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PEOPLE vs. CONCEPCION, 44 Phil. 126 REPUBLIC v.

BAGTAS, 116 SCRA 262

FACTS: Venancio Concepcion, President of the FACTS: On May 8, 1948, Jose Bagtas borrowed
Philippine National Bank and a member of the from the Bureau of Animal Industry three bulls for
Board thereof, authorized an extension of credit in one year for breeding purposes upon payment of a
favor of "Puno y Concepcion, S. en C.” to the breeding fee of 10% of the book value of the bulls.
manager of the Aparri branch of the Philippine After one year, the contract was renewed but only
National Bank. "Puno y Concepcion, S. en C." was for one bull. Bagtas offered to buy the bulls at book
a co-partnership where Concepcion is a partner. value less depreciation, but the Bureau told him that
Subsequently, Concepcion was charged and found he should either return the bulls or pay for their
guilty in the Court of First Instance of Cagayan with book value. Bagtas failed to pay the book value, so
violation of section 35 of Act No. 2747. Section 35 the Republic filed an action with the CFI Manila to
of Act No. 2747 provides that the National Bank order the return of the bulls or the payment of the
shall not, directly or indirectly, grant loans to any of book value. Felicidad Bagtas, the surviving spouse
the members of the board of directors of the bank and administratrix of the decedent’s estate, said that
nor to agents of the branch banks. Counsel for the the two bulls have already been returned in 1952,
defense argue that the documents of record do not and that the remaining one died of gunshot during a
prove that authority to make a loan was given, but Huk raid. It was established that the two bulls were
only show the concession of a credit. They averred returned, thus, there is no more obligation on the
that the granting of a credit to the co-partnership part of Bagtas. With regards the bull not returned,
"Puno y Concepcion, S. en C." by Venancio Felicidad maintained that the obligation is
Concepcion, President of the Philippine National extinguished since the contract is that of a
Bank, is not a "loan" within the meaning of section commodatum and that the loss through fortuitous
35 of Act No. 2747. event should be borne by the owner.

ISSUE: Whether or not the granting of a credit of ISSUE: Whether or not the contract entered into
P300,000 to the co-partnership "Puno y between Bagtas and the Republic is that of
Concepcion, S. en C." by Venancio Concepcion, commodatum making Bagtas not liable for the
President of the Philippine National Bank, a "loan" death of the bull.
within the meaning of section 35 of Act No. 2747.
HELD: A contract of commodatum is essentially
HELD: The Supreme Court ruled in the gratuitous. If the breeding fee be considered
affirmative. The "credit" of an individual means his compensation, then the contract would be a lease of
ability to borrow money by virtue of the confidence the bull. Under article 1671 of the Civil Code the
or trust reposed by a lender that he will pay what he lessee would be subject to the responsibilities of a
may promise. A "loan" means the delivery by one possessor in bad faith because she had continued
party and the receipt by the other party of a given possession of the bull after the expiry of the
sum of money, upon an agreement, express or contract. Even if the contract be commodatum, still
implied, to repay the sum loaned, with or without Bagtas is liable because article 1942 of the Civil
interest. The concession of a "credit" necessarily Code provides that a bailee in a contract
involves the granting of "loans" up to the limit of of commodatum is liable for loss of the things even
the amount fixed in the "credit," if it should be through a fortuitous event if he keeps
it longer than the period stipulated or if the thing money, a consumable thing; and second, the
loaned has been delivered with appraisal of its transaction was onerous as Doronilla was obliged to
value, unless there is a stipulation exempting the pay interest. Hence, petitioner argues that it cannot
bailee from responsibility in case of a fortuitous be held liable because it is not privy to the
event. The loan of one bull was renewed for another transaction between the latter and Doronilla. Private
period of one year but Bagtas kept and used the bull respondent, on the other hand, argues that the
more than one year where during a Huk raid it was transaction between him and Doronilla is not a
killed by stray bullets. Furthermore, when lent and mutuum but an accommodation, since he did not
delivered to the deceased husband of Bagtas, the actually part with the ownership of his P200,000.00
bulls had each an appraised book value. It was not but retained some degree of control over his money
stipulated that in case of loss of the bull due to through his wife who was made a signatory to the
fortuitous event the late husband of the appellant savings account and in whose possession the
would be exempt from liability. savings account passbook was given.

