TOLENTINO v GONZALES SY CHIAM - G.R. No.

260865 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 where by "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.
Tolentino’s 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: W/N the contract in question is a mortgage

HELD: No. The Supreme Court held that upon its terms, the deed of pacto de retro sale is an absolute sale with
right of repurchase and not a mortgage. Thus, Gonzalez is the owner of the land and Tolentino is only holding it as
a tenant by virtue of a contract of lease.

Art. 1933: By a contract of loan, one of the parties delivers to another xxx money or other consumable
thing, upon the condition that the same amount of the same kind and quality shall be paid, in which case the
contract is simply called a loan or mutuum.

A contract of 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 has been defined as an advancement of money, goods, or
credits upon a contract or stipulation to repay, not to return, the thing loaned at some future day in accordance
with the terms of the contract.

DELOS SANTOS V. JARRA - 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 latter’s mill is terminated. When delos Santos demanded the return of the animals Jimenea refused, hence this
suit.

1. Felix de los Santos brought suit against Agusitina Jarra (the administratrix of the estate of Magdaleno Jimenea,
he alleges that Jimenea borrowed and obtained from the plaintiff 10 first class carabos, to be used at the animal
power mill of Jimenea’s hacienda, without recompense or remuneration for the use of it and under the sole
condition thatthey should be returned to the owner as soon as the work at the mill was terminated. Jimenea
however, did not return the carabaos even though De los Santos claimed their return after the work at the mill was
finished.

2. Jimenea died in 1904 (before the suit)and Jarra was appointed by the CFI as administratrix of his estate.

3. De los Santos presented his claim to the commissioners of the estate of Jimenea for return of the carabaos. (for
the carabaos to be exluded from the estate of Jimenea). thecommissioners rejected his claim, and thus a lawsuit
ensued.

4. Jarra answered and said that it was true that the late Jimenea asked the plaintiff to loanhim ten carabaos, but
that he only obtained THREE (3) second-class carabaos, whichwere afterwards sold by the Delos Santos to Jimenea.
(basically Jarra denied all the allegations in the complaint)

5. The case came up for trial and the court rendered judgment against Jarra and ordering her to return to De los
Santos 6 second-class and third class carabaos. The value of which was 120 each so 720 pesos.

6. Jarra appealed. The supreme court held that there is no evidence of the sale between Jimenea and De los Santos.
Therefore it is not true. The carabaos delivered to be used were not returned by Jiminea upon demand. There is no
doubt that Jarra is under the obligation to indemnify delos Santos.

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.

Art. 1933. By the contract of loan, one of the parties delivers to another, either something not consumable
so that the latter may use the same for a certain time and return t, in which case, the contract is call a commodatum.

GELANO V. CA- G.R. No. L-39050 February 24, 1981

FACTS:
 Insular Sawmill was a corporation engaged in the general lumberand sawmill business with a corporate life
of fifty years, beginningSept 17, 1945 – Sept 17, 1995. To carry on the business, Insular Sawmill leased
paraphernalproperty of petitioner Guillerma Gelano. It was while leasing theproperty, that the Guillerma, and her
husband Carlos, incurred thefollowing debts to the corporation:
1.For cash advances made by the corporation to Carloswhich was supposed to be deducted from the
monthlyrentals being paid by the corporation;
2. For credit purchases of lumber materials from the company;
3. For credit accommodation obtained by the spouses from China Banking Corporation, for which the
corporation executed a promissory note in favour of the bank from which the bank collected Carlos’ debt.

On May 22, 1959, the corporation, thru Atty. German Lee, filed acomplaint for collection against the
spouses Gelano before CFI-Manila. Trial was held and when the case was at the stage of submitting memorandum,
Atty. Lee retired from active law practice and Atty. Eduardo F. Elizalde took over and prepared the memorandum.
While the case was pending, Insular Sawmill amended its Articles of Incorporation to shorten its term of existence
up to December31, 1960 only. The amended Articles of Incorporation was filed with, and approved by the Securities
and Exchange Commission, but the trial court was not notified of the amendment shortening the corporate
existence and no substitution of party was ever made.On November 20, 1964 and almost four (4) years after the
dissolution of the corporation, the trial court rendered a decision in favor of Insular Sawmill. The CA modified the
decision, holding the spouses solidarily liable. After the Gelanos received a copy of the decision on August 24,1973,
they came to know that the Insular Sawmill Inc. was dissolved way back on December 31, 1960. Thus they filed an
Motion to Dismiss (MD) on the ground that the case was prosecuted even after dissolution of Insular Sawmill as a
corporation and that a defunct corporation cannot maintain any suit for or against it without first complying with
the requirements of the winding up of the affairs of the corporation and the assignment of its property rights within
the required period. Their MD was denied thus the present petition for review.

