1.CEBU INTERNATIONAL V.

CA
316 SCRA 488

FACTS:
Petitioner is a quasi-banking institution involved in money market
transactions. Alegre invested with petitioner P500,000. Petitioner issued then a
promissory note, which would mature approximately after a month. The note
covered for Alegres placement plus interest. On the maturity of the note, petitioner
issued a check payable to Alegre, covering the whole amount due. It was drawn
from petitioners current account in BPI. When the wife of Alegre tried to
deposit the check, the bank dishonored the check. Petitioner was notified of
this matter and Alegre demanded the immediate payment in cash. In turn,
petitioner promised to replace the check on the impossible premise that the first
issued be returned to them. This prompted Alegre to file a complaint against
petitioner and petitioner in turn, filed a case against BPI for allegedly
unlawfully deducting from its account counterfeit checks. The trial court decided
in favor of Alegre.

ISSUE:
Whether or not the Negotiable Instruments Law is applicable to the money
market transaction held
between petitioner and Alegre?

HELD:
No. A money market has been defined to be a market dealing in standardized
short-term credit instruments where lenders and borrowers dont deal directly
with each other but through a middleman or dealer in the open market. In a money
market transaction, the investor is the lender who loans his money to a
borrower through a middleman or dealer.

In the case at bar, the transaction is in the nature of a loan. Petitioner

accepted the check but when he tried to encash it, it was dishonored. The holder
has an immediate recourse against the drawer, and consequently could
immediately file an action for the recovery of the value of the check.
Further, 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
legal tender, and therefore cannot constitute valid tender of payment.

2.MAMBULAO LUMBER COMPANY V. PNB (G.R. NO. L-22973)

Facts:

Petitioner Mambulao Lumber applied for an industrial loan with herein respondent
PNB and was approved with its real estate, machinery and equipments as collateral.
PNB released the approved loan but petitioner failed to pay and was later
discovered to have already stopped in its operation. PNB then moved for the
foreclosure and sale of the mortgaged properties. The properties were sold and
petitioner sent a bank draft to PNB to settle the balance of the obligation. PNB
however alleges that a remaining balance stands and a foreclosure sale would still
be held unless petitioner remits said amount. The foreclosure sale proceeded and
petitioners properties were taken out of its compound. Petitioner filed actions
before the court and claims among others, moral damages.

Issue:

Whether or not petitioner corporation, who has already ceased its operation, may
claim for moral damages.

Ruling: NO.

Herein appellants claim for moral damages, however, seems to have no legal or
factual basis. Obviously, an artificial person like herein appellant corporation cannot
experience physical sufferings, mental anguish, fright, serious anxiety, wounded
feelings, moral shock or social humiliation which are basis of moral damages. A
corporation may have a good reputation which, if besmirched, may also be a ground
for the award of moral damages. The same cannot be considered under the facts of
this case, however, not only because it is admitted that herein appellant had
already ceased in its business operation at the time of the foreclosure sale of the
chattels, but also for the reason that whatever adverse effects of the foreclosure
sale of the chattels could have upon its reputation or business standing would
undoubtedly be the same whether the sale was conducted at Jose Panganiban,
Camarines Norte, or in Manila which is the place agreed upon by the parties in the
mortgage contract.

