Garcia vs Thio Credit Digest

Carolyn M. Garcia
-vs-
Rica Marie S. Thio
GR No. 154878, 16 March 2007

FACTS
Respondent Thio received from petitioner Garcia two crossed checks which
amount to US$100,000 and US$500,000, respectively, payable to the order of Marilou
Santiago. According to petitioner, respondent failed to pay the principal amounts of the
loans when they fell due and so she filed a complaint for sum of money and damages
with the RTC. Respondent denied that she contracted the two loans and countered that
it was Marilou Satiago to whom petitioner lent the money. She claimed she was merely
asked y petitioner to give the checks to Santiago. She issued the checks for P76,000 and
P20,000 not as payment of interest but to accommodate petitioner’s request that
respondent use her own checks instead of Santiago’s.

RTC ruled in favor of petitioner. CA reversed RTC and ruled that there was no
contract of loan between the parties.

ISSUE
(1) Whether or not there was a contract of loan between petitioner and respondent.
(2) Who borrowed money from petitioner, the respondent or Marilou Santiago?

HELD
(1) The Court held in the affirmative. A loan is a real contract, not
consensual, and as such I perfected only upon the delivery of the object of the contract.
Upon delivery 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 respondent.

(2) However, the checks were crossed and payable not to the order of the
respondent but to the order of a certain Marilou Santiago. Delivery is the act by which
the res or substance is thereof placed within the actual or constructive possession or
control of another. Although respondent 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 amount to Santiago.

Petition granted; judgment and resolution reversed and set aside.

Saura Import vs DBP Credit Digest

Saura Import & Export Co., Inc.
-vs-
DBP
GR No. L-24968, 27 April 972
44 SCRA 445

FACTS
Saura applied to the Rehabilitation Finance Corporation (RFC), before its conversion into
DBP, for an industrial loan to be used for construction of factory building, for payment of the
balance of the purchase price of the jute 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. The
cancellation of the mortgage was requested 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 9 years after the mortgage was cancelled, Saura sued RFc alleging failure to comply
with tits obligations to release the loan proceeds, thereby prevented it from paying the
obligation to Prudential Bank.

The trial court ruled in favor of Saura, ruling that there was a perfected contract between the
parties ad that the RFC was guilty of breach thereof.

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

HELD
The Court held in the affirmative. 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. 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.

Credit Transactions Case Digest: BPI

Investment Corp V. CA (2002)
G.R. No. 133632 February 15, 2002

Lessons Applicable: Simple Loan

Laws Applicable:

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.
 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.
 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
 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 the contract of loan was perfected only on September 13, 1982 or the second release
of the loan?
HELD: YES. AFFIRMED WITH MODIFICATION as to the award of damages. The award of moral
and exemplary damages in favor of private respondents is DELETED, but the award to them of
attorney’s fees in the amount of P50,000 is UPHELD. Additionally, petitioner is ORDERED to pay
private respondents P25,000 as nominal damages. Costs against petitioner.
 obligation to pay commenced only on October 13, 1982, a month after the perfection of the
contract
 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. Consequently, petitioner could only demand for the
payment of the monthly amortization after September 13, 1982 for it was only then when it
complied with its obligation under the loan contract.
 BPIIC was negligent in relying merely on the entries found in the deed of mortgage, without
checking and correspondingly adjusting its records on the amount actually released and the date
when it was released. Such negligence resulted in damage for which an award of nominal
damages should be given
 SSS where we awarded attorney’s fees because private respondents were compelled to litigate,
we sustain the award of P50,000 in favor of private respondents as attorney’s fees

POLO S. PANTALEON v AMERICAN EXPRESS INTERNATIONAL, INC.

G.R. No. 174269-2010
Aug, 25, 2010

BRION, J.:

FACTS:
AMEX is a corporation engaged in providing credit services through the operation of a charge card system.
Pantaleon was a cardholder since 1980.

Pantaleon, his wife, daughter and son went on a guided European tour and subsequently arrived in
Amsterdam. While in Coster Diamond House, his wife wanted to purchase some diamond pieces,
amounting to $13, 826. Pantaleon presented his credit card which was swiped. He was then asked to sign
the charge slip which was electronically transferred to AMEX’s Amsterdam office. However, Coster was
not able to receive approval from AMEX for the purchase so Pantaleon asked the clerk to cancel the sale.
The store manager convinced Pantaleon to wait for a few minutes and subsequently told Pantaleon that
AMEX was asking for bank references and Pantaleon responded by giving names of his Phil. depository
banks. Still, it was not approved. But Coster decided to release the items even without AMEX’s approval
since the tour couldn’t go on without them.

