Carolyn Garcia v. Rica Marie Thio, G.R. No.

154878, March 16, 2007

In Carolyn Garcia v. Rica Marie Thio, G.R. No. 154878, March 16, 2007, Rica received from Carolyn a
crossed check in the amount of $100,000.00 payable to the order of Marilou Santiago. Thereafter, Carolyn
received from Rica payments. Again, Rica received a check in the amount of P500,000.00 from Carolyn and
payable to the order of Marilou and payments were again made by her representing interests. There was
failure to pay the principal amounts hence, a complaint for sum of money with damages was filed. Rica
contended that she had no obligation to her as it was Marilou who was indebted as she was merely asked
to deliver the checks to Marilou and that the check payments she issued were merely intended to
accommodate Marilou. The RTC ruled in favor of Carolyn but the CA reversed on the ground that there was
no
contract
between
Rica
and
Carolyn.
On
appeal,
the
SC
Held: There was a contract of loan between Carolyn and Rica. 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 acquired ownership of such money or loan proceeds and is
bound to pay the creditor an equal amount. (Naguiat v. CA, G.R. No. 118375, October 3, 2003, 412 SCRA
591). 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.
The Court agree with petitioner. Delivery is the act by which the res or substance thereof is placed
within the actual or constructive possession or control of another. (Buenaflor v. CA, G.R. No. 142021,
November 29, 2000, 346 SCRA 563). 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 Marilou. Several factors support this conclusion.
(1) Carolyn did not know personally Marilou. This was admitted by Rica, hence, it is not possible for
Carolyn to grant loans in such big sum of money even without any acknowledgment of debt. It was Rica
who had transactions with Marilou.
(2) It is unbelievable that Rica would put herself in a position where she would be compelled to pay
interest out of her own funds for loans she never contracted.
(3) When Marilou filed a petition for insolvency, it was Rica who was listed as a debtor.
No interest if there is no written agreement to pay it;
exception.
Whether the debtor is liable to pay interest since there was no written agreement to pay interest,
the SC
Held: No, because no interest shall be due unless it has been expressly stipulated in writing. (Art. 1956,
NCC) While there can be no stipulated interest, there can be legal interest pursuant to Article 2209 of the
Civil
Code.
It
is
well-settled:
When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or
forbearance of money, the interest due should be that which may have been stipulated in writing.
Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the
absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from
judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.
Hence, Rica is liable for the payment of legal interest per annum to be computed from the date
when she received the demand letter. From the finality of the decision until it is fully paid, the amount due
shall earn interest at 12% per annum, the interim period being deemed equivalent to a forbearance of
credit. (Cabrera v. People, G.R. 150618, July 24, 2003, 407 SCRA 247).

BPI Investment Corporation -vs- CA GR No. 133632, 15 February 2002 377 SCRA 117
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.
o

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 Roas 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 attorneys 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 attorneys fees because private respondents were compelled to litigate, we
sustain the award of P50,000 in favor of private respondents as attorneys fees.

Pantaleon vs American Express Bank (2010)

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 AMEXs 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 AMEXs approval since the
tour couldnt go on without them.
In all, it took AMEX a total of 78 minutes to approve Pantaleons 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 childrens 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 AMEXs 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 Pantaleons
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 debtors
default. AMEX as debtor had an obligation as the credit provider to act on Pantaleons purchase requests,
whether to approve or disapprove them, with "timely dispatch."
Hence, this motion for reconsideration.
Issue:
1. Whether or not AmEx had committed a breach of its obligations to Pantaleon.
2. Whether or not AmEx is liable for damages.
Ruling:
1. Yes. 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 card company to
approve or disapprove a customers purchase, much less one specifically contracted upon by the parties.
One hour appears to be patently unreasonable length of time to approve or disapprove a credit card
purchase.
The culpable failure of AmEx herein is not the failure to timely approve petitioners purchase, but the more
elemental failure to timely act on the same, whether favorably or unfavorably. Even assuming that AmExs
credit authorizers did not have sufficient basis on hand to make a judgment, we see no reason why it could
not have promptly informed Pantaleon the reason for the delay, and duly advised him that resolving the
same could take some time.
2. Yes. The reason why Pantaleon is entitled to damages is not simply because AmEx incurred delay, but
because the delay, for which culpability lies under Article 1170, led to the particular injuries under Article
2217 of the Civil Code for which moral damages are remunerative. The somewhat unusual attending
circumstances to the purchase at Coster that there was a deadline for the completion of that purchase by
petitioner 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
Pantaleon, as concluded by the RTC.
**Different Ruling**
Ruling:
No, AMEX is not liable for breach of contractual obligation with Pantaleon and is not liable for damages.
The Court had the occasion to present the nature of credit card transactions which involves three (3)
contracts. (a) the sales contract between the credit card holder and the merchant; (b) the loan agreement
between the credit card issuer and holder; and (c) the promise to pay between the credit card issuer and
the merchant.
Philippine jurisdiction generally adheres to the Gray ruling, recognizing the relationship between the credit
card issuer and holder as a contractual one that is governed by the terms and conditions found in the card
membership agreement. A card membership agreement is a contract of adhesion.

