Central bank GR. L-45710 OCt.

3, 100-hectare land located in Cubo, Las

1985 - UTANG Loan from IBP Nieves, Agusan. The loan called for a lump
Mina GR.L-8321 Oct. 14, 1913 sum of P80,000, repayable in semi-annual
XXXXXXXXXXXXXXXXXXXXXXXXX installments for 3 yrs, with 12% annual
interest. After the agreement, a mere
XXXXXXXXXXXXXXXXXXXXXXXX -
P17K partial release of the loan was made
BAHAY (Indivisiblility not by the bank and Tolentino and his wife
applicable) signed a promissory note for the P17,000
Catholic GR. 80294-95 Sept. 21, at 12% annual interest payable w/in 3 yrs.
1988 - CHURCH (Commodatum - An advance interest was deducted fr the
Trust and confidence) partial release but this prededucted
Tolentino GR. 26085 Aug. 12, 1927 interest was refunded to Tolentino after
YYYYYYYYYYYYYY - Pacto de retro being informed that there was no fund yet
(Commodatum/ Vendor-Lessee for the release of the P63K balance.
and Purchasor LEssor
Consolidated cases GR.114286 Monetary Board of Central Bank, after
Apr.19, 2001 - Floating of interest finding that bank was suffering liquidity
Casa filipina GR.May 28, problems, prohibited the bank fr making
1992xxxxxxxxxxxxxxxxxxxxxxxxxx new loans and investments. And after the
xxxxxx - 24% interest (As bank failed to restore its solvency, the
stipulated in the contract) Central Bank prohibited Island Savings
Bank from doing business in the
PNB GR. 88880 Apr. 30, 1991 - Tax
Philippines. Island Savings Bank in view of
increased 3 times in one year. the non-payment of the P17K filed an
Relucio GR.76518 July 13, application for foreclosure of the real
1990xxxxxxxxxxxxxxxxxxxxxx - estate mortgage. Tolentino filed petition
Interest on the Installment Fee. for specific performance or rescission and
(RISK) damages with preliminary injunction,
Eastern GR. 97412 July 12, 1994 - alleging that since the bank failed to
Default (when to apply 6% and deliver P63K, he is entitled to specific
12% interest) performance and if not, to rescind the real
Central Bank v Court of Appeals estate mortgage.
G.R. No. L-45710 October 3, 1985

The banks asking for advance

interest for the loan is improper
Issues: 1) Whether or not Tolentinos can
considering that the total loan hasnt
been released. A person cant be collect from the bank for damages
charged interest for nonexisting
debt. The alleged discovery by the 2) Whether or not the mortgagor is
bank of overvaluation of the loan liable to pay the amount covered by the
collateral is not an issue. Since Island promissory note
Savings Bank failed to furnish the
P63,000.00 balance of the P80,000.00
loan, the real estate mortgage of 3) Whether or not the real estate
Sulpicio M. Tolentino became mortgage can be foreclosed
unenforceable to such extent.
Held:
Facts: Island Savings Bank, upon favorable
recommendation of its legal department,
approved the loan application for 1) Whether or not Tolentinos can collect
P80,000.00 of Sulpicio M. Tolentino, who, from the bank for damages
as a security for the loan, executed on the
same day a real estate mortgage over his
The loan agreement implied reciprocal
obligations. When one party is willing and
ready to perform, the other party not
ready nor willing incurs in delay. When
Tolentino executed real estate mortgage,
he signified willingness to pay. That time,
the banks obligation to furnish the P80K
loan accrued. Now, the Central Bank
resolution made it impossible for the bank
to furnish the P63K balance. The
prohibition on the bank to make new loans
is irrelevant bec it did not prohibit the
bank fr releasing the balance of loans
previously contracted. Insolvency of
debtor is not an excuse for non-fulfillment
of obligation but is a breach of contract.
The banks asking for advance interest for
the loan is improper considering that the
total loan hasnt been released. A person
cant be charged interest for nonexisting
debt. The alleged discovery by the bank of
overvaluation of the loan collateral is not
an issue. The bank officials should have
been more responsible and the bank bears
risk in case the collateral turned out to be
overvalued. Furthermore, this was not
raised in the pleadings so this issue cant
be raised. The bank was in default and
Tolentino may choose bet specific
performance or rescission w/ damages in
either case. But considering that the bank
is now prohibited fr doing business,
specific performance cannot be granted.
