CAROLYN M. GARCIA vs. RICA MARIE S.

THIO
G.R. No. 154878, March 16, 2007

FACTS:
On February 1995, Rica Marie S. Thio received from Carolyn M. Garcia a
US$100,000 check payable to the order of a certain Marilou Santiago. Carolyn then
received from Rica every month US$3,000 (on March, April, June and July 1995) and
P76,500 (July, August, September and October, 1995).
Rica then received another check worth P500,000, dated June 29, 1995, also
payable to the order of Marilou Santiago. Carolyn then received from Rica the amount of
P20,000 every month on August, September, October and November, 1995.
However, Rica failed to pay the principal amounts due. On February 24, 1996,
Carolyn filed a complaint for a sum of money and damages in the RTC of Makati City
against Rica, seeking to collect the sums of US$100,000, with interest at 3% a month
from October 26, 1995 and P500,000, with interest at 4% a month from November 5,
1995.
Carolyn claims that Rica borrowed money from her. Rica paid the stipulated
monthly interest for both loans but on their maturity dates, she failed to pay the principal
amounts despite repeated demands.
Rica denied that she contracted the two loans with Carolyn and said that it was
Marilou Santiago to whom Carolyn lent the money. She claimed she was merely asked by
Carolyn to give the crossed checks to Santiago.She issued the checks for P76,000 and
P20,000 not as payment of interest but to accommodate Carolyn's request that Rica use
her own checks instead of Santiagos.
The RTC ruled in favor of Carolyn stating that there was a contract of loan. On
appeal, the Court of Appeals reversed the RTC's decision and stated that there was no
contract of loan between the parties.

ISSUE:
Whether there was a contract of loan between Carolyn and Rica.

HELD:
YES. A loan is a real contract, not consensual, and as such is perfected only upon
the delivery of the object of the contract. This is evident in Art. 1934 of the Civil Code
which provides:
An accepted promise to deliver something by way of commodatum or simple loan
is binding upon the parties, but the commodatum or simple loan itself shall not be
perfected until the delivery of the object of the contract.

Upon delivery of the object of the contract of loan (in this case the money
received by the debtor when the checks were encashed) the debtor acquires ownership of
such money or loan proceeds and is bound to pay the creditor an equal amount.
It is undisputed that the checks were delivered to Rica. However, these checks
were crossed and payable not to the order of Rica but to the order of a certain Marilou
Santiago. Thus the main question to be answered is: who borrowed money from Carolyn,
Rica or Santiago?
Carolyn argues that once Rica received the checks, Rica had possession and
control of them such that she had the choice to either forward them to Santiago (who was
already her debtor), to retain them or to return them to Carolyn.
Delivery is the act by which the res or substance thereof is placed within the
actual or constructive possession or control of another. Although Rica did not physically
receive the proceeds of the checks, these instruments were placed in her control and
possession under an arrangement whereby she actually re-lent the amounts to Santiago.
We hold that the CA committed reversible error when it ruled that Rica did not
borrow the amounts of US$100,000 and P500,000 from Carolyn.
 SAURA IMPORT and EXPERT CO., INC., vs DBP
[G.R. No. L-24968, April 27, 1972] MAKALINTAL, J.

FACTS:

In July 1952, Saura, Inc., applied to Rehabilitation Finance Corp., now DBP, for an
industrial loan of P500,000 to be used for the construction of a factory building, to pay the
balance of the jute mill machinery and equipment and as additional working capital. In
Resolution No.145, the loan application was approved to be secured first by mortgage on
the factory buildings, the land site, and machinery and equipment to be installed.
The mortgage was registered and documents for the promissory note were
executed. But then, later on, was cancelled to make way for the registration of a mortgage
contract over the same property in favor of Prudential Bank and Trust Co., the latter having
issued Saura letter of credit for the release of the jute machinery. As security, Saura execute
a trust receipt in favor of the Prudential. For failure of Saura to pay said obligation,
Prudential sued Saura.
After almost 9 years, Saura Inc, commenced an action against RFC, alleging failure
on the latter to comply with its obligations to release the loan applied for and approved,
thereby preventing the plaintiff from completing or paying contractual commitments it had
entered into, in connection with its jute mill project.
The trial court ruled in favor of Saura, ruling that there was a perfected contract between
the parties and that the RFC was guilty of breach thereof.

ISSUE: Whether or not there was a perfected contract between the parties.

Ratio: YES. There was indeed a perfected consensual contract.

HELD:
Article 1934 provides: An accepted promise to deliver something by way of
commodatum or simple loan is binding upon the parties, but the commodatum or simple
loan itself shall not be perfected until delivery of the object of the contract.
There was undoubtedly offer and acceptance in the case. The application of Saura,
Inc. for a loan of P500,000.00 was approved by resolution of the defendant, and the
corresponding mortgage was executed and registered. The defendant failed to fulfill its
obligation and the plaintiff is therefore entitled to recover damages.
When an application for a loan of money was approved by resolution of the
respondent corporation and the responding mortgage was executed and registered, there
arises a perfected consensual contract.
However, it should be noted that RFC imposed two conditions (availability of raw
materials and increased production) when it restored the loan to the original amount of
P500,000.00.
Saura, Inc. obviously was in no position to comply with RFC’s conditions. So
instead of doing so and insisting that the loan be released as agreed upon, Saura, Inc. asked
that the mortgage be cancelled.The action thus taken by both parties was in the nature of
mutual desistance which is a mode of extinguishing obligations. It is a concept that derives
from the principle that since mutual agreement can create a contract, mutual disagreement
by the parties can cause its extinguishment.