PRODUCERS BANK OF THE PHILIPPINES ISSUE: Whether or not the contract between
vs. COURT OF APPEALS, GR No. 115324 Sanchez and Doronilla and Vives is a contract of
commodatum, thus making petitioner Bank liable.
FACTS: Sometime in 1979, private respondent
Franklin Vives, upon request of his friend Angeles HELD: Supreme Court held that the contract is
Sanchez and relying on the assurance that he could commodatum. Although in view of Article 1933 of
withdraw his money within a month’s time, issued a the Civil Code, the object in commodatum is non-
check in the amount of Two Hundred Thousand consumable, but Article 1936 of the Civil Code
Pesos in favor of Sterela Marketing and Services provides “Consumable goods may be the subject of
owned by one Col. Arturo Doronilla. Subsequently, commodatum if the purpose of the contract is not
private respondent and his wife found out that the consumption of the object, as when it is merely
Sterela can’t be found on the address previously for exhibition.” Thus, if consumable goods are
given to then, so they went to petitioner Producer’s loaned only for purposes of exhibition or when the
Bank of the Philippines to verify if their money was intention of the parties is to lend consumable goods
still intact. They were informed that part of the and to have the very same goods returned at the end
amount had been withdrawn by Doronilla and that of the period agreed upon, the loan is commodatum
the latter instructed the bank to debit from the and not a mutuum. The evidence shows that private
savings account the amount and deposit it in his respondent merely "accommodated" Doronilla by
current account Private respondent filed an action lending his money without consideration, as a favor
for recovery of sum of money against Doronilla, to his good friend Sanchez. It was however clear to
Sanchez, Dumagpi and petitioner. The trial court the parties to the transaction that the money would
ruled in favour of herein private respondents. On not be removed from Sterela’s savings account and
appeal of the case, the appellate court affirmed the would be returned to private respondent after thirty
decision of the RTC. Petitioner contends that the (30) days.
transaction between private respondent and CAROLYN M. GARCIA vs. RICA MARIE S.
Doronilla is a simple loan (mutuum) since all the THIO, GR. No. 154878, March 16, 2007
elements of a mutuum are present: first, what was
delivered by private respondent to Doronilla was
FACTS: Sometime in February 1995, respondent amount. It is undisputed that the checks were
Rica Marie S. Thio received from petitioner delivered to respondent. However, these checks
Carolyn M. Garccia a crossed check in the amount were crossed and payable not to the order of
of $100,000.00 payable to the order of Marilou respondent but to the order of a certain Marilou
Santiago. Thereafter, Carolyn received from Rica Santiago. The Supreme Court agrees with petitioner
payments of the sum due. In June 1995, Rica that delivery is the act by which the res or substance
received another check in the amount of thereof is placed within the actual or constructive
P500,000.00 from Carolyn and payable to the order possession or control of another. Although
of Marilou. Payments were made by Rica respondent did not physically receive the proceeds
representing interests. There was failure to pay the of the checks, these instruments were placed in her
principal amount hence a complaint for sum of control and possession under an arrangement
money with damages was filed by Carolyn. Rica whereby she actually re-lent the amounts to
contended that she had no obligation to petitioner as Santiago. Hence, Rica is the debtor and not
it was Marilou who was indebted as she was merely Marilou.
asked to deliver the checks to the latter and that the COLITO T. PAJUYO vs. COURT OF
check payments she issued were merely intended to APPEALS, GR. No. 146364, June 3, 2004
accommodate Marilou. The RTC ruled in favor of
Carolyn but the CA reversed on the ground that FACTS: In June 1979, petitioner Colito T. Pajuyo
there was no contract between Rica and Carolyn as purchased the rights over a property from Pedro
there is nothing in the record that shows that Perez. Thereafter, he constructed a house therein
respondent received money from petitioner and that and he and his family lived there. Later, Pajuyo
the checks received by respondent, being crossed, agreed to let private respondent Eddie Guevarra to
may not be encashed but only deposited in the bank live in the house for free provided that the latter
by the payee thereof, that is, by Marilou Santiago maintain the cleanliness and orderliness of the
herself. house. They also agreed that Guevarra should leave
the premises upon demand. Subsequently, when
ISSUE: Whether or not there was a contract of loan Pajuyo told Guevarra that he needed the house,
between petitioner and respondent. Guevarra refused, hence an ejectment case was
filed. Guevarra claimed that Pajuyo had no valid
HELD: There Court ruled in the affirmative. A loan title or right of possession over the lot where the
is a real contract, not consensual, and as such is house stands because the lot is within the 150
perfected only upon the delivery of the object of the hectares set aside for socialized housing. The MTC
contract. Art. 1934 of the Civil Code provides that ruled that the subject of the agreement between
“an accepted promise to deliver something by way Pajuyo and Guevarra is the house and not the lot.
of commodatum or simple loan is binding upon the Pajuyo is the owner of the house, and he allowed
parties, but the commodatum or simple loan itself Guevarra to use the house only by tolerance. Thus,
shall not be perfected until the delivery of the object Guevarra’s refusal to vacate the house on Pajuyo’s
of the contract.” Upon delivery of the object of the demand made Guevarra’s continued possession of
contract of loan (in this case the money received by the house illegal. Aggrieved, Guevarra appealed to
the debtor when the checks were encashed the the Regional Trial Court which only affirmed the
debtor acquires ownership of such money or loan MTC decision. At the CA, the latter reversed the
proceeds and is bound to pay the creditor an equal RTC decision. The Court of Appeals ruled that the
Kasunduan is not a lease contract but QUINTOS vs. BECK, 69 Phil 108
a commodatum because the agreement is not for a
price certain. Since Pajuyo admitted that he FACTS: Beck is a tenant of defendant Margarita
resurfaced only in 1994 to claim the property, the Quintos. As such, Beck occupied Quintos’ house.
appellate court held that Guevarra has a better right Quintos granted Beck the use of the furniture found
over the property under Proclamation No. 137. At on the leased house, among these were three gas
that time, Guevarra was in physical possession of heaters and 4 electric lamps, subject to the condition
the property. that the defendant would return them to the plaintiff
upon the latter's demand. Quintos sold the pieces of
ISSUE: Whether or not the contract between furniture to Maria Lopez and Rosario Lopez and
petitioner and private respondent is one of thereafter notified Beck of the conveyance. Beck
commodatum. informed Quintos that the latter can get the furniture
at the ground floor of the house, however, at a later
HELD: The Supreme Court held that the contract is date, Beck told Quintos that he will return only the
not a commodatum. “In a contract of commodatum, other furniture but not the gas heaters and the
one of the parties delivers to another something not electric lamps as he is to return them only after the
consumable so that the latter may use the same for a expiration of the lease contract. When the lease
certain time and return it. An essential feature of contract expires, Beck deposited the furniture to the
commodatum is that it is gratuitous. Another feature sheriff’s warehouse. Quintos refused to get the
is that the use of the thing belonging to another is furniture in view of the fact that the defendant had
for a certain period. Thus, the bailor cannot demand declined to make delivery of all of them.
the return of the thing loaned until after the Consequently, Quintos brought an action to compel
expiration of the period stipulated, or after Beck to return her certain furniture which she lent
accomplishment of the use for which the him for his use. The trial court ruled in favour of
commodatum is constituted. If the bailor should Beck holding that Quintos failed to comply with her
have urgent need of the thing, he may demand its obligation to get the furniture when they were
return for temporary use. If the use of the thing is offered to her. On appeal of the case, the Court of
merely tolerated by the bailor, he can demand the First Instance of Manila affirmed the lower court’s
return of the thing at will, in which case the decision. Hence, this petition.
contractual relation is called a precarium.
The Kasunduan reveals that the accommodation ISSUE: Whether or not the trial court erred in
accorded by Pajuyo to Guevarra was not essentially ruling that Quintos failed to comply with her
gratuitous. While the Kasunduan did not require obligation to get the furniture when they were
Guevarra to pay rent, it obligated him to maintain offered to her.
the property in good condition. The imposition of
this obligation makes the Kasunduan a contract HELD: The contract entered into between the
different from a commodatum. The effects of parties is one of commadatum. Under it the plaintiff
the Kasunduan are also different from that of gratuitously granted the use of the furniture to the
a commodatum. defendant, reserving for herself the ownership
thereof. By this contract the defendant bound
himself to return the furniture to the plaintiff, upon
the latter’s demand. The obligation voluntarily
assumed by the defendant to return the furniture months to pay the loan with compounded bank
upon the plaintiff's demand, means that he should interest for the last six months only; that the CA’s
return all of them to the plaintiff at the latter's ruling that a loan always bears interest otherwise it
residence or house. The defendant did not comply is not a loan is contrary to Art. 1956 of the New
with this obligation when he merely placed them at Civil Code which provides that no interest shall be
the disposal of the plaintiff, retaining for his benefit due unless it has been expressly stipulated in
the three gas heaters and the four electric lamps. writing.
The trial court, therefore, erred when it came to the
legal conclusion that the plaintiff failed to comply ISSUE: Whether or not the compounded bank
with her obligation to get the furniture when they interest should be limited to six months as contained
were offered to her. in the MOA.

