 4as %ari$ou &antia!o 4hom the money 4as $ent by Garcia' &he issued the chec s for P*+,### and P1#,### not as payment of interest but to accommodate petitioner5s re6uest that respondent use her o4n chec s instead of &antia!o RT7 ru$ed in favor of Garcia 7- reversed RT7'

ISSUE: 1. Who borrowed the money (Santiago or Thio) HEL : 1. Thio !ATI":

A loan is a real contract as it is perfected upon deli"ery of the ob2ect !his is different from a consensual contract which only re>uires consent An accepted promise to deli"er by way of commodatum or simple loan is binding upon parties, howe"er, the loan itself is only perfected upon deli"ery of the ob2ect ?etitioner insisted that it was upon respondent's instruction that both checks were made payable to :antiago

It was also argued that upon deli"ery of the checks, respondents ac>uired control and possession of it and can choose to retain or deli"ery it to :antiago %actors that supported the conclusions are4 o ?etitioner did not know :antiago personally o @eticia #ui< 5friend of both petitioner and respondent6 testified that the plan of !hio is to borrow money from Aarcia then subse>uently lend it out to :antiago o for the /:B199,999 loan, respondent admitted issuing her own checks in the amount of ?10,999 each 5peso e>ui"alent of /:B3,9996 for eight months to co"er the monthly interest %or the ?*99,999 loan, she also issued her own checks in the amount of ?(9,999 each for four months :he claimed, howe"er, that :antiago would replace the checks with cash +er explanation is simply incredible It is difficult to belie"e that respondent would put herself in a position where she would be compelled to pay interest, from her own funds, for loans she allegedly did not contract o In the petition of insol"ency filed by :antiago, the one listed as creditor is !hio rather than Aarcia o .o corroborati"e e"idence was presented by !hio o

GALANG: RE !BLI" #F THE HILI INE$ %B!REA! #F LAN&$' vs. THE H#N. "#!RT #F A EAL$( HEIR$ #F &#)ING# RI"AR&# BAL#*( ET AL.( respo+de+ts. A # .o @-3013* .o"ember (0, 1)80 ?A#A:, J

. BAL#*( represe+ted b,

FA"T$: ?etition for re"iew on certiorari !his case originally emanated from a decision of the then $ourt of %irst Instance of Cambales in denying respondentsD application for registration ApplicantsD 5heirs of Eomingo Baloy6 claim is anchored on their possessory information title coupled with their continuous, ad"erse and public possession o"er the land in >uestion :aid possessory information title had been regularly issued ha"ing been ac>uired by applicantsD predecessor, Eomingo Baloy, under the pro"isions of the :panish &ortgage @aw !he Eirector of @ands opposed the registration alleging that this land had become public land thru the operation of Act 0(1 of the ?hilippine $ommission Fn .o"ember (0, 1)9( pursuant to the executi"e order of the ?resident of the / : , the area was declared within the / : .a"al #eser"ation /nder Act 0(1 as amended by Act 1138, a period was fixed within which persons affected thereby could file their application, 5that is within 0 months

from July 8, 1)9*6 otherwise Gthe said lands or interest therein will be conclusi"ely ad2udged to be public lands and all claims on the part of pri"ate indi"iduals for such lands or interests therein not to presented will be fore"er barred G ?etitioner argues that since Eomingo Baloy failed to file his claim within the prescribed period, the land had become irre"ocably public and could not be the sub2ect of a "alid registration for pri"ate ownership !rial court held the land to be of public use $ourt of Appeals re"ersed trial court decision, it ruled that there has not been presented a formal order or decision of the said $ourt of @and #egistration so declaring the land public because of that failure, it can with plausibility be said that after all, there was no 2udicial declaration to that effect, the title of applicants was in a state of suspended animation only I$$!E4 ,F. not holding the pri"ate respondentsD rights by "irtue of their possessory information title was lost by prescription HEL&4 N# It partakes of the character of a co--odatu- It cannot therefore militate against the title of Eomingo Baloy and his successors-in-interest A%%I#&HE $!A decision RATI#4 /nder the pro"isions of Act 0(1, pri"ate land could be deemed to ha"e become public land only by "irtue of a 2udicial declaration after due notice and hearing It runs contrary therefore to the contention of petitioners that failure to present claims set forth under :ec ( of Act 0(1 made the land ipso facto public without any deed of 2udicial pronouncement !he finding of respondent court that during the interim of *1 years from .o"ember (0, 1)9( to Eecember 11, 1)*) 5when the / : .a"y possessed the area6 the possessory rights of Baloy or heirs were merely suspended and not lost by prescription, is supported by a communication or letter .o 1198-03, dated June (3, 1)03, which contains an official statement of the position of the #epublic of the ?hilippines with regard to the status of the land in >uestion :aid letter recogni<es the fact that Eomingo Baloy and-or his heirs ha"e been in continuous possession of said land since 18)3 as attested by an GInformacion ?ossessoriaG !itle, which was granted by the :panish Ao"ernment +ence, the disputed property is pri"ate land and this possession was interrupted only by the occupation of the land by the / : .a"y in 1)3* for recreational purposes !he / : .a"y e"entually abandoned the premises !he heirs of the late Eomingo ? Baloy, are now in actual possession, and this has been so since the abandonment by the / : .a"y A new recreation area is now being used by the / : .a"y personnel and this place is remote from the land in >uestion $learly, the occupancy of the / : .a"y was not in the concept of owner It partakes of the character of a commodatum FneDs ownership of a thing may be lost by prescription by reason of anotherDs possession if such possession be under claim of ownership, not where the possession is only intended to be transient, as in the case of the / : .a"yDs occupation of the land concerned, in which case the owner is not di"ested of his title, although it cannot be exercised in the meantime

.!INT#$ /. BE"0 B, "arlosTheFierce FA"T$:

