1. Carolyn M.

Garcia
-vsRica Marie S. Thio
GR No. 154878, 16 March 2007
FACTS
Respondent Thio received from petitioner Garcia two crossed checks
which amount to US$100,000 and US$500,000, respectively, payable to the
order of Marilou Santiago. According to petitioner, respondent failed to pay
the principal amounts of the loans when they fell due and so she filed a
complaint for sum of money and damages with the RTC. Respondent denied
that she contracted the two loans and countered that it was Marilou Satiago
to whom petitioner lent the money. She claimed she was merely asked y
petitioner to give the checks to Santiago. She issued the checks for P76,000
and P20,000 not as payment of interest but to accommodate petitioners
request that respondent use her own checks instead of Santiagos.
RTC ruled in favor of petitioner. CA reversed RTC and ruled that there
was no contract of loan between the parties.
ISSUE
(1) Whether or not there was a contract of loan between petitioner and
respondent.
(2) Who borrowed money from petitioner, the respondent or Marilou Santiago?
HELD
(1)
The Court held in the affirmative. A loan is a real contract, not
consensual, and as such I perfected only upon the delivery of the object of
the contract. Upon delivery of the contract of loan (in this case the money
received by the debtor when the checks were encashed) the debtor acquires
ownership of such money or loan proceeds and is bound to pay the creditor
an equal amount. It is undisputed that the checks were delivered to
respondent.
(2)
However, the checks were crossed and payable not to the
order of the respondent but to the order of a certain Marilou Santiago.
Delivery is the act by which the res or substance is thereof placed within the
actual or constructive possession or control of another. Although respondent
did not physically receive the proceeds of the checks, these instruments
were placed in her control and possession under an arrangement whereby
she actually re-lent the amount to Santiago.
Petition granted; judgment and resolution reversed and set aside.
3. BPI Investment Corporation

-vsCA
GR No. 133632, 15 February 2002
377 SCRA 117
FACTS
Frank Roa obtained a loan from Ayala Investment and Development
Corporation (AIDC), for the construction of his house. Said house and lot
were mortgaged to AIDC to secure the loan. Roa sold the properties to ALS
and Litonjua, the latter paid in cash and assumed the balance of Roas
indebtedness wit AIDC. AIDC was not willing to extend the old interest to
private respondents and proposed a grant of new loan of P500,000 with
higher interest to be applied to Roas debt, secured by the same property.
Private respondents executed a mortgage deed containing the stipulation.
The loan contract was signed on 31 March 1981 and was perfected on 13
September 1982, when the full loan was released to private respondents.
BPIIC, AIDCs predecessor, released to private respondents P7,146.87,
purporting to be what was left of their loan after full payment of Roas loan.
BPIIC filed for foreclosure proceedings on the ground that private
respondents failed to pay the mortgage indebtedness. Private respondents
maintained that they should not be made to pay amortization before the
actual release of the P500,000 loan. The suit was dismissed and affirmed by
the CA.
ISSUE
Whether or not a contract of loan is a consensual contract.
HELD
The Court held in the negative. A loan contract is not a consensual contract
but a real contract. It is perfected only upon delivery of the object of the
contract. A contract o 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 is a proper
manner with what is incumbent upon him
4.
.R. No. 174269, May 8 2009 [Credit Transaction]
FACTS:
After the Amsterdam incident that happened involving the delay of American Express Card
to approve his credit card purchases worth US$13,826.00 at the Coster store, Pantaleon
commenced a complaint for moral and exemplary damages before the RTC against American
Express. He said that he and his family experienced inconvenience and humiliation due to
the delays in credit authorization. RTC rendered a decision in favor of Pantaleon. CA reversed

