credits digested cases from case 1 - 12

7/21/2019 Credits Digested Cases From Case 1 - 12

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CIR vs. Burroughs Limited

FACTS: Sometime in March 1979, said branch ofce applied with the Central

Bank or authority to remit to its parent company abroad, branch prot

amountin to !7,"#7,$%&'$$' (hus, on March 1#, 1979, it paid the 1%)

branch prot remittance ta*, pursuant to Sec' +# b- +- ii- and remitted to

its head ofce the amount o !",#99,999'.$' (he bank paid prot ta* in the

amount o 1, 1#7, $%&'$$, the basic o computation o which is the total

prot eraned by the bank in the amount o 7, "#7, $%&'$$' Claimin that the

1%) prot remittance ta* should ha/e been computed on the basis o the

amount actually remitted !",#99,999'.$- and not on the amount beore

prot remittance ta* !7,"#7,$%&'$$-, pri/ate respondent led on 0ecember

+#, 19&$, a written claim or the reund or ta* credit o the amount o

!17+,$%&'9$ representin alleed o/erpaid branch prot remittance ta*' (he

Court o (a* ppeal ranted such petition sayin the the basic o

computation o the prot ta* should be the amount ACTUALLY remitted'

2ence, this petition'

ISSUE: 3hether or not the basic o computation should be on the amount

actually remitted4

RULING: YES.3e rule in the afrmati/e' (he pertinent pro/ision o the

5ational 6e/enue Code is Sec' +# b- +- ii- which states

Sec' +#' 6ates o ta* on corporations''''

b- (a* on orein corporations' '''

+- ii- (a* on branch prots remittances' ny prot remitted abroad by a

branch to its head ofce shall be sub8ect to a ta* o teen per cent 1% )- '''

n a Bureau o nternal 6e/enue rulin dated :anuary +1, 19&$ by then ctin

Commissioner o nternal 6e/enue 2on' ;ren ' !lana the aore<uoted

pro/ision had been interpreted to mean that =the ta* base upon which the

1%) branch prot remittance ta* ''' shall be imposed'''is- the prot actually

remitted abroad and not on the total branch prots out o which the

remittance is to be made' = (he said rulin is hereinbelow <uoted as ollows



n reply to your letter o 5o/ember ., 197&, relati/e to your <uery as to the

ta* base upon which the 1%) branch prots remittance ta* pro/ided or

under Section +# b- +- o the 1977 (a* Code shall be imposed, please be

ad/ised that the 1%) branch prot ta* shall be imposed on the branch

prots actually remitted abroad and not on the total branch prots out o

which the remittance is to be made'

!lease be uided accordinly'

pplyin, thereore, the aore<uoted rulin, the claim o pri/ate respondent

that it made an o/erpayment in the amount o !17+,$%&'9$ which is the

di>erence between the remittance ta* actually paid o !l,1#7,$%&'7$ and the

remittance ta* that should ha/e been paid o !97#,999,&9, computed as

ollows

!rots actually remitted''''''''''''''''''''''''''''''''''''''''' !",#99,999'.$

6emittance ta* rate'''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''' 1%)

6emittance ta* due''''''''''''''''''''''''''''''''''''''''''''''''''' !97#,999'&9

is well?taken' s correctly held by respondent Court in its assailed decision?

6espondent concedes at least that in his rulin dated :anuary +1, 19&$ he

held that under Section +# b- +- o the (a* Code the 1%) branch prot

remittance ta* shall be imposed on the prot actually remitted abroad and

not on the total branch prot out o which the remittance is to be made'

Based on such rulin petitioner should ha/e paid only the amount o

!97#,999'&9 in remittance ta* computed by takin the 1%) o the prots o

!",#99,999'&9 in remittance ta* actually remitted to its head ofce in the

@nited States, instead o !l,1#7,$%&'7$, on its net prots o !7,"#7,$%&'$$'

@ndoubtedly, petitioner has o/erpaid its branch prot remittance ta* in the

amount o !17+,$%&'9$'



Peope vs. Co!"ep"io!

