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People v.

Puig & Porras
Facts:
Respondents were conspiring, confederating, and helping one another, with grave abuse of confidence, being the Cashier and Bookkeeper of the Rural Bank of Pototan,
Inc., Pototan, Iloilo, without the knowledge and/or consent of the management of the Bank and with intent of gain, did then and there willfully, unlawfully and
feloniously take, steal and carry away the sum of P15,000.00, Philippine Currency, to the damage and prejudice of the said bank in the aforesaid amount.
However, the trial court did not find the existence of probable cause because (1) the element of ‘taking without the consent of the owners’ was missing on the ground
that it is the depositors-clients, and not the Bank, which filed the complaint in these cases, who are the owners of the money allegedly taken by respondents and hence,
are the real parties-in-interest; and (2) the Informations are bereft of the phrase alleging "dependence, guardianship or vigilance between the respondents and the
offended party that would have created a high degree of confidence between them which the respondents could have abused.".
Issue:
WON the bank was the owner and thus, the real party in interest?
Held:
Yes. Under Art 1980 of the CC, “fixed, savings and current deposits of money in banks shall be
governed by the provisions concerning simple loans” and Art. 1953 provides that “a person who receives a loan of money acquires the owernship thereof, and is bound
to pay to the creditor an equal amount of the same kind and quality.” Thus, it posits that the depositors who place their money with the bank are considered creditors of
the bank. The bank acquires ownership of the money deposited by its clients, making the money taken by respondents as belonging to the bank. Allegations in the
information that such employees acted with grave abuse of confidence, to the damage and prejudice of the Bank, without particularly referring to it as owner of the
money deposits, as sufficient to make out a case of Qualified Theft.

BPI FAMILY BANK VS. FRANCO
G.R. No. 123498 November 23, 2007
J. Nachura
FACTS:
On August 15, 1989, Tevesteco opened a savings and current account with BPI-FB. Soon thereafter,
FMIC also opened a time deposit account with the same branch of BPI-FB
On August 31, 1989, Franco opened three accounts, namely, a current, savings, and time deposit, with BPI-
FB. The total amount of P2,000,000.00 used to open these accounts is traceable to a check issued by
Tevesteco allegedly in consideration of Franco’s introduction of Eladio Teves, to Jaime Sebastian, who was
then BPI-FB SFDM’s Branch Manager. In turn, the funding for the P2,000,000.00 check was part of the
P80,000,000.00 debited by BPI-FB from FMIC’s time deposit account and credited to Tevesteco’s current
account pursuant to an Authority to Debit purportedly signed by FMIC’s officers.
It appears, however, that the signatures of FMIC’s officers on the Authority to Debit were forged. BPI-
FB, debited Franco’s savings and current accounts for the amounts remaining therein. In the meantime, two
checks drawn by Franco against his BPI-FB current account were dishonored and stamped with a notation
“account under garnishment.” Apparently, Franco’s current account was garnished by virtue of an Order of
Notably, the dishonored checks were issued by Franco and presented for payment at BPI-FB prior to
Franco’s receipt of notice that his accounts were under garnishment. It was only on May 15, 1990, that Franco
was impleaded in the Makati case. Immediately, upon receipt of such copy, Franco filed a Motion to Discharge
Attachment. On May 17, 1990, Franco pre-terminated his time deposit account.
BPI-FB deducted the amount of P63,189.00 from the remaining balance of the time deposit account
representing advance interest paid to him. Consequently, in light of BPI-FB’s refusal to heed Franco’s
demands to unfreeze his accounts and release his deposits therein, Franco filed on June 4, 1990 with the
Manila RTC the subject suit.
ISSUE: WON Respondent had better right to the deposits in the subject accounts which are part of the
proceeds of a forged Authority to Debit
HELD: NO
There is no doubt that BPI-FB owns the deposited monies in the accounts of Franco, but not as a legal
consequence of its unauthorized transfer of FMIC’s deposits to Tevesteco’s account. BPI-FB conveniently orgets that the deposit of money in banks is governed by the
Civil Code provisions on simple loan or mutuum.
As there is a debtor-creditor relationship between a bank and its depositor, BPI-FB ultimately acquired
ownership of Franco’s deposits, but such ownership is coupled with a corresponding obligation to pay him an
equal amount on demand. Although BPI-FB owns the deposits in Franco’s accounts, it cannot prevent him
from demanding payment of BPI-FB’s obligation by drawing checks against his current account, or asking for
the release of the funds in his savings account. Thus, when Franco issued checks drawn against his current
account, he had every right as creditor to expect that those checks would be honored by BPI-FB as debtor.
More importantly, BPI-FB does not have a unilateral right to freeze the accounts of Franco based on its
mere suspicion that the funds therein were proceeds of the multi-million peso scam Franco was allegedly
involved in. To grant BPI-FB, or any bank for that matter, the right to take whatever action it pleases on
deposits which it supposes are derived from shady transactions, would open the floodgates of public distrust in
the banking industry.
Ineluctably, BPI-FB, as the trustee in the fiduciary relationship, is duty bound to know the signatures of
its customers. Having failed to detect the forgery in the Authority to Debit and in the process inadvertently
facilitate the FMIC-Tevesteco transfer, BPI-FB cannot now shift liability thereon to Franco and the other payeesof checks issued by Tevesteco, or prevent withdrawals
from their respective accounts without the appropriate court writ or a favorable final judgment.

CEBU INTERNATIONAL FINANCE CORPORATION VS. CA Case Digest
CEBU INTERNATIONAL FINANCE CORPORATION VS. COURT of APPEALS

G. R. No. 123031. October 12, 1999
316 SCRA 488

FACTS: Cebu International Finance Corporation (CIFC) is a quasi-banking institution engaged in money market operations. On April 25, 1991, private respondent
Vicente Alegre invested with CIFC P500, 000.00 in cash. Petitioner issued a promissory note to mature on May 27, 1991. The note for P516, 238. 67 covered private