Beck was a tenant occupying the house of =uintos in &+ Eel ?ilar :t January 13, 1)30 - !he original contract of lease between them was .F;A!HE when =uintos gratuitously granted Beck the use of his furniture sub2ect to the condition that he would return them upon plaintiff's 5=uintos6 demand :eptember 13, 1)30 - =uintos, howe"er, :F@E !+H +F/:H being occupied by Beck Beck was gi"en 09 EAI: to "acate the house =uintos also demanded that the furniture be returned to him at once Beck informed =uintos that he may get the furniture at his house where they are found .o"ember * , 1)30 J Beck ,#F!H to =uintos through another person that the furniture can be ta1e+ 5.F!H4 the phrase used in the case is Kcall forL which I 2ust interpreted by context clues as Kto takeL 6 in the ground floor of the house .o"ember 1, 1)30 J Beck wrote a letter again to =uintos saying that he could not gi"e up the three gas heaters a+d 2our electric la-ps because he would use them u+til Nove-ber 34( 3567 J the end of the 09-day grace period to "acate the house, when the contract of lease would ha"e expired =uintos, despite ha"ing been informed that he may take the furniture in the house, #H%/:HE to get them because Beck declined to make the EH@I;H#I F% A@@ F% !+H& .o"ember 1*, 1)30 J Beck EH?F:I!HE all the furniture in a warehouse in the custody of a sheriff $%I &anila ordered that plaintiff =uintos should pay the expenses occasioned by the deposit of the furniture in the warehouse =uintos appealed the ruling I$$!E: ,hether Beck complied with his obligation to return the furniture upon =uintos' demand ,hether =uintos should bear the cost of depositing the furniture in the warehouse HEL&: Beck did not comply with his obligation to deli"er the furniture Beck should pay the costs of deposit RATI#: 1 !he contract entered into is one of a $F&&FEA!/& where plaintiff gratuitously granted the use of the furniture to the defendant, reser"ing the ownership thereof and where the defendant bound himself to #H!/#. the furniture to the plaintiff upon the latter's demand ( Beck should return A@@ !+H %/#.I!/#H --- not 2ust some or not without the gas heaters and electric lamps --- A! !+H #H:IEH.$H of =uintos Beck EIE .F! $F&?@I with this obligation7 +e merely placed them at the disposal of the plaintiff =uintos, retaining for his benefit the 3 gas heaters and 3 electric lamps Beck should bear the cost occasioned by the deposit of the furniture in the warehouse under the custody of the sheriff

:imply put, defendant has +o right to place the 2ur+iture i+ a deposit and plaintiff has +o dut, to accept incomplete furniture * ?laintiff =uintos, howe"er, is .F! H.!I!@HE to the payment of the "alue of the furniture .F! AA#HHE /?F. by both parties in case defendant fails to deli"er them $ourt is to determine their "alue through e"idence the parties may desire to present

Eispositi"e4 1 Beck is ordered to return and deli"er to =uintos all the furniture in the residence or house of the latter ( Beck should also bear the cost of the deposit of the furniture in the warehouse

G'R' 2o' 8-)15# February 1#, 191# 9e$os &antos v ,arra Facts: The P$aintiff Fe$i; de$os &antos fi$ed this suit a!ainst -!ustina ,arra' ,arra 4as the administrati; of the estate of ,imenea' P$aintiff a$$e!ed that he o4ned 1# 1st c$ass carabaos 4hich he $ent to his father-in$a4 ,imenea to be used in the anima$-po4er mi$$ 4ithout compensation' This 4as done on the condition of their return after the 4or at the $atter5s mi$$ is terminated' <hen de$os &antos demanded the return of the anima$s ,imenea refused, hence this suit' I##$e: W%& the 'ontra't# i# one o( a 'ommodat$m Ru$in!: =>&' The carabaos 4ere !iven on commodatum as these 4ere de$ivered to be used by defendant' ?pon fai$ure of defendant to return the catt$e upon demand, he is under the ob$i!ation to indemnify the p$aintiff by payin! him their va$ue' &ince the + carabaos 4ere not the property of the deceased or of any of his descendants, it is the duty of the administratri; of the estate to either return them or indemnify the o4ner thereof of their va$ue'

)AN8AN# /. ERE8 August ), (991 ?anganiban, J The Fo9 1 ?etitioner, Hmilia &an<ano, owns the sub2ect property 5a lot and a house6 :he is the sister of .ie"es &an<ano, the predecessor-in-interest of the respondent ( Hmilia alleges that .ie"es BF##F,HE 5commodatum6 the property for the latter to use as collateral to a pro2ected loan Hmilia agreed

3 3 * 0 1

!wo deeds of con"eyances for the sale of the lot and the house were executed for a consideration of ?1 99 plus F!+H# ;A@/AB@H: .ie"es, with her husband, succeeded in obtaining the loan from #ural Bank of Infanta, and executed a #eal Hstate &ortgage of the property as collateral .a-tegui si .ie"es in 1)1) +er husband, &iguel and children, as heirs, allegedly refused to return the property e"en after payment of the loan Hmilia sought for the annulment of the deeds of sale and execution of a deed of recon"eyance of the property M damages eklat As an affirmati"e defense, &iguel argued that the original agreement was to resell the property to Hmilia after payment of the loan but since the property was their only memory of Hmilia, they politely refused to sell the same +uhuhu