In all, it took AMEX a total of 78 minutes to approve Pantaleon’s purchase and to transmit the approval
to the jewelry store.
This was followed by two similar incidents when the family then had another trip to the US. They also
experienced inconvenience using the AMEX credit card in purchasing golf equipment and children’s shoes.

When they got to Manila, Pantaleon sent a letter to AMEX, demanding an apology for the humiliation
and inconvenience. AMEX responded that the delay in Amsterdam was due to the amount involved,
saying that the purchase deviated from his established charge purchase pattern. Dissatisfied, Pantaleon
filed an action for damages in RTC.

The testimony of AMEX’s credit authorizer Edgardo Jaurique, the approval time for credit card charges
would be three to four seconds under regular circumstances. Here, it took AMEX 78 minutes to approve
the Amsterdam purchase. SC attributed the unwarranted delay to Jaurique, who had to go over
Pantaleon’s past credit history, his payment record and his credit and bank references before he approved
the purchase.
In 2009, the SC reversed the ruling in CA; and said that AMEX was guilty of mora solvendi or debtor’s
default. AMEX as debtor had an obligation as the credit provider to act on Pantaleon’s purchase requests,
whether to approve or disapprove them, with "timely dispatch."

Hence, this motion for reconsideration.

ISSUE:
Whether it is proper to award damages to Pantaleon, assuming AMEX committed an injury against
him.

HELD:
No. The doctrine of volenti non fit injuria ("to which a person assents is not esteemed in law as
injury") refers to self-inflicted injury or to the consent to injury which precludes the recovery of damages
by one who has knowingly and voluntarily exposed himself to danger, even if he is not negligent in doing
so.

This doctrine, in our view, is wholly applicable to this case. Pantaleon himself testified that the most basic
rule when travelling in a tour group is that you must never be a cause of any delay because the schedule
is very strict. When Pantaleon made up his mind to push through with his purchase, he must have known
that the group would become annoyed and irritated with him. This was the natural, foreseeable
consequence of his decision to make them all wait.

We do not discount the fact that Pantaleon and his family did feel humiliated and embarrassed
when they had to wait for AMEX to approve the Coster purchase in Amsterdam. We have to acknowledge,
however, that Pantaleon was not a helpless victim in this scenario - at any time, he could have cancelled
the sale so that the group could go on with the city tour. But he did not. More importantly, AMEX did not
violate any legal duty to Pantaleon under the circumstances under the principle of damnum absque
injuria, or damages without legal wrong, loss without injury. As we held in BPI Express Card v. CA:

We do not dispute the findings of the lower court that private respondent suffered damages as a
result of the cancellation of his credit card. However, there is a material distinction between damages and
injury. Injury is the illegal invasion of a legal right; damage is the loss, hurt, or harm which results from the
injury; and damages are the recompense or compensation awarded for the damage suffered. Thus, there
can be damage without injury in those instances in which the loss or harm was not the result of a violation
of a legal duty. In such cases, the consequences must be borne by the injured person alone, the law affords
no remedy for damages resulting from an act which does not amount to a legal injury or wrong. These
situations are often called damnum absque injuria.

In other words, in order that a plaintiff may maintain an action for the injuries of which he
complains, he must establish that such injuries resulted from a breach of duty which the defendant owed
to the plaintiff - a concurrence of injury to the plaintiff and legal responsibility by the person causing it.
The underlying basis for the award of tort damages is the premise that an individual was injured in
contemplation of law. Thus, there must first be a breach of some duty and the imposition of liability for
that breach before damages may be awarded; and the breach of such duty should be the proximate cause
of the injury.
4243
Pantaleon is not entitled to damages. Because AMEX neither breached its contract with
Pantaleon, nor acted with culpable delay or the willful intent to cause harm, we find the award of moral
damages to Pantaleon unwarranted. Similarly, we find no basis to award exemplary damages. In contracts,
exemplary damages can only be awarded if a defendant acted "in a wanton, fraudulent, reckless,
oppressive or malevolent manner." The plaintiff must also show that he is entitled to moral, temperate,
or compensatory damages before the court may consider the question of whether or not exemplary
damages should be awarded.

As previously discussed, it took AMEX some time to approve Pantaleon's purchase requests because it
had legitimate concerns on the amount being charged; no malicious intent was ever established here. In
the absence of any other damages, the award of exemplary damages clearly lacks legal basis.

Neither do we find any basis for the award of attorney's fees and costs of litigation. No premium should
be placed on the right to litigate and not every winning party is entitled to an automatic grant of attorney's
fees. To be entitled to attorney's fees and litigation costs, a party must show that he falls under one of
the instances enumerated in Article 2208 of the Civil Code. This, Pantaleon failed to do. Since we
eliminated the award of moral and exemplary damages, so must we delete the award for attorney's fees
and litigation expenses.