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    Santiago v. Garcia + Garcia CLR II G01 DLSU

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    Mark Evan Garcia
    The Supreme Court ruled that there was an investment contract, not a simple loan, between Merian Santiago and Edna Garcia. Merian invested money in Edna's lending business in exchange for monthly interest payments and the promise that the principal would be returned upon demand. While the parties may agree to allocate risks differently, there was no evidence presented that Edna's business suffered losses. Therefore, the lower court incorrectly ruled that Merian assumed the risk of losing her principal investment.

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    Santiago v. Garcia + Garcia CLR II G01 DLSU

    Uploaded by

    Mark Evan Garcia
    3K views1 page
    The Supreme Court ruled that there was an investment contract, not a simple loan, between Merian Santiago and Edna Garcia. Merian invested money in Edna's lending business in exchange for monthly interest payments and the promise that the principal would be returned upon demand. While the parties may agree to allocate risks differently, there was no evidence presented that Edna's business suffered losses. Therefore, the lower court incorrectly ruled that Merian assumed the risk of losing her principal investment.

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    The Supreme Court ruled that there was an investment contract, not a simple loan, between Merian Santiago and Edna Garcia. Merian invested money in Edna's lending business in exchange for monthly interest payments and the promise that the principal would be returned upon demand. While the parties may agree to allocate risks differently, there was no evidence presented that Edna's business suffered losses. Therefore, the lower court incorrectly ruled that Merian assumed the risk of losing her principal investment.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    3K views1 page

    Santiago v. Garcia + Garcia CLR II G01 DLSU

    Uploaded by

    Mark Evan Garcia
    The Supreme Court ruled that there was an investment contract, not a simple loan, between Merian Santiago and Edna Garcia. Merian invested money in Edna's lending business in exchange for monthly interest payments and the promise that the principal would be returned upon demand. While the parties may agree to allocate risks differently, there was no evidence presented that Edna's business suffered losses. Therefore, the lower court incorrectly ruled that Merian assumed the risk of losing her principal investment.

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    120 MERIAN B. SANTIAGO v.

    SPOUSES EDNA AND BAYANI GARCIA


    G.R. No. 228356 Even assuming that the agreement between the parties was that Merian shall bear the risk of losing the
    DATE: March 9, 2020 principal amount she invested, in case of business loss, there was no allegation nor proof presented that,
    By: GARCIA indeed, Edna's lending business suffered business loss. The ruling, therefore, that the principal amount
    Topic: Elements of a Contract should no longer be returned because of Merian's assumption of risk lacks factual basis.
    Petitioner: Merian Santiago
    Respondent: Spouses Edna and Bayani Garcia
    Ponente: Reyes, Jr., J.

    DOCTRINE:   As in all contractual relations, an investment contract is largely governed by the
    stipulations, clauses, terms, and conditions as the parties may deem convenient, which shall be
    respected as long as it is not contrary to law, morals, good customs, public order, or public
    policy.

    FACTS: Petitioner Merian Santiag was enticed by respondent Edna Garcia to invest money in its lending
    business given the promise of a high return in terms of monthly interest from 5-8%. The parties agreed
    that monthly interest shall be transmitted by Edna to Merian and that the principal amount invested
    shall be returned to Merian upon demand. However, there is no evidence presented that such
    agreement was reduced into writing.

    Merian invested a total of P1,569,000. Edna remitted the total amount of P877,000 as interest. Edna
    however defaulted in remitting in Merian after payment of the P877,000. Depsite demands, Edna failed
    to pay and remit the interest to Merian. When Merian is already asking for the principal amount
    invested, Edna agreed to pay on a “pay when able” basis and was only able to pay P20,000 as intial
    payment out of the P1,569,000 investment.

    Merian filed a complaint for sum of money with prayer for a wirt of preliminary attachment against
    spouses Edna and Bayani Garcia.

    ISSUE: Whether there is the existence of a partnership or a simple loan based on the elements present
    in the abovemetioned facts, entered into by Merian and Edna.

    HELD: NO.

    RULING:  The facts in this case demonstrate that Edna was engaged in the business of lending and that
    she solicited funds from Merian which Edna then used to grant loans to other persons. The parties'
    contemporaneous and subsequent acts reveal their intent to enter into an investment contract in a
    lending business.

    An investment contract, like any other contractual relations, is largely governed by the stipulations,
    clauses, terms, and conditions as the parties may deem convenient, which shall be respected as long as it
    is not contrary to law, morals, good customs, public order, or public policy. Parties are free to agree that
    the investment shall entail the sharing of profits and losses, or otherwise.

    In this case, Merian alleged that she and Edna agreed that Merian will be investing capital on the lending
    business which shall earn a 5% monthly interest; that the capital will be revolving; and that the capital
    shall be returned upon demand. That Edna agreed to return the principal amount to Merian is further
    supported by the acknowledgment receipt which Edna herself had written. In said acknowledgment
    receipt, Edna paid the amount of P20,000.00 as "partial payment from the principal" – thus
    acknowledging her obligation to return the principal amount invested. Notably as well, Edna failed to
    present countervailing evidence to demonstrate the real agreement between the parties as her husband,
    who solely participated at the trial, merely denied knowledge of the agreement between Merian and
    Edna.

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