FRIAS vs. SAN DIEGO-SISON, GR. No. HELD: The agreement stipulated in the MOA that the
155223, April 4, 2007 amount given shall bear compounded bank interest
for the last six months only (referring to the second
FACT: Petitioner Bobie Rose V. Frias owned a six-month period), does not mean that interest will
house and lot which she acquired from Island no longer be charged after the second six-month
Masters Realty and Development Corporation period since such stipulation was made on the
(IMRDC) by virtue of a Deed of Sale. She entered logical and reasonable expectation that such amount
into a MOA with respondent Flora San Diego-Sison. would be paid within the date stipulated.
In the MOA, they had agreed among others that in Considering that the petitioner failed to pay the
the event that on the 6thmonth of the 6-month period amount given which under the MOA shall be
to purchase land, respondent would decide not to considered as a loan, the monetary interest for the
purchase, the petitioner has a period of another 6 last six months continued to accrue until the actual
months to pay P3M provided that the said amount payment of the loaned amount. The payment of
shall earn compounded bank interest for the last six regular interest constitutes the price or cost of the
months only. Respondent decided not to purchase money use and thus, until the principal sum due is
the property so what happened was that the P3M returned to the creditor, regular interest continues to
would be considered as a loan payable within six accrue since the debtor continues to use such
months. Petitioner failed to pay the P2M. principal amount.
Consequently, respondent filed with the RTC a LIGUTAN vs. COURT OF APPEALS, GR. No.
complaint for sum of money. RTC rules in favor of 138677, February 12, 2002
respondent and orders the payment of P2M plus
compounded interest at 32% interest per annum FACTS:
pursuant to the MOA. Petitioner appeals to CA. The Petitioners Tolomeo Ligutan and Leonidas dela Lla
CA affirms RTC decision with modification with na obtained a loan from private respondent Security
regard to the interest from32% to 25%. Petitioner Bank and Trust Company. Petitioners executed a
opposed to the said decision contending that the promissory note to pay the sum loaned with an
interest is contrary to the parties’ Memorandum of interest of 15.189% per annum upon maturity and to
Agreement; that the agreement provides that if pay a penalty of 5% every month on the outstanding
respondent would decide not to purchase the principal and interest in case of default. On
property, petitioner has the period of another six maturity of the obligation, petitioners failed to settle
the debt despite several demands from the bank. core of a bank's existence. The Court of Appeals,
Consequently, the bank filed a complaint for exercising its good judgment in the instant case, has
recovery of the due amount. After trial of the case, rightly reduced the penalty interest from 5% a
the Trial court ruled in favour of the Bank, ordering month to 3% a month.
petitioners to pay the respondent the sum of EASTERN SHIPPING LINES, INC. vs. CA, GR.
P114,416.00 with interest thereon at the rate of No. 97412, July 12, 1994
15.189% per annum and 5% per month penalty
charge among others. On appeal of the case, FACTS: Two fiber drums of riboflavin were
petitioners prayed for the reduction of the 5% shipped from Yokohama, Japan on board the vessel
stipulated penalty for being unconscionable. The owned by herein petitioner Eastern Shipping Lines.
Court of Appeals ruled that in the interest of justice When it arrives in Manila, it was put unto the
and public policy, a penalty of 3% per month or custody of Metro Port Service, Inc. The latter
36% per annum would suffice. But still, petitioners excepted to one drum which is said to be in bad
dispute the said decision. order and which damage was unknown to Eastern
Shipping Lines. Later, Allied Brokerage
ISSUE: Whether or not the 15.189% interest and Corporation received the shipment from Metro Port
the penalty of three (3%) percent per month or Service, Inc. With one drum damaged, Allied
thirty-six (36%) percent per annum imposed by Brokerage Corporation made deliveries to the
private respondent bank on petitioners’ loan consignee's warehouse. The latter excepted to one
obligation are exorbitant, iniquitous and drum that is damaged. Eastern Shipping Lines
unconscionable. averred that due to the one drum that is damaged
and due to the fault and negligence of Metro Port
HELD: The question of whether a penalty is Service, Inc. and Allied Brokerage Corporation, the
reasonable or iniquitous can be partly subjective consignee suffered losses. The two failed and
and partly objective. Its resolution would depend refused to pay the claims for damages.
on such factors as, but not necessarily confined to, Consequently, Eastern Shipping Lines was
the type, extent and purpose of the penalty, the compelled to pay the consignee being subrogated to
nature of the obligation, the mode of breach and its all the rights of action of said consignee against
consequences, the supervening realities, the Metro Port Service, Inc. and Allied Brokerage
standing and relationship of the parties, and the like, Corporation. Trial ensued and on appeal of the case,
the application of which, by and large, is addressed the appellate court affirmed the decision of the trial
to the sound discretion of the court. The essence or court ordering Metro Port Service and Allied
rationale for the payment of interest is not exactly Brokerage to pay Eastern Shipping Lines, jointly
the same as that of a surcharge or a penalty. A and severally, the amount of P19,032.95, with the
penalty stipulation is not necessarily preclusive of present legal interest of 12% per annum from the
interest. What may justify a court in not allowing date of filing of the complaints, until fully paid.
the creditor to impose full surcharges and penalties, Metro Port Service and Allied Brokerage opposed
despite an express stipulation therefor in a valid especially as to the payment of interest contending
agreement, may not equally justify the non-payment that the legal interest on an award for loss or
or reduction of interest. Indeed, the interest damage should be 6% in view of Article 2209 of the
prescribed in loan financing arrangements is a Civil Code.
fundamental part of the banking business and the
ISSUE: Whether or not the payment of legal the interest shall begin to run only from the
interest on an award for loss or damage is twelve date the judgment of the court is made (at
percent (12%) or six percent (6%). which time the quantification of damages
may be deemed to have been reasonably
HELD: Article 2209 of the New Civil Code ascertained). The actual base for the
provides that if the obligation consists in the computation of legal interest shall, in any
payment of a sum of money, and the debtor incurs case, be on the amount finally adjudged.
in delay, the indemnity for damages, there being no
stipulation to the contrary, shall be the payment of 3. When the judgment of the court awarding a
interest agreed upon, and in the absence of sum of money becomes final and executory,
stipulation, the legal interest which is six the rate of legal interest, whether the case