ISSUE: W/N a corporation, whose corporate life had ceased by the expiration of its term of existence, could still
continue prosecuting and defending suits after its dissolution and beyond the period of 3 years provided for under
Act No. 1459, otherwise known as the Corporation law, to wind up its affairs, without having undertaken any step
to transfer its assets to a trustee or assignee.

HELD: YES. Affirmed with modification - conjugal property is liable from the time during which the corporation,
through its own officers, may conduct the liquidation of its assets and sue and be sued as a corporation is limited
to 3 years from the time the period of dissolution commences; but that there is no time limited within which the
trustees must complete a liquidation placed in their hands only the conveyance to the trustees must be made
within the 3-year period effect of the conveyance is to make the trustees the legal owners of the property
conveyed, subject to the beneficial interest therein of creditors and stockholders trustee may commence a suit
which can proceed to final judgment even beyond the 3-year period "trustee" = general concept - include the
counsel to whom was entrusted in the instant case. The purpose in the transfer of the assets of the corporation
to a trustee upon its dissolution is more for the protection of its creditor and stockholders. Debtors may not take
advantage of the failure of the corporation to transfer its assets to a trustee.

Relate to Art. 1933 the transfer of the assets of the corporation to a trustee. Art. 1933 By the contract of loan,
one of the parties delivers to another, either something not consumable so that the latter may use the same for a
certain time and return t, in which case, the contract is call a commodatum.
SPOUSES SINFRONIO PUERTO and ESPERANZA PUERTO VS CA - G.R. No. 138210. June 06, 2002

FACTS:
Petitioners spouses Sinfronio and Esperanza Puerto were the former registered owners of a house and lot
located at 89 Kapiligan, Araneta Subdivision, Quezon City, subject of the present controversy. They bought this
property from one Mrs. Luna but did not have the title immediately transferred to their names until they mortgaged
the same to private respondents spouses Inocencio and Eleuteria Cortes.

On May 8, 1972, petitioners executed, in favor of private respondents, a Deed of Real Estate Mortgage
covering the said house and lot. This deed provides, among others, that petitioner spouses, obtained from private
respondents a loan in the amount of P200,000, payable within one year from the date of the execution thereof.
Ostensibly, the mortgage contract did not provide for any stipulated interest. It however provided that should
petitioners fail to pay the principal loan, private respondents were authorized to immediately foreclose the
mortgaged property, judicially or extrajudicially, under the provisions of Act No. 3135. Furthermore, private
respondents would be appointed receiver in case of foreclosure.

According to petitioner Esperanza Puerto, the Deed of Mortgage did not reflect the true intent of the
parties, as in fact, the consideration of the mortgage was only P150,000. She claims that the one year interest was
added to the P150,000, the additional P50,000 as advance payment, hence, the amount of P200,000 was stated in
the deed. She further testified that the P150,000 constituted the advance of P8,000, with the corresponding receipt;
another P2,000, without any receipt, received by petitioner Esperanza on May 8, 1972, for payment of taxes and
to register the deed of sale when the property was first bought by petitioners from Mrs. Luna, and to register the
mortgage in favor of private respondents; a Monte de Piedad cashiers check in the amount of P70,000 received by
Esperanza on May 10, 1972; and several pieces of jewelry valued at P70,000 she received on May 9, 1972. She
added that for the last transaction, she made out a receipt to the effect that she received the amount of P30,000
in cash and pieces of diamond jewelry worth P170,000. All the receipts presented by Esperanza were written and
duly signed by her. Esperanza testified that she reached a verbal agreement with private respondents that would
not pay an interest for one year from date of mortgage until maturity because of the prepaid interest of P50,000;
that after the maturity of the loan, private respondents would still allow the petitioners to redeem the property
even after foreclosure as long as the latter would return the amount of P200,000 in lump sum; that in the event
that petitioners could not return the loan in lump sum, they would pay P4,000 monthly interest; and that petitioners
would cooperate with the private respondents to conceal the usurious character of the loan by not demanding
receipts for payments of interest.