I$$!E: ,as the agreement between the parties a $F&&FEA!/& F# an AB:F@/!H :A@HN Held: $": AB$#L!TE $ALE. !he Eeed of :ale executed was "alid ?ere< is the rightful owner of the sub2ect property $A4 AB:F@/!H :A@H #!$4 $F&&FEA!/& @abanan ito ng ebidensya :$ re"iewed the factual findings because of the conflicting findings of the lower tribunals Ratio: ?etitioner presented no con"incing proof of her F,.H#:+I? of the sub2ect property #espondents presented the deeds of sale were each was in consideration of ?1 99 plus F!+H# ;A@/AB@H: and ha"ing been notari<ed, must be accorded with the presumption to ha"e been duly executed Also, after the sale, !ax Eeclaration .o )*8) which co"ered the property was issued in fa"or of .IH;H: Fi+di+gs o2 the "A :hich the "ourt agreed :ith: 1 If H&I@IA maintained the ownership of the property, she would ha"e not agreed to reac>uire one-half of the property for a consideration of 19k ( If indeed the agreement was to merely use the property as collateral, it was not explained why physical possession had to be transferred to .IH;H: and family .on-payment of .IH;H: of real estate taxes does not pre2udice them ?ayment of realty tax is not conclusi"e e"idence of ownership It becomes strong e"idence of ownership when accompanied by A$!/A@ ?F::H::IF. Also, H&I@IA only began paying the taxes due when the case was instituted wais si day

.IH;H: obtained a $ert of !ax Eeclaration as the owner and possessor of the property !he issuance of the tax declaration number indicates that the transfer of property was based on the Eeed of Absolute :ale !here is a presumption that a written contract was for a "aluable consideration !he party alleging the lack of consideration has the burden of proof Assuming that the consideration is suspiciously insufficient, it will not necessarily in"alidate the sale Inade>uacy of monetary consideration does not render a con"eyance null since the "endor's liberality may be a sufficient cause for a "alid contract

#ther poi+ts b, the "ourt: 3. E-ilia avers that the propert, :as -erel, b, virtue o2 tolera+ce ; this allegatio+ has +ot bee+ substa+tiated he+ce ca++ot sta+d. 2. I+ order to prevail over a :ritte+ agree-e+t o2 the parties a+d the presu-ptio+ o2 regularit, i+ the e9ecutio+ thereo2( there -ust be clear a+d co+vi+ci+g evide+ce that is -ore tha+ -erel, prepo+dera+t but E)ILIA 2ailed to co-e up :ith eve+ a prepo+dera+ce o2 evide+ce. 6. <urisprude+ce o+ the sub=ect -atter( :he+ applied thereto( poi+ts to the e9iste+ce o2 a sale( +ot a commodatum over the sub=ect house a+d lot. $laims of H&I@IA4 1 :he inherited the sub2ect house from her parents7 her siblings wai"ed claim o"er the same ( 3 3 !he property was mortgaged to secure a loan of 39k in the name of .ie"es /pon full payment of the loan, the documents pertaining to the house were returned to her !hree of the respondents signed a document transferring one half of the property to her for 9k did not materiali<e because of the refusal of the other respondents to sign H&I@IA hacked the stairs of the house yet no case was filed against her

%or the $ourt, these claims e"en buttress the claim of the &iguel ?ere<4 Indeed, how could one of them ha"e obtained a mortgage o"er the property, without ha"ing dominion o"er itN ,hy would they execute a recon"eyance of one half of it in fa"or of petitionerN ,hy would the latter ha"e to pay ?19,999 for that portion if, as she claims, she owns the wholeN N#TE: There :as +o discussio+ or a+,thi+g said about a "#))#&AT!) a+d $ALE. *u+ la+g.

"redit > 7 roducers Ba+1 o2 the Doctrine:

hilippi+es vs "A %2??6'

Facts: ;i"es 5will be the creditor in this case6 was asked by his friend :anche< to help the latter's friend, Eoronilla 5will be the debtor in this case6 in incorporating Eoronilla's business K:trelaL !his KhelpL basically in"ol"ed ;i"es depositing a certain amount of money in :trela's bank account for purposes of incorporation 5rationale4 Eoronilla had to show that he had sufficient funds for incorporation6 !his amount shall later be returned to ;i"es #elying on the assurances and representations of :anche< and Eoronilla, ;i"es issued a check of ?(99,99 in fa"or of :trela and deposited the same into :trela's newly-opened bank account 5the passbook was gi"en to the wife of ;i"es and the passbook had an instruction that no withdrawals-deposits will be allowed unless the passbook is presented6 @ater on, ;i"es learned that :trela was no longer holding office in the address pre"iously gi"en to him +e later found out that the funds had already been withdrawn lea"ing only a balance of ?)9,999 !he ;i"es spouses tried to withdraw the amount, but it was unable to since the balance had to answer for certain postdated checks issued by Eoronilla Eoronilla made "arious tenders of check in fa"or of ;i"es in order to pay his debt All of which were dishonored +ence, ;i"es filed an action for reco"ery of sum against Eoronilla, :anche<, Eumagpi and ?roducer's Bank !$ O $A4 ruled in fa"or of ;i"es Issue@s: 516 ,F. the transaction is a commodatum or a mutuum $F&&FEA!/& 5(6 ,F. the fact that there is an additional ? 1(,999 5allegedly representing interest6 in the amount to be returned to ;i"es con"erts the transaction from commodatum to mutuum .F 536 ,F. ?roducer's Bank is solidarily liable to ;i"es, considering that it was not pri"y to the transaction between ;i"es and Eoronilla IH: Held@Ratio: 516 !he transaction is a commodatum $$ 1)33 5the pro"ision distinguishing between the two kinds of loans6 seem to imply that if the sub2ect of the contract is a consummable thing, such as money, the contract would be a mutuum +owe"er, there are instances when a commodatum may ha"e for its ob2ect a consummable thing :uch can be found in $$ 1)30 which states that Kconsummable goods may be the sub2ect of commodatum if the purpose of the contract

is not the consumption of the ob2ect, as when it is merely for exhibitionL In this case, the intention of the parties was merely for exhibition ;i"es agreed to deposit his money in :trela's account specifically for purpose of making it appear that :treal had sufficient capitali<ation for incorporation, with the promise that the amount should be returned withing 39 days 5(6 $$ 1)3* states that Kthe bailee in commodatum ac>uires the use of the thing loaned but not its fruitsL In this case, the additional ? 1(,999 corresponds to the fruits of the lending of the ? (99,999 536 Atien<a, the Branch &anager of ?roducer's Bank, allowed the withdrawals on the account of :trela despite the rule written in the passbook that neither a deposit, nor a withdrawal will be permitted except upon the production of the passbook 5recall in this case that the passbook was in the possession of the wife of ;i"es all along6 +ence, this only pro"es to show that Atien<a allowed the withdrawals because he was party to Eoronilla's scheme of defrauding ;i"es By "irtue of $$ (189, ?.B, as employer, is held primarily and solidarily liable for damages caused by their employees acting within the scope of their assigned tasks Atien<a's acts, in helpong Eoronilla, a customer of the bank, were ob"iously done in furtherance of the business of the bank, e"en though in the process, Atien<a "iolated some rules Eigested by4 $ari &angalindan 5A(91*6

