Herrera vs Petro Phil Corp 146 Scra 385

FACTS:
On December 5, 1969, Herrera and ESSO
Standard, (later substituted by Petrophil Corp.,)
entered into a lease agreement, whereby the
former leased to the latter a portion of his
property for a period of 20yrs. subject to the
condition that monthly rentals should be paid
and there should be an advance payment of
rentals for the first eight years of the contract,
to which ESSO paid on December 31, 1969.
However, ESSO deducted the amount of 101,
010.73 as interest or discount for the eight
years advance rental.

On August 20, 1970, ESSO informed

Herrera that there had been a mistake
in the computation of the interest and
paid an additional sum of 2,182.70;
thus, it was reduced to 98, 828.03.

As such, Herrera sued ESSO for the

sum of 98, 828.03, with interest,
claiming that this had been illegally
deducted to him in violation of the
Usury Law.

ESSO argued that amount deducted

was not usurious interest but rather a
discount given to it for paying the
rentals in advance. Judgment on the
pleadings was rendered in favor of
ESSO. Thus, the matter was elevated to
the SC for only questions of law was
involve.

ISSUE: W/N the contract between the parties

is one of loan or lease.

RULING:

Contract between the parties is one of

lease and not of loan. It is clearly
denominated a "LEASE AGREEMENT."
Nowhere in the contract is there any
showing that the parties intended a
loan rather than a lease. The provision
for the payment of rentals in advance
cannot be construed as a repayment of
a loan because there was no grant or
forbearance of money as to constitute
an indebtedness on the part of the
lessor. On the contrary, the defendantappellee was discharging its obligation
in advance by paying the eight years
rentals, and it was for this advance
payment that it was getting a rebate or
discount.
There is no usury in this case because
no money was given by the defendantappellee to the plaintiff-appellant, nor
did it allow him to use its money
already in his possession. There was
neither loan nor forbearance but a
mere discount which the plaintiffappellant allowed the defendantappellee to deduct from the total
payments because they were being
made in advance for eight years. The
discount was in effect a reduction of
the rentals which the lessor had the
right to determine, and any reduction
thereof, by any amount, would not
contravene the Usury Law.
The difference between a discount and
a loan or forbearance is that the former
does not have to be repaid. The loan or
forbearance is subject to repayment
and is therefore governed by the laws
on usury.
To constitute usury, "there must be
loan or forbearance; the loan must be
of money or something circulating as

money; it must be repayable absolutely

and in all events; and something must
be exacted for the use of the money in
excess of and in addition to interest
allowed by law."
It has been held that the elements of usury
are (1) a loan, express or implied; (2) an
understanding between the parties that
the money lent shall or may be returned;
that for such loan a greater rate or
interest that is allowed by law shall be
paid, or agreed to be paid, as the case
may be; and (4) a corrupt intent to take
more than the legal rate for the use of
money loaned. Unless these four things
concur in every transaction, it is safe to affirm
that no case of usury can be declared
US vs. Diaz-Conde (42 Phil 766)
Facts:
On December 30, 1915, complainants
Bartolome Oliveros and Engracia Lianco
entered into a contract with the defendants
concerning a debt of P300. Oliveros and co.
were obligated to pay five percent interest per
month within the first ten days of every month.
On May 6, 1921, Vicente Diaz Conde and
Apolinaria R. De Conde were charged with
violating the Usury Law in the Court of First
Instance of the city of Manila. They were found
guilty, sentenced to pay a fine of P120 and in
case of insolvency, to suffer subsidiary
imprisonment in accordance with the
provisions of law. They took it to SC to plead.
Issues:
WoN the Usury Law has a retroactive effect in
this case
WoN the law impaired the contract
Held and Ratio:

No. The Usury Law, a penal law, cannot

become retroactive unless it is favorable to the
person accused. (Art. 21 and 22 Penal Code)
Yes. If a contract is legal at its inception, it
cannot be rendered illegal by any subsequent
legislation.
Decision: Judgment reversed, defendants
acquitted.
G.R. No. L-1927

May 31, 1949

CRISTOBAL ROO, petitioner, vs. JOSE L.