FACTS: Aenancio Concepcion, president o the 5ational bank, authoried an

e*tension o credits in a/or o the co partnership !uno D Concepcion S' en

C' in the amount o !.$$, $$$'$$' (his was made as an e*emption to the

memorandum order o Aenancio Concepcion limitin the discretional power

o the local manaer to rant only !%,$$$'$$ and in certain cases, until

!1$,$$$'$$' Subse<uently, Aenancio Concepcion was chared beore the

Court o Eirst nstance o Caayan with a /iolation o Section .% o ct 5o'

+7#7 which pro/ides that =(he 5ational Bank shall not, directly or indirectly,

rant loans to any o the members o the board o directors o the bank nor

to aents o the branch banks'=Aenancio Concepcion was ound uilty

therein' 2ence, this present recourse'

ISSUE: #st issue:3hether or not it is a concession o credits or a loan4 $!d

issue: 3hether or not the rant o such credit is a discount or a loan4 %rd

issue: 3hether or not, the rant o loan alls within the meanin o indirect

loan4

RULING: #st Co!"essio! o& "redits. Counsel arue that the documents o

record do not pro/e that authority to make a loan was i/en, but only show

the concession o a credit' n this statement o act, counsel is correct, or the

e*hibits in <uestion speak o a =credito= credit- and not o a = prestamo=

loan-'

(he =credit= o an indi/idual means his ability to borrow money by /irtue o

the condence or trust reposed by a lender that he will pay what he may

promise' 0onnell /s' :ones F1&#&G, 1. la', #9$H Bou/ierIs Jaw 0ictionary'-

=loan= means the deli/ery by one party and the receipt by the other party o

a i/en sum o money, upon an areement, e*press or implied, to repay the



sum loaned, with or without interest' !ayne /s' Kardiner F1&"#G, +9 5' D',

1#", 1"7'- (he concession o a =credit= necessarily in/ol/es the rantin o

=loans= up to the limit o the amount *ed in the =credit,=

$!d issue: The "redit &'s (ithi! the me'!i!g o& ' o'!. 0iscounts are

a/ored by bankers because o their li<uid nature, rowin, as they do, out o

an actual, li/e, transaction' But in its last analysis, to discount a paper is only

a mode o loanin money, with, howe/er, these distinctions 1- n a

discount, interest is deducted in ad/ance, while in a loan, interest is taken at

the e*piration o a creditH +- a discount is always on double?name paperH a

loan is enerally on sinle?name paper'

Concedin, without decidin, that, as ruled by the nsular uditor, the law

co/ers loans and not discounts, yet the conclusion is ine/itable that the

demand notes sined by the rm =!uno y Concepcion, S' en C'= were not

discount paper but were mere e/idences o indebtedness, because 1-

interest was not deducted rom the ace o the notes, but was paid when the

notes ell dueH and +- they were sinle?name and not double?name paper'

%rd issue: It is '! i!dire"t o'!. n the interpretation and construction o

statutes, the primary rule is to ascertain and i/e e>ect to the intention o

the Jeislature' n this instance, the purpose o the Jeislature is plainly to

erect a wall o saety aainst temptation or a director o the bank' (he

prohibition aainst indirect loans is a reconition o the amiliar ma*im that

no man may ser/e two masters L that where personal interest clashes with

delity to duty the latter almost always su>ers' , thereore, it is shown that

the husband is nancially interested in the success or ailure o his wieIs

business /enture, a loan to partnership o which the wie o a director is a

member, alls within the prohibition'

Aarious pro/isions o the Ci/il ser/e to establish the amiliar relationship

called a con8ual partnership' rticles 1.1%, 1.9., 1#$1, 1#$7, 1#$&, and

1#1+ can be specially noted'- loan, thereore, to a partnership o which the

wie o a director o a bank is a member, is an indirect loan to such director'



(hat it was the intention o the Jeislature to prohibit e*actly such an

occurrence is shown by the acknowleded act that in this instance the

deendant was tempted to minle his personal and amily a>airs with his

ofcial duties, and to permit the loan !.$$,$$$ to a partnership o no

established reputation and without askin or collateral security'

n the case o Jester and 3ie /s' 2oward Bank F1&7$G, .. Md', %%&H . m'

6ep', +11-, the Supreme Court o Maryland said

3hat then was the purpose o the law when it declared that no director or

ofcer should borrow o the bank, and =i any director,= etc', =shall be

con/icted,= etc', =o directly or indirectly /iolatin this section he shall be

punished by ne and imprisonment4= 3e say to protect the stockholders,

depositors and creditors o the bank, aainst the temptation to which the

directors and ofcers miht be e*posed, and the power which as such they

must necessarily possess in the control and manaement o the bank, and

the leislature unwillin to rely upon the implied understandin that in

assumin this relation they would not ac<uire any interest hostile or ad/erse

to the most e*act and aithul dischare o duty, declared in e*press terms

that they should not borrow, etc', o the bank'



