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Vic Byron Fernandez

Credit Transactions
Mina vs Pascual
Facts: Francisco Fontanilla and Andres Fontanilla were brothers. Francisco Fontanilla acquired during
his lifetime, on March 12, 1874, a lot.
Andres Fontanilla, with the consent of his brother Francisco, erected a warehouse on a part of the said lot,
embracing 14 meters of its frontage b 11 meters of its depth.
Francisco Fontanilla, the former owner of the lot, being dead, the herein plaintiffs, Ale!andro Mina, et al.,
were recogni"ed without discussion as his heirs.
Andres Fontanilla, the former owner of the warehouse, also ha#ing died, the children of $uperta %ascual
were recogni"ed, though it is not said how, and consequentl are entitled to the said building, or rather, as
$uperta %ascual herself stated, to onl si&'se#enths of one-half of it, the other half belonging, as it
appears, to the plaintiffs themsel#es, and the remaining one'se#enth of the first one'half to the children of
one of the plaintiffs, (lena de )illanue#a.
Ruperta Pascual, as the guardian of her minor children, the herein defendants,
petitioned the Curt of First Instance of Ilocos Norte for authorization to sell "the six-
sevenths of the one-half of the warehouse, of ! "# meters, together with its lot$
%he warehouse, together with the lot on which it stands, was sold to Cu &oco, the
other defendant in this case
Issue: WoN there exist a contract of commodatum
Held: although "oth litigating parties ma# have agreed in their idea of the
commodatum, on account of its not "eing, as indeed it is not, a 'uestion of fact "ut
of law
Contracts are not to "e interpreted in conformit# with the name that the parties
thereto agree to give them, "ut must "e construed, dul# considering their
constitutive elements, as the# are de(ned and denominated "# law$
)# the contract of loan, one of the parties delivers to the other, either an#thing not
perisha"le, in order that the latter ma# use it during the certain period and return it
to the former, in which case it is called commodatum
It is, tere!ore, an essential !eature o! te co""odatu" tat te use o!
te tin# $elon#in# to anoter sall B% !or a certain &eriod. Francisco
Fontanilla did not (x an# de(nite period or time during which *ndres Fontanilla
could have the use of the lot whereon the latter was to erect a stone warehouse of
considera"le value, and so it is that for the past thirt# #ears of the lot has "een
used "# "oth *ndres and his successors in interest$
It would seem that the Supreme Court failed to consider the possibility of a contract
of precardium between Francisco and Andres. Precardium is a kind of commodatum
+item ,u'ue +adatuan &r$ - P a g e
wherein the bailor may demand the object at will if the contract does not stipulate a
period or use to which the thing is deoted.
'e&u$lic o! te Pili&&ines vs. (ose Ba#tas, Felicidad Ba#tas
Facts: On May 8, 1948, Jose Bagtas borrowed from the Bureau of Animal Industry 3 bulls for 1
year for breeding uroses, sub!e"t to breeding fee for 1#$ of the boo% &alue of the bulls' (on
the e)iration of the "ontra"t, Bagtas as%ed for a renewal for another year' *he renewal granted
was only for 1 bull' Bagtas offered to buy the bulls at boo% &alue less dere"iation, but the
Bureau told him that he should either return the bulls or ay for their boo% &alue' Bagtas failed
to ay the boo% &alue, and so the +eubli" "ommen"ed an a"tion with the ,-I Manila to order
the return of the bulls of the ayment of boo% &alue' -eli"idad Bagtas, the sur&i&ing souse and
administratri) of the de"edent.s estate, stated that the / bulls ha&e already been returned in
190/, and that the remaining one died of gunshot during a 1u% raid' As regards the two bulls, is
was ro&en that they were returned and thus, there is no more obligation on the art of the
aellant' As to the bull not returned, -eli"idad "ontends that the obligation is e)tinguished
sin"e the "ontra"t is that of a "ommodatum and that the loss through fortuitous e&ent should be
borne by the owner'
Issue: 2hether, deending on the nature of the "ontra"t, the resondent is liable for the death
of the bull
Held: A "ontra"t of commodatum is essentially gratuitous' If the breeding fee be "onsidered a
"omensation, then the "ontra"t would be a lease of the bull' (nder arti"le 1341 of the ,i&il ,ode
the lessee would be sub!e"t to the resonsibilities of a ossessor in bad faith, be"ause she had
"ontinued ossession of the bull after the e)iry of the "ontra"t' And e&en if the "ontra"t be
"ommodatum, still the aellant is liable, be"ause arti"le 194/ of the ,i&il ,ode ro&ides that a
bailee in a "ontra"t of commodatum
' ' ' is liable for loss of the things, e&en if it should be through a fortuitous e&ent5
6/7 If he %ees it longer than the eriod stiulated ' ' '
637 If the thing loaned has been deli&ered with araisal of its &alue, unless there is a
stiulation e)emting the bailee from resonsibility in "ase of a fortuitous e&ent8
*he loan of one bull was renewed for another eriod of one year to end on 8 May 190#' But the
aellant %et and used the bull until 9o&ember 1903 when during a 1u% raid it was %illed by
stray bullets' -urthermore, when lent and deli&ered to the de"eased husband of the aellant
the bulls had ea"h an araised boo% &alue' It was not stiulated that in "ase of loss of the bull
due to fortuitous e&ent the late husband of the aellant would be e)emt from liability'
:e"ial ro"eedings for the administration and settlement of the estate of the de"eased Jose ;'
Bagtas ha&ing been instituted in the ,ourt of -irst Instan"e of +i<al 6=>/##7, the money
!udgment rendered in fa&or of the aellee "annot be enfor"ed by means of a writ of e)e"ution
but must be resented to the robate "ourt for ayment by the aellant, the administratri)
aointed by the "ourt'
+item ,u'ue +adatuan &r$ . - P a g e
If the "reeding fee "e considered a compensation, then the contract would "e a
lease of the "ull$ /nder article 01 of the Civil Code the lessee would "e su"2ect to
the responsi"ilities of a possessor in "ad faith, "ecause she had continued
possession of the "ull after the expir# of the contract$
Catolic Vicar A&ostolic o! te Mountain Province vs. Court o!