percent per annum. With regard particularly to an falls under paragraph 1 or paragraph 2,
award of interest in the concept of actual and above, shall be 12% per annum from such
compensatory damages, the rate of interest, as well finality until its satisfaction, this interim
as the accrual thereof, is imposed, as follows: period being deemed to be by then an
1. When the obligation is breached, and it equivalent to a forbearance of credit.
consists in the payment of a sum of
money, the interest due should be that which SIGA-AN vs. VILLANUEVA, GR. No. 173227,
may have been stipulated in January 20, 2009
writing. Furthermore, the interest due shall
itself earn legal interest from the time it is FACTS: Herein respondent Alicia Villanueva is
judicially demanded. In the absence of engaged in supplying office materials and
stipulation, the rate of interest shall be equipments to the Philippine Navy Office (PNO)
12% per annum to be computed from where herein Sebastian Siga-an works as a military
default under and subject to the provisions officer and comptroller. Villanueva alleged that
of Article 1169 of the Civil Code. Siga-an offered to loan her the amount of
P540,000.00. Having needed capital for her
2. When an obligation, not constituting a loan business transactions with the PNO, Villanueva
or forbearance of money, is breached, an accepted petitioner’s proposal. The loan agreement
interest on the amount of damages awarded was not reduced in writing and there was no
may be imposed at the discretion of the stipulation as to the payment of interest for the loan.
court at the rate of 6% per annum. No Villanueva issued two checks worth P500,000.00
interest, however, shall be adjudged on and P200,000.00. Siga-an wanted to apply the
unliquidated claims or damages except when payment of P540,000.00 to the principal amount
or until the demand can be established with and the excess amount of P160,000.00 would be
reasonable certainty. Accordingly, where the applied for the interest. He demanded from
demand is established with reasonable Villanueva to pay additional interest with a threat to
certainty, the interest shall begin to run from block or disapprove her transactions with the PNO
the time the claim is made judicially or if she would not comply with his demand thus
extrajudicially (Art. 1169, Civil Code) but respondent paid additional amounts as interests for
when such certainty cannot be so reasonably the loan. Villanueva asked Siga-an for receipt but
established at the time the demand is made, petitioner refused to give as it was not necessary as
there was mutual trust and confidence between
them. The total amount paid by Villanueva totalled CARPO vs. CHUA & DY NG, GR. Nos. 150773
P1,200,000.00. When Villanueva was advised by & 153599, September 30, 2005
her lawyer that she made an overpayment, she sent
a demand letter to Siga-an asking for the return of FACTS: Herein petitioner spouses David Carpo
the excess amount of P660,000.00. Siga-an just and Rechilda Carpo contracted a loan from Eleanor
ignored Villanueva’s claim for reimbursement. Chua and Elma Dy Ng for a certain sum of money
Hence, Villanueva instituted a complaint for sum of payable within six (6) months with an interest rate
money against herein petitioner Sebastian Siga-an. of six percent (6%) per month secured by a
After trial of the case, the Trial Court ordered mortgaged of the spouses Carpo of their residential
petitioner Siga-an to refund the excess amount to house and lot. Petitioners failed to pay the loan
Villanueva pursuant to the principle of solutio upon demand. Consequently, the real estate
indebiti. On appeal of the case, the appellate court mortgage was extrajudicially foreclosed, mortgaged
affirmed the decision of the RTC. Petitioner filed a property sold at a public auction, and the house and
motion for reconsideration but this was denied. lot was awarded to respondents, who were the only
Hence, the instant petition. bidders. Unable to exercise their right of redemption
by petitioners, a certificate of sale was issued in the
ISSUE: Whether or not there was interest due to name of respondents. However, petitioners
petitioner. continued to occupy the said house and lot, thus
respondents file a petition for writ of possession
HELD: There was no interest due to petitioner. which was granted by the Trial Court. Petitioners
Article 1956 of the Civil Code, which refers to filed a complaint for annulment of real estate
monetary interest, specifically mandates that no mortgage and the consequent foreclosure
interest shall be due unless it has been expressly proceedings claiming that the rate of interest
stipulated in writing. Payment of monetary interest stipulated in the principal loan agreement is clearly
is allowed only if there was an express stipulation null and void for being excessive, iniquitous,
for the payment of interest; and the agreement for unconscionable and exorbitant. Consequently, they
the payment of interest was reduced in writing. The also argue that the nullity of the agreed interest rate
concurrence of the two conditions is required for the affects the validity of the real estate mortgage.
payment of monetary interest. Thus, the collection
of interest without any stipulation therefore in ISSUE: Whether or not the agreed rate of interest
writing is prohibited by law. It appears that of 6% per month or 72% per annum is so excessive,
petitioner and respondent did not agree on the iniquitous, unconscionable and exorbitant that it
payment of interest for the loan. Neither was there should have been declared null and void.
convincing proof of written agreement between the
two regarding the payment of interest. HELD: In a long line of cases, the Supreme Court
Compensatory interest is not chargeable in the has invalidated similar stipulations on interest rates
instant case because it was not duly proven that for being excessive, iniquitous, unconscionable and
respondent defaulted in paying the loan. Also, as exorbitant. Pursuant to the freedom of contract
earlier found, no interest was due on the loan principle embodied in Article 1306 of the Civil
because there was no written agreement as regards Code, contracting parties may establish such
payment of interest. stipulations, clauses, terms and conditions as they
may deem convenient, provided they are not penalty charge of 3% per month or the 36% per
contrary to law, morals, good customs, public order, annum should be reduced to 2% per month or 24%
or public policy. In the ordinary course, the codal per annum. In a long line of cased decided by the
provision may be invoked to annul the excessive Supreme Court, it considered the 36% per annum to
stipulated interest. In the case at bar, the stipulated be excessive and unconscionable. Citing
interest rate is 6% per month, or 72% per annum. Article1229, in exercising this power to determine
By the standards set by jurisprudence, this what is iniquitous and unconscionable; courts must
stipulation is similarly invalid. consider the circumstances of each case since what
may be iniquitous and unconscionable in one maybe
totally just and equitable in another. In the
instant case, Macalinao made partial payments to
BPI .Therefore, the interest rate and penalty charge
of 3% per month or 36% per annum should be
reduced to 2% per month or 24% per annum.