Nicolas Cuenco. The court granted CIFC’s motion but upon the motion to dismiss the third-party complaint filed by BPI. in his capacity as Judge of the Court of First Instance of Cebu City. US Lines filed a suit against petitioner seeking payment of demurrage charges plus interest and damages. Hence. UNITED STATES LINES Case Digest TELENGTAN BROTHERS and SONS vs. 1991. 1992. CIFC appealed from the said decision. Francisco P. Wherefore. BPI dishonored the check. . On June 17. During the hearing.  The public respondent Judge ruled in favor of Amigable and directed the Republic of the Philippines to pay Amigable the value of the property taken with interest at 6% and the attorney's fees. counterfeit checks amounting to P1.34.459.No. the government proved that the price of the property at the time of taking was P2. 1992. Amigable filed in the Court of First Instance a complaint to recover the ownership and possession of the land and for damages for the alleged illegal occupation of the land by the government (entitled Victor Amigable vs. and Victor Amigable. and that in any case. 132284 February 28.94 in favor of the private respondent as proceeds of his mature investment plus interest.  In the hearing. (RCBC) in Puerto Princesa.  The correct amount of compensation would be P14. 1993. Ratio:  Article 1250 of the NCC provides that the value of currency at the time of the establishment of the obligation shall be the basis of payment which would be the value of peso at the time of taking of the property when the obligation of the government to pay arises. 1981. Immediately. for contribution and indemnity. Commissioner of Public Highways vs. not at the time of the establishment. by the use of a check. A check is not a legal tender. RTC ruled that petitioner is liable to respondent and all be computed as of the date of payment in accordance with Article 1250 of the Civil Code. and the interest in the sum of P145.37 per square meter. It is only when there is an agreement that the inflation will make the value of currency at the time of payment. CIFC is still liable for the payment of the check. Tender of payment involves a positive and unconditional act by the obligor of offering legal tender currency as payment to the obligee for the former’s obligation and demanding that the latter accept the same. CIFC denied the request and instead instructed private respondent to wait for its ongoing bank reconciliation with BPI.2006 FACTS: Petitioner is a domestic corporation while US Lines is a foreign corporation engaged in overseas shipping. BPI took custody of the check pending an investigation of several counterfeit checks drawn against CIFC’s checking account.410.  On 1959. 1980 De Castro. Hon. BPI used the check to trace the perpetrators of the forgery.44 at the rate of 6% from 1924 up to the time respondent court rendered its decision as was awarded by the said court should accordingly be reduced. CIFC has not yet tendered a valid payment of its obligation to the private respondent. In a loan transaction. the obligation to pay a sum certain in money may be paid in money. CA affirmed the decision.000 which the latter refused to pay despite repeated demands. the court dismissed the third-party complaint. CIFC in its response to Alegre’s complaint filed for leaver of court and impleaded BPI to enforce a right. vs.615. Petitioner incurred P94.775. as well as the check remained in BPI’s custody. 1991. Also. respondents. On September 27. 724. 1993. It alleged that BPI unlawfully deducted from CIFC’s checking account. BPI encashed and deducted the said amount from the account of CIFC.79 at P2.Makati Branch. 390. Issue:  Whether or not the provision of Article 1250 of the New Civil Code is applicable in determining the amount of compensation to be paid to private respondent Amigable for the property taken. Branch II. ISSUE: Whether or not the petitioner is still liable for the payment of check even though BPI accepted the instrument RULING: The Supreme Court held that the money market transaction between the petitioner and private respondent is in the nature of loan. CIFC issued BPI Check No. the right of the owner to recover the value of said property was already barred by estoppel and the statute of limitations. On July 27. Petitioner disclaims liability alleging that it has never entered into a contract nor signed an agreement to be bound by it. the non-suability of the government was invoked. Tender of payment cannot be presumed by a mere inference from surrounding circumstances. the government took private respondent Victor Amigable's land for road-right-of-way purpose. and therefore cannot constitute valid tender of payment. On February 25. Burgos. UNITED STATES LINES G. Alegre filed a complaint for recovery of sum of money against petitioner. the basis for payment. The action included the prayer to collect the amount of the check paid to Alegre but dishonored by BPI. 513397 for P514. Held:  Not applicable. BPI through its Manager. CIFC sought to recover its lost funds and formally filed against BPI a separate civil action for collection of a sum of money with RTC. the assailed decision is affirmed and the petition is denied. that the check is subject of an investigation. Amigable. alleging that he had connived with other persons to forge several checks of BPI’s client. 58. Palawan. but the appellate court affirmed in toto the decision of the lower court. respondent’s placement plus interest at 20. RTC-Makati Branch rendered its judgment in favor of private respondent.58. J: Facts:  On 1924. 364. Private respondent made a formal demand of his money market placement. on the other hand. In turn.5% for 32 days. not P49.R. BPI filed a separate collection suit against Alegre. TELENGTAN BROTHERS and SONS vs. In effect. Burgos (Consti1) Commissioner of Public Highways. It was made applicable that consignees who fail to take delivery of their containerized cargo within the 10-day free period are liable to pay demurrage charges. private respondent’s wife deposited the check with Rizal Commercial Banking Corp. 364. testified that on July 16. which is the legal tender or. 724. The check was drawn from petitioner’s current account maintained with Bank of the Philippine Islands (BPI) main branch at Makati City. amounting to P1. private respondent notified CIFC of the dishonored check and demanded that he be paid in cash.  Amigable's complaint was dismissed on the grounds that the land was either donated or sold by its owners to enhance its value. CIFC promised to replace the check but required an impossible condition that the original check must first be surrendered. presented a newspaper showing that the price was P6. but the proceeds. petitioner.37 per square meter. in his capacity as Commissioner of Public Highways and Republic of the Philippines). On June 22. On May 27. This was alleged in accordance with the Compromise Agreement it entered with CIFC to end the litigation in RTC-Makati Branch. March 31. 1993. On July 13.