Rescission is the only remedy left, but the
rescission shld only be for the P63K
balance.
2) Whether or not the mortgagor is liable
to pay the amount covered by the
promissory note
The promissory note gave rise to Sulpicio
M. Tolentinos reciprocal obligation to pay
the P17,000.00 loan when it falls due. His
failure to pay the overdue amortizations
under the promissory note made him a
party in default, hence not entitled to
rescission (Article 1191 of the Civil Code).
If there is a right to rescind the promissory
note, it shall belong to the aggrieved
party, that is, Island Savings Bank. If
Tolentino had not signed a promissory
note setting the date for payment of
P17,000.00 within 3 years, he would be
entitled to ask for rescission of the entire
loan because he cannot possibly be in
default as there was no date for him to
perform his reciprocal obligation to pay.
Since both parties were in default in the
performance of their respective reciprocal
obligations, that is, Island Savings Bank
failed to comply with its obligation to
furnish the entire loan and Sulpicio M.
Tolentino failed to comply with his
obligation to pay his P17,000.00 debt
within 3 years as stipulated, they are both
liable for damages.
3) Whether or not the real estate
mortgage can be foreclosed
Since Island Savings Bank failed to
furnish the P63,000.00 balance of the
P80,000.00 loan, the real estate mortgage
of Sulpicio M. Tolentino became
unenforceable to such extent. P63,000.00
is 78.75% of P80,000.00, hence the real
estate mortgage covering 100 hectares is
unenforceable to the extent of 78.75
hectares. The mortgage covering the
remainder of 21.25 hectares subsists as a
security for the P17,000.00 debt. 21.25
hectares is more than sufficient to secure
a P17,000.00 debt.
MINA - MISSING
Catholic Vicar vs CA GR 80294-95 21
September 1988
Facts: Catholic Vicar Apostolic of the
Mountain Province (VICAR for brevity) filed
an application for registration of title over
Lots 1, 2, 3, and 4, said Lots being the
sites of the Catholic Church building,
convents, high school building, school
gymnasium, school dormitories, social
hall, stonewalls, etc. The Heirs of Juan
Valdez and the Heirs of Egmidio Octaviano
filed their Answer/Opposition on Lots Nos.
2 and 3, respectively, asserting ownership
and title thereto since their predecessors
house was borrowed by petitioner Vicar
after the church and the convent were
destroyed.. After trial on the merits, the
land registration court promulgated its
Decision confirming the registrable title of
VICAR to Lots 1, 2, 3, and 4.
The Heirs of Juan Valdez appealed the
decision of the land registration court to
the then Court of Appeals, The Court of
Appeals reversed the decision. Thereupon,
the VICAR filed with the Supreme Court a
petition for review on certiorari of the
decision of the Court of Appeals dismissing
his application for registration of Lots 2
and 3.
Issue: Whether or not the failure to return
the subject matter of commodatum
constitutes an adverse possession on the
part of the owner
Decision: No. The bailees failure to
return the subject matter of commodatum
to the bailor did not mean adverse
possession on the part of the borrower.
The bailee held in trust the property
subject matter of commodatum.
Petitioner repudiated the trust by
declaring the properties in its name for
taxation purposes.
TOLETINO - MISSING
Consolidated Bank V. CA GR No.
114286, Apr. 19, 2001
FACTS: Continental Cement Corp obtained
from Consolidated Bank letter of credit
used to purchased 500,000 liters of
bunker fuel oil. Respondent Corporation
(Continental Cement Corporation) made a
marginal deposit to petitioner. A trust
receipt was executed by respondent
corporation, with respondent Gregory Lim
as signatory. Claiming that respondents
failed to turn over the goods or proceeds,
petitioner filed a complaint for sum of
money before the RTC of Manila. In their
answer, respondents aver that the
transaction was a simple loan and not a
trust receipt one, and that the amount
claimed by petitioner did not take into
account payments already made by them.
The court dismissed the complaint, CA
affirmed the same.
ISSUE
Whether or not the marginal deposit
should not be deducted outright from the
amount of the letter of credit.
