DBP vs CA Case Digest

DEVELOPMENT BANK OF THE PHILIPPINES v. COURT OF APEEALS G.R.No. 138703,June 30, 2006 FACTS: In March 1968, DBP granted to private respondents an industrial loan in the amount of P2,500,000 P500,000 n cash and P2,000,000 in DBP Progress Bank. It was evidenced by a promissory note and secured by a mortgage executed by respondents over their present and future properties. Another loan was granted by DBP in the for of a 5-year revolving guarantee to P1,700,000. In 1975, the outstanding accounts wth DBP was restructured in view of failure to pay. Amounting to P4,655,992.35 were consolidated into a single account. On the other hand, all accrued interest and charges due amounting to P3,074,672.21 were denominated as Notes Taken for Interests and evidenced by a separate promissory note. For failure to comply with its obligation, DBP initiated foreclosure proceedings upon its computation that respondents loans were arrears by P62,954,473.68. Res pondents contended that the collection was unconscionable if not unlawful or usurious . RTC, as affirmed by the CA, ruled in favor of the respondents. ISSUE: Whether the prestation to collect by the DBP is unconscionable or usurious RULING: It cannot be determined whether DBP in fact applied an interest rate higher than what is prescribed under the law. Assuming it did exceed 12% in addition to the other penalties stipulated in the note, this should be stricken out for being usurious. The petition is partly granted. Decision of the court of Appeals is reversed and set aside. The case is remanded o the trial court for the determination of the total amount of the respondents obligation based on the promissory notes, according to the interest rat e agreed upon by the parties on the interest rate of 12% per annum, whichever is lower.

[G.R. No. 133632. February 15, 2002]

BPI INVESTMENT CORPORATION, petitioner, vs. HON. COURT OF APPEALS and ALS MANAGEMENT & DEVELOPMENT CORPORATION, respondents.

Lessons Applicable: Simple Loan Laws Applicable: Facts:

Frank Roa obtained a loan with interest rate of 16 1/4%/annum from Ayala Investment and Development Corporation (AIDC), the predecessor of BPI Investment Corp. (BPIIC), for the construction of a house on his lot in New Alabang Village, Muntinlupa. He mortgaged the house and lot to AIDC as security for the loan. 1980: Roa sold the house and lot to ALS Management & Development Corp. and Antonio Litonjua for P850K who paid P350K in cash and assumed the P500K indebtness of ROA with AIDC. AIDC proposed to grant ALS and Litonjua a new loan for P500K with interested rate of 20%/annum and service fee of 1%/annum on the outstanding balance payable within 10 years through equal monthly amortization of P9,996.58 and penalty interest of 21%/annum/day from the date the amortization becomes due and payable.

March 1981: ALS and Litonjua executed a mortgage deed containing the new stipulation with the provision that the monthly amortization will commence on May 1, 1981 August 13, 1982: ALS and Litonjua paid BPIIC P190,601.35 reducing the P500K principal loan to P457,204.90. September 13, 1982: BPIIC released to ALS and Litonjua P7,146.87, purporting to be what was left of their loan after full payment of Roas loan June 1984: BPIIC instituted foreclosure proceedings against ALS and Litonjua on the ground that they failed to pay the mortgage indebtedness which from May 1, 1981 to June 30, 1984 amounting to P475,585.31 August 13, 1984: Notice of sheriff's sale was published

February 28, 1985: ALS and Litonjua filed Civil Case No. 52093 against BPIIC alleging that they are not in arrears and instead they made an overpayment as of June 30, 1984 since the P500K loan was only released September 13, 1982 which marked the start of the amortization and since only P464,351.77 was released applying legal compensation the balance of P35,648.23 should be applied to the monthlyamortizations

RTC: in favor of ALS and Litonjua and against BPIIC that the loan granted by BPI to ALS and Litonjua was only in the principal sum of P464,351.77 and awarding moral damages, exemplary damages and attorneys fees for the publication CA: Affirmed reasoning that a simple loan is perfected upon delivery of the object of the contract which is on September 13, 1982