$aura I-port A E9port "o-pa+,( I+c. v. &evelop-e+t Ba+1 o2 the hilippi+es %Na-i+git' 2B April 2?36 <. )a1ali+tal Facts: :aura Import O Hxport $ompany, Inc 5:aura6 applied to the #ehabilitation %inance $orporation 5#%$6, now EB? for an industrial loan of ?*99,999 99 !he loan will be used to de"elop the manufacture of 2ute sacks in &indanao Ff the *99,999 loan (*9,999 will be for the construction of a factory building, (39,)99 for the payment of the balance of the purchase price of the 2ute mill factory and e>uipment, and ),199 for additional capital !he pro2ect was described by :aura in their brochure as the first attempt in the country to use 199P locally grown materials notably kenaf Fn the basis of which the original appro"al was gi"en by #%$ Jan 1 1)*3 J #esolution Q 13* by #%$ Board appro"ing the loan sub2ect to the gi"en terms and conditions 5how the loan will be implemented, execution of securities, and the manner of release of funds6

:aura made a re>uest to modify the terms because $hina Hngineers was willing to assume liability only to the extent of its stock subscription with :aura %eb 3, 1)*3 J #esolution Q 130 pro"iding for the reexamination of all the aspects of the loan with special reference to the ad"isability of finance the pro2ect based present conditions obtaining in the operation of 2ute mills 5lack of local raw materials6 o $hina Hngineers agreed again to act as co-signer of the loan !hus, the loan documents were executed June 19, 1)*3 - #esolution Q130 was appro"ed reducing the loan from *99,999 to 399,999 o $hina Hngineers, @td withdraws from the contract but was willing to go back if the loan will be raised to *99,999 Eec 11, 1)*3 J #esolution Q)983 restoring the loan back to *99,996 Additional condition that the Eept of Agri and .atural #esources will certify the a"ailability of raw materials in the immediate "icinity 5local raw materials were not enough at that time6 :aura asked #$% to gi"e assurance that will be able to bring in sufficient 2ute materials necessary for the operation of the factory !his contra"enes the basis of #$% in appro"ing the loan :aura no longer pursued the loan Asked #$% to cancel the mortgage ) years after the mortgage was cancelled, :aura instated a suit for damages arising from #$%'s breach of in performing its obligation o

Issue: ,-. #$% committed breach of contract Held: .o !he obligations of the two parties were extinguished by mutual desistance !here was a perfected contract between the two parties ,here an application for a loan of money was appro"ed by resolution of the #$% Board and the corresponding mortgage was executed and registered, there arises a perfected consensual contract of loan +owe"er, after the appro"al of :aura's loan, :aura, instead of insisting for its release, asked the mortgage gi"en as security be canceled to which #$% complied !he action taken by the parties was in the nature of mutual desistance which is a mode of extinguishment of obligations !herefore, no breach was committed and :aura is not entitled to damages

B?I In"estment $orporation " $A 1* %ebruary (99( =uisumbing, J FA"T$

%rank #oa obtained a loan from Ayala In"estment and Ee"elopment $orporation 5AIE$6, for the construction of his house :aid house and lot were mortgaged to AIE$ to secure the loan #oa sold the properties to A@: and @iton2ua 5respondents6, the latter paid in cash and assumed the balance of #oa's indebtedness with AIE$ AIE$ was not willing to extend the old interest to pri"ate respondents and proposed to grant of new loan of ?*99,999 with higher interest to be applied to #oa's debt, secured by the same property ?ri"ate respondents executed a mortgage deed on &arch 31, 1)81 with the pro"ision that payment shall commence on &ay 1, 1)81 +owe"er, the full loan was released only on :eptember 13, 1)8( B?II$, AIE$'s predecessor, filed for foreclosure proceedings on the ground that pri"ate respondents failed to pay the mortgage indebtedness from &ay 1, 1)81 to June 39, 1)83 ?ri"ate respondents maintained that they should not be made to pay amorti<ation before the actual release of the ?*99,999 loan !he suit was dismissed and affirmed by the $A I$$!E ,F. a contract of loan is a consensual contract HEL& .o A loa+ co+tract is +ot a co+se+sual co+tract but a real co+tract. It is per2ected o+l, upo+ deliver, o2 the ob=ect o2 the co+tract. A contract of loan in"ol"es a reciprocal obligation, wherein the obligation or promise of each party is the consideration for that of the other7 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 is a proper manner with what is incumbent upon him
In this case, even though the loan contract was signed on March 31, 1981, it was perfected only on eptem!er 13, 198", the date of the second release of the loan# $hus, o!ligation to pay commenced only a month after the perfection of the contract despite the e%press agreement that payment shall commence on May 1, 1981#