A&&eals, Heirs o! %#"idio )ctaviano and (uan Valdez
%he whole controvers# started when the herein petitioner (led an application
for registration of lands , ., 3 and ! in 4a %rinidad, )enguet on 5eptem"er 6,
70.$ %he heirs of &uan 8aldez and the heirs of 9gmidio :ctaviano (led an
opposition on lots . and 3, respectivel#$ :n Novem"er 1, 706, the land
registration court con(rmed the registra"le title of the petitioner$ :n ;a# 7,
711, the Court of *ppeals reversed the decision and dismissed the 8icar<s
application$ %he heirs (led a motion for reconsideration, pra#ing that the lots
"e ordered registered under their names$ %he Court of *ppeals denied the
motion for lac= of su>cient merit$ )oth parties then came "efore the
5upreme Court$ %he 5upreme Court, in a minute resolution, denied "oth
petitions$ %he heirs (led the instant cases for the recover# and possession of
the lots$
Respondents argue that the petitioner is "arred from setting up the defense
of ownership or long and continuous possession "# the prior 2udgment of the
Court of *ppeals under the principle of res 2udicata$ Petitioner contends that
the principle is not applica"le "ecause the dispositive portion of the
2udgment merel# dismissed the application for registration$
%he two cases a>rmed "# the 5upreme Court, touched on the ownership of lots .
and 3 in 'uestion? that the two lots were possessed "# the predecessors-in-interest
of private respondents under claim of ownership in good faith from 7@0 to 76?
that petitioner had "een in possession of the same lots as "ailee in commodatum
up to 76, when petitioner repudiated the trust and when it applied for registration
in 70.? that petitioner had 2ust "een in possession as owner for eleven #ears,
hence there is no possi"ilit# of ac'uisitive prescription which re'uires @ #ears
possession with 2ust title and 3@ #ears of possession without? that the principle of
res judicata on these (ndings "# the Court of *ppeals will "ar a reopening of these
'uestions of facts? and that those facts ma# no longer "e altered$
Issue: WoN the failure of 8icar to return the su"2ect propert# to respondents
constitute adverse possession which would entitle 8icar to have 2ust title in order for
ordinar# ac'uisitive prescription to set in$
Private respondents were a"le to prove that their predecessorsA house was
"orrowed "# petitioner 8icar after the church and the convent were destro#ed$ %he#
+item ,u'ue +adatuan &r$ 3 - P a g e
never as=ed for the return of the house, "ut when the# allowed its free use, the#
"ecame "ailors in commodatum and the petitioner the "ailee$ %he "aileesA failure to
return the su"2ect matter of commodatum to the "ailor did not mean adverse
possession on the part of the "orrower$ %he "ailee held in trust the propert# su"2ect
matter of commodatum$ %he adverse claim of petitioner came onl# in 76 when it
declared the lots for taxation purposes$ %he action of petitioner 8icar "# such
adverse claim could not ripen into title "# wa# of ordinar# ac'uisitive prescription
"ecause of the a"sence of 2ust title$
*+INT), V, B%C- ./ PHI0 123
Facts: Buintos and )ec= entered into a contract of lease, where"# the latter
occupied the former<s house$ :n &an !, 730, the contract of lease was novated,
wherein the B/intos gratuitousl# granted to )ec= the use of the furniture, su"2ect to
the condition that )ec= should return the furnitures to Buintos upon demand$
%hereafter, Buintos sold the propert# to ;aria and Rosario 4opez$ )ec= was noti(ed
of the conve#ance and given him 0@ da#s to vacate the premises$ IN addition,
Buintos re'uired )ec= to return all the furniture$ )ec= refused to return 3 gas
heaters and ! electric lamps since he would use them until the lease was due to
expire$ Buintos refused to get the furniture since )ec= had declined to return all of
them$ )ec= deposited all the furniture "elonging to B/intos to the sheriC$
I,,+%: W)N )ec= complied with his o"ligation of returning the furnitures to
Buintos when it deposited the furnitures to the sheriC$
'+0IN4: %he contract entered into "etween the parties is one of commadatum,
"ecause under it the plaintiC gratuitousl# granted the use of the furniture to the
defendant, reserving for herself the ownership thereof? "# this contract the
defendant "ound himself to return the furniture to the plaintiC, upon the latters
demand Dclause 1 of the contract, 9xhi"it *? articles 1!@, paragraph , and 1! of
the Civil CodeE$ %he o"ligation voluntaril# assumed "# the defendant to return the
furniture upon the plaintiCAs demand, means that he should return all of them to the
plaintiC at the latterAs residence or house$ %he defendant did not compl# with this
o"ligation when he merel# placed them at the disposal of the plaintiC, retaining for
his "ene(t the three gas heaters and the four eletric lamps$
*s the defendant had voluntaril# underta=en to return all the furniture to the
plaintiC, upon the latterAs demand, the Court could not legall# compel her to "ear
the expenses occasioned "# the deposit of the furniture at the defendantAs "ehest$
%he latter, as "ailee, was nt entitled to place the furniture on deposit? nor was the
plaintiC under a dut# to accept the oCer to return the furniture, "ecause the
defendant wanted to retain the three gas heaters and the four electric lamps$
+item ,u'ue +adatuan &r$ ! - P a g e
Chee Kiong Yam v. Malik
GR No-50550-52 October 31 1!"!
#act$% &etitioner$ 'ile( a )etition 'or certiorari )rohibition an( man(am*$ +ith
)reliminar, in-*nction again$t the re$)on(ent .*(ge Malik +ho r*le( that $everal
ca$e$ o' e$ta'a 'ile( again$t the )etitioner$ $ho*l( be a(mitte( 'or trial in hi$ $ala.
/t m*$t be note( that all com)lainant$ a(mitte( that the mone, +hich the
)etitioner$ (i( not ret*rn +ere obtaine( 'rom them b, the latter in a 'orm o' loan$.