Deflation is an inverse situation. 2009 Sebastian Siga-an. CA affirmed the decision deleting the amounts representing 10% VAT and rental adjustment.107. It ratiocinated that respondent’s obligation was only to pay the loaned amount of P540. Bathala Marketng. 7 of the contract and Article 1250. ALMEDA v. EQUITABLE PCI BANK vs NG SHEUNG NGOR Case Digest EQUITABLE PCI BANK. Not satisfied with the amount applied as interest. The Court holds that there has been an extraordinary inflation within the meaning of Article 1250 of the Civil Code.R.000. 1998. Petition is denied. Respondent refused the demand and insisted that there was no extraordinary inflation to warrant such application.00 of which the loan agreement was not reduced in writing and there was no stipulation as to the payment of interest for the loan. Facts: Respondent filed a complaint for sum of money against petitioner. Respondent issued a check worth P500. Ponciano agreed to lease a porton of Almeda Compound for a monthly rental of P1.R. January 28. No. Despite the devaluation of the peso.00 through mistake. Absent an official pronouncement or declaration by competent authorities of its existence. petitioner pestered her to pay additional interest and threatened to block or disapprove her transactions with the PNO if she would not comply with his demand. Neither can petitioners legitimately demand rental adjustment because of extraordinary inflation or devaluation.000. She asked petitioner for receipt for the payments but was told that it was not necessary as there was mutual trust and confidence between them.000. petitioner. CA decision is affirmed.348. she paid additional amounts in cash and checks as interests for the loan.R. 173227. The assailed decision is affirmed with modification that the order for re-computation as of the date of payment in accordance with the provisions of Article 1250 of New Civil Code is deleted. Thus. USURY: Case Digest: G. 2007 FACTS: On October 7. petitioner should pay exemplary damages by way of example or correction for the public good. respondent. ISSUE: Whether or not there was an extraordinary deflation RULING: Extraordinary inflation exists when there is an unusual decrease in the purchasing power of currency and such decrease could not be reasonably foreseen or was beyond the contemplation of the parties at the time of the obligation. YU and APAS v.00. Alicia Villanueva. after 1977.000. 6th Condition states that respondent can only be held liable for new taxes imposed after the effectivity of the contract of lease. and that the alleged interests due should not be included in the computation of respondent’s total monetary debt because there was no agreement between them regarding payment of interest.00 to petitioner as payment of the remaining balance of the loan of which the excess amount of P160.69 for four years.00 would be applied as interest for the loan. petitioner informed respondent that its monthly rental be increased by 73% pursuant to the condition No. 171545. its effects are not to be applied. RTC ordered the use of the 1996 dollar exchange rate in computing respondent’s dollar-denominated loans. RTC ruled in favor of the respondent and declared that plaintiff is not liable for the payment of VAT and the adjustment rental. petitioner should pay moral damages for the sleepless nights and wounded feelings experienced by respondent. The RTC rendered a Decision holding that respondent made an overpayment of her loan obligation to petitioner and that the latter should refund the excess amount to the former. plus attorney’s fees and costs of suit. VAT cannot be considered a “new tax”. Further. It concluded that since respondent made an excess payment to petitioner in the amount of P660. and (2) whether the principle of solutio indebiti applies to the case at bar.No. She then issued another check in the amount of P200. Respondent claimed that petitioner approached her inside the PNO and offered to loan her the amount of P540.00 to petitioner as partial payment of the loan. BSP never declared a situation of extraordinary inflation. the total amount she paid to petitioner for the loan and interest accumulated to P1. Also. Decision of lower courts are reversed and set aside.000. Issue: (1) Whether or not interest was due to petitioner.000. There is no reason for ordering the payment of an obligation in an amount different from what has been agreed upon because of the purported supervention of an extraordinary inflation. Respondents should pay their dollar denominated loans at the exchange rate fixed by the BSP on the date of maturity. there being no extraordinary inflation or devaluation. ISSUE: Whether the amount of rentals due the petitioners should be adjusted by reason of extraordinary inflation or devaluation RULING: Petitioners are stopped from shifting to respondent the burden of paying the VAT. 2001.00. According to her computation.ISSUE: Whether the re-computation of the judgment award in accordance with Article 1250 of the Civil Code proper RULING: The Supreme Court found as erroneous the trial court’s decision as affirmed y the Court of Appeals. Respondent refused to pay the VAT and adjusted rentals as demanded by the petitioners but continually paid the stipulated amount.200. NG SHEUNG NGOR G. BATHALA MARKETING G.000. BATHALA MARKETING Case Digest EUFEMIA and ROMEL ALMEDA v. They claimed that they were induced by the bank to avail of its peso and dollar credit facilities by offering low interests so they accepted and signed Equitable’s proposal. January 20.NO. 2008 FACTS: In May 1997. December 19. vs. CA granted the Bank’s application for injunction but the properties were sold to public auction. On January 26. renewed its Contract of Lease with Ponciano Almeda. Under the contract. They alleged that they were unaware that the documents contained escalation clauses granting Equitable authority to increase interest without their consent. 150806. respondents Ngor and Go filed an action for amendment and/or reformation of documents and contracts against Equitable and its employees. petitioner should return the said amount to respondent pursuant to the principle of solutio indebiti. . These were rebutted by the bank.

A. The Civil Code permits the agreement upon a penalty apart from the interest. which "suspended" the Usury Law of 1916 (Act No. ineluctably shows that said Amendment was never intended to completely supersede the original mortgage contract. R. 2655 as regards usurious interest rates. RULING: The Court of Appeals decision is REVERSED and SET ASIDE. President Fidel V. Said provision provides that if something is received when there is no right to demand it. has no authority to continue enforcing Central Bank Circular No. No. the CB-MB issued CB Circular No. In its Resolution No. Also in 1976. payment of monetary interest is allowed only if: (1) there was an express stipulation for the payment of interest. 1962. within limits prescribed by the Usury Law.00. Ramos signed into law R. We have held that the principle of solutio indebiti applies in case of erroneous payment of undue interest.R. and its President. 905.000. YES . Article 1956 of the Civil Code. The GSIS first approved only the amount of P350. Ruling: (1) No. 2655).A. The trial court ruled in the favor of the Medinas. Whether the CB-MB exceeded its authority when it issued CB Circular No. Interest by way of damages is governed by Art 2209 of the Civil Code. J. and subsequent acts of the parties. FACTS: Advocates for Truth in Lending. Article 2154 of the Civil Code explains the principle of solutio indebiti. The Medinas then executed an Amendment of Real Estate Mortgage. 1962. Whether or not the Court of Appeals erred in holding that the interest rates on the loan accounts are usurious. BANGKO SENTRAL NG PILIPINAS Advocates for Truth in Lending. VS. and body of the Amendment Real Estate Mortgage taking into account the prior. they began defaulting in the payment of fire insurance premiums. 7653.A.000. Section 1 of the Circular. et. replacing the Central Bank Monetary Board (CB-MB) by virtue of R. preamble. and (2) the agreement for the payment of interest was reduced in writing. Beginning 1965. such as solutio indebiti. which removed all interest ceilings and thus suspended Act No.000. which refers to monetary interest. 2013 REYES. Series of 1982. Article 2232 of the Civil Code states that in a quasi-contract. 905. al.00 was approved on the security of the same mortgaged properties and additional properties. if the borrower of loan pays interest when there has been no stipulation therefor. and the person who has no right to receive such payment becomes obligated to return the same. The quasi-contract of solutio indebiti harks back to the ancient principle that no one shall enrich himself unjustly at the expense of another. they filed an Application of Foreclosure of Mortgage and the properties were sold at a public auction in 1976. 905. And in 1967. we have held that collection of interest without any stipulation therefor in writing is prohibited by law. and (2) the payment is made through mistake. ISSUES: 1. G. 2. the obligation to return it arises. particularly with respect to compounding of interest. 192986 / January 15. ISSUE/S: 1. who has no duty to pay. executed a promissory note and a real estate mortgage in favor of GSIS. No. Both parties appealed with the Court of Appeals and the Court of Appeals affirmed the trial courts decision. specifically mandates that no interest shall be due unless it has been expressly stipulated in writing. an additional loan of P230. and not through liberality or some other cause. the provisions of the Civil Code concerning solutio indebiti shall be applied.000. Inc. NO 2. Whether or not the Court of Appeals erred in holding that the amendment of Real Estate Mortgage dated July 6. 265. No.00 was restored. 4. No. Then the amount of P350. The title recognizes the existence and effectivity of the previous mortgage contract. vs. and it was unduly delivered through mistake. 7653 establishing the Bangko Sentral ng Pilipinas (BSP) to replace the CB. removed the ceilings on interest rates on loans or forbearance of any money. In 1963. Petitioner acted oppressively when he pestered respondent to pay interest and threatened to block her transactions with the PNO if she would not pay interest. On June 14. The Usury Law applies only to interest by way of compensation for the use of forbearance of money. issued by the CB-MB in 1982. A careful perusal of the title. among others. Inc.00 then reduced the amount to P295. GSIS then imposed 9%/12% interest on all installments due and unpaid and in 1975. 905. the BSP-MB may continue to enforce CB Circular No. private respondents spouses Nemencio Medina and Josefina Medina applied with GSIS for a loan of P600. under its General Provisions. Compensatory interest is not chargeable in the instant case because it was not duly proven that respondent defaulted in paying the loan and no interest was due on the loan because there was no written agreement as regards payment of interest. 7653. (2) Petitioner cannot be compelled to return the alleged excess amount paid by respondent as interest. and as such the two are different and distinct things that may be demanded separately. The concurrence of the two conditions is required for the payment of monetary interest. exemplary damages may be imposed if the defendant acted in an oppressive manner. This forced respondent to pay interest despite lack of agreement thereto. the award of exemplary damages is appropriate so as to deter petitioner and other lenders from committing similar and other serious wrongdoings. the Medinas filed an Amended Complaint praying for the declaration of nullity of the 2 real estate mortgage contracts as well as of the extra-judicial foreclosure proceedings and the refund of excess payments. Whether under R. L-52478 | GSIS v Court of Appeals | Paras FACTS: In 1961. 2224. HELD: 3. 1993. goods or credits. and the person who received the payment. INC. Under Article 1960 of the Civil Code. The Medinas accepted the amount. In such a case.000. Eduardo Olaguer claim that they are raising issues of transcendental importance to the public and so they filed Petition for Certiorari under Rule 65 ROC seeking to declare that the Bangko Sentral ng Pilipinas Monetary Board (BSP-MB). contemporaneous. which created the Central Bank (CB) of the Philippines. damages and attorney’s fees. BSP.00. Thus. ADVOCATES FOR TRUTH IN LENDING. empowered the CB-MB to. The principle of solutio indebiti applies where (1) a payment is made when there exists no binding relation between the payor. superseded the Mortgage contract dated April 4.A. The penalty does not include the interest. Thus. As can be gleaned from the foregoing provision. No. Nowhere in the Amendment did the party manifest their intention to supersede the original contract and it does not embody the act of conveyancing the subject properties by way of mortgage. set the maximum interest rates which banks may charge for all types of loans and other credit operations. Case Digest # II-2 | GR No. the Medinas defaulted in the payment of the monthly amortization of their loan. a creditor-debtor relationship is created under a quasi-contract whereby the payor becomes the creditor who then has the right to demand the return of payment made by mistake.