MACALINAO V. BPI, 600 SCRA 67

FACTS: Petitioner Ileana Macalinao defaulted on


the payment of her BPI credit card dues. There was
a stipulation in a contract that the charges and/or
balance shall earn 3% per month and additional
penalty fee of another 3% per month. The Regional
Trial Court reduced the 3% monthly interest to 2%.
On appeal of the case, the Court of Appeals
reversed the decision of the RTC holding that
petitioner Macalinao freely availed herself of the
BANK OF THE PHILIPPINE ISLANDS VS
credit card facility offered by respondent Bank of
IAC, 164 SCRA 630
the Philippine Islands to general public; contracts of
adhesion are not invalid per se. Petitioner assailed
FACTS: Arthur and Vivienne Canlas opened a joint
the appellate court’s decision alleging that the
current account in CBTC now Bank of the
interest rate and penalty charges are unconscionable
Philippine Islands. However, the bank teller
and iniquitous at 36% per annum.
erroneously placed the old account number of Mr.
ISSUE: Whether or not the interest rate and penalty Canlas on the new account. Consequently, the
charges are unconscionable and iniquitous at 36% subsequent deposits made by the spouses Canlas
per annum. were not reflected in the new account. It was found
out only when a check issued by Viviene was
HELD: The interest rate and penalty charges are
dishonored due to insufficiency of funds. Thus, the
unconscionable and iniquitous at 36% per annum.
spouses Canlas instituted a suit for damages. The
The Supreme Court held that the interest rate and
bank on the other hand alleged that it should not be
held liable merely on account of the inadvertence of FACTS: In 1898, Fr. Agustin Dela Pena deposited
its employees. in his personal account a sum of money entrusted to
him for the construction of a leper hospital.
ISSUE: Whether or not the Bank of the Philippine Thereafter, Father De la Peña was arrested by the
Islands is liable. military authorities as a political prisoner. While
under detention, Fr. Dela Pea made an order on said
HELD: The Supreme Court ruled in the bank in favor of the United States Army officer
affirmative. There is no merit in petitioner's under whose charge he was then for the sum thus
argument that it should not be considered negligent, deposited in said bank. The arrest of Father De la
much less held liable for damages on account of the Peña and the confiscation of the funds in the bank
inadvertence of its bank employee for Article 1173 were the result of the claim of the military
of the Civil Code only requires it to exercise the authorities that he was an insurgent and that the
diligence of a good father of family. The bank is not funds thus deposited had been collected by him
expected to be infallible but it must bear the blame for revolutionary purposes. The money was taken
for not discovering the mistake of its teller despite from the bank by the military authorities by virtue
the established procedure requiring the papers and of such order and was turned over to the
bank books to pass through a battery of bank Government.
personnel whose duty it is to check and
countercheck them for possible errors. Apparently, ISSUE: Whether or not Father de la Peña is liable
the officials and employees tasked to do that did not for the loss of the money under his trust.
perform their duties with due care.
HELD: The Supreme Court ruled in the negative.
Father De la Peña's liability is determined by those
portions of the Civil Code which relate to
obligations. Although the Civil Code states that "a
person obliged to give something is also bound to
preserve it with the diligence pertaining to a good
father of a family". It also provides, following the
principle of the Roman law, major casus est, cui
humana infirmitas resistere non potest, that "no one
shall be liable for events which could not be
foreseen, or which having been foreseen were
inevitable, with the exception of the cases expressly
mentioned in the law or those in which the
obligation so declares."