Private respondent Eleuteria Cortes, on the other hand, testified that sometime in 1972, petitioners asked
them for a loan of P200,000 and gave the house and lot as security. According to Eleuteria, she loaned Esperanza
the money because of their long friendship. She claims that the mortgage deed as well as all the receipts presented
by Esperanza reflect all their agreements.

When the loan matured on May 8, 1973, petitioners failed to pay the P200,000. On August 3, 1973, private
respondents made a formal demand for petitioners to pay the loan under threat of foreclosure of the mortgaged
property. As petitioners failed to pay, private respondents foreclosed the property, which was sold at a public
auction on October 4, 1973. Private respondents were the highest bidders.

On May 7, 1975, even after title to the property was transferred to private respondents, petitioners were
allowed to stay on the property until they could find a new residence. However, after repeated extensions to stay,
petitioners did not transfer. They then entered into a lease contract where petitioners would pay the respondents,
as new owners, P3,000 by way of rentals, effective January 1, 1975. On September 16, 1976, when petitioners failed
and refused to pay monthly rentals beginning February 1976, private respondents filed an ejectment case against
them in the City Court of Quezon City.

Petitioners, for their part, alleged that when they failed to pay the loan, private respondents demanded a
monthly interest of P4,000. When they failed to pay said interest for four months, private respondents foreclosed
the mortgage. On October 5, 1974, after the expiration of the redemption period, private respondents acquired
full title to the property and were issued Transfer Certificate of Title No. 207527. Petitioners claim that from October
1973 until December 1975, they continued to pay the monthly interest of P4,000, but without receipts because of
their verbal agreement to conceal the usurious nature of the transaction. Sometime in January 1976, according to
petitioners, they appealed to private respondents to reduce the interest rate to P3,000 per month. Private
respondents agreed on the condition that they sign a lease contract, whereby private respondents would appear
as lessors and petitioners as lessees, and P3,000 interest would be denominated as rent.

On January 1, 1976, petitioner Esperanza and private respondent Eleuteria executed a contract of lease.
Petitioners paid the rent on the first month but could not pay for the succeeding months allegedly because of the
usurious demands of private respondents.

On August 20, 1976, petitioners filed an action against private respondents for the declaration of nullity of
the Deed of Real Estate Mortgage, before the Court of First Instance of Rizal, Branch XVII. The complaint was
amended on February 23, 1978 to include additional causes of action.

The trial court dismissed the complaint. On appeal, the appellate court reversed the decision of the trial
court, declaring the mortgage contract of the parties null and void, the foreclosure of said property of no force and
effect, ordering the plaintiff-appellants to pay the defendants-appellees P150,000.00 with the legal rate of interest
thereon from the time of demand until fully paid; and ordering the cancellation of the Transfer Certificate of Title
in defendants-appellees name. However, private respondents filed motion for reconsideration that was granted by
the appellate court. In its amended decision dated February 4, 1999, the Court of Appeals rendered judgment
granting appellees motion for reconsideration. The decision herein promulgated on September 30, 1998 is hereby
RECONSIDERED and SET ASIDE. The Decision dated January 18, 1991 in Civil Case No. Q-21883 is hereby AFFIRMED.
Thereafter, petitioners filed a motion for reconsideration of the aforestated amended decision. On April 5, 1999,
the Court of Appeals rendered its resolution denying petitioners motion for reconsideration and their motion to set
for oral argument, for lack of merit. Hence, the present petition.

ISSUE: W/N the contract between the parties, which is a loan secured by the deed of real estate mortgage, violated
the Usury Law (P.D. 116).

HELD: Yes. In a simple loan with a stipulation of usurious interest, the prestation of the debtor to pay the principal
debt, which is the cause of the contract, is not illegal. The illegality lies only in the stipulated interest. Being
separable, only the latter should be deemed void. To discourage stipulations on usurious interest, said stipulations
are treated as wholly void, so that the loan becomes one without a stipulation as to payment of interest. It should
not, however, be interpreted to mean forfeiture even of the principal, for this would unjustly enrich the borrower
at the expense of the lender.
 In this case, SC held the September 30, 1998 with the following: declaring the mortgage contract of the
parties null and void, the foreclosure of said property of no force and effect, ordering the plaintiff-appellants to pay
the defendants-appellees P150,000.00 with the legal rate of interest thereon from the time of demand until fully
paid; and ordering the cancellation of the Transfer Certificate of Title in defendants-appellees name.

