Cases in Mutuum Credtrans
Cases in Mutuum Credtrans
Facts:
Petitioner Yong Chan Kim was employed as a Researcher at the Aquaculture Department of the
Southeast Asian Fisheries Development Center (SEAFDEC) with head station at Tigbauan, Province of
Iloilo. As Head of the Economics Unit of the Research Division, he conducted prawn surveys which
required him to travel to various selected provinces in the country where there are potentials for prawn
culture.
On 15 June 1982, petitioner was issued Travel Order No. 2222 which covered his travels to different
places in Luzon from 16 June to 21 July 1982, a period of thirty five (35) days, where he received
P6,438.00 as cash advance to defray his travel expenses.
Within the same period, petitioner was issued another travel order, T.O. 2268, requiring him to travel
from the Head Station at Tigbauan, Iloilo to Roxas City from 30 June to 4 July 1982, a period of five (5)
days, where petitioner received a cash advance of P495.00.
On 14 January 1983, petitioner presented both travel orders for liquidation, submitting Travel Expense
Reports to the Accounting Section. When the Travel Expense Reports were audited, it was discovered
that there was an overlap of four (4) days (30 June to 3 July 1982) in the two (2) travel orders for which
petitioner collected per diems twice.
Petitioner was required to comment on the internal auditor's report regarding the alleged anomalous
claim for per diems. In his reply, petitioner denied the alleged anomaly, claiming that he made make-up
trips to compensate for the trips he failed to undertake under T.O. 2222 because he was recalled to the
head office and given another assignment.
Issue:
Was petitioner under obligation to return the same money (cash advance), which he had received?
Held:
No. Liquidation simply means the settling of indebtedness. An employee, such as herein petitioner,
who liquidates a cash advance is in fact paying back his debt in the form of a loan of money advanced to
him by his employer, as per diems and allowances. In other words, the money advanced by either party
is actually a loan to the other. Hence, petitioner was under no legal obligation to return the same cash
or money, i.e., the bills or coins, which he received from the private respondent.
Commodatum is essentially gratuitous. Simple loan may be gratuitous or with a stipulation to pay
interest. In commodatum, the bailor retains the ownership of the thing loaned, while in simple loan,
ownership passes to the borrower."
"Art. 1953. - A person who receives a loan of money or any other fungible thing acquires the ownership
thereof, and is bound to pay to the creditor an equal amount of the same kind and quality."
In this case, there is transfer of ownership of money to the petitioner subject to a suspensive condition
that he liquidates.
FACTS: Jose Grijaldo obtained five crop loans from the branch office of the Bank of Taiwan, Ltd. in
Bacolod City, in the total sum of P1,281.97 with interest at the rate of 6% per annum, compounded
quarterly. These loans are evidenced by five promissory notes executed by the appellant in favor of the
Bank. All notes without due dates, but because the loans were crop loans it was considered that the
loans were due one year after they were incurred. To secure the payment of the loans the appellant
executed a chattel mortgage on the standing crops on his land known as Hacienda Campugas.
By virtue of “Trading with the Enemy Act” the assets in the Philippines of the Bank of Taiwan, Ltd. were
vested in the Government of the United States which were subsequently transferred to the Republic of
the Philippines.
Grijaldo failed to pay the crop loans despite the extra-judicial demand of the Government of the
Philippines. He argued that the Government has no cause of action, that because the loans were
secured by a chattel mortgage on the standing crops on a land owned by him and those crops were lost
or destroyed through enemy action his obligation to pay the loans was thereby extinguished.
ISSUE: Whether or not Grijaldo’s obligation to pay the crop loans had extinguished due to the crops that
were lost or destroyed through enemy action.
RULING: NO.
The obligation of the Grijaldo under the five promissory notes was not to deliver a determinate thing;
namely, the crops to be harvested from his land, or the value of the crops that would be harvested from
his land. Rather, his obligation was to pay a generic thing the amount of money representing the total
sum of the five loans, with interest.
The chattel mortgage on the crops growing on appellant's land simply stood as a security for the
fulfillment of appellant's obligation covered by the five promissory notes, and the loss of the crops did
not extinguish his obligation to pay, because the account could still be paid from other sources aside
from the mortgaged crops.