WHEREFORE, the judgment appealed from is reversed and the complaint

dismissed.
 BPI Investment Corp. v. CA
G.R. No. 133632. February 15, 2002

o credit transactions: Loan (Mutuum): A loan contract is not a consensual contract

but a real contract. It is perfected upon delivery of the object of the contract.
o obligations and contracts: Reciprocal Obligations: It is a basic principle in
reciprocal obligations that neither party incurs in delay, if the other does not
comply or is not ready to comply in a proper manner with what is incumbent upon
him.
Facts:

Frank Roa obtained a loan with interest rate of 16 1/4%/annum from Ayala
Investment and Development Corporation (AIDC), the predecessor of BPI Investment
Corp. (BPIIC), for the construction of a house on his lot in New Alabang Village,
Muntinlupa.He mortgaged the house and lot to AIDC as security for the loan.

1980: Roa sold the house and lot to ALS Management & Development Corp. and
Antonio Litonjua for P850K who paid P350K in cash and assumed the P500K indebtness
of ROA with AIDC.

AIDC proposed to grant ALS and Litonjua a new loan for P500K with interested rate of
20%/annum and service fee of 1%/annum on the outstanding balance payable within 10
years through equal monthly amortization of P9,996.58 and penalty interest of
21%/annum/day from the date the amortization becomes due and payable.

On March 1981 ALS and Litonjua executed a mortgage deed containing the new
stipulation with the provision that the monthly amortization will commence on May 1,
1981.

August 13, 1982 ALS and Litonjua paid BPIIC P190,601.35 reducing the P500K
principal loan to P457,204.90.

On September 13, 1982: BPIIC released to ALS and Litonjua P7,146.87, purporting to be
what was left of their loan after full payment of Roa’s loan.

On June 1984 BPIIC instituted foreclosure proceedings against ALS and Litonjua on the
ground that they failed to pay the mortgage indebtedness which from May 1, 1981 to
June 30, 1984 amounting to P475,585.31

August 13, 1984: Notice of sheriff's sale was published

February 28, 1985: ALS and Litonjua filed Civil Case No. 52093 against BPIIC alleging
that they are not in arrears and instead they made an overpayment as of June 30, 1984
since the P500K loan was only released September 13, 1982 which marked the start of
the amortization and since only P464,351.77 was released applying legal compensation
the balance of P35,648.23 should be applied to the monthly amortizations

RTC: in favor of ALS and Litonjua and against BPIIC that the loan granted by BPI to
ALS and Litonjua was only in the principal sum of P464,351.77 and awarding moral
damages, exemplary damages and attorneys fees for the publication

CA: Affirmed reasoning that a simple loan is perfected upon delivery of the object of the
contract which is on September 13, 1982

ISSUE:W/N a contract of loan is a consensual contract

HELD:

A loan contract is not a consensual contract but a real contract. It is perfected upon
delivery of the object of the contract. Although a perfected consensual contract can give
rise to an action for damages, it does not constitute a real contract which requires delivery
for perfection. A perfected real contract gives rise only to obligations on the part of the
borrower.

In the present case, the loan contract was only perfected on the date of the second release
of the loan.

A contract of loan involves a reciprocal obligation, wherein the obligation or promise of

each party is the consideration for that of the other. It is a basic principle in reciprocal
obligations that neither party incurs in delay, if the other does not comply or is not ready
to comply in a proper manner with what is incumbent upon him. Only when a party has
performed his part of the contract can he demand that the other party also fulfills his own
obligation and if the latter fails, default sets in.

DECISION:

The payment of amortization should accrue from the time BPIIC released the loan
amount to ALS and Litonjua because it was only at that time (the delivery of the amount -
- the object of the contract) that the loan contract was perfected.
 Pantaleon v. American Express International, Inc. G.R. No. 174269 (May 8, 2009)
Facts:

1. The petitioner (Pantaleon) and his family, joined an escorted tour of Western
Europe.
2. In Coster Diamond House, Amsterdam, Mrs. Pantaleon (wife) was about to bought
a 2.5 karat diamond brilliant cut, a pendant and a chain, all of which totaled U.S.
$13,826.00.
3. To pay these purchases, around 9:15am, Pantaleon presented his American
Express Credit Card together with his passport.
4. By 9:40am, Pantaleon was already worried about further inconveniencing the tour
group, he asked the store clerk to cancel the sale. the store manager though asked
him to wait a few more minutes.
5. Around 10:00am (around 45 minutes after Pantaleon had presented his
AmexCard), Coster decided to release the items even without American Express
International, Inc.’s (herein respondent, Amex for brevity) approval of the
purchase. This was 30 minutes after the tour group was supposed to have left the
store.
6. The spouses Pantelon returned. Their offers of apology were met by their
tourmates with stony silence. The tour group’s visible irritation was aggravated
when the tour guide announced that the city tour of Amsterdam was to be canceled
due to lack of remaing time. Mrs. Pantaleon ended up weeping.
7. After the star-crossed tour had ended, the Pantaleon family proceeded to the
United States before returning to Manila. While in the United States, Pantaleon
continued to use his AmEx card, several times without hassle or delay, but with
two other incidents similar to the Amsterdam brouhaha.