With regard to AMEXs obligations, Pantaleon assumes that since his credit card has no pre-set spending
limit, AMEX has to approve all charge requests. However, the Court said that there is first a need to
distinguish a relationship between credit card issuer-holder to a creditor-debtor relationship. In an issuerholder relationship, it relates merely to an agreement providing for credit facility to the holder. On the
other hand, in a creditor-debtor relationship, it involves the actual credit on loan agreement involving three
contracts.
When cardholders use their cards to pay, they merely offer to enter into loan agreements with the
company. It is only after the approval do the parties enter into binding loan contracts, in keeping with NCC
1319.This is supported in the reservation found in the card membership agreement which clearly states
that AMEX "reserves the right to deny authorization for any requested Charge."
Thus, since AMEX has no obligation to approve purchase requests, Pantaleon cant claim that AMEX
defaulted. In this case, there is no demandable obligation. Before the credit card issuer accepts this offer,
no obligation relating to the loan agreement exists between them. A demand presupposes the existence
of an obligation between the parties. Moreover, AMEX is not bound or obligated to act on its cardholders
purchase requests within any specific period of time.

Producers Bank of the Philippines vs CA (2003)

Facts: Doronilla is in the process of incorporating his business and to comply with one of the requirements
of incorporation, he caused Vives to issue a check which was then deposited in Doronillas savings
account. It was agreed that Vives can withdraw his money in a months time. However, what Doronilla did
was to open a current account and instructed the bank to debit from the savings account and deposit it in
his current account. So when Vives checked the savings account, the money was gone.
Claims: Petitioner:
1. The transaction between private respondent and Doronilla is a simple loan (mutuum) since all
the elements of amutuum are present: first, what was delivered by private respondent to
Doronilla was money, a consumable thing; and second, the transaction was onerous as Doronilla
was obliged to pay interest, as evidenced by the check issued by Doronilla in the amount
of P212,000.00, or P12,000 more than what private respondent deposited in Sterelas bank
account.