/$$*e% Can there be a crime o' e$ta'a 'or non-)a,ment o' a loan0
1el(% No. /n or(er that a )er$on be convicte( o' 2+in(ling 34$ta'a5 *n(er 6rt. 315
o' the Revi$e( &enal Co(e it m*$t be )roven that he ha$ the obligation to (eliver or
ret*rn the $ame mone, goo($ or )er$onal )ro)ert, that he receive(. &etitioner$
ha( no $*ch obligation to ret*rn the $ame mone, i.e. the bill$ or coin$ +hich the,
receive( 'rom )rivate re$)on(ent$. 7hi$ i$ $o beca*$e a$ clearl, $tate( in criminal
com)laint$ the relate( civil com)laint$ an( the $*))orting $+orn $tatement$ the
$*m$ o' mone, that )etitioner$ receive( +ere loan$. /n 8.2. v$. /ba9e: 1! &hil.
55! 5;0 31!115 the 2*)reme Co*rt hel( that it i$ not e$ta'a 'or a )er$on to re'*$e
to )a, hi$ (ebt or to (en, it$ e<i$tence.
/t i$ the o)inion o' the Co*rt that +hen the relation i$ )*rel, that o' (ebtor an(
cre(itor the (ebtor can not be hel( liable 'or the crime o' e$ta'a *n(er $ai( article
b, merel, re'*$ing to )a, or b, (en,ing the in(ebte(ne$$.
/t a))eare( that re$)on(ent -*(ge 'aile( to a))reciate the (i$tinction bet+een the
t+o t,)e$ o' loan m*t**m an( commo(at*m +hen he )er'orme( the =*e$tione(
act$. 1e mi$took the tran$action bet+een )etitioner$ an( )rivate re$)on(ent$ to be
commo(at*m +herein the borro+er (oe$ not ac=*ire o+ner$hi) over the thing
borro+e( an( ha$ the (*t, to ret*rn the $ame thing to the len(er.
+item ,u'ue +adatuan &r$ 6 - P a g e
2a*ra /m)ort >4<)ort Co. /nc v. ?@&
G.R. No. A-2B!;C 6)ril 2" 1!"2

#act$% 2a*ra /nc. a))lie( to the Rehabilitation #inance Cor) 3be'ore it$ conver$ion
to ?@&5 'or a loan o' 500k $ec*re( b, a 'ir$t mortgage o' the 'actor, b*il(ing to
'inance 'or the con$tr*ction o' a -*te mill 'actor, an( )*rcha$e o' 'actor,
im)lement$. R#C acce)te( an( a))rove( the loan a))lication $*b-ect to $ome
con(ition$ +hich 2a*ra a(mitte( it co*l( not com)l, +ith. Ditho*t having receive(
the amo*nt being loane( an( $en$ing that it co*l( not at an,+a, obtain the '*ll
amo*nt o' loan 2a*ra /nc. then a$ke( 'or cancellation o' the mortgage +hich R#C
al$o a))rove(. Nine ,ear$ a'ter the cancellation o' the mortgage 2a*ra $*e( R#C
'or (amage$ 'or it$ non-'*l'illment o' obligation$ arg*ing that there +a$ in(ee( a
)er'ecte( con$en$*al contract bet+een them.
/$$*e% Da$ there a )er'ecte( con$en$*al contract0 Da$ there a real contract o' loan
+hich +o*l( +arrant recover, o' (amage$ ari$ing o*t o' breach o' $*ch contract0
1el(% On the 'ir$t i$$*e ,e$ there +a$ in(ee( a )er'ecte( con$en$*al contract a$
recogni:e( in 6rticle 1!3B o' the Civil Co(e. 7here +a$ *n(o*bte(l, o''er an(
acce)tance in thi$ ca$e% the a))lication o' 2a*ra /nc. 'or a loan o' &500000.00
+a$ a))rove( b, re$ol*tion o' the (e'en(ant an( the corre$)on(ing mortgage +a$
e<ec*te( an( regi$tere(. @*t thi$ 'act alone 'all$ $hort o' re$olving the $econ( i$$*e
an( the ba$ic claim that the (e'en(ant 'aile( to '*l'ill it$ obligation an( the )lainti''
i$ there'ore entitle( to recover (amage$. 7he action th*$ taken b, both )artie$E
2a*raF$ re=*e$t 'or cancellation an( R#CF$ $*b$e=*ent a))roval o' $*ch cancellation
E+a$ in the nat*re o' m*t*al (e$i$tance E +hat Manre$a term$ Gm*t*o (i$en$oGE
+hich i$ a mo(e o' e<ting*i$hing obligation$. /t i$ a conce)t (erive( 'rom the
)rinci)le that $ince m*t*al agreement can create a contract m*t*al (i$agreement
b, the )artie$ can ca*$e it$ e<ting*i$hment. /n vie+ o' $*ch e<ting*i$hment $ai(
)er'ecte( con$en$*al contract to (eliver (i( not con$tit*te a real contract o' loan.
+item ,u'ue +adatuan &r$ 0 - P a g e
Her"o5ina %stores vs. ,&ouses Arturo and 0aura ,u&an#an
4.'. No. 16718/ *pril F, .@.