ISSUE: W/N the contract of loan was perfected only on September 13, 1982 or the second release of the loan? HELD: YES. AFFIRMED WITH MODIFICATION as to the award of damages. The award of moral and exemplary damages in favor of private respondents is DELETED, but the award to them of attorneys fees in the amount of P50,000 is UPHELD. Additionally, petitioner is ORDERED to pay private respondents P25,000 as nominal damages. Costs against petitioner.

obligation to pay commenced only on October 13, 1982, a month after the perfection of the contract contract of 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 in a proper manner with what is incumbent upon him. Consequently, petitioner could only demand for the payment of the monthlyamortization after September 13, 1982 for it was only then when it complied with its obligation under the loan contract.

BPIIC was negligent in relying merely on the entries found in the deed of mortgage, without checking and correspondingly adjusting its records on the amount actually released and the date when it was released. Such negligence resulted in damage for which an award of nominal damages should be given

SSS where we awarded attorneys fees because private respondents were compelled to litigate, we sustain the award of P50,000 in favor of private respondents as attorneys fees

G.R. No. L-49101 October 24, 1983 RAOUL S.V. BONNEVIE and HONESTO V. BONNEVIE, petitioners, vs. THE HONORABLE COURT OF APPEALS and THE PHILIPPINE BANK OF COMMERCE, respondents. Facts:

December 6, 1966: Spouses Jose M. Lozano and Josefa P. Lozano secured their loan of P75K from Philippine Bank of Commerce (PBC) by mortgaging their property December 8, 1966: Executed Deed of Sale with Mortgage to Honesto Bonnevie where P75K is payable to PBC and P25K is payable to Spouses Lanzano. April 28, 1967 to July 12, 1968: Honesto Bonnevie paid a total of P18,944.22 to PBC May 4, 1968: Honesto Bonnevie assigned all his rights under the Deed of Sale with Assumption ofMortgage to his brother, intervenor Raoul Bonnevie June 10, 1968: PBC applied for the foreclosure of the mortgage, and notice of sale was published January 26, 1971: Honesto Bonnevie filed in the CFI of Rizal against Philippine Bank of Commerce for the annulment of the Deed of Mortgage dated December 6, 1966 as well as the extrajudicial foreclosuremade on September 4, 1968. CFI: Dismissed the complaint with costs against the Bonnevies CA: Affirmed

ISSUE: W/N the forclosure on the mortgage is validly executed. HELD: YES. CA affirmed

A contract of loan being a consensual contract is perfected at the same time the contract of mortgagewas executed. The promissory note executed on December 12, 1966 is only an evidence of indebtedness and does not indicate lack of consideration of the mortgage at the time of its execution.

Respondent Bank had every right to rely on the certificate of title. It was not bound to go behind the same to look for flaws in the mortgagor's title, the doctrine of innocent purchaser for value beingapplicable to an innocent mortgagee for value. Thru certificate of sale in favor of appellee was registered on September 2, 1968 and the one year redemption period expired on September 3, 1969. It was not until September 29, 1969 that Honesto Bonnevie first wrote respondent and offered to redeem the property.

loan matured on December 26, 1967 so when respondent Bank applied for foreclosure, the loan was already six months overdue. Payment of interest on July 12, 1968 does not make the earlier act of PBC inequitous nor does it ipso facto result in the renewal of the loan. In order that a renewal of a loan may be effected, not only the payment of the accrued interest is necessary but also the payment of interest for the proposed period of renewal as well. Besides, whether or not a loan may be renewed does not solely depend on the debtor but more so on the discretion of the bank.

G.R. No. L-20240

December 31, 1965

REPUBLIC OF THE PHILIPPINES, plaintiff-appellee, vs. JOSE GRIJALDO, defendant-appellant.