The court ordered the estate of Grijaldo to answer for the settlement of the crop loans.
Obligations and contracts; Crop loans obtained from the Bank of Taiwan, Ltd.; Right of Philippine
Government to collect the loans.—In 1943, appellant obtained crop loans from the Bank of Taiwan, Ltd.,
Bacolod City Branch, evidenced by promissory notes. To secure payment of the loans, appellant
executed a chattel mortgage over the standing crops on his land. After the war, the Republic of the
Philippines brought the present action to collect from appellant the unpaid account. Held: It is true that
the Bank of Taiwan, Ltd. was the original creditor and the transaction between the appellant and the
Bank of Taiwan was a private contract of loans. However, pursuant to the Trading with the Enemy Act,
as amended, and Executive Order No. 9095 of the United States; and under Vesting Order No. P-4, dated
January 21, 1946, the properties of the Bank of Taiwan, Ltd., were vested in the United States
Government. Pursuant, further, to the Philippine Property Act of 1946 and Transfer Agreements dated
July 20, 1954 and June 15, 1957, between the United States Government and the Republic of the
Philippines, the assets of the Bank of Taiwan, Ltd. were transferred to and vested in the Republic of the
Philippines. The successive transfers of the rights over the loans in question from the Bank of Taiwan,
Ltd. to the United States Government, and from the United States Government to the government of
the Republic of the Philippines, made the Republic of the Philippines the successor of the rights, title and
interests in said loans, thereby creating a privity of contract between the appellee and the appellant.
Same; Same; Same; Destruction of crop through enemy action; Effect on the obligation.—Appellant
maintains, in support of his contention that the appellee has no cause of action, that because the loans
were secured by a chattel mortgage on the standing crops on the land owned by him and those crops
were lost or destroyed through enemy action his obligation to pay the loans was thereby extinguished.
Held: This argu ment is untenable. The obligation of the appellant under the promissory notes was not
to deliver a determinate thing. namely, the crops to be harvested from his land, but to pay a generic
thing—the amount of money representing the total sum of his loans, with interest. The chattel
mortgage on the crops simply stood as a security for the fulfillment of appellant's obligation covered by
the, promissory notes, and the loss of the crops did not 'extinguish his obligation to pay, because the ac
count could still be paid from other sources aside from the mortgaged crops.
Same; Same; Same; Payment in Japanese war notes; Application of Ballantyne scale of values.—
Contracts stipulating for payments presumably in Japanese war notes may be enforced after the
liberation to the extent of the just obligation of the contracting parties and, as said notes have become
worthless, in order that justice may be done and the party entitled to be paid can recover their actual
value in Philippine Currency, what the debtor or defendant bank should return or pay is the value of the
Japanese military notes in relation to the peso in Philippine Currency obtaining on the date when and at
the place where the obligation was incurred unless the parties had agreed otherwise. (Hilado vs. De la
Costa L-150 April 30. 1049, 46 Off. Gaz. 5472.)
A parcel of land described in a cause of action was the subject matter of the public auction sale wherein the
plaintiff, Lucia Tan was the highest bidder and as such a Certificate of Sale was executed in favor of herein plaintiff.
Due to the failure of defendant Arador Valdehueza to redeem the said land within the period of one year as being
provided by law, an Absolute Deed of Sale in favor of the plaintiff was executed. The defendants Valdeheuza have
executed two documents of Deed of Pacto de Retro Sale in favor of the plaintiff of two portions of a parcel of land
which is described in the second cause of action with the total amount of P1,500. From the execution of the Deed
of Sale with right to repurchase mentioned in the second cause of action, defendants remained in the possession
of the land.
A complaint for injunction was filed by Tan to enjoin the Valdehuezas "from entering the parcel of land and
gathering the nuts therein ". The complaint and the counterclaim were later on dismissed for failure of the parties
to seek for immediate trial, thus evincing lack of interest on their part to proceed with the case. The Deed of Pacto
de Retro referred to was not registered in the Registry of Deeds, while the second Deed of Pacto de Retro was
registered.
Issue:
1.
Whether the transactions between the parties were simple loan?