Repu)i" vs. B'gt's

FACTS: :ose A' Batas borrowed rom the 6epublic o the !hilippines throuh

the Bureau o nimal ndustry three bulls a 6ed Sinhi with a book /alue o !1,

17"'#", a Bhanari with a book /alue o !1,.+$'%" and a Sahiniwal with a

book /alue o !7##'#" or a period o 1 year and he will pay 1$percent or

the breedin purposes' @pon the e*piration o the lease contract, :ose A'

Batas renewed only 1 bull or another 1 year' 2e thereater reiterated his

desire to buy the bull with a reduction as to its depreciation e/ery year' (he

director o animals reused to sell the bulls and that :ose A' Batas could

either pay the /alue o the bulls or pay the 1$percent breedin ee' @pon his

ailure to return the bull, :ose A' Batas was chared o a case beore the CE

o Manila' n 19%9, his spouse said that they could not be held liable or the

two bulls were returned and the other bull was killed due to a orce ma8eure

and that the contract is one o commodatum'

ISSUE: 3hether or not the contract is one o commodatum4

RULING: N*. (he appellant contends that the Sahiniwal bull was

accidentally killed durin a raid by the 2uk in 5o/ember 19%. upon the

surroundin barrios o 2acienda Eelicidadntal, Baao, Caayan, where the

animal was kept, and that as such death was due to orce ma8eure she is

relie/ed rom the duty o returnin the bull or payin its /alue to the



appellee' (he contention is without merit' (he loan by the appellee to the

late deendant :ose A' Batas o the three bulls or breedin purposes or a

period o one year rom & May 19#& to 7 May 19#9, later on renewed or

another year as reards one bull, was sub8ect to the payment by the

borrower o breedin ee o 1$) o the book /alue o the bulls' (he appellant

contends that the contract was commodatum and that, or that reason, as

the appellee retained ownership or title to the bull it should su>er its loss

due to orce ma8eure' contract ocommodatum is essentially ratuitous'1

the breedin ee be considered a compensation, then the contract would be

a lease o the bull' @nder article 1"71 o the Ci/il Code the lessee would be

sub8ect to the responsibilities o a possessor in bad aith, because she had

continued possession o the bull ater the e*piry o the contract' nd e/en i

the contract be commodatum, still the appellant is liable, because article

19#+ o the Ci/il Code pro/ides that a bailee in a contract o commodatum L

' ' ' is liable or loss o the thins, e/en i it should be throuh a ortuitous

e/ent

+- he keeps it loner than the period stipulated ' ' '

.- the thin loaned has been deli/ered with appraisal o its /alue, unless

there is a stipulation e*emptin the bailee rom responsibility in case o a

ortuitous e/entH

(he oriinal period o the loan was rom & May 19#& to 7 May 19#9' (he loan

o one bull was renewed or another period o one year to end on & May

19%$' But the appellant kept and used the bull until 5o/ember 19%. when

durin a 2uk raid it was killed by stray bullets' Eurthermore, when lent and

deli/ered to the deceased husband o the appellant the bulls had each an

appraised book /alue, to with the Sindhi, at !1,17"'#", the Bhanari at

!1,.+$'%" and the Sahiniwal at !7##'#"' t was not stipulated that in case o

loss o the bull due to ortuitous e/ent the late husband o the appellant

would be e*empt rom liability'



+ui!tos vs. Be",

FACTS: (he deendant was a tenant by the plainti>' @pon the no/ation o

the contract, the plainti> ratuitously ranted the deendant the use o some

urnitures by her on the condition that the latter will return it to her upon

demand' 3hen he sold the property to Maria Jope and 6osario Jope, he

ordered the deendant to /acate the house and to return the urnitures to

her' (he deendant throuh another person wrote the plainti> that she could

et the urnitures that were situated in the rst oor but not the three as

heaters and the our electric lamps or he will return it to her upon the

e*piration o the contract o lease' Beore /acatin the house, the deendant

deposited the urniture to the sheri>'