9%0 CA,TI00), J.:
$ In :ct$ 773, Hermo2ina 9stores and 5pouses 5upangan entered into a
Conditional ,eed of 5ale where 9stores oCered to sell, and 5pouses oCered to
"u# a parcel of land in Cavite for P!$1;$
.$ *fter almost 1 #ears and despite the pa#ment of P3$6; "# the 5pouses, 9stores
still failed to compl# with her o"ligation to handle the peaceful transfer of
ownership as stated in 6 provisions in the contract$
3$ In a letter in .@@@, 5pouses demanded the return of the amount within 6 da#s
from receipt
!$ In repl#, 9stores promised to return the same within .@ da#s
6$ 5pouses agreed "ut imposed an interest of .I annuall#
0$ 9stores still failed despite demands
1$ 5pouses (led a complaint with the R%C against 9stores and Ro"erto *rias
Dallegedl# acted as 9stores< agentE
F$ In *nswer, 9stores said the# were willing to pa# the principal amount "ut without
the interest as it was not agreed upon
a$ %hat since the Conditional ,eed of 5ale provided onl# for the return of the
downpa#ment in case of "reach, the# cant "e lia"le for legal interest as
.$ R%C ruled sa#ing that the 5pouses are entitled to the interest "ut onl# at 0I per
annum and also entitled to att#<s fees
3$ :n appeal, C* said that the issue to resolve is
a$ whether it is proper to impose interest for an o"ligation that does not
involve a loan or for"earance of mone# in the a"sence of stipulation of the
!$ C* a>rmed R%C
a$ %hat interest should start on date of formal demand "# 5pouses to return
the mone# not when contract was executed as stated "# the R%C
"$ %hat *rias not "e solidaril# lia"le as he acted as agent onl# and did not
expressl# "ind himself or exceeded his authorit#
6$ 9stores contendsG
+item ,u'ue +adatuan &r$ 1 - P a g e
a$ Not "ound to pa# interest "ecause the deed onl# provided for the return of
the downpa#ment in case of failure to compl# with her o"ligations
"$ %hat att# fees not proper "ecause "oth R%C and C* sustained her
contention that .I interest was uncalled for so it showed that 5pouses
did not win
0$ 5pouses contendG
a$ It is onl# fair that interest "e imposed "ecause 9stores failed to return the
amount upon demand and used the mone# for her "ene(t
"$ 9stores failed to relocate the house outside the perimeter of the su"2ect
lot and complete the necessar# documents
c$ *s to the fees, the# claim that the# were forced to litigate when 9stores
un2ustl# held the amount
Is the imposition of interest and attorne#<s fees is properJ K95
Interest "ased on *rt ..@7 of CC D0IE or under Central )an= Circular !0 D.IEJ .I
Interest "ay $e i"&osed even in te a$sence o! sti&ulation in te
*rticle ..@ of the Civil Code expressl# provides that LMiNnterest ma#, in the discretion
of the court, "e allowed upon damages awarded for "reach of contract$O
9stores failed on her o"ligations despite demand$
o 5he admitted that the conditions were not ful(lled and was willing to
return the full amount of P3$6; "ut hasn<t done so
o 5he is now in default
Te interest at te rate o! 1:; is a&&lica$le in te instant case.
Pen RuleG the applica"le interest rate shall "e computed in accordance with the
stipulation of the parties
9xcG if no stipulation, applica"le rate of interest shall "e .I per annum
o Qhen o"ligation arises out of a loan or for"earance of mone#, goods or
In other cases, it shall "e 0I
In this case, no stipulation was made
Contract involved in tis case is not a loan $ut a Conditional 9eed o!
o No <uestion tat te o$li#ations =ere not "et and te return o!
"oney not "ade
%ven i! transaction =as a Conditional 9eed o! ,ale, te sti&ulation
#overnin# te return o! te "oney can $e considered as a !or$earance
o! "oney =ic re<uires 1:; interest
+item ,u'ue +adatuan &r$ F - P a g e
In Crismina !arments" Inc. . Court of Appeals, For$earance-- Lcontractual o"ligation
of lender or creditor to refrain during a given period of time, from re'uiring the
"orrower or de"tor to repa# a loan or de"t then due and pa#a"le$O
o In such case, Lfor"earance of mone#, goods or creditsO will have no distinct
de(nition from a loan$
o however, the phrase Lfor"earance of mone#, goods or creditsO is meant to have
a separate meaning from a loan, otherwise there would have "een no need to
add that phrase as a loan is alread# su>cientl# de(ned in the Civil Code
o For"earance of mone#, goods or credits should therefore refer to arrangements
other than loan agreements, where a person ac'uiesces to the temporar# use
of his mone#, goods or credits pending happening of certain events or
ful(llment of certain conditions$
9stores< unwarranted withholding of the mone# amounts to for"earance of mone#
which can "e considered as an involuntar# loan so rate is .I starting in 5ept$ .@@@
Te a=ard o! attorney>s !ees is =arranted.
no dou"t that the 5pouses were forced to litigate to protect their interest, i.e$, to
recover their mone#$ %he amount of P6@,@@@$@@ more appropriate
4,I, vs CA 7.?63
Facts: In 70, herein private respondents spouses Nemencio R$ ;edina and &ose(na P$
;edina D;edinas for shortE applied with the herein petitioner Povernment 5ervice Insurance
5#stem DP5I5 for shortE for a loan of P0@@,@@@$@@$
%he P5I5 )oard of %rustees, in its Resolution of ,ecem"er .@, 70, approved under
Resolution No$ 6@! onl# the amount of P36@,@@@$@@, su"2ect to the following conditionsG
that the rate of interest shall "e 7I per annum compounded monthl#? repa#a"le in ten D@E
#ears at a monthl# amortization of P!,!33$06 including principal and interest, and that an#
installment or amortization that remains due and unpaid shall "ear interest at the rate of
7IR.I per month$
/pon application "# the ;edinas, the P5I5 )oard of %rustees adopted Resolution No$ . on
&anuar# F, 703, as amended "# Resolution No$ 3!F dated Fe"ruar# .6, 703, approving an
additional loan of P.3@,@@@$@@ in favor of the ;edinas on the securit# of the same
mortgaged properties and the additional properties covered
the ;edinas having defaulted in the pa#ment of the monthl# amortization on their loan, the
P5I5 imposed 7IR.I interest on an installments due and unpaid$
the P5I5 noti(ed the ;edinas that the# had arrearages in the aggregate amount of
P616,06.$!. as of *pril F, 71!, and demanded pa#ment within seven D1E da#s from notice
thereof, otherwise, it would foreclose the mortgage$
the P5I5 (led an *pplication for Foreclosure of ;ortgage with the 5heriC of the Cit# of ;anila
the real properties of the ;edinas were sold at pu"lic auction to the P5I5 as the highest
"idder for the total amount of P!!@,@F@$@@ on &anuar# ., 710, and the corresponding
Certi(cate of 5ale was executed "# the 5heriC of ;anila on &anuar# .1, 710
+item ,u'ue +adatuan &r$ 7 - P a g e
the ;edinas (led an *mended Complaint with the trial court, pra#ing for DaE the declaration
of nullit# of their two real estate mortgage contracts with the P5I5 as well as of the extra-
2udicial foreclosure proceedings? and D"E the refund of excess pa#ments, plus damages and
attorne#As fees
Issue: 3$ QH9%H9R :R N:% %H9 C:/R% :F *PP9*45 9RR9, IN H:4,INP %H*% %H9
IN%9R95% R*%95 :N %H9 4:*N *CC:/N%5 :F R95P:N,9N%-*PP94499 5P:/595
*R9 /5/RI:/5?