3. Liam Law vs. Olympic Sawmill (GR L-30771, 28 May 1984)

Facts: On 7 September 1957, Liam Law (plaintiff) loaned P10,000.00, without

interest, to Olympic Sawmill Co. and Elino Lee Chi, as the latters managing partner
(defendants). The loan became ultimately due on 31 January 1960, but was not paid
on that date, with the debtors asking for an extension of 3 months, or up to 30 April
1960. On 17 March 1960, the parties executed another loan document. Payment of
the P10,000.00 was extended to 30 April 1960, but the obligation was increased by
P6,000 which formed part of the principal obligation to answer for attorneys fees,
legal interest, and other cost incident thereto to be paid unto the creditor and his
successors in interest upon the termination of this agreement. The defendants
again failed to pay their obligation.
On 23 September 1960, the plaintiff instituted the collection case before the Court
of First Instance of Bulacan. The defendants admitted the P10,000.00 principal
obligation, but claimed that the additional P6,000.00 constituted usurious interest.
Upon the plaintiffs application, the Trial Court issued a writ of Attachment on real
and personal properties of defendants. After the Writ of Attachment was
implemented, proceedings before the Trial Court versed principally in regards to the
attachment. On 18 January 1961, an Order was issued by the Trial Court allowing
both parties to simultaneously submit a Motion for Summary Judgment. On 26 June
1961, the Trial Court rendered decision ordering defendants to pay the plaintiff the
amount of P10,000.00 plus the further sum of P6,000.00. The defendants appealed
before the then court of Appeals, which endorsed it to the Supreme Court stating
that the issue involved was one of law.
Issue [1]: Whether the allegation of usury should be made in writing and under
oath, pursuant to Section 9 of the Usury Law.
Held [1]: Section 9 of the Usury Law provides that the person or corporation sued
shall file its answer in writing under oath to any complaint brought or filed against
said person or corporation before a competent court to recover the money or other
personal or real property, seeds or agricultural products, charged or received in
violation of the provisions of this Act. The lack of taking an oath to an answer to a
complaint will mean the admission of the facts contained in the latter. It envisages
a complaint filed against an entity which has committed usury, for the recovery of
the usurious interest paid. In that case, if the entity sued shall not file its answer
under oath denying the allegation of usury, the defendant shall be deemed to have
admitted the usury. The provision does not apply to a case where it is the
defendant, not the plaintiff, who is alleging usury.

4. FLORANTE VS PILAR DEVT

FACTS: petitioner spouses Florante and Laarni Bautista purchased a house and lot
in Pilar Village, Las Pinas, Metro Manila. To partially finance the purchase, they
obtained from the Apex Mortgage & Loan Corporation (Apex) a loan in the amount
of P100,180.00. They executed a promissory note on December 22, 1978 obligating
themselves, jointly and severally, to pay the "principal sum of P100,180.00 with
interest rate of 12% and service charge of 3%" for a period of 240 months, or
twenty years, from date, in monthly installments of P1,378.83. Petitioner spouses
again failed to pay the installments. respondent corporation, as successor-in-
interest of Apex, instituted against petitioner spouses Civil Case No. 17702 before
the Regional Trial Court, Makati, Branch 138. petitioner spouses mainly contended
that the terms of the second promissory note increasing the interest rate to 21%
and the escalation clauses authorizing Apex to increase interest rates pursuant to
any law or Central Bank regulation are null and void.

Issue: W/N THE ESCALATION OF INTEREST RATE FROM 12% PER ANNUM (1ST
PROMISSORY NOTE) TO 21% PER ANNUM (2ND PROMISSORY NOTE) IS UNLAWFUL.

Held: No. At the time the parties executed the first promissory note in 1978, the
interest of 12% was the maximum rate fixed by the Usury Law for loans secured by
a mortgage upon registered real estate. On December 1, 1979, the Monetary Board
of the Central Bank of the Philippines issued Circular No. 705 which fixed the
effective rate of interest on loan transactions with maturities of more than 730 days
to twenty-one per cent (21%) per annum for both secured and unsecured loans. On
January 28, 1980, The Monetary Board issued Circular No. 712 reiterating the
effective interest rate of 21% on said loan transactions. On January 1, 1983, CB
Circular No. 905, series of 1982, took effect. This Circular declared that the rate of
interest on any loan or forbearance of any money, goods or credits, regardless of
maturity and whether secured or unsecured, "shall not be subject to any ceiling
prescribed under or pursuant to the Usury Law, as amended."In short, Circular No.
905 removed the ceiling on interest rates for secured and unsecured loans,
regardless of maturity.
5. TOLENTINO(plaintiff-apellant) v GONZALES SY CHIAM (defendant-appellee)
G.R. No. 26085 August 12, 1927

FACTS:
1.Before Nov 28, 1922, Severino Tolentino and Potenciana Manio purchased Luzon
Rice Mills, Inc., parcel of land in Tarlac for P25,000.00 to be paid in three
installments.
a.First installment is P2,000 due on or before May 2, 1921
b.Second installment is P8,000 due on or before May 31, 1921
c.Third installment of P15,000 at 12% interest due on or before Nov 30, 1922
One of the conditions of the contract of purchase was that if Tolentino and Manio
failed to pay the balance of any of the installments on the date agreed upon, the
property bought would revert to the original owner.
The first and second installments were paid but the balance was paid on Dec 1,
1922