GOMEZ, ET AL., respondents.
*Usurious Transactions
#6 (round 2)
STATEMENT OF FACTS: On October 5, 1944,
Cristobal Roo received as a loan from Jose L.
Gomez P4,000.00 in Japanese fiat money
(mickey mouse money). The contract of loan is
under the condition that said loan will not
earn interest and that it will be paid in the
currency then prevailing one year after the
execution of the contract. After a year, a
collection suit was filed by respondent Gomez
against petitioner Rono to collect the latters
debt. Subsequently, the trial court ruled in
favor of Gomez. The court ordered Rono to pay
the respondent an amount of P4,000.00 in
Philippine currency which was then the
prevailing currency at the time of payment.
Contending such decision, Rono insists that the
contract taken in favor of respondent is
contrary to law, public order and good morals
since his loan then of P4,000.00 mickey
mouse money is equivalent only to P100.00 of
the Philippine currency which is the prevailing
currency at the time of payment.
CONTENTION OF THE PETITIONER: Roo
asserts that the decision of the trial court ruling
in favor of respondent is contrary to the Usury
law, because on the basis of calculations by

Government experts he only received the

equivalent of P100 Philippine pesos and now he
is required to give four thousand pesos or
interest greatly in excess of the lawful rates.

is not subject to the operation of the Usury

law.

CONTENTION OF THE RESPONDENT: That

both parties agreed that the loaned amount of
P4,000.00 mickey mouse money be paid in
the currency prevailing by the end of one
year. The civil code supports such agreement
when it says "obligations arising from contracts
shall have the force of law between the
contracting parties and must be performed in
accordance with their stipulations" (Article
1091).

G.R. No. L-35697-99 pril 15, 198

RESOLUTION OF SC:
The SC ruled that that the contract between
the parties is an aleatoty contract.
The eventual gain of Gomez is not interest
within the meaning of the Usury law. In the first
place, Rono is not paying an interest. Such is
evidenced by the fact that in his promissory
note, he indicated that the money loaned will
not earn any interest.
Furthermore, both parties clearly agreed at the
time of the execution of the contract that the
loaned money (P4,000.00 mickey mouse) will
be paid in the currency prevailing by the end
of the stipulated period of one year.
The devaluation of the Mickey mouse money is
due to an event unforseable by any man; that
the increased intrinsic value and purchasing
power of the current money is consequence of
an event (change of currency) which at the
time of the contract neither party knew would
certainly happen within the period of one year.
However, both parties subjected their rights
and obligations to that contingency. Thus, the
contract in question is legal and obligatory and

ELADlA DE LIMA vs. LAGUNA TAYABAS CO.

FACTS:
On June 3, 1958, an accident between a
Laguna Tayabas Co. (LTB) bus and Seven-up
Bottlers Co. delivery truck resulted to the death
of an LTB passenger named Petra dela Cruz.
Two other LTB passengers namely Eladia de
Lima and Nemesio Flores also incurred physical
injuries. De Lima, Flores and the heir of dela
Cruz filed suits to the bus company.
In December 29, 1971, the petitioners
requested to expedite the decision of the case
with the hope that the legal interest is to be
given immediately from the date of the
decision. By January 31, 1972, the decision was
given. Again, the petitioners reiterated their
request for the modification of the decision in
such a way that the effectivity is to be rolled
back to December 27, 1963. Furthermore, the
heir of dela Cruz filed a reconsideration for the
increase of indemnity from P3,000 to P12,000.
With this pending motion for reconsideration,
LTB filed an appeal for the case. The appellate
court turned down the motion for
reconsideration of the plaintiffs indicating that
an appeal should have been filed for the
awarding of the legal interest. The petition was
reviewed in 1988, thirty years after the actual
incident.
ISSUES:
a. Whether the effectivity of the decision is to
be rolled back as requested by the plaintiffs.
b. Whether the lower court was erroneous in
the delay of the decision for the increase in the
claim of the heir of Petra dela Cruz.

HELD:

PHILIPPINE AIRLINES vs. COURT OF

APPEALS and LEOVIGILDO A. PANTEJO

as he did not have cash with him at that time

but PAL refused. Fortunately, Pantejo was
accommodated by Andoni Dumlao and he
shared a room with the latter at Sky View Hotel
with the promise to pay his share of the
expenses upon reaching Surigao. When the
flight for Surigao was resumed, Pantejo was
informed that the hotel expenses of his copassengers were reimbursed by PAL. At this
point, Pantejo informed the Manager for
Departure Services of PAL at Mactan Airport
that he was going to sue the airline for
discriminating against him. The manager
offered to pay Pantejo P300 which the latter
declined. Pantejo filed a suit for damages
against PAL in the Regional Trial Court of
Surigao City. Said court rendered judgment in
favor of Pantejo, ordering PAL to pay Pantejo
P300 for actual damages, P150,000 as moral
damages, P100,000 as exemplary damages,
P15,000 as attorney's fees, and 6% interest
from the time of the filing of the complaint until
said amounts shall have been fully paid, plus
costs of suit. On appeal, CA affirmed the
decision, but with the exclusion of the award of
attorney's fees and litigation expenses. Hence,
this petition.