NACAR V. GALLERY FRAMES

FACTS:
On October 15, 1998, the Labor Arbiter rendered a Decisionin favor of petitioner and found that he was
dismissed from employment without a valid or just cause. Thus, petitioner was awarded backwages and separation
pay in lieu of reinstatement in the amount ofP158,919.92.

Respondents appealed to the NLRC, but it was dismissed for lack of merit. Accordingly, the NLRC sustained the
decision of the Labor Arbiter. Respondents filed a motion for reconsideration, but it was denied. Dissatisfied,
respondents filed a Petition for Review on Certiorari before the CA but it was likewise denied. Respondents then
sought relief before the Supreme Court. Finding no reversible error on the part of the CA, this Court denied the
petition in the Resolution dated April 17, 2002.

An Entry of Judgment was later issued certifying that the resolution became final and executory on May 27, 2002.
The case was, thereafter, referred back to the Labor Arbiter for execution. Petitioner filed a Motion for Correct
Computation, praying that his backwages be computed from the date of his dismissal on January 24, 1997 up to the
finality of the Resolution of the Supreme Court on May 27, 2002. Upon recomputation, the Computation and
Examination Unit of the NLRC arrived at an updated amount in the sum of P471,320.31.

Respondents filed a Motion to Quash Writ of Execution, arguing, among other things, that since the Labor Arbiter
awarded separation pay ofP62,986.56 and limited backwages of P95,933.36, no more recomputation is required to
be made of the said awards. They claimed that after the decision becomes final and executory, the same cannot be
altered or amended anymore. LA denied the motion but the decision was reversed by the NLRC on appeal.

Petitioner appealed to the CA but was denied, stating that since petitioner no longer appealed the October 15,
1998 Decision of the Labor Arbiter, which already became final and executory, a belated correction thereof is no
longer allowed. The CA stated that there is nothing left to be done except to enforce the said judgment.
Consequently, it can no longer be modified in any respect, except to correct clerical errors or mistakes. Thus,
petitioner filed this petition for review on certiorari.

ISSUE: Whether or not a re-computation in the course of execution of the labor arbiter's original computation of
the awards made is legally proper.

HELD: Yes. The legal interest in loan and forbearance of money, credits or goods was amended from 12% to 6%
effective July 1, 2013. Bangko Sentral ng Pilipinas Monetary Board (BSP-MB), in its Resolution No. 796, approved
the amendment of Section 2 of Circular No. 905, Series of 1982 and, accordingly, issued Circular No. 799, Series of
2013, effective July 1, 2013, the pertinent portion of which reads:
Section 1. The rate of interest for the loan or forbearance of any money, goods or credits and the rate
allowed in judgments, in the absence of an express contract as to such rate of interest, shall be six percent (6%) per
annum.
 Thus, from the foregoing, in the absence of an express stipulation as to the rate of interest that would
govern the parties, the rate of legal interest for loans or forbearance of any money, goods or credits and the rate
allowed in judgments shall no longer be 12% per annum but will now be 6% per annum effective July 1, 2013. It
should be noted, nonetheless, that the new rate could only be applied prospectively and not retroactively.
Consequently, the 12% per annum legal interest shall apply only until June 30, 2013. Come July 1, 2013 the new
rate of 6% per annum shall be the prevailing rate of interest when applicable.

SC in this case held the following: Decision dated September 23, 2008 of the Court of Appeals in CA-G.R. SP
No. 98591, and the Resolution dated October 9, 2009 are REVERSED and SET ASIDE. Respondents are Ordered to
Pay petitioner:
(1) backwages computed from the time petitioner was illegally dismissed on January 24, 1997 up to May
27, 2002, when the Resolution of this Court in G.R. No. 151332 became final and executory;
(2) separation pay computed from August 1990 up to May 27, 2002 at the rate of one month pay per year
of service; and
(3) interest of twelve percent (12%) per annum of the total monetary awards, computed from May 27,
2002 to June 30, 2013 and six percent (6%) per annum from July 1, 2013 until their full satisfaction.
The Labor Arbiter is hereby ORDERED to make another recomputation of the total monetary benefits
awarded and due to petitioner in accordance with this Decision.