CCP. 2655. Nevertheless. who allegedly asked for his help to obtain a loan from CCP. as amended. more particularly under Article 2209 of the NCC which provides that: If the obligation consists in the payment of a sum of money. the BSP-MB may prescribe the maximum rate or rates of interest for all loans or renewals thereof or the forbearance of any money. No. Tan interposed the defense that he merely accommodated a friend. Tan filed a Manifestation wherein he proposed to settle his indebtedness to CCP. granting that the CB had power to "suspend" the Usury Law. 28 June 1989 174 SCRA 295 . 905 provides that. as amended. The penalty may be enforced only when it is demandable in accordance with the provisions of this Code. 265. 905. or loans of financial intermediaries. The BSP-MB has authority to enforce CB Circular No. 7653. 265 covered only loans extended by banks. COURT OF APPEALS and the CULTURAL CENTER OF THE PHILIPPINES." that "a CB Circular cannot repeal a law. A closer perusal shows that Section 109 of R. CA. CB Circular No. if there is no stipulation to the contrary. 905 "did not repeal nor in anyway amend the Usury Law but simply suspended the latter’s effectivity. the GSIS case went on to state that such a stipulation about payment of an additional interest rate partakes of the nature of a penalty clause which is sanctioned by law. Petitioner claimed that he has not been able to locate his friend. shall be the payment of the interest agreed upon. Petitioners contend that. citing several cases. 2. No. No. However. or public policy.A. After partial payments. If the parties stipulate this kind of agreement. whereas R. and the debtor incurs in delay. there being no stipulation to the contrary. provided they are not contrary to law. CA affirmed the decision. which is six per cent per annum Integrated Realty Corp vs PNB GR No. if not against the law. Liwanag .R. an earlier law. No. 265.A.A. It is settled that nothing in CB Circular No. 2655. this Court has ruled that the NCC permits an agreement upon a penalty apart from the monetary interest. fees and other charges. 265. and iniquitous interest. on a loan or forbearance of any money. and as such the two are different and distinct from each other and may be demanded separately.A. CB Circular No. the penalty shall substitute the indemnity for damages and the payment of interests in case of non-compliance. herein petitioner. CA. whether natural or juridical. under which the contracting parties may establish such stipulations. premiums. the lifting of the ceilings for interest rates does not authorize stipulations charging excessive.RULING: 1. Yes. Stipulations authorizing iniquitous or unconscionable interests have been invariably struck down for being contrary to morals. as well as such loans made by pawnshops. 905 grants lenders a carte blanche authority to raise interest rates to levels which will either enslave their borrowers or lead to a hemorrhaging of their assets. the petitioner was not able to pay the balance of the loan and requested from CCP for the restructuring of the loan which was granted by the latter. It cited Article 1306 of the New Civil Code.A." and "Usury has been legally non-existent in our jurisdiction. Act No. including those for loans of low priority such as consumer loans. wrote a letter to Tan demanding full payment of the restructured loan. respondents. No. 116285 | 2001-10-19 DOCTRINE A stipulation about payment of an additional interest rate partakes of the nature of a penalty clause. No. damages shall be paid if the obligor refuses to pay the penalty or is guilty of fraud in the fulfillment of the obligation. 7653 been intended to repeal Section 1-a of Act No." It does not purport to suspend the Usury Law only as it applies to banks. "The rate of interest. As the Court explained in the landmark case of Medel v. in view of Section 135 of R. The petitioners point out that R. instead. which expressly repealed R. G. the legal interest. While the case was pending in the trial court. Whether there are contractual and legal bases for the imposition of the penalty and interest on the penalty.A. the Usury Law has been rendered ineffective. v. ISSUES: 1. vs. In GSIS v. The power of the CB to effectively suspend the Usury Law pursuant to P. Penalty on delinquent loans may take different forms. The CB-MB merely suspended the effectivity of the Usury Law when it issued CB Circular No. Had R. 905." By lifting the interest ceiling. terms and conditions as they may deem convenient. CCP filed a complaint for collection of a sum of money. No. 905 merely upheld the parties’ freedom of contract to agree freely on the rate of interest. No favorable response was made. goods or credits. Further. until fully paid. No. No. No. and in the absence of stipulation. Whether interest may accrue on the penalty or compensatory interest without violating the provisions of Article 1959 of the New Civil Code. which provides that: HELD: 1. or credits. finance companies and similar credit institutions. Article 1226 of NCC provides that: In obligations with a penal clause. Tan failed to pay any installment on the said restructured loan. merely supplemented it as it concerns loans by banks and other financial institutions. but to all lenders. CCP did not agree to Tan’s proposals and so the trial of the case ensued. ANTONIO TAN. obtained 2 loans from the Cultural Center of the Philiipines (CCP). now R.A. FACTS Antonio Tan. is much broader in scope." that "by virtue of CB Circular No. 60705. against Tan after the latter failed to settle his said restructured loan obligation. including commissions. whereas under Section 1-a of the Usury Law. Tan requested from CCP a moratorium on his loan obligation. including deposits and deposit substitutes. 7653. the penalty does not include the monetary interest. public order. It even authorizes the BSP-MB to prescribe different maximum rate or rates for different types of borrowings. unconscionable. good customs. 905.D. it would have so stated in unequivocal terms. 7653 did not reenact a provision similar to Section 109 of R. goods. Section 1 of CB Circular No.A. [for] only a law can repeal another law. The PNs expressly provides for the imposition of both interest and penalties in case of default on the part of the petitioner in the payment of the subject restructured loan. Penalty clauses can be in the form of penalty or compensatory interest. the new BSP-MB did not retain this power of its predecessor. clauses. petitioner. regardless of maturity and whether secured or unsecured. 2. 1684 has long been recognized and upheld in many cases. the indemnity for damages. Interest can now be charged as lender and borrower may agree upon. Quoting Equitable Banking Corp. shall not be subject to any ceiling prescribed under or pursuant to the Usury Law. Trial court ordered Tan to pay CCP his outstanding account with the corresponding stipulated interest and charges (penalty and interest on penalty) thereof. morals. that may be charged or collected by any person.