"ELE$TINA T. NAG!IAT( petitioner, "s "#!RT #F A EAL$ a+d A!R#RA.!EAC#( respondents G.R. No. 33D6B4 #ctober 6( 2??6 Facts: =ueaRo applied with .aguiat for a loan in the amount of ?(99,999 which .aguiat granted .aguiat indorsed to =ueaRo Associated Bank $heck for the amount ?)*,999, which was earlier issued to .aguiat by the $orporate #esources %inancing $orporation :he also issued her own %ilmanbank $heck, to the order of =ueaRo, and for the amount of ?)*,999 !he proceeds of these checks constitute the loan granted by .aguiat to =ueaRo !o secure the loan, =ueaRo executed a Eeed of #eal Hstate &ortgage in fa"or of .aguiat, and surrendered to the latter the owner's duplicates of the titles co"ering the mortgaged properties =ueaRo issued to .aguiat a promissory note for the amount

of ?(99,999, with interest at 1(P per annum =ueaRo also issued a :ecurity Bank and !rust $ompany check, postdated for the amount of ?(99,999 and payable to the order of .aguiat /pon presentment on its maturity date, the :ecurity Bank check was dishonored for insufficiency of funds =ueaRo recei"ed a letter from .aguiat's lawyer, demanding settlement of the loan =ueaRo and one #uby #uebenfeldt 5#uebenfeldt6 met with .aguiat At the meeting, =ueaRo told .aguiat that she did not recei"e the proceeds of the loan, adding that the checks were retained by #uebenfeldt, who purportedly was .aguiat's agent .aguiat applied for the extra2udicial foreclosure of the mortgage Before the scheduled sale, =ueaRo filed annulment of the mortgage deed

Issues: 516 ,hether or not petitioner can foreclose the mortgage properties 5(6 Agency by estoppel between petitioner and #uebenfeldt Ruli+gs: 516 Absolutely no e"idence was submitted by .aguiat that the checks she issued or endorsed were actually encashed or deposited !he mere issuance of the checks did not result in the perfection of the contract of loan %or the $i"il $ode pro"ides that the deli"ery of bills of exchange and mercantile documents such as checks shall produce the effect of payment only when they ha"e been cashed It is only after the checks ha"e produced the effect of payment that the contract of loan may be deemed perfected A loan contract is a real contract, not consensual, and, as such, is perfected only upon the deli"ery of the ob2ect of the contract In this case, the ob2ects of the contract are the loan proceeds which =ueaRo would en2oy only upon the encashment of the checks signed or indorsed by .aguiat :ince .aguiat presented no such proof, it follows that the checks were not encashed or credited to =ueaRo's account .o compelling reason to disturb the finding of the courts a >uo that the lender did not remit and the borrower did not recei"e the proceeds of the loan !hat being the case, it follows that the mortgage which is supposed to secure the loan is null and "oid 5(6 !he existence of an agency relationship between .aguiat and #uebenfeldt is supported by ample e"idence .aguiat instructed #uebenfeldt to withhold from =ueaRo the checks she issued or indorsed to =ueaRo, pending deli"ery by the latter of additional collateral It was also #uebenfeldt who accompanied =ueaRo in her meeting with .aguiat

:ource4 http4--thestraydecision wordpress com-(919-1(-91-cebu-international-"s-court-ofappeals$HB/ I.!H#.A!IF.A@ "s $F/#! F% A??HA@: A # .o 1(3931 Fctober 1(, 1))) %acts4 $ebu International %inance $orporation 5$I%$6, a >uasi-banking institution, is engaged in money market operations Fn April (*, 1))1, ;icente Alegre, in"ested with $I%$, ?*99,999 99 pesos, in cash ?etitioner issued a promissory note to mature on &ay (1, 1))1 for ?*10,(38 01 placement plus interest at twenty and a half 5(9 *P6 percent for thirty-two 53(6 days Fn &ay (1, 1))1, $I%$ issued B?I $heck .o *133)1 for ?*13,3)9 )3 in fa"or of Alegre as proceeds of his matured in"estment plus interest !he $+H$S was drawn from petitioner's current account number maintained with the B?I &akati $ity Alegre's wife deposited the $+H$S with #$B$ ?uerto ?rincesa, ?alawan but it was dishonoured with the annotation, that the K$heck 5is6 :ub2ect of an In"estigation L Alegre notified $I%$ of the dishonored $+H$S and demanded, on se"eral occasions, that he be paid in cash Alegre, through counsel, made a formal demand for the payment of his money market placement In turn, $I%$ promised to replace the $+H$S but re>uired an impossible condition that the original must first be surrendered +ence, this case for reco"ery of sum of money #!$ ruled in fa"our of Alegre $A affirmed

Issue4 1 ,as there "alid payment to AlegreN ( ,as there a "alid discharge of the checkN +eld4 1 .o In the case at bar, the money market transaction between the petitioner and the pri"ate respondent is in the nature of a loan !he pri"ate respondent accepted the $+H$S, instead of re>uiring payment in money Iet, when he presented it to #$B$ for encashment, as early as June 11, 1))1, the same was dishonored by non-acceptance, with B?I's annotation4 K$heck 5is6 sub2ect of an in"estigation L !hese facts were testified to by B?I's manager /nder these circumstances, and after the notice of dishonor, the holder has an immediate right of recourse against the drawer, and conse>uently could immediately file an action for the reco"ery of the "alue of the check In a loan transaction, the obligation to pay a sum certain in money may be paid in money, which is the legal tender or, by the use of a check A check is not a legal tender, and therefore cannot constitute "alid tender of payment :ince a negotiable instrument is only a substitute for money and not money, the deli"ery of such an instrument does not, by itself, operate as payment 5citation omitted6 A check, whether a manager's check or ordinary check, is not legal tender, and an offer of a check in payment of a debt is not a "alid tender of payment and may be refused receipt by the obligee or creditor &ere deli"ery of checks does not discharge the obligation under a 2udgment !he obligation is not extinguished and remains suspended until the payment by commercial document is actually reali<ed 5Art 1(3), $i"il $ode, par 3 6 ( .o ,hen the bank deducted the amount of the $+H$S from $I%$'s current account, this did not ipso facto operate as a discharge or payment of the instrument Although the "alue of the $+H$S was deducted from the funds of $I%$, it was not deli"ered to the payee, ;icente Alegre Instead, B?I offset the amount against the losses it incurred from forgeries of $I%$ checks, allegedly committed by Alegre !he confiscation of the "alue of the check was agreed upon by $I%$ and B?I !his compromise agreement between $I%$ and B?I cannot bind Alegre who was a non-party thereto +is money could not be the sub2ect of an agreement between $I%$ and B?I Although Alegre's money was in custody of the bank, the bank's possession of it was not in the concept of an owner B?I cannot "alidly appropriate the money as its own

Severino Tolentino and Potenciana Manio v. Benito Gonzalez August 12, 1927; Johnson, J.