2.
Under article 1875 of the Civil Code of 1889, registration was a necessary requisite for the validity of a mortgage
even as between the parties, but under article 2125 of the new Civil Code (in effect since August 30,1950), this is
no longer so.
If the instrument is not recorded, the mortgage is nonetheless binding between the parties. (Article 2125, 2nd
sentence).
The Valdehuezas having remained in possession of the land and the realty taxes having been paid by them, the
contracts which purported to be pacto de retro transactions are presumed to be equitable mortgages, 5 whether
registered or not, there being no third parties involved.
1.
WON the subject land subject of pacto de retro is actually an equitable mortgage
2.
The Valdehuezas having remained in possession of the land and the realty taxes having been paid by
them, the contracts which purported to be pacto de retro transactions are presumed to be equitable
mortgages, whether registered or not, there being no third parties involved.
Under article 1875 of the Civil Code of 1889, registration was a necessary requisite for the validity of a
mortgage even as between the parties, but under article 2125 of the new Civil Code (in effect since
August 30,1950), this is no longer so.
If the instrument is not recorded, the mortgage is nonetheless binding between the parties. (Article
2125, 2nd sentence).
1.
WON the imposition of legal interest on the amounts subject of the equitable mortgages,
P1,200 and P300, respectively
It is without legal basis, for, "No interest shall be due unless it has been expressly stipulated in writing."
(Article 1956, new Civil Code) Furthermore, the plaintiff did not pray for such interest; her thesis was a
consolidation of ownership, which was properly rejected, the contracts being equitable mortgages.
FACTS:
The private respondent, Jose Valenzuela, Jr., filed a complaint against Casa Filipina Development Corporation
before Office of Appeals, Adjudication and Legal Affairs (OAALA) [now Housing and Land Use Regulatory
Board (HLURB)] for its failure to execute and deliver the deed of sale and the transfer certificate of title (TCT).
Private respondent alleged that he entered a contract to sell with petitioner for the purchase of a lot for a
total of 51,984.00 to be paid in 12 equal monthly installments with 24% interest. He also alleged that despite
full payment, the petitioner refuses to execute the deed of sale and deliver the TCT. He had also offered to
pay for or reimburse petitioner the expenses for the transfer of the title but the petitioner refuses to accept
the same.
The OAALA rendered judgment in favor of private respondent and ordered petitioner to execute the deed of
sale and deliver the TCT. It also ordered that in the event petitioner is unable to deliver the title to the said
lot, petitioner is to refund to private respondent his total payments plus 24% interest per annum from the
date of the filing of the complaint, until fully paid.
Petitioner then filed an appeal before the HLURB which the HLURB dismissed for lack of merit. Petitioner
appealed further to the Office of the President which was also dismissed for lack of merit. Hence, this
petition.
ISSUE:
Whether or not the legal interest or the interest rate stipulated in the contract is to be applied.
RULING:
The Supreme Court ruled that the interest rate stipulated in the contract is to be applied.
The Supreme Court emphasized that in cases where damages in the form of interest is due but no specific
rate has been previously set by the parties, the legal interest of 12% per annum must be applied. In the
present case, however, the interest rate of 24% per annum was mutually agreed upon by petitioner and
private respondent in their contract to sell. There is no reason why this same interest rate should not be
equally applied to petitioner which is guilty of violating the reciprocal obligation.
FACTS: As payments for the purchase of medicines, the Province of Isabela issued several checks drawn against its
account with petitioner Philippine National Bank (PNB) in favor of the seller, Lyndon Pharmaceuticals Laboratories,
a business operated by private respondent Ibarrola.
The checks were delivered to the seller’s agents who turned them over to Ibarrola, except 23 checks amounting to
P98,691.90, which the agents appropriated after negotiating them with PNB. For her failure to receive the full
payment for the medicines, Ibarrola filed on November 6, 1974 before the Regional Trial Court (RTC) an “action for
a sum of money and damages,” docketed as Civil Case 4226-P, against the Province of Isabela, its Treasurer, the
two agents and PNB.