Facts: Grijaldo obtained five loans from the Bank of Taiwan in the total sum of P1,281.97 with interest at the rats of 6% per annum compounded quarterly. These were evidenced by five promissory notes. These loans were crop loans and was considered to be due one year after they were incurred. As a security for the payment of the loans, a chattel mortgage was executed on the standing crops of his land. The assets in the Bank of Taiwan were vested in the US Govt which were subsequently transferred to the Republic of the Philippines RP is now demanding the payment of the account. Justice of Peace dismisses the case on the ground of prescription. CA rendered a decision ordering the appellant to pay the appellee

Defendants contentions: 1) 2) 3) Issue: Can RP still collect from Grijaldo? Held: Yes Ratio: The obligation of the contract was not to deliver a determinate thing, it was a generic thing the amount of money representing the total sum of his loans. The destruction of anything of the same kind does not extinguish the obligation. 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. Also, prescription does not run against the State.
Colinares vs. Court of Appeals [339 SCRA 609 (Sept. 25,2000)] Trust Receipts Law Facts: Melvin Colinares and Lordino Veloso (Petitioners) were contracted for a consideration of P40,000 by the Carmelite Sisters of Cagayan de Oro City to renovate the latters convent. Petitioners obtained the materials needed for the construction project from CM Builders Centre. Petitioners applied for a commercial letter of credit with the Philippine Banking Corporation (PBC) in favor of CM Builders Centre. PBC approved the letter of credit to cover the full invoice value of the goods. Petitioners signed a pro-forma trus receipt as security. PBC wrote to Petitioners demanding that the amount be paid within seven days from notice. Instead of complying with the demand, Veloso confessed that they lost P19,195 in the Carmelite Monastery Project and requested for a grace period to settle the account. The grace period lapsed and PBC sent a new demand letter to Petitioners. Petitioners proposed that the terms of payment of the loan be modified. Petitioners were charged with the violation of P.D. No. 115 (Trust Receipts Law) in relation to Art. 315 of the Revised Penal Code. The Petitioners were convicted.

The appellee has no cause of action against appellant since the transaction was with Taiwan Bank. That if the appellee has a cause of action at all, it had prescribed The lower court erred in ordering the appellant to pay P2,377.23

Issue: Assuming there was a valid trust receipt, whether or not the accused were properly charged, tried and convicted for violation of P.D. No. 115 in relation to Art. 315 of the RPC, notwithstanding the novation of the so-called trust receipt converting the trustor-trustee relationship to creditor-debtor situation Held: Section 4 of P.D. No. 115 defines a trust receipt transaction as any transaction by and between a person referred to as the entruster, and another person referred to as the entrustee, whereby the entruster who owns or holds absolute title or security interest over certain specified goods, documents or instruments, releases the same to the possession of the entrustee upon the latters execution and delivery to the entruster of a signed document called a trust receipt wherein the enteustee binds himself to hold the designated goods, documents or instruments with the obligation to turn over to the entruster the proceeds thereof to the extent of the amount owing to the entruster or as appears in the trust receipt or the goods, documents or instruments themselves if they are unsold or not otherwise disposed of, in accordance with the terms and conditions specified in the trust receipt. A thorough examination of the facts obtaining in the case at bar reveals that the transaction intended by the parties was a simple loan, not a trust receipt agreement. On the day the Petitioners received the merchandise from CM Builders Centre, ownership was already transferred to Petitioners who were to use the materials for the construction project. It was only a day later that they went to the bank to apply for a loan to pay for the merchandise. This situation belies what normally obtains in a pure trust receipt transaction where goods are owned by the bank and only released to the importer in trust subsequent to the grant of the loan. Nowhere in the testimony of PBCs witness does it appear that PBC represented to Petitioners that the transaction they were entering into was not a pure loan but had trust receipt implications. The Information charged Petitioners with intent to defraud and misappropriating the money for their personal use. But Petitioners employed no artifice in dealing with PBC and never did they evade payment of their obligation. Petitioners acquitted.