Held: *s to whether or not the interest rates on the loan accounts of the ;edinas
are usurious, it has alread# "een settled that the /sur# 4aw applies onl# to interest
"# wa# of compensation for the use or for"earance of mone# D4opez v$ Hernaez, 3.
Phil$ 03? )achrach ;otor Co$ v$ 9spiritu, 6. Phil$ 3!0? 9'uita"le )an=ing
Corporation v$ 4iwanag, 3. 5CR* .73, ;arch 3@, 71@E$ Interest "# wa# of damages
is governed "# *rticle ..@7 of the Civil Code of the Philippines which providesG
*rt$ ..@7$ If the o"ligation consists in the pa#ment of a sum of mone#, and the
de"tor incurs in dela#, the indemnit# for damages, there "eing no stipulation to the
contrar#, shall "e the pa#ment of the interest agreed upon,$$$
In the )achrach case DsupraE the 5upreme Court ruled that the Civil Code permits the
agreement upon a penalt# apart from the interest$ 5hould there "e such an agreement, the
penalt# does not include the interest, and as such the two are diCerent and distinct things
which ma# "e demanded separatel#$ Reiterating the same principle in the later case of
9'uita"le )an=ing Corp$ DsupraE, where this Court held that the stipulation a"out pa#ment of
such additional rate parta=es of the nature of a penalt# clause, which is sanctioned "# law$
@on# Can -i" vs Peo&le o! te Pili&&ines
Facts: Petitioner Yong Chan Kim was employed as a Researcher at the Aquaculture Department of the
Southeast Asian Fisheries Development Center S!AFD!C" with head station at #ig$auan% Province of
&loilo' As (ead of the !conomics )nit of the Research Division% he conducted prawn surveys which
required him to travel to various selected provinces in the country where there are potentials for prawn
*n +, -une +./0% petitioner was issued #ravel *rder 1o' 0000 which covered his travels to different
places in 2u3on from +4 -une to 0+ -uly +./0% a period of thirty five 5," days' )nder this travel order% he
received P4%65/'77 as cash advance to defray his travel e8penses'
9ithin the same period% petitioner was issued another travel order% #'*' 004/% requiring him to travel from
the (ead Station at #ig$auan% &loilo to Ro8as City from 57 -une to 6 -uly +./0% a period of five ," days'
For this travel order% petitioner received a cash advance of P6.,'77'
*n +6 -anuary +./5% petitioner presented $oth travel orders for liquidation% su$mitting #ravel !8pense
Reports to the Accounting Section' 9hen the #ravel !8pense Reports were audited% it was discovered
that there was an overlap of four 6" days 57 -une to 5 -uly +./0" in the two 0" travel orders for which
petitioner collected per diems twice' &n sum% the total amount in the form of per diems and allowances
charged and collected $y petitioner under #ravel *rder 1o' 0000% when he did not actually and physically
travel as represented $y his liquidation papers% was P+%057'77'
the court finds the accused% Yong Chan Kim% guilty $eyond reasona$le dou$t for the crime of !stafa
penali3ed under paragraph l$" of Article 5+,%
+item ,u'ue +adatuan &r$ @ - P a g e
Issue: WoN a person receiving a Cash advance ma# "e held lia"le for 9stafa
if he does not return the excess or if he he collected for each da# twice
Held: Art' +.,5': A person who receives a loan of money or any other fungi$le thing acquires the
ownership thereof% and is $ound to pay to the creditor an equal amount of the same ;ind and quality'
#he ruling of the trial <udge that ownership of the cash advanced to the petitioner $y private respondent
was not transferred to the latter is erroneous' *wnership of the money was transferred to the petitioner'
Since ownership of the money cash advance" was transferred to petitioner% no fiduciary relationship was
created' A$sent this fiduciary relationship $etween petitioner and private respondent% which is an
essential element of the crime of estafa $y misappropriation or conversion% petitioner could not have
committed estafa'
0I4+TAN V,. C)+'T )F APP%A0,
P$R$ No$ !1!06, Fe"ruar# ., .@@.
Facts: 4igutan and dela 4lana o"tained a loan from 5ecurit# )an= and %rust Co$
%he# executed a promissor# note "inding themselves 2ointl# and severall# to pa#
the sum "orrowed with an interest of 6$F7I per annum upon maturit# and to pa# a
penalt# of 6I ever# month on the outstanding principal and interest in case of
default$ In addition, the# agreed to pa# @I of the total amount due "# wa# of
attorne#<s fees if the matter were indorsed to a law#er for collection or if a suit were
instituted to enforce pa#ment$ 4igutan and dela 4lana failed to settle the de"t$ *
complaint for recover# of the amount due was (led with the R%C$ %he court held,
among others, the "orrowers were lia"le for a 3I per month penalt# Dinstead of 6IE
and @I of the total amount of the inde"tedness for attorne#<s fee, in addition to
the principal loan$
Issue: Qhether the court is correct in holding the "orrowers lia"le for the penalt#$
Qhether or not the pa#ment of Interest is still proper even after pa#ment of penalt#
HeldG * penalt# clause, expressl# recognized "# law, is an accessor# underta=ing to
assume greater lia"ilit# on the part of an o"ligor in case of "reach of an o"ligation$
It functions to strengthen the coercive force of the o"ligation and to provide for
what could "e the stipulated indemnit# without the necessit# of proof on the
+item ,u'ue +adatuan &r$ - P a g e
existence and on the measure of damages caused "# the "reach$ *lthough the
court ma# not at li"ert# ignore the freedom of the parties to agree on such terms
and conditions as the# see (t, a stipulated penalt#, nevertheless ma# "e e'uita"l#
reduced "# the courts if ini'uitous or unconsciona"le or if the principal o"ligation
has "een partl# or irregularl# complied with$ %he reduction is 2usti(ed "# the facts
that the "orrowers were a"le to partl# compl# with their o"ligations$
Held: *he essence or rationale for the pament of interest, quite often referred to as cost of
mone, is not e&actl the same as that of a surcharge or a penalt. A penalt stipulation is not
necessaril preclusi#e of interest, if there is an agreement to that effect, the two being distinct
concepts which ma separatel be demanded.