BISHOP OF JARO VS DELA PENA, 26 Phil 144


HELD: The Supreme Court ruled in the
affirmative. In a contract of deposit, a person
receives an object belonging to another with the
obligation of safely keeping it and returning the
same. A deposit may be constituted even without
any consideration. It is not necessary that the
depositary receives a fee before it becomes
obligated to keep the item entrusted for safekeeping
and to return it later to the depositor. Petitioner
TRIPLE-V FOOD SERVICES INC. vs. cannot evade liability by arguing that neither a
FILIPINO MERCHANTS INSURANCE contract of deposit nor that of insurance, guaranty
COMPANY, GR. No. 160554, February 21, 2005 or surety for the loss of the car was constituted
when De Asis availed of its free valet parking
FACTS: Mary Jo-Anne De Asis dined at service.
petitioner's Kamayan Restaurant. De Asis was using
a Mitsubishi Galant Super Saloon Model 1995
issued by her employer Crispa Textile Inc.. On said
date, De Asis availed of the valet parking service of
petitioner and entrusted her car key to petitioner's
valet counter. Afterwards, a certain Madridano,
valet attendant, noticed that the car was not in its
parking slot and its key no longer in the box where
valet attendants usually keep the keys of cars
entrusted to them. The car was never recovered.
Thereafter, Crispa filed a claim against its insurer,
herein respondent Filipino Merchants Insurance
Company, Inc. Having indemnified Crispa for the CA AGRO-INDUSTRIAL DEVELOPMENT
loss of the subject vehicle, FMICI, as subrogee to CORP. VS CA, 291 SCRA 426
Crispa's rights, filed with the RTC at Makati City an
action for damages against petitioner Triple-V Food FACTS: Petitioner CA Agro-Industrial
Services, Inc. Petitioner claimed that the complaint Development Corp. and the spouses Ramon and
failed to adduce facts to support the allegations of Paula Pugao rented a Safety Deposit Box Security
recklessness and negligence committed in the Bank and Trust Company. Certificates of title of
safekeeping and custody of the subject vehicle. parcels of land were then stored therein. Thereafter,
Besides, when De Asis availed the free parking stab a certain Mrs. Margarita Ramos offered to buy two
which contained a waiver of petitioner’s liability in lots from petitioner. Mrs. Ramos demanded the
case of loss, she had thereby waived her rights. execution of a deed of sale which necessarily
entailed the production of the certificates of title. In
ISSUE: Whether or not petitioner Triple-V Food view thereof, Aguirre, accompanied by the Pugaos,
Services, Inc. is liable for the loss. then proceeded to the Bank to open the safety
deposit box and get the certificates of title.
However, when opened in the presence of the
Bank's representative, the box yielded no such
certificates. By virtue of which, petitioner filed an YHT REALTY CORPORATION VS. CA, GR.
action against the bank for the loss. The bank, No. 126780, February 17, 2005
however, contended that they are not liable for the
loss because, aside from the waiver signed by the FACTS: Maurice Mcloughlin is an Australian
petitioner, what transpired between them is a philanthropist, businessman, and a tourist. In his
contract of lease and not deposit. various trips from Australia going to different
countries, one of which is the Philippines, he would
ISSUE: Whether or not the contractual relation stay in Tropicana Inn which is owned by YHT
between a commercial bank and another party in a Realty Corp. After series of transactions with the
contract of rent of a safety deposit box with respect inn as depositary of his belongings, he noticed that
to its contents placed by the latter one of bailor and his money and several jewelries would be either
bailee or one of lessor and lessee. reduced or lost. He then decided to file an action
against Tropicana and its inn-keepers. However, the
HELD: The contract for the rent of the safety latter argued that they have no liability with regard
deposit box is not an ordinary contract of lease as to the loss by virtue of the undertaking signed by
defined in Article 1643 of the Civil Code. However, Mcloughlin. Such undertaking is a waiver of the
the Court do not fully subscribe to its view that the inn’s liability in case of any loss. The RTC and CA
same is a contract of deposit that is to be strictly both decided that such undertaking is null and void
governed by the provisions in the Civil Code on as contrary to the express provisions of the law.
deposit; the contract in the case at bar is a special Hence, the petition.
kind of deposit. It cannot be characterized as an
ordinary contract of lease under Article 1643 ISSUE: Whether or not the subject undertaking is
because the full and absolute possession and control null and void
of the safety deposit box was not given to the joint
renters — the petitioner and the Pugaos. The guard HELD: The court ruled in the affirmative. Art.
key of the box remained with the respondent Bank; 2003 of the Civil Code provides that, the hotel-
without this key, neither of the renters could open keeper cannot free himself from responsibility by
the box. On the other hand, the respondent Bank posting notices to the effect that he is not liable for
could not likewise open the box without the renter's the articles brought by the guest. Any stipulation
key. In this case, the said key had a duplicate which between the hotel-keeper and the guest whereby the
was made so that both renters could have access to responsibility of the former as set forth in Articles
the box. 1998 to 2001 is suppressed or diminished shall be
void.
Held: Petitioner under the continuing guaranty
obligated itself to SOLIDBANK as a surety. A
surety is distinguished from a guaranty in that a
guarantor is the insurer of the solvency of the debtor
and thus binds himself to pay if the principal
is unable to pay, it is the guarantor's own separate
undertaking, in which the principal does not
join while a surety is the insurer of the debt, and he
obligates himself to pay if the principal does not
pay and is usually bound with his principal by the
same instrument, executed at the same time, and on
E.ZOBEL INC. vs. COURT OF APPEALS, GR. the same consideration. The contract clearly
No. 113931, May 6, 1998 discloses that petitioner assumed liability to
SOLIDBANK, as a regular party to the undertaking
FACT: Private respondent spouses Raul and Elea and obligated itself as an original promissor. It
Claveria, doing business under the name "Agro bound itself jointly and severally to the obligation
Brokers," applied for a loan with respondent with the respondent spouses. The use of the term
Consolidated Bank and Trust Corporation (now "guarantee" does not ipso facto mean that the
SOLIDBANK) to finance the purchase of two contract is one of guaranty. Authorities recognize
maritime barges and one tugboat which would be that the word "guarantee" is frequently employed in
used in their molasses business. The loan was business transactions to describe not the security of
granted subject to the condition that respondent the debt but an intention to be bound by a primary
spouses will execute a chattel mortgage over the or independent obligation. The trial court has
three vessels to be acquired and that a continuing observed that the interpretation of a contract is not
guarantee be executed by Ayala International limited to the title alone but to the contents and
Philippines, Inc., now petitioner E. Zobel, Inc. in intention of the parties.
favor of SOLIDBANK. Respondent spouses
defaulted in the payment of the entire obligation
upon maturity. Hence, SOLIDBANK filed a
complaint for sum of money with a prayer for a writ
of preliminary attachment against respondent
spouses and petitioner. Petitioner moved for
dismissal. The trial court denied the motion to
dismiss and required petitioner to file an answer. INTERNATIONAL FINANCE CORP. vs.
Petitioner assailed the trial court’s order. The IMPERIAL TEXTILE MILLS INC. GR. No.
appellate court dismissed the petition. 160324, Nov. 15, 2005