275 SCRA 621

ISSUE:

The court granted the petition noting that the

plaintiffs were unable to make an appeal in the
lower court due to the fact that the petitioners
are seeking judicial remedy as impoverished
individuals. They were hopeful that the
adjudged amount will be provided to them by
the transportation company. With the case
pending for thirty years, the court aptly found
this as a sufficient justification to grant the
legal interest as well as the increase in
indemnity.
It was found that the rolling back of the
effectivity date was necessary to compensate
for the monetary loss the plaintiffs incurred
from the accident, death and court
proceedings. Moreover, the claim for Petra dela
Cruz was increased from P3,000.00 to
P30,000.00. The decision was immediately
executory in response to the identified urgent
need of the plaintiffs.

G.R. No. 120262

July 17, 1997

FACTS:
On October 23, 1988, Leovegildo Pantejo, then
City Fiscal of Surigao City, boarded a PAL plane
in Manila and disembarked in Cebu City where
he was supposed to take his connecting flight
to Surigao City. However, due to typhoon
Osang, the connecting flight to Surigao City
was cancelled. PAL initially gave out cash
assistance of P100 and, the next day, P200 for
their expected stay of two days in Cebu.
Pantejo requested instead that he be
accommodated in a hotel at the expense of PAL

Whether or not PAL was liable for

damages.
HELD:
Yes. A contract to transport passengers
is quite different in kind and degree from any
other contractual relation because of the
relation which an air carrier sustains with the
public. Its business is mainly with the travelling
public. It invites people to avail of the comforts
and advantages it offers. The contract of air
carriage, therefore, generates a relation
attended with a public duty. Neglect or
malfeasance of the carrier's employees

naturally could give ground for an action for

damages.
In this case, there was bad faith on the
part of PAL. Contrary to the claim of PAL that
cash assistance was given instead because of
non-availability of rooms in hotels, the
evidence showed that Sky View Hotel, where
respondent Pantejo was billeted, had plenty of
rooms available. Pantejo only came to know
about the reimbursements when other
passengers informed him that they were able
to obtain the refund for their own hotel
expenses. PAL offered to pay P300.00 to
Pantejo only after the latter had confronted the
manager of PAL about the discrimination
committed against Pantejo, which the manager
realized was an actionable wrong. The hotel
accommodation was not a mere amenity or
privilege. It was a company policy whenever a
flight is cancelled as testified by several
witnesses. And even if it was a mere privilege,
PAL was still liable for damages for its blatant
refusal to accord the so-called amenities
equally to all its stranded passengers. No
compelling or justifying reason was advanced
for such discriminatory and prejudicial conduct.
It was not also true that Pantejo was not
listening to the announcements. In fact,
Pantejo immediately proceeded to the office of
PAL and requested for hotel accommodations.
He was not only refused accommodations, but
he was not even informed that he may later on
be reimbursed for his hotel expenses. The
refund of hotel expenses was surreptitiously
and discriminatorily made by PAL as only
handful of passengers knew about it. Pantejo
was exposed to humiliation and
embarrassment especially because of his
government position and social prominence.
The discriminatory act of PAL against Pantejo
made PAL liable for moral damages under
Article 21 in relation to Article 2219 (10) of the
Civil Code. As held in Alitalia Airways vs. CA,
such inattention to and lack of care by

petitioner airline for the interest of its

passengers who were entitled to its utmost
consideration, particularly as to their
convenience, amounted to bad faith which
entitled the passenger to the award of moral
damages. Under the peculiar circumstances of

this case, the awards for actual, moral and

exemplary damages granted in the judgment
of CA were just and equitable. But the interest
of 6% imposed should be computed from the
date of rendition of judgment and not from the
filing of the complaint. The judgment of Court

of Appeals was AFFIRMED, subject to the

MODIFICATION regarding the computation of
the 6% legal rate of interest on the monetary
awards granted therein to private respondent.