Eastern Shipping Lines v. CA
GR No. !"B12 .*l, 12 1!!B
#act$% &etitioner-(e'en(ant +a$ con$igne( to (eliver a cargo. 8)on embarkment the cargo
+a$ 'o*n( to be (amage( +hile on tran$it. &rivate re$)on(ent-)lainti'' Mercantile
/n$*rance )ai( the con$ignee the amo*nt o' (amage ba$e( on a marine in$*rance )olic,.
Mercantile con$=*entl, $*e( the )etitioner 'or recover, o' (amage$ it )ai( to the con$ignee.
7he co*rt a =*o (eci(e( in 'avor o' the )lainti'' an( '*rther $tre$$ing the amo*nt )ai( b, the
in$*rance com)an, to the con$ignee be )ai( an( +ith the )re$ent legal intere$t o' 12H )er
ann*m commencing on the (ate o' 'iling o' the com)laint *ntil '*ll, )ai(. 7he )etitioner
no+ con$te$t$ the r*ling )artic*larl, on the i$$*e o' intere$t.
/$$*e% Dhen $ho*l( the reckoning )erio( be 'or the com)*tation o' the )a,ment o' legal
intere$t on an a+ar( 'or lo$$ or (amage0 Dhat i$ the a))licable rate o' intere$t0
1el(% 7he Co*rt lai( (o+n the 'ollo+ing r*le$ o' th*mb 'or g*i(ance in ca$e$ like that o' the
/. Dhen an obligation regar(le$$ o' it$ $o*rce i.e. la+ contract$ =*a$i-contract$ (elict$ or
=*a$i-(elict$ i$ breache( the contravenor can be hel( liable 'or (amage$. 7he )rovi$ion$ *n(er
7itle IJ/// on G?amage$G o' the Civil Co(e govern in (etermining the mea$*re o' recoverable
+item ,u'ue +adatuan &r$ . - P a g e
//. Dith regar( )artic*larl, to an a+ar( o' intere$t in the conce)t o' act*al an( com)en$ator,
(amage$ the rate o' intere$t a$ +ell a$ the accr*al thereo' i$ im)o$e( a$ 'ollo+$%
1. Dhen the obligation i$ breache( an( it con$i$t$ in the )a,ment o' a $*m o' mone, i.e. a loan
or 'orbearance o' mone, the intere$t (*e $ho*l( be that +hich ma, have been $ti)*late( in
+riting. #*rthermore the intere$t (*e $hall it$el' earn legal intere$t 'rom the time it i$ -*(iciall,
(eman(e(. /n the ab$ence o' $ti)*lation the rate o' intere$t $hall be 12H )er ann*m to be
com)*te( 'rom (e'a*lt i.e. 'rom -*(icial or e<tra-*(icial (eman( *n(er an( $*b-ect to the
)rovi$ion$ o' 6rticle 11;! o' the Civil Co(e.
2. Dhen an obligation not con$tit*ting a loan or 'orbearance o' mone, i$ breache( an intere$t
on the amo*nt o' (amage$ a+ar(e( ma, be im)o$e( at the (i$cretion o' the co*rt at the rate o'
;H )er ann*m. No intere$t ho+ever $hall be a(-*(ge( on *nli=*i(ate( claim$ or (amage$
e<ce)t +hen or *ntil the (eman( can be e$tabli$he( +ith rea$onable certaint,. 6ccor(ingl,
+here the (eman( i$ e$tabli$he( +ith rea$onable certaint, the intere$t $hall begin to r*n 'rom
the time the claim i$ ma(e -*(iciall, or e<tra-*(iciall, 36rt. 11;! Civil Co(e5 b*t +hen $*ch
certaint, cannot be $o rea$onabl, e$tabli$he( at the time the (eman( i$ ma(e the intere$t $hall
begin to r*n onl, 'rom the (ate the -*(gment o' the co*rt i$ ma(e 3at +hich time the
=*anti'ication o' (amage$ ma, be (eeme( to have been rea$onabl, a$certaine(5. 7he act*al
ba$e 'or the com)*tation o' legal intere$t $hall in an, ca$e be on the amo*nt 'inall, a(-*(ge(.
3. Dhen the -*(gment o' the co*rt a+ar(ing a $*m o' mone, become$ 'inal an( e<ec*tor, the
rate o' legal intere$t +hether the ca$e 'all$ *n(er )aragra)h 1 or )aragra)h 2 above $hall be
12H )er ann*m 'rom $*ch 'inalit, *ntil it$ $ati$'action thi$ interim )erio( being (eeme( to be
b, then an e=*ivalent to a 'orbearance o' cre(it.