HELD
No. petitioner argues that the marginal
deposit should be considered only after
computing the principal plus accrued
interest and other charges. It could be
onerous to compute interest and other
charges on the face value of the letter of
credit which a bank issued, without first
crediting or setting off the marginal
deposit which the borrower paid to it-
compensation is proper and should take
effect by operation of law because the
requisited in Art. 1279 are present and
should extinguish both debts to the
concurrent amount. Unjust enrichment.
CASA - MISSING
PHILIPPINE NATIONAL BANK vs, THE
HON. COURT OF "PEALS and
AMBROSIOPADILLA,
GR# 88880. April 30, 1991.
FACTS:
Private respondent (PR) Ambrosio Padilla,
applied for and was granted a credit line
of 321.8million, by petitioner PNB. This
was for a term of 2 years at 18% interest
per annum and was secured byreal estate
mortgage and 2 promissory notes
executed in favor of Petitioner by PR. The
credit agreementand the promissory
notes, in effect, provide that PR agrees to
be bound by increases to the interest
ratestipulated, provided it is within the
limits provided for by law.Conflict in this
case arose when Petitioner unilaterally
increased the interest rate from 18% to:
(1) 32%[July 1984]; (2) 41% [October
1984]; and (3) 48% [November 1984], or 3
times within the span of a singleyear. This
was done despite the numerous letters of
request made by PR that the interest rate
beincreased only to 21% or 24%.PR filed a
complaint against Petitioner with the
RTC. The latter dismissed the case for lack
of merit. Appeal by PR to CA resulted in
his favor. Hence the petition for certiorari
under Rule 45 of ROC filed byPNB with SC.
ISSUE:
Despite the removal of the Usury Law
ceiling on interest, may the bank validly
increase thestipulated interest rate on
loans contracted with third persons as
often as necessary and against theprotest
of such persons.
HELD:
NO
RATIO:
Although under Sec. 2 of PD 116,
the Monetary Board is authorized to
prescribe the maximumrate of interest for
loans and to change such rates whenever
warranted by prevailing economic and
socialconditions, by express provision, it
may not do so oftener than once every
12 months. If the MonetaryBoard cannot,
much less can PNB, effect increases on the
interest rates more than once a
year.Based on the credit agreement and
promissory notes executed between the
parties, although PR didagree to increase
on the interest rates allowed by law, no
law was passed warranting Petitioner to
effectincrease on the interest rates on the
existing loan of PR for the months of July
to November of 1984.Neither there being
any document executed and delivered by
PR to effect such increase.For escalation
clauses to be valid and warrant the
increase of the interest rates on loans,
there must be:(1) increase was made by
law or by the Monetary Board; (2)
stipulation must include a clause for
thereduction of the stipulated interest rate
in the event that the maximum interest is
lowered by law or by theMonetary board.
In this case, PNB merely relied on its own
Board Resolutions, which are not laws
nor resolutions of the Monetary
Board.Despite the suspension of the Usury
Law, imposing a ceiling on interest rates,
this does not authorizebanks to
unilaterally and successively increase
interest rates in violation of Sec. 2 PD
116.Increases unilaterally effected by PNB
was in violation of the Mutuality of
Contracts under Art. 1308. Thisprovides
that the validity and compliance of the
parties to the contract cannot be left to
the will of one of the contracting parties.
Increases made are therefore
void.Increase on the stipulated interest
rates made by PNB also contravenes Art.
1956. It provides that, nointerest shall be
due unless it has been expressly
stipulated in writing. PR never agreed in
writing to payinterest imposed by PNB in
excess of 24% per annum. Interest rate
imposed by PNB, as correctly foundby CA,
is indubitably excessive.
RELUCION - MISSING
Eastern Shipping Lines, Inc. v CA
(Credit Transactions) G.R. No. 97412
July 12, 1994
FACTS: This is an action against
defendants shipping company, arrastre
operator and broker-forwarder for
damages sustained by a shipment while in
defendants' custody, filed by the insurer-
subrogee who paid the consignee the
value of such losses/damages.
the losses/damages were sustained while
in the respective and/or successive
custody and possession of defendants
carrier (Eastern), arrastre operator (Metro
Port) and broker (Allied Brokerage).
As a consequence of the losses sustained,
plaintiff was compelled to pay the
consignee P19,032.95 under the
aforestated marine insurance policy, so
that it became subrogated to all the rights
of action of said consignee against
defendants.