2. Petitioners Assistant Manager, Mr. Rufo Atienza, could not be faulted for allowing Doronilla to
withdraw from the savings account of Sterela since the latter was the sole proprietor of said
company. Petitioner asserts that Doronillas May 8, 1979 letter addressed to the bank,
authorizing Mrs. Vives and Sanchez to open a savings account for Sterela, did not contain any
authorization for these two to withdraw from said account. Hence, the authority to withdraw
therefrom remained exclusively with Doronilla, who was the sole proprietor of Sterela, and who
alone had legal title to the savings account. Petitioner points out that no evidence other than
the testimonies of private respondent and Mrs. Vives was presented during trial to prove that
private respondent deposited his P200,000.00 in Sterelas account for purposes of its
incorporation. Hence, petitioner should not be held liable for allowing Doronilla to withdraw from
Sterelas savings account.
3. The Court of Appeals erred in affirming the trial courts decision since the findings of fact therein
were not accord with the evidence presented by petitioner during trial to prove that the
transaction between private respondent and Doronilla was a mutuum, and that it committed no
wrong in allowing Doronilla to withdraw from Sterelas savings account .
4. Petitioner claims that since there is no wrongful act or omission on its part, it is not liable for the
actual damages suffered by private respondent, and neither may it be held liable for moral and
exemplary damages as well as attorneys fees.
Respondent:
1. the transaction between him and Doronilla is not a mutuum but an accommodation,[21]since he did
not actually part with the ownership of his P200,000.00 and in fact asked his wife to deposit said
amount in the account of Sterela so that a certification can be issued to the effect that Sterela had
sufficient funds for purposes of its incorporation but at the same time, he retained some degree of
control over his money through his wife who was made a signatory to the savings account and in
whose possession the savings account passbook was given.
2. The trial court did not err in finding that petitioner, Atienzas employer, is liable for the return of his
money. He insists that Atienza, petitioners assistant manager, connived with Doronilla in
defrauding private respondent since it was Atienza who facilitated the opening of Sterelas current
account three days after Mrs. Vives and Sanchez opened a savings account with petitioner for said
company, as well as the approval of the authority to debit Sterelas savings account to cover any
overdrawings in its current account.
Issue/s: (1)WON the transaction is a commodatum or a mutuum. COMMODATUM.
(2) WON the fact that there is an additional P 12,000 (allegedly representing interest) inthe amount to
be returned to Vives converts the transaction from commodatum tomutuum. NO.
(3)WON Producers Bank is solidarily liable to Vives, considering that it was not privy tothe transaction
between Vives and Doronilla. YES.
Held/Ratio:
Supreme Court held that the contract is a commodatum. Although in a commodatum, the object is a nonconsumable thing, there are instances where a consumable thing may be the object of a commodatum,
such as when the purpose is not for consumption of the object but merely for exhibition (Art. 1936). Thus,
if consumable goods are loaned only for purposes of exhibition, or when the intention of the parties is to
lend consumable goods and to have the very same goods returned at the end of the period agreed upon,
the loan is a commodatum and not a mutuum.
COLITO T. PAJUYO vs. COURT OF APPEALS and EDDIE GUEVARRA (G.R. No. 146364, June 3,
2004)
FACTS:
Petitioner Pajuyo paid P400 to a certain Pedro Perez for the rights over a lot, where Pajuyo subsequently
built a house. In 1985, Pajuyo and private respondent Guevarra executed a Kasunduan wherein Pajuyo
allowed Guevarra to live in the house for free, on the condition that Guevarra would maintain the
cleanliness and orderliness of the house. Guevarra promised that he would vacate the premises upon
Pajuyos demand.

In 1994, Pajuyo informed Guevarra of his need of the house and demanded that the latter vacate the
house. Guevarra refused. Pajuyo filed an ejectment case against Guevarra before the MTC.
Guevarra claimed that Pajuyo had no valid title over the lot since it is within the area set aside for
socialized housing. MTC rendered its decision in favor of Pajuyo, which was affirmed by RTC. (MTC and RTC
basically ruled that the Kasunduan created a legal tie akin to that of a landlord and tenant relationship).
CA reversed the RTC decision, stating that the ejectment case is without legal basis since both Pajuyo and
Guevarra illegally occupied the said lot. CA further stated that both parties are in pari delicto; thus, the
court will leave them where they are. CA ruled that the Kasunduan is not a lease contract, but a
commodatum because the agreement is not for a price certain.
ISSUE: W/N the contractual relationship between Pajuyo and Guevarra was that of a commodatum NO
HELD: In a contract of commodatum, one of the parties delivers to another something not
consumable so that the latter may use the same for a certain time and return it. An essential
feature of commodatum is that it is gratuitous. Another feature of commodatum is that the use of
the thing belonging to another is for a certain period. Thus, the bailor cannot demand the return of the
thing loaned until after expiration of the period stipulated, or after accomplishment of the use for which
the commodatum is constituted. If the bailor should have urgent need of the thing, he may demand its
return for temporary use. If the use of the thing is merely tolerated by the bailor, he can demand the
return of the thing at will, in which case the contractual relation is called a precarium. Under the Civil Code,
precarium is a kind of commodatum.
The Kasunduan reveals that the accommodation accorded by Pajuyo to Guevarra was not essentially
gratuitous. While the Kasunduan did not require Guevarra to pay rent, it obligated him to maintain the
property in good condition. The imposition of this obligation makes the Kasunduan a contract different
from a commodatum. The effects of the Kasunduan are also different from that of a commodatum. Case
law on ejectment has treated relationship based on tolerance as one that is akin to a landlord-tenant
relationship where the withdrawal of permission would result in the termination of the lease. The tenants
withholding of the property would then be unlawful.
Even assuming that the relationship between Pajuyo and Guevarra is one of commodatum, Guevarra as
bailee would still have the duty to turn over possession of the property to Pajuyo, the bailor. The obligation
to deliver or to return the thing received attaches to contracts for safekeeping, or contracts of commission,
administration and commodatum.70 These contracts certainly involve the obligation to deliver or return
the thing received.
Guevarra turned his back on the Kasunduan on the sole ground that like him, Pajuyo is also a squatter.
Guevarra should know that there must be honor even between squatters. Guevarra freely entered into the
Kasunduan. Guevarra cannot now impugn the Kasunduan after he had benefited from it. The Kasunduan
binds Guevarra.
The Kasunduan is not void for purposes of determining who between Pajuyo and Guevarra has a right to
physical possession of the contested property. The Kasunduan is the undeniable evidence of Guevarras
recognition of Pajuyos better right of physical possession. Guevarra is clearly a possessor in bad faith. The
absence of a contract would not yield a different result, as there would still be an implied promise to
vacate.

