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Credit Transaction Midterms Reviewer Case Annotations*

some parts from http://www.scribd.com/doc/30238661/Case-Table-Credit

Prof. Joven 2 semester, AY 10-11

nd

Janz Hanna Ria N. Serrano

Republic v. Balagtas. A contract of commodatum is essentially gratuitous. If the breeding fee be considered compensation, then the contract would be a lease of the bull. Under A1671, CC, the lessee would be subject to the responsibilities of a possessor in bad faith because she had continued possession of the bull after the expiration of the contract. And even if the contract be commodatum, still B is liable under A1942(2,3). Garcia v. Thio. A loan is a real contract, not consensual, and as such is perfected only upon the delivery of the object of the contract. Upon delivery of the object 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 and is bound to pay the creditor an equal amount Republic v. CA. The occupancy of the US Navy was not in the concept of owner. It partakes of the character of a commodatum. It cannot therefor militate against the title of Domingo Baloy. Ones ownership of a thing may be lost by prescription by reason of anothers possession if such possession be under claim of ownership, not where the possession is only intended to be transient, as in the case of the US Navys occupation of the land concerned, in which case the owner is not divested of his title, although it cannot be exercised in the meantime. Quintos v. Beck. [furniture case] The contract entered into between the parties is a commodatum because inder it, lessor gratuitously granted the used of the furniture to tenant reserving for himself the ownership thereof. By this contract, tenant bound himself to return the furniture to owner upon demand. Tenant did not comply with his obligation when he merely placed them at the disposal of B. De los Santos v. Jarra. [carabao] In a contract of commodatum whereby one of the parties thereto delivers to the other a thing that is not perishable, to be used for a certain time and afterwards returned, it is the imperative duty of the bailee, if he should be unable to return the thing itself to the owner, to pay damages to the latter if, through fault of the bailee, the thing loaned was lost or destroyed. Manzano v. Perez. The presence of a contract of commodatum shall be determined by the factual evidence presented by the party alleging the same. Producers Bank v. CA. The contract in this case was a commodatum == Private respondent agreed to deposit his money in the savings account of Sterela specifically for the purpose of making it appear that said firm had sufficient capitalization for incorporation, with the promise tht the amount shall be returned within 30 days. Private respondent merely accommodated Doronilla by lending his money without consideration. The additional 12,000 did not convert the same to a mutuum, since it was actually the FRUITS of the original amount. Saura Import & Export Co. v. DBP. Where an application for a loan of money was approved by resolution of the corporation (lender) and the corresponding mortgage was executed and registered, there arises a perfected consensual contract of loan. While a perfect contract of loan can give rise to an action for damages, said contract does not constitute the real contract of loan. BPI Investment Corp. v. CA. A perfected consensual contract can give rise to an action for damages. However, said contract does not constitute the real contract of loan which requires the delivery of the object of the contract for its perfection and which gives rise to obligations only on the part of the borrower Naguiat v. CA. Absolutely no evidence was submitted by Naguiat that the checks she issued or endorsed were actually encashed or deposited. The mere issuance of the checks did not result in the perfection of the contract of loan. For the Civil Code provides that the delivery of bills of exchange and mercantile documents such as checks shall produce the effect of payment only when they have been cashed. Cebu Financial v. CA. In a money market transaction, the investor is a lender who loans his money to a borrower through a middleman or dealer. Tolentino v. Gonzales Sy Chiam. Contract of loan Signifies the delivery of money or some other consumable thing to another with a promise to repay an equivalent amount of the same kind and quality, but not a promise to return the same thing loaned which becomes the property of the obligor Contract of rent/lease A contract by which one of the parties delivers to another some nonconsumable thing in order that the latter may use ir during a certain period and return in to the former

The owner or lessor does not lose his ownership; he simply loses control over the property rented during the period of the contract The creditor receives payment for the loan The owner of the property rented receives compensation or price either in money, provisions, chattels, or labor from the occupant thereof in return for its use The transaction was one of rent and not a loan. The property in question was sold absolutely with the right only to repurchase. During the period of redemption, vendee and not vendor was the owner of the property. Dissent (Malcolm): The contract was merely a clever device to cover up the payment of usurious interest.

Pajuyo v. CA. Precarium is a contract by which the owner of a thing, at the request of another person, gives the latter the thing for use as long as the owner shall please. || CA held that the contract was a commodatum. SC: there is actually a consideration, the agreement was not gratuitous. The consideration is the obligation to safekeep. Even if it were a commodatum, bailee nevertheless has the duty to return possession to bailor. People v. Puig. The Bank acquirres ownership of the money deposited by its clients; and the employees of the Bank, who are entrusted with the possession of money of the bank due to the confidence reposed in them, occupy positions of confidence. || The relationship between depositor and Bank is that of a creditor-debtor.

Pantaleon v. American Express. Credit card company was not liable to pay damages in this case because the period of time it took to send its approval was justified. || The use of a credit card to pay for a purchase is only an offer to the credit card company to enter a loan agreement with the credit card holder. Before the credit card issuer accepts this offer, no obligation relating to the loan agreement exists between them. || In fact, credit card application forms typically contain terms stating that the credit card company reserves the right to deny authorization for any requested charge.|| There is no provision in the (credit card) agreement that obligates (the credit card company) to act on all cardholder purchase requests within a specifically defined period of time.

Jardenil v. Salas. The payment of interest must be expressly stipulated. The court must not impose an obligation that the parties have not chosen to agree upon. The act of the mortgagee of granting to the mortgagor on the deed of mortgage an extension of one year from the date of maturity to make the payment without making any mention of any interest which the mortgagor should pay during the additional period indicates the true intention of the parties that not interest should be paid during the period of grace.