ISSUE: 3hether or not the deendant complied with his obliation to return

the urniture to the plainti>4 3hether the plainti> is bound to bear the

deposit ees4 3hether the plainti> is entitled to litiation cost4



RULING: #st No. $!d No. %rd Yes. (he contract entered into between the

parties is one o commodatum, because under it the plainti> ratuitously

ranted the use o the urniture to the deendant, reser/in or hersel the

ownership thereoH by this contract the deendant bound himsel to return

the urniture to the plainti>, upon the latters demand clause 7 o the

contract, ;*hibit H articles 17#$, pararaph 1, and 17#1 o the Ci/il Code-'

(he obliation /oluntarily assumed by the deendant to return the urniture

upon the plainti>Is demand, means that he should return all o them to the

plainti> at the latterIs residence or house' (he deendant did not comply with

this obliation when he merely placed them at the disposal o the plainti>,

retainin or his benet the three as heaters and the our eletric lamps' (he

pro/isions o article 11"9 o the Ci/il Code cited by counsel or the parties

are not s<uarely applicable' (he trial court, thereore, erred when it came to

the leal conclusion that the plainti> ailed to comply with her obliation to

et the urniture when they were o>ered to her'

s the deendant had /oluntarily undertaken to return all the urniture to the

plainti>, upon the latterIs demand, the Court could not leally compel her to

bear the e*penses occasioned by the deposit o the urniture at the

deendantIs behest' (he latter, as bailee, was not entitled to place the

urniture on depositH nor was the plainti> under a duty to accept the o>er to

return the urniture, because the deendant wanted to retain the three as

heaters and the our electric lamps'

s to the /alue o the urniture, we do not belie/e that the plainti> is entitled

to the payment thereo by the deendant in case o his inability to return

some o the urniture because under pararaph " o the stipulation o acts,

the deendant has neither areed to nor admitted the correctness o the said

/alue' Should the deendant ail to deli/er some o the urniture, the /alue

thereo should be latter determined by the trial Court throuh e/idence

which the parties may desire to present'

(he costs in both instances should be borne by the deendant because the

plainti> is the pre/ailin party section #&7 o the Code o Ci/il !rocedure-'



(he deendant was the one who breached the contract o commodatum, and

without any reason he reused to return and deli/er all the urniture upon the

plainti>Is demand' n these circumstances, it is 8ust and e<uitable that he

pay the leal e*penses and other 8udicial costs which the plainti> would not

ha/e otherwise derayed'

S'ur' Import - Eport Co./ I!". vs. 0BP

FACTS: Saura nc' applied or a loan with 6EC in the amount o !%$$,$$$'$$

or the construction o the 8ute mill buildin and or the payment o the

purchase price o the 8ute mill machinery which Saura nc' had purchased

throuh a credit e*tended by prudential bank' 6esolution 5o' 1#% was

passed by the board o 6'E'C' appro/in the loan o !%$$,$$$'$$ in a/or o

Saura nc' and the 8ute mill buildin was mortaed in a/or o 6EC' !ursuant

to board resolution no' 7.", the board o committee will ree*amine all the

aspects o the appro/ed loan' 0espite the appro/ed loan, and pursuant to

the ree*amination made by 6EC it reduced the amount to be loaned by

Saura nc' rom !%$$,$$$'$$ to !.$$,$$$'$$' China ltd' one o the co



siners o the appro/ed loan cancelled its sinature as one o the co

siners due to the act that the loan had been reduced' n a letter sent by

Saura to 6EC, it reiterated that China ltd' will sin aain as a co siner i

the loan will be restored as to the oriinal areement, the !%$$,$$$'$$ loan'

!ursuant to 6esolution 5o' 9$&., 6EC restored the loan to be ranted to

Saura nc' in its oriinal areement pursuant to the conditions that 1- (he

raw materials needed by the borrower corporation 6EC- to carry out its

operations are a/ailable in its immediate /iccinityH and +- (hat there is

prospect o increased production thereo to pro/ide ade<uately or the

re<uirements o the actory' Eailure by the Saura nc' to comply with the

oreoin conditions which is to utilie raw materials, it decided that the loan

to be ranted by them will be used or the imported raw materials' 0ue to

this act, 6EC denied aain to release the loan to 6EC and 6EC on the other

hand re<uested that the mortae o/er the 8ute buildin be cancelled' By the

ailure o Saura nc' to pay its loan to !rudential Bank which it used or the

payment o the purchase price o 8ute machinery, prudential bank sued

Saura nc' 9 years later, Saura nc' sued 6EC the predecessor o 0B! then or

its ailure to comply with its obliation to rant the loan, due to that act,

Saura nc' was not able to ulll its commitment it had entered into in

connection with the 8ute mill pro8ect'