1991.00 was already withdrawn from the firm’s account. Banco Filipino may increase rate of interest on said loans. represented by the DENR for the reforestation of a forest land within a period of 3 years. loan from petitioner as evidenced by promissory note. thru President Calvin Arcilla secured loans from BPI with FGU Insurance as surety.C. LC Diaz then sued Solidbank. on 3 occassions. respectively. it is the duty of LC Diaz to secure its passbook. an accounting firm. from requiring borrower or debtor to repay loan or debt then due and payable. On appeal. deposited an amount with the bank but due to a long line and the fact that he still needs to deposit a certain amount in another bank. the context of usury law. meanwhile. The RTC ruled in favor of Solidbank. 494 provinding for the maximum interest of 19%pa. that when the P300k was withdrawn. the amount due to respondent does not represent a loan or forbearance of money. The bank is the debtor and the depositor is the creditor. the depositor. he was again issued a CTD. The reliance on the circular was without any legal basis. but as damages fro failure and delay in the payment of its obligations which thereby compelled IRC and Santos to resort to the courts. 1991. On appeal. The act of the teller returning the passbook to someone else other than . within. After due dates of the time deposit certificates. is governed by quasi-delict in determining the liability of Solidbank. OBM is being required to pay such interest. HELD The Court held in the affirmative. LC Diaz demanded Solidbank to refund the said amount which the bank refused. under Usury Law. It does not comprehend interest paid as damages. as a contractual obligation of lender or creditor to refrain. IRC and Santos now claim that OBM should reimburse them for whatever amts they may be adjudged to pay PNB by way of compensation for damages incurred. With the contract was the release of mobilization fund but the fund was to be returned upon completion or deducted from periodic release of mhoneys to petitioner. But when the messenger returned. 383 SCRA 590 FACTSPetitioner entered into a contract with respondent. On another date. It appears however that in the afternoon of August 14. Santos executed a Deed of Assignment of the 2 time deposits. thru its president Raul Santos. respondent sent a notice of cancellation. PB then filed with RTC to collect from IRC and Santos with interest. in the nature of damages for non-compliance with an obligation to puy sum of money. The depositor lends the bank money and the bank agrees to pay the depositor on demand. OBM should be held for damages. Under said deeds. later. the amount of P300. In its defense. this duty is also applicable to Solidbank when it gains possession of said passbook which it did when the messenger left it to the bank’s possession through the bank’s teller. ISSUE: Whether or not the relations between Solidbank and LC Diaz. the Court ruled that Central Bank Circular 494. not as interest income stipulated in the CTD. On August 14. Petitioner undertook to report to DENR any event or condition which delays or may delay the project. within the limits allowed by law.Private respondents aver that they are entitled to the refund inasmuch as the escalation clause incorporated in the loan contracts do not have a corresponding de-escalation clause and is therefore. the messenger left the firm’s passbook with a teller of Solidbank. OBM contends that it had agreed to pay interest only up to the dates of maturity of the CTD and that Santos is not entitled to interest after maturity dates had expired. the firm’s messenger. the Court of Appeals reversed the decision of the RTC. this applies only to interest for the use of money. Banco Filipino issued an account statement with 17% pa as interest. PNB then demanded payment from IRC and Santos. To secure such. Interest at the rate of 12% pa is impossible if there is no stipulation in the contract. However. at that time. Under their contract. REM was also executed. There was a yet no obstacle to the faithful compliance by OBM of its liabilities. the CA ordered OBM to pay IRC and Santos whatever amts they will to PNB with interest. 141009. the Central bank issued Circular No. However.000. 2 July 2002. CA L. 30 May 2000 332 SCRA 241 FACTS Elsa and Calvin Arcilla secured. The 2 time deposits matured on 11 January 1968 and 6 February 1968. although it has the force and effect of law. In the absence of stipulation. ISSUE Whether the order to refund the balance of the fund with 12% interest pa is proper. Santos again made a time deposit with OBM in the amount of P200H. The savings deposit agreement between the bank and the depositor is the contract that determines the rights and obligations of the parties.FACTS Raul Santos made a time deposit with OBM in the amount of P500H and he was issued a certificate of time deposits. the legal interest is 6% pa on the amount finally adjudged by the Court. It found LC Diaz to be negligent in handling its passbook. which affirmed the trial court and that the balnce of the fund should be returned with 12% interest. The loss of the P300k was not the result of Solidbank’s negligence. OBM did not pay PNB. The Arcillas filed for annulment of the loan contracts because the rate of interests charged were usurious. In Banco Filipino Savings & Mortgage Bank vs Navarro. but they replied that the loan was deemed paid with the irrevocable assignment of the time deposit certificates. the passbook was presented. Believing that petitioners failed to comply with their obligations. The contract between the bank and its depositor is governed by the provisions of the Civil Code on simple loan (Article 1980. Consolidated Bank v. The word “forbearance” is defined. ISSUE Whether or not respondents are entitled to refund of the alleged interest overpayments. There is a debtor-creditor relationship between the bank and its depositor. Bataan Seedling vs Republic. thus. IRC. respondent filed a complaint for damages against petitioners. Petitioners failed to respond to the notice. Skyli Builders. the teller returned the passbook to someone else. On August 15. the maximum rate of interest for loans secured by REM was 12% pa. Solidbank is liable for the loss of the P300k but it’s liability is grounded on culpa contractual. is recoverable from the date judicially or extra-judicially demand is made. no interest shall be due unless it has been expressly stipulated in writing. Apparently. GR No. is not a law and is not the law contemplated by the parties which authorizes the petitioner to unilaterally raise the interest rate of loan. LC Diaz made a formal request ordering Solidbank not to honor any transaction concerning their account with them until the firm is able to acquire a new passbook. Solidbank contends that under their banking rules. 1991. Diaz and Company (LC Diaz). OBM was not allowed and suspended to operate only on 31 July 1968 and resolved on 2 August 1968. Herein subject contract does not contain any stipulation as to interest. the withdrawer presented a withdrawal slip which bore the signatures of the representatives of LC Diaz. However. Civil Code). The RTC held that respondent had sufficient grounds to cancel the contract but saw no reason why the mobilization fund and the cash advances should be refunded or that petitioners are liable for liquidated damages. Banco Filipino vs CA GR No. HELD: No. HELDNo. has a savings account with Consolidated Bank and Trust Corporation (now called Solidbank Corporation). While it is true that under Article 1956 of the CC. a certain Ismael Calapre. illegal. they are authorized to honor withdrawals if presented with the passbook. the passbook is already missing. applied for a loan and/or credit line (P700H) with PNB. HELD Yes. 129227. The CA used the rules on quasi-delict (Article 2176 of the Civil Code). Both parties appealed to the CA. For having incurred in delay in the performance of its obligation. Further. The applicable rule is that LI. ISSUE Whether or not the claim of IRC and Santos will prosper. during given period of time. 2% additional interest and 1& PA penalty interest. The trial court ruled in favor of PNB ordering IRC and Santos to pay PNB the total amount of P700H plus interest of 9% PA.