Credit Transaction Midterms Reviewer Case Annotations*

some parts from http://www.scribd.com/doc/30238661/Case-Table-Credit

Prof. Joven 2 semester, AY 10-11

nd

Janz Hanna Ria N. Serrano

Cu Unjieng v. Mabalacat. The provision merely requires the debtor to pay interest monthly at the end of each month, such interest to be computed upon the capital of the loan already paid. It does not justify the charging of compound interest accruing upon the capital monthly. GSIS v. CA. It has already been settled that the Usury Law applies only to interest by way of compensation for the use or forbearance of money. || The Civil Code, However, permits the agreement upon a penalty apart from the interest. Ligutan v. CA.

Tan v. CA. Under A1959, the compounding of not only the monetary interest but also the penalty charge is allowed. Hence, the borrower may be held liable to pay the interest on the total amount of principal, the monetary interest and the penalty interest. RCBC v. CA.The charging of interest for loans forms a very essential and fundamental element of the banking business, which may truly be considered to be at the very core of its existence or being. It is inconceivable for a bank to grant loans for which it will not charge any interest at all Eastern Shipping v. CA. I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasi-delicts 18 is breached, the contravenor can be held liable for damages. 19 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. 21 Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. 22 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 23 of the Civil Code. 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 24 at the rate of 6% per annum. 25 No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. 26 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. 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.

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First Fil-Sin Lending v. Padillo. The interest on the loans is per annum as expressly stated in the promissory notes and disclosures statements. The provisions as to annual interest is clear and requires no room for interpretation. Integrated Realty Corp v. PNB. Where a certificate of deposit in a bank payable at a future date is handed over by the debtor to the creditor, it was NOT payment unless there was an express agreement on Cs part to receive it as such. Bataan Seedling v. Republic. Project Development Plan Catungal v. Hao. There is no question that after the expiration of the lease contracts which respondent contracted with Aniana Galang and BPI, she lost her right to possess the property since, as early as the actual expiration date of the lease contract, petitioners were not negligent in enforcing their right of ownership over the property. Banco Filipino v. CA. CBC494, although it has the force and effect of law, is not a law and is not the law contemplated by the parties which authorizes the petitioner to unilaterally raise the interest of the loan. Consequently, the reliance by the petitioner on Central Bank Circular 494 to unilaterally raise the interest rates on the loan was without any legal basis.

Credit Transaction Midterms Reviewer Case Annotations*

some parts from http://www.scribd.com/doc/30238661/Case-Table-Credit

Prof. Joven 2 semester, AY 10-11

nd

Janz Hanna Ria N. Serrano

Consolidated Bank v. CA. The trust receipts Law does not seek to enforce payment of the loan, rather it punishes the dishonesty and abuse of confidence in the handling of money or goods to the prejudice of another regardless of whether the latter is the owner||The practice of banks of making borrowers sign trust receipts to facilitate collection of loans and place them under the threats of criminal prosecution should they be unable to pay may be unjust and inequitable, if not reprehensible. || FLOATING INTEREST RATE = invalid ::: no reference rates set either by it or the BSP. Mendoza v. CA. as to interest: the increase was null and void, since no notice to Mendoza about the same was not had. FMIC v. Este del Sol. An apparently lawful loan is usurious when it is intended that additional compensation for loan be disguised by an ostensibly unrelated contract providing for payment by the borrower for the lenders services which are of little value or which are not, in fact, to be rendered. Frias v. San Diego-Sison. The phrase for the last six months only should be taken in the context of the entire agreement. In the agreement, there were two periods of 6 months each. The first six months was for the respondent to make up her mind WON she would purchase the property. The second 6 months was for the petitioner to pay the P2M in the event that respondent decide not to buy the property, in which case interest will be charged for the last six months only So that means, no interest shall be charged for the first six month period while appellee was making up her mind whether to buy the property Siga-an v. Villanueva. Interest may be paid either as compensation for the use of money (monetary interest) referred to in A1956 or imposed by law or by courts as penalty for indemnity of damages (compensatory interest) under A2209 and A2212 for breach of contractual obligations Carpo v. Chua. A 6%monthly interest rate is unconscionable, but the invalidity of the interest rate stipulation does not invalidate the entire loan obligation.

UCPB v. Samuel & Beluso. Interest rate void, since determined solely by UCPB || Illegal not only because of CC provisions but also because they violate TILA for non-disclosure of true finance charges its a form of deception. || In such transactions, the debtor and lending institution do not deal on an equal footing and this law (TILA) was intended to protect the public from hidden/undisclosed charges on their loan obligation.

BPI v. IAC.

Roman Catholic Bishop v. dela Pena. By placing the money in the bank and mixing it with his personal funds, priest did not thereby assume an obligation different from that under which he would have lain if such deposit had not been made nor did he thereby make himself liable to repay the money at all hazards.

CA Agro-Industrial Dev. Corp v. CA. Contract is not an ordinary contract of lease but a special kind of deposit. The guard key of the box remained with the bank, without it, neither the renters could open the box. On the other hand, bank could not likewise open the box without the renters key. Javellana v. Lim. The transaction was not a deposit but a real contract of loan. Chan v. Maceda. Moreman case. The record is bereft of any contract of deposit, oral or written, between petitioners and respondent. If at all, it was only between petitioners and Moreman. YHT Realty v. CA

Triple-V Food Services v. FMIC.