ISSUE: Whether or not petitioner E. Zobel Inc., FACTS: Petitioner International Finance
under the continuing guaranty obligated itself to Corporation (IFC) and respondent Philippine
SOLIDBANK as a guarantor or a surety. Polyamide Industrial Corporation (PPIC) entered
into a loan agreement wherein IFC extended to
PPIC a loan payable in 16 semi-annual installments
with interest at the rate of 10% per annum on the
principal amount of the loan advanced and Held: ITM is a surety, and thus solidarily liable
outstanding from time to time. A guarantee with PPIC for the payment of the loan. As Article
agreement was executed with Imperial Textile 2047 provides, a suretyship is created when a
Mills, Inc. (ITM), Grand Textile Manufacturing guarantor binds itself solidarily with the principal
Corporation (Grandtex) and IFC as parties. ITM obligor. While referring to ITM as a guarantor, the
and Grandtex agreed to guarantee PPIC’s agreement specifically stated that the corporation
obligations under the loan agreement. There was a was “jointly and severally” liable. It further stated
reschedule of payments as requested by PPIC. that ITM was a primary obligor, not a mere surety.
Despite the rescheduling of the installment ITM thereby brought itself to the level of PPIC and
payments, however, PPIC defaulted. Hence, IFC could not be deemed merely secondarily liable.
served a written notice of default to PPIC Those words emphasize the nature of their liability,
demanding the latter to pay the outstanding which the law characterizes as a suretyship.
principal loan and all its accrued interests. Despite Therefore, ITM bound itself to be solidarily liable
such notice, PPIC failed to pay the loan and its with PPIC for the latter’s obligations under the loan
interests. IFC, together with DBP, applied for the agreement with IFC.
extrajudicial foreclosure of mortgages on the real PHIL. BLOOMING MILLS INC. vs. CA., GR.
estate, buildings, machinery, equipment plant and No. 142381, Oct. 15, 2003
all improvements owned by PPIC. IFC and DBP
were the only bidders during the auction sale. PPIC FACTS: Petitioner Philippine Blooming Mills, Inc.
failed to pay the remaining balance, thus, IFC (PBM) obtained a loan from Traders Royal Bank
demanded ITM and Grandtex, as guarantors of (TRB). Ching, the Senior Vice-President of PBM,
PPIC, to pay the outstanding balance. However, signed Deed of Suretyship in his personal capacity
despite the demand made by IFC, the outstanding and not as mere guarantors but as primary obligors.
balance remained unpaid. Consequently, IFC filed a PBM and Ching filed a petition for suspension
complaint against PPIC and ITM for the payment of of payments with the SEC, and eventually placed
the outstanding balance plus interests and attorney’s under rehabilitation receivership. Consequently,
fees. The trial court held PPIC liable for the TRB dismissed complaint as to PBM. Ching then
payment of the outstanding loan plus interests and alleged that the Deed of Suretyship executed in
attorney’s fees. However, the trial court relieved 1977 could not answer for obligations not yet in
ITM of its obligation as guarantor. On appeal of the existence at the time of its execution. It could not
case, the Court of Appeals reversed the decision of answer for debts contracted by petitioner PBM in
the trial court. The CA, however, held that ITM’s 1980 and 1981. No accessory contract of suretyship
liability as a guarantor would arise only if and when could arise without an existing principal contract of
PPIC could not pay. Since PPIC’s inability to loan.
comply with its obligation was not sufficiently
established, ITM could not immediately be made to Issue: Whether or not Ching is liable for credit
assume the liability. Hence, this petition. obligations contracted by Philippine Blooming
Mills Inc. against Traders Royal Bank before and
Issue: Whether or not ITM is a surety, and thus after the execution of the Deed of Suretyship.
solidarily liable with PPIC for the payment of the
loan. Held: Ching is liable for credit obligations
contracted by Philippine Blooming Mills Inc. of the same loan by other stockholders and officers
against Traders Royal Bank before and after the of Falcon, acting in their personal and individual
execution of the Deed of Suretyship. This is evident capacities. One Guaranty was executed by
from the tenor of the deed itself, referring to petitioner Salvador Escaño, while the other by
amounts to PBM may now be indebted or may petitioners Mario M. Silos, Ricardo C. Silverio, et
hereafter become indebted to Traders Royal Bank. al. Two years later, an agreement developed to cede
The law expressly allows a suretyship for future control of Falcon to Escaño, Silos and Joseph M.
debts. Article 2053 provides that Matti. Thus, contracts were executed whereby
a guaranty may also be given as security for future Ortigas, George A. Scholey, Inductivo and the heirs
debts, the amount of which is not yet known, there of then already deceased George T. Scholey
can be no claim against the guarantor until the debt assigned their shares of stock in Falcon to Escaño,
is liquidated. Silos and Matti. Part of the consideration that
induced the sale of stock was a desire by Ortigas, et
al., to relieve themselves of all liability arising from
their previous joint and several undertakings with
Falcon, including those related to the loan with
PDCP. Thus, an Undertaking was executed by the
concerned parties with Escaño, Silos and Matti
identified in the document as “sureties,” on one
hand, and Ortigas, Inductivo and the Scholeys as
“obligors,” on the other. However, Falcon
subsequently defaulted in its payments. After PDCP
foreclosed on the chattel mortgage, there remained a
subsisting deficiency of P5,000,000, which Falcon
did not satisfy despite demand. In order to recover
the indebtedness, PDCP filed a complaint for sum
of money against Falcon, Ortigas, Escaño, Silos,
Silverio and Inductivo. Ortigas filed together with
ESCANO and SILOS vs. ORTIGAS, Jr., GR. his answer a cross-claim against his co-defendants
No. 151953, June 29, 2007 Falcon, Escaño and Silos, and also manifested his
intent to file a third-party complaint against the
FACTS: Private Development Corporation of the Scholeys and Matti. The cross-claim lodged against
Philippines (PDCP) entered into a loan agreement Escaño and Silos was predicated on the 1982
with Falcon Minerals, Inc. whereby PDCP agreed to Undertaking, wherein they agreed to assume the
make available and lend to Falcon a sum certain. liabilities of Ortigas with respect to the PDCP loan.
Respondent Rafael Ortigas, Jr., et al., stockholder Escaño, Ortigas and Silos each sought to seek a
officers of Falcon, executed an Assumption of settlement with PDCP. The first to come to terms
Solidary Liability whereby they agreed to assume in with PDCP was Escaño, who entered into a
their individual capacity, solidary liability with compromise agreement. In exchange, PDCP waived
Falcon for the due and punctual payment of the loan or assigned in favor of Escaño 1/3 of its entire claim
contracted by Falcon with PDCP. Two separate in the complaint against all of the other defendants
guaranties were executed to guarantee the payment in the case. Then Ortigas entered into his own
compromise agreement with PDCP, allegedly to that effect. Hence, such obligation established in
without the knowledge of Escaño, Matti and Silos. the Undertaking is presumed only to be joint.
Thereby, Ortigas agreed to pay PDCP P1.3M as full Ortigas, as the party alleging that the obligation is in
satisfaction of the PDCP’s claim against Ortigas. fact solidary, bears the burden to overcome the
Silos and PDCP entered into a Partial Compromise presumption of jointness of obligations. He has
Agreement whereby he agreed to pay P500k in failed to discharge such burden. The term “surety”
exchange for PDCP’s waiver of its claims against has a specific meaning under our Civil Code. As
him. In the meantime, after having settled with provided in Article 2047 in a surety agreement the
PDCP, Ortigas pursued his claims against Escaño, surety undertakes to be bound solidarily with the
Silos and Matti, on the basis of the 1982 principal debtor. Thus, a surety agreement is an
Undertaking. He initiated a third-party complaint ancillary contract as it presupposes the existence of
against Matti and Silos, while he maintained his a principal contract. It appears that Ortigas’
cross-claim against Escaño. RTC issued the argument rests solely on the solidary nature of the
Summary Judgment, ordering Escaño, Silos and obligation of the surety under Article2047. In
Matti to pay Ortigas, jointly and severally, the tandem with the nomenclature “sureties” accorded
amount of P1.3M, as well as P20K in attorney’s to petitioners and Matti in the Undertaking,
fees. The trial court ratiocinated that none of the however, this argument can only be viable if the
third-party defendants disputed the 1982 obligations established in the Undertaking do
Undertaking. partake of the nature of a suretyship as defined
under Article 2047 in the first place. That clearly is
ISSUE: Whether or not petitioners are solidarily not the case here, notwithstanding the use of the
liable to respondent Ortigas. nomenclature “sureties” in the Undertaking.