No contract of trust between bank and depositor The Supreme Court emphasized that the contractual relation between the bank and the depositor is that of a simple loan. However. The General Banking Law in no way modified Article 1980 of the Civil Code. Failure by the bank to pay the depositor is failure to pay a simple loan.” That “the bank is under obligation to treat the accounts of its depositors with meticulous care. the fiduciary nature of a bank-depositor relationship does not convert the contract between the bank and its depositors from a simple loan to a trust agreement. This is despite the wording of Section 2 of Republic Act 8791 (The General Banking Law of 2000) which states that the State recognizes the “fiduciary nature of banking that requires high standards of integrity and performance. whether express or implied. always having in mind the fiduciary nature of their relationship. the General Banking Act simply imposes on the bank a higher standard of integrity and performance in complying with its obligations under the contract of simple loan. is a clear breach of contract.” This fiduciary relationship means that the bank’s obligation to observe “high standards of integrity and performance” is deemed written into every deposit agreement between a bank and its depositor. . Such negligence binds the bank under the principle of respondeat superior or command responsibility. the firm’s authorized messenger. beyond those required of non-bank debtors under a similar contract of simple loan. In short. and not a breach of trust.Calapre. The fiduciary nature of banking requires banks to assume a degree of diligence higher than that of a good father of a family.

For failure to pay its obligation. First Metro vs Este del Sol GR No. respondent executed a REM. At the public auction. On the third hearing date. the appellate court affirmed the judgement of the trial court except the 2% service charge which was deleted pursuant to Central Bank Circular No. A trust receipt was executed by respondent corporation. without first crediting or setting off the marginal deposit which the borrower paid to it-compensation is proper and should take effect by operation of law because the requisited in Art. The interest prescribed in loan financing arrangements is a fundamental part of the banking business and the core of a banks existence. Claiming that respondents failed to turn over the goods or proceeds. The shipment as insured with a marine policy. 138677 | Ligutan v Court of Appeals | Vitug FACTS: Petitioners Tolomeo Ligutan and Leonidas dela Llana obtained a loan in the amount of P120. The trial court ruled in favor of plaintiff an ordered defendants to pay the former with present legal interest of 12% per annum from the date of the filing of the complaint. The CA ordered FMIC to reimburse petitioner representing what is ue to petitioner and what is due to respondent. On appeal by defendants. 141811. Upon arrival in Manila unto the custody of metro Port Service. 114286.189% interest and the penalty of 3% per month (36% per annum) is exorbitant. petitioners failed to settle the debt which then amounted to P114. so that it became subrogated to all the rights of action of consignee against the defendants Eastern Shipping. by and large. Respondent Corporation made a marginal deposit to petitioner. It could be onerous to compute interest and other charges on the face value of the letter of credit which a bank issued. The two parties filed their motions for reconsiderations and the Court of Appeals resolved the two motions: that the payment of interest and penalty commence on the date when the obligation became due and a penalty of 3% per month would suffice.Consolidated Bank vs CA. the nature of the obligation. which excepted to one drum.416.000 common shares of respondent’s capital stock for one-time underwriting fee of P200. the trial court ruled in favor of FMIC. A penalty stipulation is not necessarily preclusive of interest. the type. and the like. the Court sees no cogent ground to modify the ruling of the appellate court. petitioner argues that the marginal deposit should be considered only after computing the principal plus accrued interest and other charges. Rizal. the insurance company paid the consignee. respondents aver that the transaction was a simple loan and not a trust receipt one. the mode of breach and its consequences. In their answer. HELD: The question of whether a penalty is reasonable or iniquitous can be partly subjective and partly objective. does not appear as being excessive. The Bank sent a final demand letter however petitioners still defaulted on their obligation. The latter excepted to one drum which contained spillages while the rest of the contents was adulterated/fake. intended to circumvent the law agaistn usury shall be void. Allied delivered the shipment to the consignee’s warehouse. and unconscionable. plus interest at 21% pa. Petitioner filed to collect for alleged deficiency balance against respondents since it failed to collect from the sureties. the two being distinct concepts which may separately be demanded. The essence or rationale for the payment of interest. exercising its good judgement has reduced the penalty interest from 5% a month to 3% a month. Unjust enrichment. Eastern Shipping vs CA Credit Digest Eastern Shipping vs CA GR No. the application of which. an acceleration clause was provided and the amount due is subject to 20% one-time penalty on the amount due and such amount shall bear interest at the highest rate permitted by law.189% per annum. Respondents appealed before the CA which held that the fees provided for in the Underwriting and Consultacy Agreements were mere subterfuges to camouflage the excessively usurious interest charged. Article 1957 clearly provides: contracts and stipulations. but not confined to. 356 SCRA 671 24 FEB FACTS Continental Cement Corp obtained from Consolidated Bank letter of credit used to purchased 500. Despite several demands from the Bank. Petitioners instead of presenting their evidence had the schedule reset for two consecutive occasions. The Bank then filed a complaint for recovery of the due amount. ISSUE Whether or not the marginal deposit should not be deducted outright from the amount of the letter of credit. an apparently lawful loan is usurious when it is intended that additional compensation for the loan be disguised by an ostensibly unrelated contract for the payment by the borrower for the lender’s services which re of little value or which are not in fact to be rendered.000. The obligation matured and the bank granted an extension. Allied Brokerage Corporation received the shipment from Metro. with respondent Gregory Lim as signatory.000. The stipulated interest of 15. 19 April 2001. RULING: Petition is DENIED. The borrower may recover in accordance with the laws on usury. FIC was the highest bidder. Metro Port and Allied Brokerage. Given the circumstances and the repeated acts of breach by petitioners of their contractual obligation.000 liters of bunker fuel oil. HELD No. Two years later petitioners filed a motion for reconsideration which was denied by the trial court. petitioner filed a complaint for sum of money before the RTC of Manila. said to be in bad order and which damage was unknown the Mercantile Insurance Company. Under the agreement. Its resolution will depend on such factors as. the standing and relationship of the parties. ISSUE . The Court of Appeals. individual continuing suretyship and an underwriting agreement whereby FMIC shall underwrite the public offering of one P120. the trial court resolved to consider the case submitted for decision. The petitioners filed an omnibus motion for reconsideration which was then denied by the Court of Appeals. and tht the amount claimed by petitioner did not take into account payments already made by them. 1279 are present and should extinguish both debts to the concurrent amount. the supervening realities. quite often referred to as cost of money. 97412. GR No. CA affirmed the same. one drum opened and without seal. extent and purpose of the penalty. 12 July 1994 234 SCRA 78 FACTS Two fiber drums were shipped owned by Eastern Shipping from Japan. under any cloak or device whatever. is addressed to the sound discretion of the court. if there is an agreement to that effect.10. the interest was 16% pa based on the diminishing balance. the appellate court denied the same and affirmed in toto the decision of the trial court. FMIC caused the foreclosure of the REM. The court dismissed the complaint. In case of default.00 from Security Bank and Trust Co. II-16 | GR No. Petitioners then interposed an appeal with the Court of Appeals. ISSUE: Whether or not the 15. 15 November 2001 369 SCRA 99 FACTS FMIC granted Este del Sol a loan to finance a sports/resort complex in Montalban. The insurance company filed before the trial court. Case Digest No. ISSUE Whether or not the interests are lawful HELD No. is not exactly the same as that as a surcharge or a penalty. 763. As consequence of the loss. iniquitous.