REPUBLIC VS BAGTAS [G.R. No. L-17474 October 25, 1962] PADILLA, J. FACTS:

Jose Bagtas borrowed from the Bureau of Animal Industry three bulls for a period of one year for breeding purposes subject to a government charge of breeding fee of 10% of the book value of the books. Upon the expiration of the contract, Bagtas asked for a renewal for another one year, however, the Secretary of Agriculture and Natural Resources approved only the renewal for one bull and other two bulls be returned. Bagtas then wrote a letter to the Director of Animal Industry that he would pay the value of the three bulls with a deduction of yearly depreciation. The Director advised him that the value cannot be depreciated and asked Bagtas to either return the bulls or pay their book value. Bagtas neither paid nor returned the bulls. The Republic then commenced an action against Bagtas ordering him to return the bulls or pay their book value. After hearing, the trial Court ruled in favor of the Republic, as such, the Republic moved ex parte for a writ of execution which the court granted. Felicidad Bagtas, the surviving spouse and administrator of Bagtas estate, returned the two bulls and filed a motion to quash the writ of execution since one bull cannot be returned for it was killed by gunshot during a Huk raid. The Court denied her motion hence, this appeal certified by the Court of Appeals because only questions of law are raised.

ISSUE: WON the contract was commodatum;thus, Bagtas be held liable for its loss due to force majeure. RULING:

A contract of commodatum is essentially gratuitous. Supreme Court held that Bagtas was liable for the loss of the bull even though it was caused by a fortuitous event. If the contract was one of lease, then the 10% breeding charge is compensation (rent) for the use of the bull and Bagtas, as lessee, is subject to the responsibilities of a possessor. He is also in bad faith because he continued to possess the bull even though the term of the contract has already expired. If the contract was one of commodatum, he is still liable because: (1) he kept the bull longer than the period stipulated; and (2) the thing loaned has been delivered with appraisal of its value (10%). No stipulation that in case of loss of the bull due to fortuitous event the late husband of the appellant would be exempt from liability. The original period of the loan was from 8 May 1948 to 7 May 1949. The loan of one bull was renewed for another period of one year to end on 8 May 1950. But the appellant kept and used the bull until November 1953 when during a Huk raid it was killed by stray bullets. Furthermore, when lent and delivered to the deceased husband of the appellant the bulls had each an appraised book value, to with: the Sindhi, at P1,176.46, the Bhagnari at P1,320.56 and the Sahiniwal at P744.46. It was not stipulated that in case of loss of the bull due to fortuitous event the late husband of the appellant would be exempt from liability.

Facts: Vicente Ongkeko acted as surety for his employee, Lina Lodovica , in the latters application for credit card with BPI Express Card Corporation (BECC). The application was approved and Lodovica was given a P3,000.00 credit limit. In 1991, the credit card was renewed and Lodovicas credit limit was increased to P10,000.00. As of May 12, 1996, Lodovicas outstanding balance amounted toP22,476.61. BECC filed an action for sum of money against Lodovica and Ongkeko. In his Answer, Ongkeko admitted his undertaking but claimed that he can only be liable for the original credit limit of P3,000.00 and that the renewal of the credit card without his consent extinguished his undertaking. The issue is whether or not Ongkeko is liable as surety. The Supreme Court held in the affirmative. Article 1730 of the Civil Code provides: If the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall control. Under the suretyship contract, Ongkeko solidarily obliged himself to pay BECC all the liabilities incurred under the credit card account, whether under the principal, renewal, or extension card issued, regardless of the changes or novation in the terms and conditions in the issuance and use of the credit card. The terms and conditions of his undertaking are unambiguous and well-defined; thus, there is no room for interpretation only application. Given that Lodovica reneged on her obligations under the credit card account, Ongkeko is, therefore, liable (Ongkeko vs. BECC, G.R. No. 147275, March 31, 2006