Held: Petitioners are not solidarily liable to


respondent Ortigas. In case there is a concurrence of
two or more creditors or of two or more debtors in
one and the same obligation, Article 1207 of the
Civil Code states that among them, there is a
solidary liability only when the obligation expressly
so states, or when the law or the nature of the
obligation requires solidarity.” Article 1210 supplies
further that the indivisibility of an obligation does
not necessarily give rise to solidarity. Nor does
solidarity of itself imply indivisibility. Thus, the TUPAZ IV and TUPAZ v. CA and BPI, GR. No.
presumption is that the obligation is only joint. It 145578, Nov. 18, 2005
thus becomes incumbent upon the party alleging
that the obligation is indeed solidary in character to FACTS: Petitioners Jose Tupaz IV and Petronila
prove such fact with a preponderance of evidence. Tupaz were Vice-President for Operations and Vice-
The Undertaking does not contain any express President/Treasurer, respectively, of El Oro
stipulation that the petitioners agreed “to bind Engraver Corporation. El Oro Corporation had a
themselves jointly and severally” in their contract with the Philippine Army to supply the
obligations to the Ortigas group, or any such terms latter with survival bolos. Petitioners, on behalf of
El Oro Corporation, applied with respondent Bank liable for El Oro Corporation’s obligation. For the
of the Philippine Island for two commercial letters trust receipt dated 30 September 1981, petitioner
of credit to finance the purchase of the raw Jose Tupaz signed alone in his personal capacity, he
materials for the survival bolos. The letters of credit did not indicate that he was signing as El Oro
were in favor of El Oro Corporation’s suppliers, Corporation’s Vice-President for Operations. Hence,
Tanchaoco Manufacturing Incorporated and petitioner Jose Tupaz bound himself personally
Maresco Rubber and Retreading Corporation. liable for El Oro Corporation’s debts. Not being a
Respondent bank granted petitioners’ application party to the trust receipt dated 30 September 1981,
and issued two letters of credit. Simultaneously, petitioner Petronila Tupaz is not liable under such
petitioners signed trust receipts in favor of trust receipt.
respondent bank. On September 30, 1981, petitioner
Jose Tupaz signed, in his personal capacity, a trust
receipt corresponding to one letter of credit while
on October 9, 1981, both petitioners signed, in their
capacities as officers of El Oro Corporation, a trust
receipt corresponding to the other. After Tanchaoco
Incorporated and Maresco Corporation delivered
the raw materials to El Oro Corporation, respondent
bank paid the former. When petitioners did not
comply with their undertaking under the trust
receipts after respondent bank’s several demands,
the latter charged petitioners with estafa under the
Trust Receipts Law. The trial court acquitted
petitioners of estafa on reasonable doubt however it
found petitioners solidarily liable with El Oro
Corporation for the balance of El Oro Corporation’s
principal debt under the trust receipts. Petitioners
appealed to the Court of Appeals contending that
their acquittal operates to extinguish their civil
liability and so they are not personally liable for El
Oro Corporation’s debts. The Court of Appeals
affirmed the trial court’s ruling. Hence, this petition.

ISSUE: Whether or not petitioners are solidarily


liable with El Oro Corporation.

HELD: In the trust receipt dated 9 October 1981,


petitioners signed as officers of El Oro Corporation.
By so signing that trust receipt, petitioners did not
bind themselves personally liable for El Oro
Corporation’s obligation. Hence, for the trust receipt
dated 9 October 1981, petitioners are not personally