the Supreme Court held that the second part of the decision .when the judgment of the court awarding a sum of money becomes final and executory. The labor arbiter re-computed the award to include the separation pay and the back wages due up to the finality of the decision that fully terminated the case on the merits. Whether or not the re-computation made by the Labor Arbiter is correct. ISSUES 1. 175139 April 18.being merely a computation of what the first part of the decision established and declared . (2) Whether the payment of legal interest on the award for loss or damage is to be computed from the time the complaint is filed from the date the decision appealed from is rendered. One is the finding that an illegal dismissal was indeed made. Court of Appeals. is breached. 796 dated May 16. Respondent prayed for the quashal of such motion on the ground that the judgment made by the SC is already final and the amount should not be further altered. Estores promised to return the same within 120 days .320. Spouses demanded the return of the amount within 15 days from receipt 4. Hermojina Estores and Spouses Supangan entered into a Conditional Deed of Sale where Estores offered to sell. the Labor Arbiter ruled that petitioner was dismissed without just cause. The Supreme Court ruled that the petitioner shall be entitled to interest. this interim period being deemed to be by then an equivalent to a forbearance of money. The original computation clearly includes damages only up to the finality of the labor arbiter's decision. not constituting a loan or forbearance of money. Whether or not the re-computation made by the Labor Arbiter is correct. 3. in the absence of an express contract as to such rate of interest. 1993. the twelve percent (12%) per annum legal interest shall apply until June 30. He filed a complaint.. vs. Estores still failed to comply with her obligation to handle the peaceful transfer of ownership as stated in 5 provisions in the contract. (2) From the date the judgment is made. only the computation of monetary consequences of this dismissal is affected. The amount previously computed includes the separation pay and back wages up to the time of his dismissal. In addition to this. No. In reply. Whether or not a subsequent correction of the damages awarded during the final judgment of the Supreme Court violates the rule on immutability of judgments.: Facts: 1. During the execution of the final judgment. Gallery Frames. computed from May 27. Court of Appeals. Spouses Arturo and Laura Supangan G.can. the petitioner filed a motion for the re-computation of the damages. an interest on the amount of damaes awarded may be imposed at the discretion of the court at the rate of 6% per annum. JR. (3) The Court held that it should be computed from the decision rendered by the court a quo. Where the demand is established with reasonable certainty. No. A computation for the separation pay and back wages were made it amounted to Php 158.31. 2. HELD (1) The Court held that the legal interest is 6% computed from the decision of the court a quo.919. in its Resolution No. In the case of Eastern Shipping Lines. The final decision made by the Supreme Court to award the petitioner with damages with regards to the dismissal without justifiable cause can be divided into two important parts. Whether or not appropriate interests may be claimed by the petitioner. After almost 7 years and despite the payment of P3. Petitioner also filed another motion asking the court to order the respondent to pay the appropriate legal interest of the damages from the date of final judgment until full payment. 2. A re- computation was made and the damages was increased to 471. 2002 to June 30. 189871 August 13. 1997. DARIO NACAR. In Oct. Therefore. Whether or not a subsequent correction of the damages awarded during the final judgment of the Supreme Court violates the rule on immutability of judgments. the interest shall begin to run from the time the claim is made judicially or EJ but when such certainty cannot be so reasonably established at the time the demand is made. the rate of legal interest shall be 12% per annum from such finality until its satisfaction. 2002.5M by the Spouses. CA and Supreme Court.7M.320. (1) Whether the applicable rate of legal interest is 12% or 6%. among the guidelines laid down by the Supreme Court regarding the manner of computing legal interest is .31 as damages is correct. Dario Nacar got dismissed by his employer. the Supreme Court approves the decision confirming that a re-computation is necessary. v. The petitioner argued that the damages should cover the period until the date of final judgment. RULING 1. When the judgment of the court awarding a sum of money becomes final and executor. In a letter in 2000. 2013 FACTS On January 24. 2013 declared that the rate of interest for the loan or forbearance of any money. GALLERY FRAMES AND/OR FELIPE BORDEY. thus the judgment became final on April 17. Whether or not appropriate interests may be claimed by the petitioner. According to a previous case of Session Delights Ice Cream and Fast Foods v. 2013 until their full satisfaction. The Supreme Court believes that the amount of 471. The illegal dismissal ruling stands. According to Article 279 of the Labor Code. shall be six percent (6%) per annum. Consequently. The Supreme Court ruled that a correction in the computation of the damages does not violate the rule on immutability of judgments. And the other is the computation of damages. No interest shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. The interest due shall be 12% PA to be computed fro default. 2012 DEL CASTILLO. 2. The respondent sought appeal to the NLRC. goods or credits and the rate allowed in judgments. reliefs in case of illegal dismissal continue to add up until its full satisfaction. the Bangko Sentral ng Pilipinas Monetary Board (BSP-MB). the rate of legal interest shall be 12% per annum from such finality until satisfaction. PETITIONER. The re-computation of the consequences of illegal dismissal upon execution of the decision does not constitute an alteration or amendment of the final decision being implemented. When an obligation.R. J or EJD. Inc. be re-computed. Afterwards. G. by its nature. the interest shll begin to run only from the date of judgment of the court is made. 2013 and six percent (6%) per annum from July 1. the new rate of six percent (6%) per annum shall be the prevailing rate of interest when applicable.92. 3. J. but they were all dismissed. 3. and this is not a violation of the principle of immutability of final judgments. The respondent was ordered to pay interest of twelve percent (12%) per annum of the total monetary awards. Hermojina Estores vs.R. 2013. and Spouses offered to buy a parcel of land in Cavite for P4. RESPONDENTS.