Producers BanA o! te Pili&&ines vs CA B:228C
8ives Dwill "e the creditor in this caseE was as=ed "# his friend 5anchez to help the
latter<s friend, ,oronilla Dwill "e the de"tor in this caseE in incorporating ,oronilla<s
"usiness L5trelaO$ %his LhelpO "asicall# involved 8ives depositing a certain amount of
mone# in 5trela<s "an= account for purposes of incorporation DrationaleG ,oronilla had to
show that he had su>cient funds for incorporationE$ %his amount shall later "e returned
to 8ives$
Rel#ing on the assurances and representations of 5anchez and ,oronilla, 8ives issued a
chec= of P.@@,@@ in favor of 5trela and deposited the same into 5trela<s newl#-opened
"an= account Dthe pass"oo= was given to the wife of 8ives and the pass"oo= had an
instruction that no withdrawalsRdeposits will "e allowed unless the pass"oo= is
4ater on, 8ives learned that 5trela was no longer holding o>ce in the address previousl#
given to him$ He later found out that the funds had alread# "een withdrawn leaving onl#
a "alance of P7@,@@@$ %he 8ives spouses tried to withdraw the amount, "ut it was
una"le to since the "alance had to answer for certain postdated chec=s issued "#
+item ,u'ue +adatuan &r$ 3 - P a g e
,oronilla made various tenders of chec= in favor of 8ives in order to pa# his de"t$ *ll of
which were dishonored$
Hence, 8ives (led an action for recover# of sum against ,oronilla, 5anchez, ,umagpi
and Producer<s )an=$
%C S C*G ruled in favor of 8ives$
DE Q:N the transaction is a commodatum or a mutuum$ C:;;:,*%/;$
D.E Q:N the fact that there is an additional P .,@@@ Dallegedl# representing interestE in
the amount to "e returned to 8ives converts the transaction from commodatum to
mutuum$ N:$
D3E Q:N Producer<s )an= is solidaril# lia"le to 8ives, considering that it was not priv# to
the transaction "etween 8ives and ,oronilla$ K95$
DE %he transaction is a commodatum$
CC 733 Dthe provision distinguishing "etween the two =inds of loansE seem to impl#
that if the su"2ect of the contract is a consumma"le thing, such as mone#, the contract
would "e a mutuum$ However, there are instances when a commodatum ma# have for
its o"2ect a consumma"le thing$ 5uch can "e found in CC 730 which states that
Lconsumma"le goods ma# "e the su"2ect of commodatum if the purpose of the contract
is not the consumption of the o"2ect, as when it is merel# for exhi"itionO$ In this case,
the intention of the parties was merel# for exhi"ition$ 8ives agreed to deposit his mone#
in 5trela<s account speci(call# for purpose of ma=ing it appear that 5treal had su>cient
capitalization for incorporation, with the promise that the amount should "e returned
withing 3@ da#s$
D.E CC 736 states that Lthe "ailee in commodatum ac'uires the use of the thing loaned "ut
not its fruitsO$ In this case, the additional P .,@@@ corresponds to the fruits of the
lending of the P .@@,@@@$
D3E *tienza, the )ranch ;anager of Producer<s )an=, allowed the withdrawals on the account of 5trela
despite the rule written in the pass"oo= that neither a deposit, nor a withdrawal will "e permitted
except upon the production of the pass"oo= Drecall in this case that the pass"oo= was in the
possession of the wife of 8ives all alongE$ Hence, this onl# proves to show that *tienza allowed the
withdrawals "ecause he was part# to ,oronilla<s scheme of defrauding 8ives$ )# virtue of CC
.F@, PN), as emplo#er, is held primaril# and solidaril# lia"le for damages caused "# their
emplo#ees acting within the scope of their assigned tas=s$ *tienza<s acts, in helpong ,oronilla, a
customer of the "an=, were o"viousl# done in furtherance of the "usiness of the "an=, even
though in the process, *tienza violated some rules$
Carolyn M. 4arcia
'ica Marie ,. Tio
4' No. 17?363, 1. Marc :226
Respondent %hio received from petitioner Parcia two crossed chec=s
which amount to /5T@@,@@@ and /5T6@@,@@@, respectivel#, pa#a"le to the
order of ;arilou 5antiago$ *ccording to petitioner, respondent failed to pa#
the principal amounts of the loans when the# fell due and so she (led a
+item ,u'ue +adatuan &r$ ! - P a g e
complaint for sum of mone# and damages with the R%C$ Respondent denied
that she contracted the two loans and countered that it was ;arilou 5atiago
to whom petitioner lent the mone#$ 5he claimed she was merel# as=ed #
petitioner to give the chec=s to 5antiago$ 5he issued the chec=s for P10,@@@
and P.@,@@@ not as pa#ment of interest "ut to accommodate petitioner<s
re'uest that respondent use her own chec=s instead of 5antiago<s$
R%C ruled in favor of petitioner$ C* reversed R%C and ruled that there
was no contract of loan "etween the parties$
DE Qhether or not there was a contract of loan "etween petitioner and
D.E Qho "orrowed mone# from petitioner, the respondent or ;arilou
DE %he Court held in the a>rmative$ * loan is a real contract, not
consensual, and as such I perfected onl# upon the deliver# of the o"2ect of
the contract$ /pon deliver# of the contract of loan Din this case the mone#
received "# the de"tor when the chec=s were encashedE the de"tor ac'uires
ownership of such mone# or loan proceeds and is "ound to pa# the creditor
an e'ual amount$ It is undisputed that the chec=s were delivered to
D.E However, the chec=s were crossed and pa#a"le not to the order of
the respondent "ut to the order of a certain ;arilou 5antiago$ ,eliver# is the
act "# which the res or su"stance is thereof placed within the actual or
constructive possession or control of another$ *lthough respondent did not
ph#sicall# receive the proceeds of the chec=s, these instruments were
placed in her control and possession under an arrangement where"# she
actuall# re-lent the amount to 5antiago$
Petition granted? 2udgment and resolution reversed and set aside$
&a-*,o v. C6
GR No. 1B;3;B .*ne 3 200B
#act$% &a-*,o entr*$te( a ho*$e to G*evara 'or the latterF$ *$e )rovi(e( he $ho*l(
ret*rn the $ame *)on (eman( an( +ith the con(ition that G*evara $ho*l( be
re$)on$ible o' the maintenance o' the )ro)ert,. 8)on (eman( G*evara re'*$e( to
ret*rn the )ro)ert, to &a-*,o. 7he )etitioner then 'ile( an e-ectment ca$e again$t
+item ,u'ue +adatuan &r$ 6 - P a g e
G*evara +ith the M7C +ho r*le( in 'avor o' the )etitioner. On a))eal +ith the C6
the a))ellate co*rt rever$e( the -*(gment o' the lo+er co*rt on the gro*n( that
both )artie$ are illegal $ettler$ on the )ro)ert, th*$ have no legal right $o that the
Co*rt $ho*l( leave the )re$ent $it*ation +ith re$)ect to )o$$e$$ion o' the )ro)ert,
a$ it i$ an( r*ling '*rther that the contract*al relation$hi) o' &a-*,o an( G*evara
+a$ that o' a commo(at*m.