Facts

Plaintiff (Tolentino) purchased a parcel of land from Luzon Rice Mills promising to pay in 3 installments

P2,000 due on May 2, 1921; P8,000 due on May 31, 1921; balance of P15,000 and 12% interest due on or about Nov. 31, 1922

One condition was that upon failure to pay the balance of the said purchase or any installment on the date agreed upon, the property would revert to the original owner

On Nov. 7, 1922, the vendor wrote to Plaintiff Manio that failure to pay balance would make vendor file actions for recovery with damages

Plaintiffs feeling that they would not be able to pay the balance of P16, 965.09 due, decided to borrow P17,500 from Defendant Gonzalez under the condition that plaintiffs execute and deliver a pacto de retro of said property.

Issues/Holding/Ratio 1. WON the contract between plaintiff and respondent is a pacto de retro or a mortgage? It is clearly a pacto de retro and not a mortgage.

The Court finds that it is a contract of pacto de retro, which is a contract of absolute sale with right to repurchase; the vendor became the tenant of the purchaser

Due to the severity of a contract of pacto de retro, generally, the court would declare the same to be a mortgage and not a sale

However, there must be something in the language or in the conduct of the parties which shows clearly and beyond doubt that they intended it to be a mortgage and not a pacto de retro

The terms of the contract use sale and there is no language to the contrary. Examples of contracts deemed to be mortgages:

Padilla v. Linsangan: the word was pledged instead of sold Manlagnit v. Dy Puico: sale and transfer with right to repurchase was in the contract, but the parties were referred to as debtor, purchaser, and the contract a mortgage

Rodriguez v. Pamintuan and De Jesus: authorizing him to borrow money in such amount and upon such terms and conditions as he might deem proper, and to secure payment of the loan by a mortgage.

Villa v. Santiago: the vendor remained in possession and invested the money in making improvements

Cuyugan v. Santos: purchaser accepted partial payments; such is incompatible with the idea of irrevocability of the title of ownership

CJ Arellano: consideration must chiefly be paid to those acts execute by said parties which are contemporary with and subsequent to the contract; they must not be held to include

things and cases different from those with regard to which the interested parties agreed to contract

There is not a word, a phrase, a sentence or a paragraph in the entire record which proves this is a mortgage and not a sale with right to repurchase

Lichauco v. Berenguer: Vendor merely continued in the possession of the lands, not as owner but as lessee. Right of ownership is not implied by the lessees payment of taxes.

2. May a tenant charge his landlord with a violation of the Usury Law upon the ground of the amount of rent he pays? No, because rents are different from interest, and so the Usury Law does not apply

This is a case of first impression While collection of a rate of interest higher than law is illegal, it only applies on loans A loan signifies the giving of a sum of money, goods or credits to another, with a promise to repay, but not a promise to return the same thing. It nevermeansthe returnof the same thing, but only an equivalent.

A contract of rent is on where the parties delivers to the other some nonconsumible thing, in order that the latter may use it during a certain period and return it to the former. It is also known as commodatum

Loan The thing loaned becomes property of the obligor The relation is obligor and obligee

Rent Owner does not lose ownership; he only loses control

!he relation is landlord and tenant

It may be defined as the compensation in money, provisions, chattels, or labor, received by the owner of the soil from the occupant

Delivery of a consumable thing Value of money, goods, or credit is easily ascertained

Delivery of a nonconsumable thing Value of rent is dependenton a thousanddifferent conditions(i.e. farm land value depends on location, prices of commodities, proximity to the market, etc.)

Justice Malcolm, Dissenting Opinion

The contract was executed as a mere clever device to cover up the payment of usurious interest. The transaction should be considered as in the nature of an equitable mortgage.

)a*$yo +# CA, -$errera

,une (, 1##) ,' 7arpio FACTS: Pa@uyo A >ddie Guevarra e;ecuted a Kasunduan or a!reement 4hereby the former a$$o4ed Guevarra to $ive in the house for free provided Guevarra 4ou$d maintain the c$ean$iness and order$iness of the house' Guevarra promised that he 4ou$d vo$untari$y vacate the premises on Pa@uyo5s demand' 2ine years $ater, Pa@uyo informed Guevarra of his need of the house and demanded that Guevarra vacate the house' Guevarra refused' -n e@ectment case 4as fi$ed in the %T7 of B7 4hich Pa@uyo 4on' -ccordin! to the %T7, Pa@uyo is the o4ner of the house, and he a$$o4ed Guevarra to use the house on$y by to$erance' Guevarra5s refusa$ to vacate the house on Pa@uyo5s demand made Guevarra5s continued possession of the house i$$e!a$' RT7 affirmed in toto' The RT7 uphe$d the Kasunduan, 4hich estab$ished the $and$ord and tenant re$ationship bet4een Pa@uyo and Guevarra' The terms of the Kasunduan bound Guevarra to return possession of the house on demand' The RT7 dec$ared that in an e@ectment case, the on$y issue for reso$ution is materia$ or physica$ possession, not o4nership' 7- reversed the RT7' The 7ourt of -ppea$s reversed the %T7 and RT7 ru$in!s, 4hich he$d that the Kasunduan bet4een Pa@uyo and Guevarra created a $e!a$ tie a in to that of a $and$ord and tenant re$ationship' The 7ourt of -ppea$s ru$ed that the Kasunduan is not a $ease contract but a commodatum because the a!reement is not for a price certain' I##$e: <C2 the Kasunduan is a commodatum' HEL : 2o' The Kasunduan is not commodatum' Pa@uyo is entit$ed to physica$ possession of the disputed property' Guevarra does not dispute Pa@uyo5s prior possession of the $ot and o4nership of the house bui$t on it' The facts ma e out a case for un$a4fu$ detainer' ?n$a4fu$ detainer invo$ves the 4ithho$din! by a person from another of the possession of rea$ property to 4hich the $atter is entit$ed after the e;piration or termination of the former5s ri!ht to ho$d possession under a contract, express or implied' The Kasunduan is not one of commodatum' Features of Commodatum 1'0 .ne of the parties de$ivers to another somethin! not consumab$e so that the $atter may use the same for a certain time and return it' 1'0 It is essentia$$y !ratuitous'