2.On Nov 7, 1922, a representative of vendor of said property wrote Manio ,

notifying her that if the balance of said indebtedness was not paid, they would
recover the property with damages for non compliance with the condition of the
contract of purchase.
3.Tolentino and Manio borrowed money from Benito Gonzales Sy Chiam to satisfy
their indebtedness to the vendor.
4.Gonzales agreed to loan the P17,500 upon condition that they execute and deliver
to him a pacto de retro of the property.
5.The contract includes a contract of lease on the property whereby the lessees as
vendors apparently bind themselves to pay rent at the rate of P375 per month and
whereby "Default in the payment of the rent agreed for two consecutive months will
terminate this lease and will forfeit our right of repurchase, as though the term had
expired naturally"
6.Upon maturation of loan, Tolentino defaulted payment and Gonzales demanded
recovery of land.
Tolentinos argument: that the pacto de retro sale is a mortgage and not an absolute
sale and that the rental price paid during the period of the existence of the right to
repurchase, or the sum of P375 per month, based upon the value of the property,
amounted to usury.

ISSUE: WoN the contract in question is a mortgage

HELD: No.

RATIO: The contract is a pacto de retro and not a mortgage. There is not a word, a
phrase, a sentence or a paragraph in the entire record, which justifies this court in
holding that the said contract of pacto de retro is a mortgage and not a sale with
the right to repurchase.
The purpose of the contract is expressed clearly that there can certainly be no
doubt as to the purpose of the Tolentino to sell the property in question, reserving
the right only to repurchase the same:
Second. That is a condition of this sale that if in the course of five (5) years from the
1st of December, 1922, we return to Don Benito Gonzales Sy Chiam the above-
mentioned price of seventeen thousand five hundred (P17,500), Mr. Benito Gonzales
Sy Chiam is forced to return the farm; but if it passes the above mentioned term of
five (5) years without exercising to the right of redemption that we have saved
ourselves, then this sale will be absolute and irrevocable.
From the foregoing, we are driven to the following conclusions: First, that the
contract of pacto de retro is an absolute sale of the property with the right to
repurchase and not a mortgage; and, second, that by virtue of the said contract the
vendor became the tenant of the purchaser, under the conditions mentioned in
paragraph 3 of said contact. When the vendor of property under a pacto de retro
rents the property and agrees to pay a rental value for the property during the
period of his right to repurchase, he thereby becomes a "tenant" and in all respects
stands in the same relation with the purchaser as a tenant under any other contract
of lease.

6. Consolidated Bank VS CA

FACTS
Continental Cement Corp obtained from Consolidated Bank letter of credit
used to purchased 500,000 liters of bunker fuel oil. Respondent Corporation made a
marginal deposit to petitioner. A trust receipt was executed by respondent
corporation, with respondent Gregory Lim as signatory. Claiming that respondents
failed to turn over the goods or proceeds, petitioner filed a complaint for sum of
money before the RTC of Manila. In their answer, respondents aver that the
transaction was a simple loan and not a trust receipt one, and tht the amount
claimed by petitioner did not take into account payments already made by them.
The court dismissed the complaint, CA affirmed the same.

ISSUE
Whether or not the marginal deposit should not be deducted outright from
the amount of the letter of credit.

HELD
No. petitioner argues that the marginal deposit should be considered only
after computing the principal plus accrued interest and other charges. It could be
onerous to compute interest and other charges on the face value of the letter of
credit which a bank issued, without first crediting or setting off the marginal deposit
which the borrower paid to it-compensation is proper and should take effect by
operation of law because the requisited in Art. 1279 are present and should
extinguish both debts to the concurrent amount. Unjust enrichment.

7.Colinares Vs CA

Facts: Melvin Colinares and Lordino Veloso (hereafter Petitioners) were contracted
for a consideration of P40,000 by the Carmelite Sisters of Cagayan de Oro City to
renovate the latters convent at Camaman-an, Cagayan de Oro City. Colinares
applied for a commercial letter of credit with the Philippine Banking Corporation,
Cagayan de Oro City branch (hereafter PBC) in favor of CM Builders Centre. PBC
approved the letter of credit for P22,389.80 to cover the full invoice value of the
goods. Petitioners signed a pro-forma trust receipt as security.