In its decision dated September 29, 1987, the trial court ordered all the defendants in said civil case, except the
treasurer who died in the meantime, to “jointly and solidarily” pay Ibarrola several amounts, among which is:
“(1) P98,691.90 with interest thereon at the legal rate from the date of the filing of the complaint until the entire
amount is fully paid;”3 (Italics supplied.)
PNB’s appeal to the Court of Appeals and later to the Supreme Court5 were denied and dismissed, respectively. All
the three courts, however, did not specify whether the legal rate of interest referred to in the judgment is 6% or
12%.
The judgment in Civil Case 4226-P became final and executory on November 26, 1993. At the execution stage, the
sheriff computed the interest mentioned in the judgment at the rate of 12% which PNB opposed insisting that the
rate should only be 6%. Ibarrola sought clarification from the same RTC which promulgated the decision.
On August 4, 1994 said court issued an order clarifying that the rate is 12%. PNB’s direct appeal to this court from
that order was referred to the CA which affirmed the RTC order. Hence, this petition for review.
ISSUES:
(1) whether in an action for damages, the legal rate of interest is 6% as provided by Article 22096 of the New Civil
Code or 12% asprovided by CB Circular 416 series of 1974,7 and
(2) whether such rate shall be computed from the filing of the complaint until fully paid?
HELD: ACCORDINGLY, the appealed decision is REVERSED. The rate of interest shall be 6% p.a. computed from the
time of the filing of the complaint until its full payment before finality of judgment. Thereafter, if the amount
adjudged remains unpaid, the interest rate shall be 12% p.a. computed from the time the judgment became final
and executory on November 26, 1993 until fully satisfied.
The case at bench does not involve a loan, forbearance of money or judgment involving a loan or forbearance of
money as it arose from a contract of sale whereby Ibarrola did not receive full payment for her merchandise.
Obligations; Interest Rates; Where an obligation arises “from a contract of purchase and sale and not from a
contract of loan or mutuum,” the applicable rate is “6% per annum as provided in Article 2209 of the NCC and not
the rate of 12% per annum as provided in (CB) Cir. No. 416.”—The case at bench does not involve a loan,
forbearance of money or judgment involving a loan or forbearance of money as it arose from a contract of sale
whereby Ibarrola did not receive full payment for her merchandise. When an obligation arises “from a contract of
purchase and sale and not from a contract of loan or mutuum,” the applicable rate is 6% per annum as provided in
Article 2209 of the NCC and not the rate of 12% per annum as provided in (CB) Cir. No. 416.” Indeed, PNB’s liability
is based only on the RTC’s judgment where it was held solidarily liable with the other defendants due to its
negligence when it “failed to assure itself” if the Provincial Treasurer was “properly authorized” by Ibarrola to
“make endorsements” of said checks.
Same; Same; Administrative Law; The rate of 12% interest referred to in Cir. 416 applies only to: “[L]oan or
forbearance of money, or to cases where money is transferred from one person to another and the obligation to
return the same or a portion thereof is adjudged, and any other monetary judgment which does not involve or
which has nothing to do with loans or forbearance of any money, goods or credit does not fall within its coverage
for such imposition is not within the ambit of the authority granted to the Central Bank.”—The rate of 12% interest
referred to in Cir. 416 applies only to: “[L]oan or forbearance of money, or to cases where money is transferred
from one person to another and the obligation to return the same or a portion thereof is adjudged. Any other
monetary judgment which does not involve or which has nothing to do with loans or forbearance of any money,
goods or credit does not fall within its coverage for such imposition is not within the ambit of the authority granted
to the Central Bank. When an obligation not constituting a loan or forbearance of money is breached then an
interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per
annum in accordance with Art. 2209 of the Civil Code. Indeed, the monetary judgment in favor of private
respondent does not involve a loan or forbearance of money, hence the proper imposable rate of interest is six
(6%) per cent.” (Italics ours.)