3.) The use of the thin! be$on!in! to another is for a certain period' The bai$or cannot demand the
return of the thin! $oaned unti$ after e;piration of the period stipu$ated, or after accomp$ishment of the use for 4hich the commodatum is constituted' If the bai$or shou$d have ur!ent need of the thin!, he may demand its return for temporary use' If the use of the thin! is mere$y to$erated by the bai$or, he can demand the return of the thin! at 4i$$, in 4hich case the contractua$ re$ation is ca$$ed a precarium' ?nder the 7ivi$ 7ode, precarium is a ind of commodatum' )'0 There is an ob$i!ation to return' In this case, the Kasunduan is 2.T !ratuitous' -$thou!h there 4as no rent, there 4as an ob$i!ation imposed to maintain the property in !ood condition' The imposition of this ob$i!ation ma es the Kasunduan a contract different from a commodatum. >ven assumin! that the re$ationship bet4een Pa@uyo and Guevarra is one of commodatum, Guevarra as bai$ee 4ou$d sti$$ have the duty to turn over possession of the property to Pa@uyo, the bai$or' The ob$i!ation to de$iver or to return the thin! received attaches to contracts for safe eepin!, or contracts of commission, administration and commodatum' The Kasunduan is not void for purposes of determinin! 4ho bet4een Pa@uyo and Guevarra has a ri!ht to physica$ possession of the contested property' The Kasunduan is the undeniab$e evidence of Guevarra5s reco!nition of Pa@uyo5s better ri!ht of physica$ possession' Guevarra is c$ear$y a possessor in bad faith' The absence of a contract 4ou$d not yie$d a different resu$t, as there 4ou$d sti$$ be an imp$ied promise to vacate'

ANTALE#N v. A-erica+ E9press I+ter+atio+al( I+c. "arpio>)orales( 2?3? FA"T$: ?olo ?antaleon and family were on a guided Huropean trip on 1))1 ,hile in Amsterdam, ?antaelon fancied some 2ewelry and tried to buy some diamond pieces worth B13,8(0 "ia credit card +e paid at )41*, and the transaction was referred to A&HT at )4(9 !he transaction had not been appro"ed until 19431A&, which caused irritation within their tour groupm and disallowed them to ha"e a guided tour of Amsterdam, because they had to be in $alais, Belgium at 3?& to catch the ferry to @ondon A&HT countered that it had to go o"er ?antaleon's transaction history and bank references !he delays happened twice subse>uently J for purchases of golf e>uipment and children's shoes J and upon ?antaleon's return to &anila, he sent a letter to A&HT demanding an apology for the humiliation and incon"enience he and his family experienced due to the delays in obtaining appro"al for his purchases A&HT said that it had to go o"er ?'s established charge purchase pattern, because the transaction for diamonds de"iated from it ?antaelon filed an action for damages with the &akati #!$ RT": A&HT guilty of delay7 ?*99k &E, ?399k HE, ?199k A%, ?8*,(33 91 @itHx "AL #!$ decision re"ersed due to ff grounds4 1 Although delay was in nature of mora accipiendi, delay was not attended by bad faith, malice, or gross negligence ( A&HT exercised diligent efforts to effect the appro"al of ?'s purchases 3 ?urchase for diamonds was a de"iation from the established spending pattern 3 .o proof that A&HT breached in contract to make it liable for damages :" %2??5 decisio+': 1 A&HT guilty of mora sol"endi 5debtor's default6 ( A&HT had the obligation, as credit pro"ider, to act on ?antaleon's purchase re>uests with timely dispatch