the award of damages in favor of Pantaleon, holding that AmEx had not breached its
obligations to Pantaleon, as the purchase at Coster deviated from Pantaleon's established
charge purchase pattern.
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
5. 115324
FACTS:
Sometime in 1979, private respondent Franklin Vives was asked by his neighbor and friend
Angeles Sanchez to help her friend and townmate, Col. Arturo Doronilla, in incorporating his
business, the Sterela Marketing and Services (Sterela for brevity). Specifically, Sanchez asked
private respondent to deposit in a bank a certain amount of money in the bank account of Sterela
for purposes of its incorporation. She assured private respondent that he could withdraw his
money from said account within a months time. With this, Mrs. Vivies, Sanchez and a certain
Estrella Dumagpi, secretary of Doronilla, went to the bank to open an account with Mrs. Vives and
Sanchez as signatories. A passbook was then issued to Mrs. Vives. Subsequently, private
respondent learned that part of the money was withdrawn without presentment of the passbook
as it was his wife got hold of such. Mrs. Vives could not also withdraw said remaining amount
because it had to answer for some postdated checks issued by Doronilla who opened a current
account for Sterela and authorized the bank to debit savings.
Private respondent referred the matter to a lawyer, who made a written demand upon Doronilla for
the return of his clients money. Doronilla issued another check for P212,000.00 in private
respondents favor but the check was again dishonored for insufficiency of funds.

Private respondent instituted an action for recovery of sum of money in the Regional Trial Court
(RTC) in Pasig, Metro Manila against Doronilla, Sanchez, Dumagpi and petitioner. The RTC ruled
in favor of the private respondent which was also affirmed in toto by the CA. Hence this petition.
ISSUE: WON THE TRANSACTION BETWEEN THE DORONILLA AND RESPONDENT VIVES WAS
ONE OF SIMPLE LOAN.
HELD: NO.
A circumspect examination of the records reveals that the transaction between them was a
commodatum. Article 1933 of the Civil Code distinguishes between the two kinds of loans in this
wise:
By the contract of loan, one of the parties delivers to another, either something not consumable
so that the latter may use the same for a certain time and return it, in which case the contract is
called a commodatum; or money or other consumable thing, upon the condition that the same
amount of the same kind and quality shall be paid, in which case the contract is simply called a
loan or mutuum.
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.
The foregoing provision seems to imply that if the subject of the contract is a consumable thing,
such as money, the contract would be a mutuum. However, there are some instances where a
commodatum may have for its object a consumable thing. Article 1936 of the Civil Code provides:
Consumable goods may be the subject of commodatum if the purpose of the contract is not the
consumption of the object, as when it is merely for exhibition.
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.
The rule is that the intention of the parties thereto shall be accorded primordial consideration in
determining the actual character of a contract. In case of doubt, the contemporaneous and
subsequent acts of the parties shall be considered in such determination.
6.

Pajuyo
GR

No.

146364

v.

June

3,

CA
2004

Facts: Pajuyo entrusted a house to Guevara for the latter's use provided he should
return the same upon demand and with the condition that Guevara should be
responsible of the maintenance of the property. Upon demand Guevara refused to
return the property to Pajuyo. The petitioner then filed an ejectment case against
Guevara with the MTC who ruled in favor of the petitioner. On appeal with the CA, the
appellate court reversed the judgment of the lower court on the ground that both
parties are illegal settlers on the property thus have no legal right so that the Court
should leave the present situation with respect to possession of the property as it is,
and ruling further that the contractual relationship of Pajuyo and Guevara was that of a

commodatum.
Issue: Is the contractual relationship of Pajuyo and Guevara that of a commodatum?
Held: No. The Court of Appeals theory that the Kasunduan is one of commodatum is
devoid of merit. 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.
7.
17474 October 25, 1962
Laws Applicable: Commodatum
Lessons Applicable:
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.
10.