Republic v Jose V. Bagtas

FACTS:

May 8, 1948: Jose V. Bagtas borrowed from the Republic of the Philippines through the Bureau of
Animal Industry three bulls: a Red Sindhi with a book value of P1,176.46, a Bhagnari, of P1,320.56
and a Sahiniwal, of P744.46, for a period of 1 year for breeding purposes subject to a breeding fee
of 10% of the book value of the bulls

May 7, 1949: Jose requested for a renewal for another year for the three bulls but only one bull was
approved while the others are to be returned

March 25, 1950: He wrote to the Director of Animal Industry that he would pay the value of the 3
bulls

October 17, 1950: he reiterated his desire to buy them at a value with a deduction of yearly
depreciation to be approved by the Auditor General.

October 19, 1950: Director of Animal Industry advised him that either the 3 bulls are to be returned
or their book value without deductions should be paid not later than October 31, 1950 which he was
not able to do

December 20, 1950: An action at the CFI was commenced against Jose praying that he be ordered
to return the 3 bulls or to pay their book value of P3,241.45 and the unpaid breeding fee of
P199.62, both with interests, and costs

July 5, 1951: Jose V. Bagtas, through counsel Navarro, Rosete and Manalo, answered that because of
the bad peace and order situation in Cagayan Valley, particularly in the barrio of Baggao, and of the
pending appeal he had taken to the Secretary of Agriculture and Natural Resources and the
President of the Philippines, he could not return the animals nor pay their value and prayed for the
dismissal of the complaint.

RTC: granted the action

December 1958: granted an ex-parte motion for the appointment of a special sheriff to serve the
writ outside Manila

December 6, 1958: Felicidad M. Bagtas, the surviving spouse of Jose who died on October 23, 1951
and administratrix of his estate, was notified

January 7, 1959: she file a motion that the 2 bulls where returned by his son on June 26, 1952
evidenced by recipt and the 3rd bull died from gunshot wound inflicted during a Huk raid and
prayed that the writ of execution be quashed and that a writ of preliminary injunction be issued.

ISSUE: W/N the contract is commodatum and NOT a lease and the estate should be liable for the loss due
to force majeure due to delay.
HELD: YES. writ of execution appealed from is set aside, without pronouncement as to costs

If contract was commodatum then Bureau of Animal Industry retained ownership or title to the bull
it should suffer its loss due to force majeure. A contract of commodatum is essentially gratuitous. If
the breeding fee be considered a compensation, then the contract would be a lease of the bull.
Under article 1671 of the Civil Code the lessee would be subject to the responsibilities of a
possessor in bad faith, because she had continued possession of the bull after the expiry of the
contract. And even if the contract be commodatum, still the appellant is liable if he keeps it longer
than the period stipulated

the estate of the late defendant is only liable for the sum of P859.63, the value of the bull which has
not been returned because it was killed while in the custody of the administratrix of his estate

Special proceedings for the administration and settlement of the estate of the deceased Jose V.
Bagtas having been instituted in the CFI, the money judgment rendered in favor of the appellee
cannot be enforced by means of a writ of execution but must be presented to the probate court for
payment by the appellant, the administratrix appointed by the court.