PBC debited P6,720 from Petitioners marginal deposit as partial payment of the
loan. After the initial payment, the spouses defaulted. PBC wrote to Petitioners
demanding that the amount be paid within seven days from notice. Instead of
complying with PBCs demand, Veloso confessed that they lost P19,195.83 in the
Carmelite Monastery Project and requested for a grace period of until 15 June 1980
to settle the account. Colinares proposed that the terms of payment of the loan be
modified P2,000 on or before 3 December 1980, and P1,000 per month . Pending
approval of the proposal, Petitioners paid P1,000 to PBC on 4 December 1980, and
thereafter P500 on 11 February 1981, 16 March 1981, and 20 April 1981.
Concurrently with the separate demand for attorneys fees by PBCs legal counsel,
PBC continued to demand payment of the balance. On 14 January 1983, Petitioners
were charged with the violation of P.D. No. 115 (Trust Receipts Law) in relation to
Article 315 of the Revised Penal Code

During trial, petitioner Veloso insisted that the transaction was a clean loan as per
verbal guarantee of Cayo Garcia Tuiza, PBCs former manager. He and petitioner
Colinares signed the documents without reading the fine print, only learning of the
trust receipt implication much later. When he brought this to the attention of PBC,
Mr. Tuiza assured him that the trust receipt was a mere formality. The Trust Receipts
Law does not seek to enforce payment of the loan, rather it punishes the dishonesty
and abuse of confidence in the handling of money or goods to the prejudice of
another regardless of whether the latter is the owner. Here, it is crystal clear that on
the part of Petitioners there was neither dishonesty nor abuse of confidence in the
handling of money to the prejudice of PBC. Petitioners continually endeavored to
meet their obligations, as shown by several receipts issued by PBC acknowledging
payment of the loan.

Issue: Whether or not the transaction of Colinares falls within the ambit of the Law
on Trust Receipt

Held: Yes. Colinares received the merchandise from CM Builders Centre on 30

October 1979. On that day, ownership over the merchandise was already
transferred to Petitioners who were to use the materials for their construction
project. It was only a day later, 31 October 1979, that they went to the bank to
apply for a loan to pay for the merchandise. This situation belies what normally
obtains in a pure trust receipt transaction where goods are owned by the bank and
only released to the importer in trust subsequent to the grant of the loan.

The bank acquires a security interest in the goods as holder of a security title for
the advances it had made to the entrustee. The ownership of the merchandise
continues to be vested in the person who had advanced payment until he has been
paid in full, or if the merchandise has already been sold, the proceeds of the sale
should be turned over to him by the importer or by his representative or successor
in interest. To secure that the bank shall be paid, it takes full title to the goods at the
very beginning and continues to hold that title as his indispensable security until the
goods are sold and the vendee is called upon to pay for them; hence, the importer
has never owned the goods and is not able to deliver possession. In a certain
manner, trust receipts partake of the nature of a conditional sale where the
importer becomes absolute owner of the imported merchandise as soon as he has
paid its price. There are two possible situations in a trust receipt transaction. The
first is covered by the provision which refers to money received under the obligation
involving the duty to deliver it (entregarla) to the owner of the merchandise sold.
The second is covered by the provision which refers to merchandise received under
the obligation to return it (devolvera) to the owner. Failure of the entrustee to turn
over the proceeds of the sale of the goods, covered by the trust receipt to the
entruster or to return said goods if they were not disposed of in accordance with the
terms of the trust receipt shall be punishable as estafa under Article 315 (1) of the
Revised Penal Code, without need of proving intent to defraud.

8.Republic vs Grijaldo

Facts:
Grijaldo obtained five loans from the Bank of Taiwan in the total sum of P1,281.97
with interest at the rats of 6% per annum compounded quarterly. These were
evidenced by five promissory notes.
These loans were crop loans and was considered to be due one year after they
were incurred.
As a security for the payment of the loans, a chattel mortgage was executed on
the standing crops of his land.
The assets in the Bank of Taiwan were vested in the US Govt which were
subsequently transferred to the Republic of the Philippines
RP is now demanding the payment of the account.
Justice of Peace dismisses the case on the ground of prescription. CA rendered a
decision ordering the appellant to pay the appellee

Defendants contentions:
1)The appellee has no cause of action against appellant since the transaction was
with Taiwan Bank.
2)That if the appellee has a cause of action at all, it had prescribed
3)The lower court erred in ordering the appellant to pay P2,377.23

Issue:
Can RP still collect from Grijaldo?

Held: Yes
Ratio: The obligation of the contract was not to deliver a determinate thing, it was a
generic thing the amount of money representing the total sum of his loans. The
destruction of anything of the same kind does not extinguish the obligation. The
loss of the crops did not extinguish his obligation to pay because the account could
still be paid from other sources aside from the mortgaged crops. Also, prescription
does not run against the State.