Issue/s:

1. Whether or not Amex was in default or mora.

2. Whether Amex (Credit Card Company) is in mora solvendi or in mora accipiendi.

Ruling:

1. Yes. The Court is convinced that Amex’s delay constituted breach of its contractual
obligation to act on his use of the card abroad “with special handling.:

Notwithstanding the popular notion that credit card purchases are approved
“WITHIN SECONDS,” there really is no strict, legally determinative point of
demarcation on how long must it take for a credit car company to approve or
disapprove a customer’s purchase, much less one specifically contracted upon by
the parties. yet this is one of those instances when “you’d know it what you’d see
it,” and one hour appears to be an awfully long, patently unreasonable length of
time to approve or disapprove a credit card purchases. It is long enough time for
the customer to walk to a bank a kilometer away, withdraw money over the
counter, and return to the store.

The Credit Authorization System (CAS) record on the Amsterdam transaction

shows how Amexco Netherlands viewed the delay as unusually frustrating. In
sequence expressed in Phoenix time from 01:20 when the charge purchased was
referred for authorization:
 01:22 – the authorization is referred to manila Amexco.

01:32 – Netherlands gives information that the identification of the card member
has been presented and he is buying jewelries worth US $13,826

01:33 – Netherlands asks “How long will this take?”

02:08 – Netherlands is still asking “How long will this take?”

The Amex has a right to verify whether the credit it is extending upon on a
particular purchase was indeed contracted by the cardholder, and that the
cardholder is within his means to make such transaction. The culpable failure of
respondent herein is not the failure to timely approve petitioner’s purchase, but
the more elemental failure to timely act on the same, whether favorably or
unfavorably. Even assuming the respondent’s credit authorizers did not have
sufficient basis on hand to make a judgment, we see no reason why Amex could
not have promptly informed petitioner the reason for the delay, and duly advised
him that resolving the same could take some time. In that way, petitioner would
have had informed basis on whether or not to pursue the transaction at Coster,
given the attending circumstances. instead, Pantaleon was left uncomfortably
dangling in the chilly autumn winds in a foreign land and soon forced to confront
the wrath of foreign folk.

The delay committed by Amex was clearly attended by unjustified neglect and bad
faith, since it alleges to have consumed more than one hour to simply go over
Pantaleon’s pas credit history with Amex, his payment record and his credit and
bank references, when all such data are already stored and readily available from
its computer. There is nothing in Pantaleon’s billing history that would warrant the
imprudent suspension of action by Amex in processing the purchase.

2. Amex is in mora solvendi. Generally, the relationship between a credit card

provided and its card holder is that of creditor-debtore, with the card company as
a the creditor extending loans and credit to the card holder, who as debtor is
obliged to repay the creditor. The relationship already takes exception to the
general rule that as between a bank and its depositors, the bank is deemed as the
debtor while the depositor is considered as the creditor. In the present case, we
should shift perspectives and again see the credit card company as the
debtor/obligor, insofar as it has the obligation to the customer as creditor/obligee
to act promptly on its purchases on credit.

If there was delay on the part of Amex in its normal role as creditor to the
cardholder, such delay would not have been in acceptance of the performance of
the debtor’s obligation (i.e., the repayment of the debt), but it would be delay in
the extension of the credit in the first place. Such delay would not fall under mora
accipiendi, which contemplates that the obligation of the debtor, such as the actual
purchases on credit has already been instituted. The establishment of the debt
itself (purchases on credit of the jewelry) had not yet been perfected, as it remained
pending the approval or consent of the credit card company.
 Notes / Doctrine:

Requisites of Mora Solvendi (delay of debtor)

1. Obligation is demandable and liquidated;

2. debtor delays performance; and
3. the creditor judicially or extrajudicially required the debtor’s performance.

Requisites of Mora Accipiendi

1. An offer of performance by the debtor who has the required capacity;

2. offer must be to comply with the prestation as it should be performed; and
3. creditor refuses the performance without just cause.

Moral damages

 Can be availed in cases of breach of contract where the defendant acted

fraudulently or in bad faith.
 In the present case, there was a deadline for the completion of that purchase by
Pantaleon before any delay would redound to the injury of his several traveling
companions – gave rise to the moral shock, mental anguish, serious anxiety,
wounded feelings and social humiliation sustained by Panaleon family. These
circumstances are fairly unusual, and should not give rise to a general entitlement
for damages under a more mundane set of facts.
 There is no hard-and-fast rule in determining what would be a fair and reasonable
amount of moral damages, since each case must be governed by its own peculiar
facts, however, it must be commensurate to the loss or injury suffered.