BPI Family Bank v. Amado Franco and Court of Appeals

DOCTRINE/S:
The deposit of money in banks is governed by the Civil Code provisions on simple loan or mutuum.
FACTS:

15 Aug 1989: Tevetesco Arrastre-Stevedoring Co., Inc. opened a savings and current account with
BPI-FB (petitioner)
25 Aug: First Metro Investment Corporation (FMIC) also opened a time deposit account w/ same
branch of BPI-FB (San Francisco del Monte) in a series of transactions
31 Aug: Amado Franco (respondent) opened three (3) accounts (current, savings, and time-deposit)
w/ BPI-FB. Total amount of P2M use to open these accounts is traceable to a check issued by
Tevesteco allegedly in consideration of respondent Francos introduction of Eladio Teves (looking for
a conduit bank to facilitate Tevetescos business transactions) to Jaime Sebastian (BPI-FBs Branch
Manager). The P2M is part of the P80M debited by BPI-FB from FMCIs time deposit account and
credited to Tevetescos current account pursuant to an Authority to Debit allegedly signed by FMCIs
officers w/c appears to be forged.
o Current: Initial deposit of P500k
o Savings: Initial deposit of P500k
o Time deposit: P1M w/ maturity date of 31 Aug 1990
4 Sept: Antonio Ong, upon being shown the Authority to debit, personally declared his signature to
be a forgery.
Tevetesco already effected several withdrawals from its current account amounting to
P37,455,410.54 including the P2M paid to respondent Franco.
8 Sept: BPI-FB, through Senior VP Severino Cornamcion, instructed Jesus Arangorin to debit Francos
savings & current accounts for the amounts remaining therein but the latters time deposit account
couldnt be debited due to computer limitations.
2 checks drawn by Franco against BPI-FB current account were dishonored upon presentment for
payment & stamped w/ notation account under garnishment.
o Garnished by virtue of an Order of Attachment issued by Makati RTC in a civil case filed by
BPI-FB against Franco, etc. to recover the P37,455,410.54 (Tevetescos total withdrawals
from its account)
o Dishonored checks were issued by respondent Franco & presented for payment at BPI-FB
prior to Francos receipt of notice of garnishment. At the time the notice dated 27 Sept was
served on BPI-FB, respondent Franco has yet to be impleaded in said case where writ of
attachment was issued. It was only on 15 May 1990 that respondent Franco was impleaded.
The attachment was subsequently lifted however the funds were not released to respondent
Franco because petitioner BPI-FB could not comply given that the money has already been
debited because of FMICs forgery claim. petitioner BPI-FBs computer that branch indicated
that the current account record was not on file.

As to respondent Francos savings account he agreed to an arrangement as a favor to Sebastian

where P400K from said account was temporarily transferred to Domingo Quiaoits savings account,
subject to its immediate return upon issuance of a certificate of deposit which Quiaoit needed in
connection with his visa application at the Taiwan Embassy.
o Sebastian retained custody of Quiaoits savings account passbook to preserve respondent
Francos deposits.
17 May 1990: Respondent Franco pre-terminated his time deposit account.
o Petitioner BPI-FB deducted P63,189 from the remaining balance of the account representing
advance interest paid to him.
Several cases have been filed and resolved pertaining to these transactions.
PET FPI-FBs refusal to heed RES Francos demand to unfreeze his accounts & release his deposits
gave rise to the latters filing a case with Manila RTC.
RTC
o Rendered judgment in favor of respondent Franco ordering Petitioner BPI-FB to pay sums of
money.
CA
o Modified decision but Petitioner BPI-FB still to pay interest deducted rom the time-deposit of
Respondent Franco, damages, etc.
ISSUE:
Who has a better right to the deposits in respondent Francos accounts? (FRANCO)