DECISION OF LOWER COURTS: * trial court:
ordered payment of damages, jointly and
severally * CA: affirmed trial court.
ISSUES AND RULING:
(a) whether or not a claim for damage
sustained on a shipment of goods can be a
solidary, or joint and several, liability of
the common carrier, the arrastre operator
and the customs broker;
YES, it is solidary. Since it is the duty of
the ARRASTRE to take good care of the
goods that are in its custody and to deliver
them in good condition to the consignee,
such responsibility also devolves upon the
CARRIER. Both the ARRASTRE and the
CARRIER are therefore charged with the
obligation to deliver the goods in good
condition to the consignee.
The common carrier's duty to observe the
requisite diligence in the shipment of
goods lasts from the time the articles are
surrendered to or unconditionally placed in
the possession of, and received by, the
carrier for transportation until delivered to,
or until the lapse of a reasonable time for
their acceptance by, the person entitled to
receive them (Arts. 1736-1738, Civil Code;
Ganzon vs. Court of Appeals, 161 SCRA
646; Kui Bai vs. Dollar Steamship Lines, 52
Phil. 863). When the goods shipped either
are lost or arrive in damaged condition, a
presumption arises against the carrier of
its failure to observe that diligence, and
there need not be an express finding of
negligence to hold it liable.
(b) whether the payment of legal interest
on an award for loss or damage is to be
computed from the time the complaint is
filed or from the date the decision
appealed from is rendered; and
FOLLOW THESE VERY IMPORTANT RULES
(GUIDANCE BY THE SUPREME COURT)
I. When an obligation, regardless of its
source, i.e., law, contracts, quasi-
contracts, delicts or quasi-delicts is
breached, the contravenor can be held
liable for damages. The provisions under
Title XVIII on "Damages" of the Civil Code
govern in determining the measure of
recoverable damages.
II. With regard particularly to an award of
interest in the concept of actual and
compensatory damages, the rate of
interest, as well as the accrual thereof, is
imposed, as follows:
1. 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.
2. When an obligation, not constituting a
loan or forbearance of money, is
breached, an interest on the amount of
damages awarded may be imposed at the
discretion of the court at the rate of 6%
per annum. No interest, however, shall be
adjudged on unliquidated claims or
damages except when or until the demand
can be established with reasonable
certainty. Accordingly, where the demand
is established with reasonable certainty,
the interest shall begin to run from the
time the claim is made judicially or
extrajudicially (Art. 1169, Civil Code) but
when such certainty cannot be so
reasonably established at the time the
demand is made, the interest shall begin
to run only from the date the judgment of
the court is made (at which time the
quantification of damages may be deemed
to have been reasonably ascertained).
The actual base for the computation of
legal interest shall, in any case, be on the
amount finally adjudged.
3. When the judgment of the court
awarding a sum of money becomes final
and executory, the rate of legal interest,
whether the case falls under paragraph 1
or paragraph 2, above, shall be 12% per
annum from such finality until its
satisfaction, this interim period being
deemed to be by then an equivalent to a
forbearance of credit.
(c) whether the applicable rate of interest,
referred to above, is twelve percent (12%)
or six percent (6%).
SIX PERCENT (6%) on the amount due
computed from the decision, dated 03
February 1988, of the court a quo (Court
of Appeals) AND A TWELVE PERCENT
(12%) interest, in lieu of SIX PERCENT
(6%), shall be imposed on such amount
upon finality of the Supreme Court
decision until the payment thereof.
RATIO: when the judgment awarding a
sum of money becomes final and
executory, the monetary award shall earn
interest at 12% per annum from the date
of such finality until its satisfaction,
regardless of whether the case involves a
loan or forbearance of money. The reason
is that this interim period is deemed to be
by then equivalent to a forbearance of
credit.
NOTES: the Central Bank Circular imposing
the 12% interest per annum applies only
to loans or forbearance of money, goods
or credits, as well as to judgments
involving such loan or forbearance of
money, goods or credits, and that the 6%
interest under the Civil Code governs
when the transaction involves the
payment of indemnities in the concept of
damage arising from the breach or a delay
in the performance of obligations in
general. Observe, too, that in these cases,
a common time frame in the computation
of the 6% interest per annum has been
applied, i.e., from the time the complaint
is filed until the adjudged amount is fully
paid.