Asia Trust v.

Tuble
Relevant Facts
1.) Carmelo H. Tuble, who served as the vice-president of petitioner
Asiatrust Development Bank availed himself of the car incentive plan and
loan privileges offered by the bank. He was also entitled to the Senior
Managers Deferred Incentive Plan (DIP)
2.) Tuble acquired a Nissan Vanette through the companys car incentive
plan. The arrangement was made to appear as a lease agreement
requiring only the payment of monthly rentals. Accordingly, the lease
would be terminated in case of the employees resignation or retirement
prior to full payment of the price.
3.) As regards the loan privileges, Tuble obtained three separate loans.
a.) First, a real estate loan evidenced by the January 18 1993
Promissory note with maturity date of Jaunary 1, 1999 was secured
by a mortgage over his property covered by transfer certificate.
b.) Second was a consumption loan, evidenced by the January 10,
1994
c.) Third, a salary loan.
4.) Tuble resigned on March 30, 1995. He was subsequently given the
option to either return the vehicle without any further obligation or retian
the unit and pay its remaining book value.
5.) Tuble had the following obligations to the bank after his retirement
a.) The purchase or return of the Nissan
b.) 100,000 as consumption loan
c.) 421,800 as real estate loan
d.) 16,250 as salary loan
6.) The bank owed Tuble his pro-rata share in the DIP which was to be
issued after the bank had given the resigned employees clearance and
25,797 representing his final salary and corresponding 13 th month pay.
7.) Tuble claimed that since he and the bank were debtors and creditors of
each other, the offsetting of loans could legally take place. He then asked
the bank to simply compute his DIP and apply his receivables to his loans.
a.) The bank refused and sent him a demand letter and required
him to return the Nissan Vanette.
8.) On august 14, 1995, Tuble wrote the bank again to follow up his
request to offset the loans. This was not immediately acted upon, and it
was only on October 13, 1995 that the bank finally allowed the offsetting
of his various claims and liabilities. As a result, his liabilities were reduced
to 970 thousand plus the unreturned value of the vehicle.

9.) The bank then filed a complaint for replevin against tuble. The
judgement was favourable for the bank. To collect the liabilities of Tuble, it
also filed a petition for extra-judicial foreclosure of real estate mortgage
over his property. It was based on his real estate loan.
10.) Tuble redeemed the property. With this payment, he was released
from his accountabilities and had his clearance.
a.) The bank then issued the clearance necessary for the release of
his DIP share. Tuble received a managers check in the amount of
166,049 representing his share in the DIP funds.
11.) Tuble paid the redemption price but disputed its costing. He filed a
complaint for recovery of a sum of money and damages before the RTC.
The RTC ruled in favor of Tuble. They held that the value of the car should
not have been included given that it was already returned. The CA
affirmed the RTC.
Issues:
1.) Whether or not the bank is entitled to interest charges on Promissory
Note 0142

Held:
Issue 1
1.) In addition to the 18% annual interest, the bank also claims a 12% per
annum on the consumption loan. Notwithstanding that promissory note
contains no stipulation on interest payments, the bank still claims that
Tuble is liable to pay the legal interest pursuant to article 2209 of the
family code:
a.) Article 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 shall be the payment of the
interest agreed upon and in the absence of stipulation, the legal
interest, which is six per cent per annum.
2.) While article 2209 allows the recovery of interest sans stipulation, this
charge is provided not as a form of monetary interest but as one of
compensatory interest.
a.) Monetary interest refers to the compensation set by the parties
for the use or forbearance of money.
b.) Compensatory interest refers to the penalty or indemnity for
damages imposed by law or courts. This is due only if the obligor is
proven to have defaulted in paying the loan.
3.) A default must exist before the bank can collect the compensatory
legal interest of 12% per annum.

a.) Tuble denies being in default since by way of legal

compensation, he effectively paid his liabilities on time.
4.) The court held that there was no legal compensation. In order for legal
compensation to take effect, article 1279 requires that the debts be
liquidated and demandable.
a. Requisites for legal compensation:
i.) That each one of the obligors be bound physically, and that
he be at the same time a principal creditor of the other.
ii.) That both debts consist in a sum of money, or if the things
due are consumable, they be of the same kind, and also of
the same quality if the latter has been stated.
iii.) That the two debts be due
iv.) That they be liquidated and demandable
v.) That over neither of them there be any retention, or
controversy, commenced by third persons and communicated
n due time to the debtor.

5.) liquidated debts are those who exact amount has already been
determined. In this case, the receivable of tuble, including his DIP share
was not yet determined. It was the banks policy to compute and issue the
computation only after the retired employee had been cleared by the
bank. Thus, Tuble incorrectly invoked legal compensation.