HELD:

No doubt that petitioner BPI-FB owns the deposited monies in the accounts of respondent Franco,
but not as a legal consequence of its unauthorized transfer of FMICs deposits to Tevetescos
account.
o The deposit of money in banks is governed by the Civil Code provisions on simple loan or
mutuum.
o As there is a debtor-creditor relationship between a bank and its depositor, petitioner FPI-FB
ultimately acquired ownership of respondent Francos deposits, but such ownership is
coupled w/ a corresponding obligation to pay him an equal amount on demand. Although
petitioner BPI-FB owns the deposits, it cannot prevent respondent Franco from demanding
payment of the formers obligation by drawing checks against his current account or asking
for the released of the funds in his savings account.
When respondent Franco issued checks drawn against his current account, he had every right as
creditor to expect that those checks would be honored by petitioner BPI-FB as debtor.

Hermojina Estores vs. Spouses Arturo and Laura Supangan

Facts:
1. In Oct. 1993, Hermojina Estores and Spouses Supangan entered into a Conditional Deed of
Sale where Estores offered to sell, and Spouses offered to buy a parcel of land in Cavite for
P4.7M.
2. After almost 7 years and despite the payment of P3.5M by the Spouses, Estores still failed to
comply with her obligation to handle the peaceful transfer of ownership as stated in 5
provisions in the contract.
3. In a letter in 2000, Spouses demanded the return of the amount within 15 days from receipt
4. In reply, Estores promised to return the same within 120 days
5. Spouses agreed but imposed an interest of 12% annually
6. Estores still failed despite demands
7. Spouses filed a complaint with the RTC against Estores and Roberto Arias (allegedly acted as
Estores agent)
8. In Answer, Estores said they were willing to pay the principal amount but without the interest
as it was not agreed upon
a. That since the Conditional Deed of Sale provided only for the return of the
downpayment in case of breach, they cant be liable for legal interest as well
9. RTC ruled saying that the Spouses are entitled to the interest but only at 6% per annum and
also entitled to attys fees
10.On appeal, CA said that the issue to resolve is
a. 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.CA affirmed RTC
a. 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. That Arias not be solidarily liable as he acted as agent only and did not expressly bind
himself or exceeded his authority
12.Estores contends:
a. 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. 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.Spouses contend:
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. Estores failed to relocate the house outside the perimeter of the subject lot and
complete the necessary documents
c. As to the fees, they claim that they were forced to litigate when Estores unjustly held
the amount

Issue:
Is the imposition of interest and attorneys 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.

Article 2210 of the Civil Code expressly provides that [i]nterest may, in the discretion of the court,
be allowed upon damages awarded for breach of contract.
Estores failed on her obligations despite demand.
o She admitted that the conditions were not fulfilled and was willing to return the full
amount of P3.5M but hasnt done so
o She is now in default
The interest at the rate of 12% is applicable in the instant case.

Gen Rule: the applicable interest rate shall be computed in accordance with the stipulation of
the parties
Exc: if no stipulation, applicable rate of interest shall be 12% per annum
o When obligation arises out of a loan or forbearance of money, goods or credits
In other cases, it shall be 6%
In this case, no stipulation was made
Contract involved in this case is not a loan but a Conditional Deed of Sale.
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, the stipulation governing the
return of the money can be considered as a forbearance of money which requires
12% interest
In Crismina Garments, Inc. v. Court of Appeals, Forbearance-- contractual obligation of lender or
creditor to refrain during a given period of time, from requiring the borrower or debtor to repay a loan
or debt then due and payable.
o In such case, forbearance of money, goods or credits will have no distinct definition from a
loan.
o however, the phrase forbearance of money, goods or credits is meant to have a separate
meaning from a loan, 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, goods or credits should therefore refer to arrangements other than
loan agreements, where a person acquiesces to the temporary use of his money, goods or
credits pending happening of certain events or fulfillment of certain conditions.
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. 2000

The award of attorneys fees is warranted.

no doubt that the Spouses were forced to litigate to protect their interest, i.e., to recover their
money. The amount of P50,000.00 more appropriate