CASE STUDY 1 SUM OF MONEY

A&B is a company engaged in the real estate business, with offices in Makati City. In
order to finance its on-going project, A&Bs General Manager, Ernesto Santos asked one
of its employees, Margaret Casas, to seek out lenders. Margaret approached Rolando
Pascual in his house in Fairview and promised him 5% interest per month if he would
lend money to A&B Realty. Pascual agreed and lent an initial amount of P1 Million
covered by a Promissory Note at 6% per month with no specified maturity date. On
January 30, 2010, Pascual delivered the amount of P1 Million in cash to Margaret Casas.
In turn, Casas delivered to him a Promissory Note dated January 31, 2010 signed by
Ernesto Santos without indicating in what capacity he was signing.
In the latter part of 2010, Margaret Casas, again approached Pascual to borrow money.
Pascual agreed to lend the amount of P1 Million payable in 1 year with an agreed interest
of P600,000 per annum. Pascual issued his personal check dated December 31, 2010 in
favor of A&B for P1 Million, which check was later deposited in the account of A&B.
From February 2010 to August 2012, A&B delivered to Pascual the monthly checks of
P50 Thousand or a total amount of P1.8 Million.
A&B stopped making any further payments in September 2012. Pascual sent separate
demand letters to A&B and Ernesto Santos demanding payment of the principal amount
of P1 Million loan covered by the Promissory Note dated January 31, 2010 and the
agreed interest at 5% per month and payment of the P1 Million loan evidenced by the
check dated December 31, 2010.
A&B responded saying that Casas was not authorized by the board of directors to borrow
money on behalf of the corporation and that the agreed interest rate was excessive and
unconscionable.