Same; Same; Judgments; The interest rate on a judgment for damages is only 6%, computed from the time of the
filing of the complaint but once the judgment becomes final and executory, and until fully satisfied, the rate
applicable is 12%.—Applying the aforequoted rule, therefore, the proper rate of interest referred to in the
judgment under execution is only 6%. This interest according to Eastern Shipping shall be computed from the time
of the filing of the complaint considering that the amount adjudged (P98,691.90) can be established with
reasonable certainty. Said amount being merely the uncollected balance of the purchase price covered by the 23
checks encashed and appropriated by Ibarrola’s agents. However, once the judgment becomes final and executory,
the “interim period from the finality of judgment awarding a monetary claim and until payment thereof, is deemed
to be equivalent to a forbearance of credit.” Thus, in accordance with the pronouncement in Eastern Shipping the
rate of 12% p.a. should be imposed, and to be computed from the time the judgment became final and executory
until fully satisfied. The actual base for the computation of this 12% interest after the judgment in this damage suit
became final shall be the amount adjudged (P98,691.90).
Private respondent alleged that the lots, which have a total contract price of P10,800.00, have already been paid
for, as she had already paid P200.00 as down payment, and had subsequently completed payment of 128 equal
monthly installments of P89.45 each amounting to P11,450.00; that as the law allows the charging of interest only
as monetary interest or as compensatory interest, none of which have obtained in her case, as she had never
incurred in delay in the payment of installments due, the stipulated interest of six percent (6%) per annum on the
outstanding balance is null and void; and that the amount of 650.00 representing overpayment be returned to her.
Petitioner alleged that private respondent is obliged to pay interest on the installment payments of the unpaid
outstanding balance even if paid on their "due dates" per schedule of payments; that private respondent had
actually been in arrears in the amount of P4,269.40, representing such interest as of June 1979, which therefore
entitled petitioner to cancel the contract in question.
ISSUE: Whether or not petitioner has the right to rescind the contract for private respondent's continued refusal to
pay the monthly installments on the contract price
HELD: No. Vendor and vendee are legally free to stipulate for the payment of either the cash price of a subdivision
lot or its installment price. Should the vendee opt to purchase a subdivision lot via the installment payment
system, he is in effect paying interest on the cash price, whether the fact and rate of such interest payment is
disclosed in the contract or not. The contract for the purchase and sale of a piece of land on the installment
payment system in the case at bar is not only quite lawful; it also reflects a very wide spread usage or custom in
our present day commercial life. Despite private respondent's failure to fully pay the stipulated price of the two
lots in question, petitioner, however, could not validly rescind the contract not being lawfully entitled to do so.
Petitioner failed to rebut private respondents' allegations that the former had failed to introduce required
improvements in the subdivision.
Civil Law; Sale; Vendor and vendee are legally free to stipulate for the payment of either the cash price of a
subdivision lot or its installment price.—Vendor and vendee are legally free to stipulate for the payment of either
the cash price of a subdivision lot or its installment price. Should the vendee opt to purchase a subdivision lot via
the installment payment system, he is in effect paying interest on the cash price, whether the fact and rate of such
interest payment is disclosed in the contract or not. The contract for the purchase and sale of a piece of land on
the installment payment system in the case at bar is not only quite lawful; it also reflects a very wide spread usage
or custom in our present day commercial life.
Same; Same; Presidential Decree No. 957; The law vests upon the buyer the option to demand reimbursement
of the total amount paid or to wait for further development of the subdivision.—In this respect, the trial court
was correct in holding that petitioner could not rescind the contract. As the law vests upon the buyer the option to
demand reimbursement of the total amount paid, or to wait for further development of the subdivision, private
respondent who opted for the latter alternative by waiting for the proper development of the site, may not be
ousted from the subdivision.
FACTS:
On January 31, 1978, First Metro Investment Corp. (FMIC) granted Este Del Sol a loan
to finance the construction and development of the Este del Sol Mountain Reserve, a
sports/resort complex project located at Montalban, Rizal. Under the terms of the Loan
Agreement, the interest on the loan was pegged at 16% per annum. In case of default, the
acceleration clause provided that the amount due was made subject to a 20% one-time penalty on
the amount due and such amount shall bear interest at the highest rate permitted by law from the
date of default until full payment plus liquidated damages at 2% per month compounded
quarterly on the unpaid balance and accrued interests together with all the penalties, fees,
expenses or charges until the unpaid balance is fully paid, plus attorney’s fees equivalent to 25%
of the sum sought to be recovered. Este Del Sol, on the same date, executed a Real Estate
Mortgage as security for payment and in addition, an Underwriting Agreement whereby FMIC
shall underwrite on a best-efforts basis the public offering of 120,000 common shares of Este Del
Sol’s capital stock. Since Este Del Sol defaulted in 1978, FMIC caused the extrajudicial
foreclosure on June 23, 1980 of the real estate mortgage in which FMIC was the highest bidder.