BPI vs Court of Appeals, 538 SCRA 184, GR

No. 123498, November 23, 2007
Posted by Pius Morados on January 12, 2012

(Negotiable Instruments Money as a medium of exchange)

Facts: Franco opened 3 accounts with BPI with the total amount of P2,000,000.00. The said amount used to open
these accounts is traceable to a check issued by Tevesteco. The funding for the P2,000,000.00 check was part of the
P80,000,000.00 debited by BPI from FMICs account (with a deposit of P100,000,000.00) and credited to Tevestecos
account pursuant to an Authority to Debit which was allegedly forged as claimed by FMIC.
Tevesteco effected several withdrawals already from its account amounting to P37,455,410.54 including the
P2,000,000.00 paid to Franco.
Franco issued two checks which were dishonoured upon presentment for payment due to garnishment of his account
filed by BPI.

BPI claimed that it had a better right to the amounts which consisted of part of the money allegedly fraudulently
withdrawn from it by Tevesteco and ending up in Francos account. BPI urges us that the legal consequence of
FMICs forgery claim is that the money transferred by BPI to Tevesteco is its own, and considering that it was able to
recover possession of the same when the money was redeposited by Franco, it had the right to set up its ownership
thereon and freeze Francos accounts.
Issue: WON the bank has a better right to the deposits in Francos account.
Held: No. Significantly, while Article 559 permits an owner who has lost or has been unlawfully deprived of a movable
to recover the exact same thing from the current possessor, BPI simply claims ownership of the equivalent amount of
money, i.e., the value thereof, which it had mistakenly debited from FMICs account and credited to Tevestecos, and
subsequently traced to Francos account.
Money bears no earmarks of peculiar ownership, and this characteristic is all the more manifest in the instant case
which involves money in a banking transaction gone awry. Its primary function is to pass from hand to hand as a
medium of exchange, without other evidence of its title. Money, which had been passed through various transactions
in the general course of banking business, even if of traceable origin, is no exception.

15. Eastern Shipping vs CA

GR No. 97412, 12 July 1994
234 SCRA 78
FACTS
Two fiber drums were shipped owned by Eastern Shipping from Japan. The shipment as insured
with a marine policy. Upon arrival in Manila unto the custody of metro Port Service, which excepted to one
drum, said to be in bad order and which damage was unknown the Mercantile Insurance Company. Allied
Brokerage Corporation received the shipment from Metro, one drum opened and without seal. Allied
delivered the shipment to the consignees warehouse. The latter excepted to one drum which contained
spillages while the rest of the contents was adulterated/fake. As consequence of the loss, the insurance
company paid the consignee, so that it became subrogated to all the rights of action of consignee against
the defendants Eastern Shipping, Metro Port and Allied Brokerage. The insurance company filed before
the trial court. The trial court ruled in favor of plaintiff an ordered defendants to pay the former with
present legal interest of 12% per annum from the date of the filing of the complaint. On appeal by
defendants, the appellate court denied the same and affirmed in toto the decision of the trial court.
ISSUE
(1) Whether the applicable rate of legal interest is 12% or 6%.
(2) Whether the payment of legal interest on the award for loss or damage is to be computed from the time
the complaint is filed from the date the decision appealed from is rendered.
HELD
(1)
The Court held that the legal interest is 6% computed from the decision of the court a quo.
When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the
amount of damaes awarded may be imposed at the discretion of the court at the rate of 6% per annum.
No interest shall be adjudged on unliquidated claims or damages except when or until the demand can be
established with reasonable certainty.
When the judgment of the court awarding a sum of money becomes final and executor, the
rate of legal interest shall be 12% per annum from such finality until satisfaction, this interim period being
deemed to be by then an equivalent to a forbearance of money.

The interest due shall be 12% PA to be computed fro default, J or EJD.

(2)
From the date the judgment is made. Where the demand is established with reasonable
certainty, the interest shall begin to run from the time the claim is made judicially or EJ but when such
certainty cannot be so reasonably established at the time the demand is made, the interest shll begin to
run only from the date of judgment of the court is made.
(3) The Court held that it should be computed from the decision rendered by the court a quo.