/$$*e% /$ the contract*al relation$hi) o' &a-*,o an( G*evara that o' a
1el(% No. 7he Co*rt o' 6))eal$K theor, that the Ka$*n(*an i$ one o' commo(at*m
i$ (evoi( o' merit. /n a contract o' commo(at*m one o' the )artie$ (eliver$ to
another $omething not con$*mable $o that the latter ma, *$e the $ame 'or a
certain time an( ret*rn it. 6n e$$ential 'eat*re o' commo(at*m i$ that it i$
grat*ito*$. 6nother 'eat*re o' commo(at*m i$ that the *$e o' the thing belonging
to another i$ 'or a certain )erio(. 7h*$ the bailor cannot (eman( the ret*rn o' the
thing loane( *ntil a'ter e<)iration o' the )erio( $ti)*late( or a'ter accom)li$hment
o' the *$e 'or +hich the commo(at*m i$ con$tit*te(. /' the bailor $ho*l( have
*rgent nee( o' the thing he ma, (eman( it$ ret*rn 'or tem)orar, *$e. /' the *$e o'
the thing i$ merel, tolerate( b, the bailor he can (eman( the ret*rn o' the thing at
+ill in +hich ca$e the contract*al relation i$ calle( a )recari*m. 8n(er the Civil
Co(e )recari*m i$ a kin( o' commo(at*m. 7he Ka$*n(*an reveal$ that the
accommo(ation accor(e( b, &a-*,o to G*evarra +a$ not e$$entiall, grat*ito*$.
Dhile the Ka$*n(*an (i( not re=*ire G*evarra to )a, rent it obligate( him to
maintain the )ro)ert, in goo( con(ition. 7he im)o$ition o' thi$ obligation make$ the
Ka$*n(*an a contract (i''erent 'rom a commo(at*m. 7he e''ect$ o' the Ka$*n(*an
are al$o (i''erent 'rom that o' a commo(at*m. Ca$e la+ on e-ectment ha$ treate(
relation$hi) ba$e( on tolerance a$ one that i$ akin to a lan(lor(-tenant relation$hi)
+here the +ith(ra+al o' )ermi$$ion +o*l( re$*lt in the termination o' the lea$e.
7he tenantK$ +ithhol(ing o' the )ro)ert, +o*l( then be *nla+'*l.
Peo&le V, Pui#
Facts: :n 1 Novem"er .@@6, the Iloilo Provincial ProsecutorAs :>ce (led "efore R%C
in ,umangas, Iloilo, . cases of Buali(ed %heft against respondents %eresita Puig
DPuigE and Romeo Porras DPorrasE who were the Cashier and )oo==eeper,
respectivel#, of private complainant Rural )an= of Pototan, Inc$
+item ,u'ue +adatuan &r$ 0 - P a g e
It was alleged in the information that %eresita Puig and Romeo Porras too= awa#
P6,@@@ without the consent of the owner )an= to the pre2udice and damage of the
%he R%C dismissed the case for insu>cienc# of the information ruling that the real
parties in interest are the depositors-clients and not the "an= "ecause the "an=
does not ac'uire ownership of the mone# deposited in it$
Hence petitioner Rural )an= went directl# to the court via petition for certiorari$
Petitioner explains that under *rticle 7F@ of the New Civil Code, "(xed, savings,
and current deposits of mone# in "an=s and similar institutions shall "e governed "#
the provisions concerning simple loans$" Corollar# thereto, *rticle 763 of the same
Code provides that "a person who receives a loan of mone# or an# other fungi"le
thing ac'uires the ownership thereof, and is "ound to pa# to the creditor an e'ual
amount of the same =ind and 'ualit#$" %hus, it posits that the depositors who place
their mone# with the "an= are considered creditors of the "an=$ %he "an= ac'uires
ownership of the mone# deposited "# its clients, ma=ing the mone# ta=en "#
respondents as "elonging to the "an=$
Issue: Qhether or not the )an= ac'uired ownership of the mone# deposited in it to
"e a"le to hold the respondents lia"le for 'uali(ed theft which re'uires that there
must "e ta=ing of the mone# without the consent of the owners$
Held: %he petition is meritorious
)an=s where monies are deposited, are considered the owners thereof$ %his is ver#
clear not onl# from the express provisions of the law, "ut from esta"lished
2urisprudence$ %he relationship "etween "an=s and depositors has "een held to "e
that of creditor and de"tor$ *rticles 763 and 7F@ of the New Civil Code, as
appropriatel# pointed out "# petitioner, provide as followsG
Article 1/78.A &erson =o receives a loan o! "oney or any oter !un#i$le
tin# ac<uires te o=nersi& tereo!, and is $ound to &ay to te creditor
an e<ual a"ount o! te sa"e Aind and <uality.
Article 1/32. FiFed, savin#s, and current de&osits o! "oney in $anAs and
si"ilar institutions sall $e #overned $y te &rovisions concernin# loan.
In a long line of cases involving Buali(ed %heft, the Court has (rml# esta"lished the
nature of possession "# the )an= of the mone# deposits therein, and the duties
"eing performed "# its emplo#ees who have custod# of the mone# or have come
into possession of it$ %he Court has consistentl# considered the allegations in the
Information that such emplo#ees acted with grave a"use of con(dence, to the
damage and pre2udice of the )an=, without particularl# referring to it as owner of
the mone# deposits, as su>cient to ma=e out a case of Buali(ed %heft
In summar#, the )an= ac'uires ownership of the mone# deposited "# its clients? and
the emplo#ees of the )an=, who are entrusted with the possession of mone# of the
)an= due to the con(dence reposed in them, occup# positions of con(dence$ %he
Informations, therefore, su>cientl# allege all the essential elements constituting the
crime of Buali(ed %heft$
+item ,u'ue +adatuan &r$ 1 - P a g e