Hduardo Jaurigue 5A&HT's credit authori<er64 Appro"al time for credit card charges from 3-3 seconds under regular circumstances7 ?antaleon's case took 18 minutes because Jaurigue had to go o"er ?antaleon's past credit history, payment record, and credit and bank references before appro"al of purchase A)EEFs )otio+ 2or Reco+: 1 Eelay was because transaction was not normal7 while ?antaleon's pre"ious purchases amassed more than the price of the diamonds, such total was ac>uired during a 19year span ( ;olume of transaction merited the re"iew of ?antaleon's credit history and bank references 3 A&HT had to ensure ?antaleon's protection and its own protection from the risk that ? might not be able to pay for his purchases on credit 3 U such exercise was keeping with the HT!#AF#EI.A#I EHA#HH of EI@IAH.$H re>uired of banks in handling its transactions * ? could ha"e pre"ented his humiliation and embarrassment had he cancelled the sale when he noticed the unusual delay I$$!E: ,hether A&HT's delay in appro"al of the purchases was 2ustifiable HEL&: IH:, A&HT was in good faith in delaying appro"al of ?antaleon's purchases because 5a6 Amex had neither a contractual nor legal obligation to act upon ?antaleon's purchases within a specific period of time7 and 5b6 A&HT has a right to re"iew a cardholder's credit card history 1 !he use of a credit card is a mere offer to enter into loan agreements !he loan agreement only begins to exist upon the meeting of the offer and the acceptance of the parties in"ol"ed ,hen cardholders use their credit cards to pay for their purchases, they merely offer to enter into loan agreements with the credit card company Fnly upon appro"al of the latter will loan contracts be binding ( $onsent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract7 the offer must be certain and the acceptance absolute7 a >ualified acceptance constitutes a counter offer 5.$$ 131)6 The card -e-bership agree-e+t itsel2 %paragraph 3?' clearl, states that A)EE reserves the right to de+, authoriGatio+ 2or a+, reHuested charge. 3 A&HT is not guilty of culpable delay .$$ 110) pro"ides that K!hose obliged to deli"er or to do something incur in delay from the time the obligee 2udicially or extra2udicially demand from them the fulfilment of their obligationL !he three re>uisites for default are 516 obligation is demandable and li>uidated7 5(6 debtor delays in performance7 and 536 the creditor 2udicially or extra2udicially re>uires the debtor's performance. The 3st reHuisite 2or de2ault %a de-a+dable a+d liHuidated obligatio+' is abse+t because A)EE is +ot obligated to approve a+taleo+Fs purchase reHuest( a+d that there :as N# &E)AN& to spea1 o2. Eemand 5Kthe assertion of a legal right7 asking an authority, claiming or challenging as due6 presupposes the existence of an obligation between the parties 3 !he use of a credit card to pay for a purchase is only an offer to the $$ company to enter a loan agreement with the $$ holder Be2ore the credit card issuer accepts this o22er( +o obligatio+ relati+g to the loa+ agree-e+t e9ists bet:ee+ the-. H"ery time ?antaleon used his $$ to pay for his purchases, what the stores transmitted to A&HT were offers to execute loan contracts, not demands, and thus, A&HT was not in default * A&HT has .F FB@IAA!IF. to act on the offer within a specific period of time Accdg to <aurige( havi+g +o pre>set spe+di+g li-it i+ a "" -ea+s that charges -ade b, are approved based o+ his abilit, to pa,( as de-o+strated b, his past spe+di+g( pa,-e+t patter+s( a+d perso+al resources. $$ companies still ha"e to determine whether it will allow charges on its account based on past credit history H"en if A&HT appro"ed purchases within 3-3 second on a regular day, such fact does not create an obligation on the part of A&HT to act on all cardholder purchase re>uests within a specifically defined period of time

La:@gover+-e+t issua+ces do +ot reHuire credit card co-pa+ies to act upo+ its cardholdersF purchase reHuests :ithi+ a speci2ic period o2 ti-e #A 8383's salient pro"isions only impose the obligation on a $$ company to disclose certain important financial information to $$ applicants, as well as a definition of the acts that constitute access de"ice fraud B:? $ircular .o 3)8 encourages Kfair and sound consumer credit practicesL, which entails that banks and their subsidiary $$ companies must exercise proper diligence by ascertaining that applicants possess good credit standing and the financial capability of fulfilling their credit commitments 1 A)EE acted i+ good 2aith i+ chec1i+g a+taleo+Fs credit histor, be2ore approvi+g the tra+sactio+. A&HT, howe"er, has no unlimited right to put off action on cardholders' purchase re>uests for indefinite periods of time, in con2unction with Arts 1), (9, and (1 of the .$$ ?antaleon was unable to pro"e that A&HT acted with deliberate intent to cause any loss or in2ury, or act in a manner contrary to morals, good customs, or public policy Jaurigue only re"iewed his spending pattern because it was his "ery first single purchase in that big an amount 8 a+taleo+Fs actio+ :as the pro9i-ate cause o2 his i+=ur,I ?antaleon knew that he had to go aboard the bus at )439, yet he did not cancel the sale when gi"en the opportunity to A person who knowingly and "oluntarily exposes himself to danger cannot claim damages for the resulting in2ury 5&ikko 'otel Manila (arden v# )eyes* Nature o2 "redit "ard Tra+sactio+s: In"ol"es a tripartite relationship among issuer bank, cardholders, and merchants participating in the system Issuer bank establishes an account on behalf of the person to whom the card is issued #bligatio+ o2 the Ba+1 to #bligatio+ o2 "ardholder to "ardholder Ba+1 1 !o pay for cardholder's 1 !o be liable to the bank account the amount of for ad"ances and merchandise or ser"ices payments made by the purchased through the bank use of the credit card ( Fbligation to pay the ( !o make the cash loans bank shall not be a"ailable to the affected by any dispute, cardholder claim, demand by the cardholder with respect to any merchandise or ser"ice purchased #bligatio+ o2 the Ba+1 to )ercha+ts 1 !o honor and pay the sales slips presented by the merchant if the merchant performs his undertakings such as checking the list of re"oked cards before accepting the card #bligatio+ o2 )ercha+ts to Ba+1s 1 !o honor the bank's credit cards

$redit cards are not limited to banks7 business establishments may extend credit sales through the use of the credit card facilities of a non-bank credit card company to a"oid the risk of uncollectible accounts from their customers Hstablishments do not deposit in their bank accounts the $$ drafts that arise from the credit sales, but record their recei"ables from the $$ company and periodically send the drafts e"idencing those recei"ables to the latter 5$I) v# +M,-*

H"ery credit card transaction in"ol"es three transactions4 o :ales contract between $$ holder and merchant-business establishment w-c accepted the $$ o @oan agreement between $$ issuer and $$ holder o ?romise to pay between $$ issuer and merchant-business establishment #+ the "" issuer>cardholder relatio+ship !he relationship begins when both parties enter into a contract, which is found in the card membership agreement $onflicting 2urisprudence7 Aray applicable in our 2urisdiction4 o Novac1 v. "ities $ervice #il "o. A "it, $tores "o v. He+derso+: Issuance of a credit card is an offer to extend a line of open account credit It is unilateral and supported by no consideration Fffer may be withdrawn at any time, without prior notice, for any reason, or, indeed, for no reason at all, and its withdrawal breaches no duty and breaches no rights, because there is no duty to continue it7 mere issuance of a credit card did not create a contractual relationship o Gra, v. A)EE4 $ard membership agreement itself is a binding contract