000. 2000 The award of attorney’s fees is warranted. is not illegal. · Estores’ unwarranted withholding of the money amounts to forbearance of money which can be considered as an involuntary loan so rate is 12% starting in Sept. they claim that they were forced to litigate when Estores unjustly held the amount Issue: Is the imposition of interest and attorney’s fees is proper? YES Interest based on Art 2209 of CC (6%) or under Central Bank Circular 416 (12%)? 12% Held: Interest may be imposed even in the absence of stipulation in the contract. · Gen Rule: the applicable interest rate shall be computed in accordance with the stipulation of the parties · Exc: if no stipulation. Estores failed to relocate the house outside the perimeter of the subject lot and complete the necessary documents c. the prestation of the debtor to pay the principal debt. CARPO and RECHILDA S. o however. o She admitted that the conditions were not fulfilled and was willing to return the full amount of P3. As to the fees. 2. JJ. the phrase “forbearance of money. To secure the payment of the loan. On appeal. That Arias not be solidarily liable as he acted as agent only and did not expressly bind himself or exceeded his authority 12. 3. Court of Appeals. no stipulation was made · Contract involved in this case is not a loan but a Conditional Deed of Sale. Forbearance-. The illegality lies only as to the prestation to pay the stipulated interest. Spouses filed a complaint with the RTC against Estores and Roberto Arias (allegedly acted as Estores’ agent) 8. the real estate mortgage was extrajudicially foreclosed where the respondents emerged winners in the public auction. v. The amount of P50. Spouses contend: a. RTC ruled saying that the Spouses are entitled to the interest but only at 6% per annum and also entitled to atty’s fees 10.“contractual obligation of lender or creditor to refrain during a given period of time. being separable. CA affirmed RTC a. It is only fair that interest be imposed because Estores failed to return the amount upon demand and used the money for her benefit b. Respondents . DOCTRINE: Usurious loan transaction is not a complete nullity but defective only with respect to the agreed interest. Not bound to pay interest because the deed only provided for the return of the downpayment in case of failure to comply with her obligations b. . Estores still failed despite demands 7.5. and ELMA DY NG. where a person acquiesces to the temporary use of his money. “forbearance of money.000. . goods or credits” is meant to have a separate meaning from a loan. payable within six (6) months with an interest rate of six percent (6%) per month. since it is the only one that is illegal. In simple loan with stipulation of usurious interest. In Answer. Nos. That atty fees not proper because both RTC and CA sustained her contention that 12% interest was uncalled for so it showed that Spouses did not win 13. Petitioners failed to pay the loan upon demand. That interest should start on date of formal demand by Spouses to return the money not when contract was executed as stated by the RTC b. CARPO. goods or credits · In other cases. CHICO-NAZARIO. o No question that the obligations were not met and the return of money not made · Even if transaction was a Conditional Deed of Sale.00 more appropriate G. Consequently. be allowed upon damages awarded for breach of contract. applicable rate of interest shall be 12% per annum o When obligation arises out of a loan or forbearance of money.. Estores contends: a. the latter only should be deemed void. i. Petitioners borrowed from respondents the amount of P175.R. otherwise there would have been no need to add that phrase as a loan is already sufficiently defined in the Civil Code o Forbearance of money. they cant be liable for legal interest as well 9. Petitioners . CA said that the issue to resolve is a. it shall be 6% · In this case. Civil Code).” · Estores failed on her obligations despite demand.e. goods or credits” will have no distinct definition from a loan. from requiring the borrower or debtor to repay a loan or debt then due and payable. Spouses agreed but imposed an interest of 12% annually 6. · Article 2210 of the Civil Code expressly provides that “[i]nterest may. goods or credits should therefore refer to arrangements other than loan agreements. in the discretion of the court.” o In such case. which is the cause of the contract (Article 1350. whether it is proper to impose interest for an obligation that does not involve a loan or forbearance of money in the absence of stipulation of the parties 11.5M but hasn’t done so o She is now in default The interest at the rate of 12% is applicable in the instant case. the stipulation governing the return of the money can be considered as a forbearance of money which requires 12% interest · In Crismina Garments. 150773 & 153599 September 30. to recover their money. 2005 SPOUSES DAVID B. Estores said they were willing to pay the principal amount but without the interest as it was not agreed upon a. goods or credits pending happening of certain events or fulfillment of certain conditions. hence. FACTS: 1.00. petitioners mortgaged their residential house and lot.versus - ELEANOR CHUA and TINGA. · no doubt that the Spouses were forced to litigate to protect their interest. That since the Conditional Deed of Sale provided only for the return of the downpayment in case of breach. Inc.

if the illegal terms can be separated from the legal ones.---NO B. but instead reduced the rate of interest to the more reasonable rate of 12% per annum." In simple loan with stipulation of usurious interest. Being a mere accessory contract. it is apparent that the stipulated interest in the subject loan is excessive. Instead of dismissing their complaint. Whether validity of said interest rate affects the Mortgage Contract. 4.From that perspective. but the waiver of the latter shall leave the former in force. or public policy. this stipulation is similarly invalid." Article 1420 of the New Civil Code provides in this regard: "In case of a divisible contract. Consequently. public order. Civil Code. Article 1273 . Whether the interest rate is valid. provides: "The renunciation of the principal debt shall extinguish the accessory obligations. the codal provision may be invoked to annul the excessive stipulated interest. clauses. This is congruent with the rule that a usurious loan transaction is not a complete nullity but defective only with respect to the agreed interest. iniquitous. unconscionable and exorbitant. being separable. Court of Appeals where the Court found that the interest stipulated at 5. In the case at bar. In a long line of cases. this Court has invalidated similar stipulations on interest rates for being excessive. petitioners continued to occupy the said house and lot. ISSUE: A. the prestation of the debtor to pay the principal debt. The illegality lies only as to the prestation to pay the stipulated interest. Despite the issuance of the TCT. hence. INTEREST RATE INVALIDITY &MORTGAGE CONTRACT The question as to whether the invalidity of the stipulation on interest carries with it the invalidity of the principal obligation is crucial . B . unconscionable and exorbitant that it should have been declared null and void.--NO HELD: A. 5. the latter only should be deemed void. Civil Code). provided they are not contrary to law. Pursuant to the freedom of contract principle embodied in Article 1306 of the Civil Code. they also argue that the nullity of the agreed interest rate affects the validity of the real estate mortgage. iniquitous. which is the cause of the contract (Article 1350. they aver that the lower court should have declared them liable to respondents for the original amount of the loan plus 12% interest per annum and 1% monthly penalty charge as liquidated damages. the latter may be enforced.Writ of possession was then issued. iniquitous. Court of Appeals the rate of interest stipulated in the principal loan agreement is clearly null and void. morals. thus a certificate of sale was issued and new TCT was issued in the name of respondents. . INTEREST RATE Petitioners contend that the agreed rate of interest of 6% per month or 72% per annum is so excessive. good customs. Further. is not illegal. In the ordinary course. the stipulated interest rate is 6% per month. Petitioners filed a complaint for annulment of real estate mortgage and the consequent foreclosure proceedings.5% per month or 66% per annum was so iniquitous or unconscionable as to render the stipulation void. unconscionable and exorbitant. Petitioners claim that following the Courts ruling in Medel v. since it is the only one that is illegal. contracting parties may establish such stipulations. or 72% per annum. prompting respondents to file a petition for writ of possession. The consideration of the mortgage contract is the same as that of the principal contract from which it receives life. the validity of the mortgage contract would depend on the validity of the loan secured by it. and without which it cannot exist as an independent contract. By the standards set in the above-cited cases. the Court did not invalidate the entire loan obligation despite the inequitability of the stipulated interest. in view of the ruling in Medel v.Petitioners failed to exercise their right of redemption. terms and conditions as they may deem convenient. Notably in Medel .