9. Tan v. Valdehueza

Facts:
Defendants herein, Arador, Rediculo, Pacita, Concepcion and Rosario, all surnamed
Valdehueza, are brothers and sisters; the parcel of land described in the first cause
of action was the subject matter of the public auction sale wherein the plaintiff was
the highest bidder and as such a Certificate of Sale was executed in favor of LUCIA
TAN the herein plaintiff. Due to the failure of defendant Arador Valdehueza to
redeem the said land within the period of one year as being provided by law, an
ABSOLUTE DEED OF SALE in favor of the plaintiff LUCIA; that defendants ARADOR
VALDEHUEZA and REDICULO VALDEHUEZA have executed two documents of DEED
OF PACTO DE RETRO SALE in favor of the plaintiff herein, LUCIA TAN of two portions
of a parcel of land which is described in the second cause of action with the total
amount of P1,500; that from the execution of the Deed of Sale with right to
repurchase mentioned in the second cause of action, defendants Arador Valdehueza
and Rediculo Valdehueza remained in the possession of the land.

A complaint for injunction filed by Tan to enjoin the Valdehuezas "from entering the
parcel of land and gathering the nuts therein ...." This complaint and the
counterclaim were subsequently dismissed for failure of the parties "to seek for the
immediate trial thereof, thus evincing lack of interest on their part to proceed with
the case.robles virtual law library
The Deed of Pacto de Retro referred to was not registered in the Registry of Deeds,
while the 2nd Deed of Pacto de Retro was registered.

Issue:
Whether the transactions between the parties were simple loan?

Held:
NO. Under article 1875 of the Civil Code of 1889, registration was a necessary
requisite for the validity of a mortgage even as between the parties, but under
article 2125 of the new Civil Code (in effect since August 30,1950), this is no longer
so.
The Valdehuezas having remained in possession of the land and the realty taxes
having been paid by them, the contracts which purported to be pacto de retro
transactions are presumed to be equitable mortgages, 5 whether registered or not,
there being no third parties involved.

10. JARDENIL V. SOLASG.R.

No. L-4787824 July 1942Article 1956: No interest shall be due unless it has been
expressly stipulated in writing.(1755a)

FACTS: The case is an action for foreclosure of mortgage. Paragraph 4 of the

mortgage deedbetween the parties states that Solas agrees to pay Jardenil on or
before 31 March 1934 theamount of P 2,400 with the interests of the sum at the
rate of 12% per year starting from the dateof execution until its maturity date on 31
March 1934. The mortgage also includes an extensionnote of one year from the
date of maturity within which to make payment, without making anymention of any
interest which the mortgagor should pay during the additional period.

ISSUE: Whether or not defendant-appellee (Solas) is bound to pay the

stipulated interest continuously up to the date of payment, regardless whether the
actual date of payment is beyond the stipulated maturity date
HELD/RATIO: No.The Court ruled that Solas clearly agreed to pay interest only up to
the date of maturity,or until March 31, 1934. As the contract is silent as to whether
after that date, in the event ofnon-payment, the debtor would continue to pay
interest, the Court cannot in law, indulge in anypresumption as to such interest;
otherwise, the Court would be imposing upon the debtor anobligation that the
parties have not chosen to agree upon. Article 1755 of the (old) Civil Codeprovides
that "interest shall be due only when it has been expressly stipulated."There is
nothing in the mortgage deed to show that the terms stipulated go against
theintention of the parties. Neither has either of the parties shown that, by mutual
mistake, the deedof mortgage fails to express their agreement since the plaintiff,
Jardenil, did not adduce evidenceto establish such mistake. Since the parties
included an extension note of one year within whichto make payment without
mentioning that additional interests should be paid during thatextended
period, it can be deduced that parties intended that no interest should be paid
during theperiod of grace.The contract is clear and unmistakable and the terms
employed therein have not beenshown to belie or otherwise fail to express the true
intention of the parties and that the deed hasnot been assailed on the ground of
mutual mistake which would require its reformation, sameshould be given its full
force and effect. Plaintiff is, therefore, entitled only to the stipulated interest of 12
per cent on the loan ofP2,400 from November 8, 1932 to March 31, 1934. And it
being a fact that extra judicialdemands have been made on the expiration of the
year of grace, he shall be entitled to legalinterest upon the principal and the
accrued interest from April 1, 1935, until full payment