Failing to secure the payment of the alleged deficiency balance from Daez, Salientes, De Vega
and Asuncion, who are sureties of the subject loan, FMIC instituted the instant collection suit
against Este Del Sol to collect the alleged deficiency balance.
In their Answer, Este Del Sol sought the dismissal of the case as they claimed that the
Underwriting and Consultancy Agreements executed simultaneously with the Loan Agreement
were in reality subterfuges resorted to by FMIC to camouflage the usurious interest being
charged by FMIC. The trial court ruled in favor of FMIC. The CA reversed the decision and
ordered FMIC to reimburse to Este Del Sol P971,000 representing the difference between what
is due to FMIC and what is due to Este Del Sol.
RULING:
No. The Court ruled that the fees provided for in the Underwriting and
Consultancy Agreements were mere subterfuges to camouflage the excessively usurious interest
charged by the FMIC on the loan of Este Del Sol. The Underwriting and Consultancy
Agreements which were executed and delivered contemporaneously with the Loan Agreement
were exacted as essential conditions for the grant of the loan. An apparently lawful loan is
usurious when it is intended that additional compensation for the loan be disguised by an
ostensibly unrelated contract providing for payment by the borrower for the lenders services
which are of little value or which are not in fact to be rendered, such as in the instant case.
Article 1957 of the Civil Code states that “Contracts and stipulations, under any cloak or device
whatever, intended to circumvent the laws against usury shall be void”. The Usury law provides
that the entire obligation does not become void because of an agreement for usurious interest; the
unpaid principal debt still stands and remains valid but the stipulation as to the usurious interest
is void. The nullity of the stipulation on the usurious interest does not affect the lender’s right to
receive back the principal amount of the loan.
25) Asian Cathay VS Gravador, 623 SCRA 577
Facts:
On October 22, 1999, petitioner Asain Cathay Finance and Leasing Corporation (ACFLC) extended a loan
of Eight Hundred Thousand Pesos (₱800,000.00) to respondent Cesario Gravador, with respondents
Norma de Vera and Emma Concepcion Dumigpi as co-makers. The loan was payable in sixty (60)
monthly installments of ₱24,000.00 each. To secure the loan, respondent Cesario executed real estate
mortgage over his property in Sta. Maria, Bulacan, covered by Transfer Certificate of Title No. T-29234.
Respondents paid the initial installment due in November 1999. However, they were unable to pay the
subsequent ones. Consequently, on February 1, 2000, respondents received a letter demanding
payment of ₱1,871,480.00 within five (5) days from receipt thereof. Respondents requested for an
additional period to settle their account, but ACFLC denied the request. Petitioner filed a petition for
extrajudicial foreclosure of mortgage with the Office of the Deputy Sherrif of Malolos, Bulacan.
Issue:
WON the Honorable Court of Appeals erred in invalidating the interest rates imposed on the
respondents’ loan, and the waiver of the right of redemption.
Ruling:
No. The imposition of an unconscionable rate of interest on a money debt, even if knowingly and
voluntarily assumed, is immoral and unjust. It is tantamount to a repugnant spoilation and an iniquitous
deprivation of property, repulsive to the common sense of man.
It has no support on law, in principles of justice, or in the human conscience nor is there any reason
whatsoever which may justify such imposition as righteous and as one that may be sustained within the
sphere of public or private morals.
Settled is the rule that for a waiver to be valid and effective, it must, in the first place, be couched in
clear and unequivocal terms which will leave no doubt as to the intention of a party to give up a right or
benefit which legally pertains to him. Additonally, the intention to waive a right or an advantage must be
shown clearlly and convincingly. Unfortunately, ACFLC failed to convince us that respondents waived
their right of redemption voluntarily.