ISSUE: 3hether or not there is a breach o obliation on the part o 0B!4

RULING:3e hold that there was indeed a perected consensual contract, as

reconied in rticle 19.# o the Ci/il Code, which pro/ides

6(' 19%#' n accepted promise to deli/er somethin, by way o

commodatum or simple loan is bindin upon the parties, but the

commodatum or simple loan itsel shall not be pererted until the deli/ery o

the ob8ect o the contract'

(here was undoubtedly o>er and acceptance in this case the application o

Saura, nc' or a loan o !%$$,$$$'$$ was appro/ed by resolution o the

deendant, and the correspondin mortae was e*ecuted and reistered'

But this act alone alls short o resol/in the basic claim that the deendant



ailed to ulll its obliation and the plainti> is thereore entitled to reco/er

damaes'

t should be noted that 6EC entertained the loan application o Saura, nc' on

the assumption that the actory to be constructed would utilie locally rown

raw materials, principally kena' (here is no serious dispute about this' t was

in line with such assumption that when 6EC, by 6esolution 5o' 9$&.

appro/ed on 0ecember 17, 19%#, restored the loan to the oriinal amount o

!%$$,$$$'$$' it imposed two conditions, to wit =1- that the raw materials

needed by the borrower?corporation to carry out its operation are a/ailable in

the immediate /icinityH and +- that there is prospect o increased production

thereo to pro/ide ade<uately or the re<uirements o the actory'= (he

imposition o those conditions was by no means a de/iation rom the terms

o the areement, but rather a step in its implementation' (here was nothin

in said conditions that contradicted the terms laid down in 6EC 6esolution

5o' 1#%, passed on :anuary 7, 19%#, namely L =that the proceeds o the loan

shall be utiliede*clusi/ely or the ollowin purposes or construction o

actory buildin L !+%$,$$$'$$H or payment o the balance o purchase

price o machinery and e<uipment L !+#$,9$$'$$H or workin capital L

!9,1$$'$$'= ;/idently Saura, nc' realied that it could not meet the

conditions re<uired by 6EC, and so wrote its letter o :anuary +1, 19%%,

statin that local 8ute =will not be able in sufcient <uantity this year or

probably ne*t year,= and askin that out o the loan areed upon the sum o

!"7,%&"'$9 be released =or raw materials and labor'= (his was a de/iation

rom the terms laid down in 6esolution 5o' 1#% and embodied in the

mortae contract, implyin as it did a di/ersion o part o the proceeds o

the loan to purposes other than those areed upon'

3hen 6EC turned down the re<uest in its letter o :anuary +%, 19%% the

neotiations which had been oin on or the implementation o the

areement reached an impasse' Saura, nc' ob/iously was in no position to

comply with 6ECIs conditions' So instead o doin so and insistin that the

loan be released as areed upon, Saura, nc' asked that the mortae be



cancelled, which was done on :une 1%, 19%%' (he action thus taken by both

parties was in the nature c mutual desistance L what Manresa terms

=mutuodisenso= 1 L which is a mode o e*tinuishin obliations' t is a

concept that deri/es rom the principle that since mutual areement can

create a contract, mutual disareement by the parties can cause its

e*tinuishment' +

(he subse<uent conduct o Saura, nc' conrms this desistance' t did not

protest aainst any alleed breach o contract by 6EC, or e/en point out that

the latterIs stand was leally un8ustied' ts re<uest or cancellation o the

mortae carried no reser/ation o whate/er rihts it belie/ed it miht ha/e

aainst 6EC or the latterIs non?compliance' n 19"+ it e/en applied with 0B!

or another loan to nance a rice and corn pro8ect, which application was

disappro/ed' t was only in 19"#, nine years ater the loan areement had

been cancelled at its own re<uest, that Saura, nc' brouht this action or

damaes'll these circumstances demonstrate beyond doubt that the said

areement had been e*tinuished by mutual desistance L and that on the

initiati/e o the plainti>?appellee itsel'

3ith this /iew we take o the case, we nd it unnecessary to consider and

resol/e the other issues raised in the respecti/e bries o the parties'

32;6;EN6;, the 8udment appealed rom is re/ersed and the complaint

dismissed, with costs aainst the plainti>?appellee'

GSIS vs. CA



FACTS: !ri/ate respondents 5emencio Medina and :osena Medina applied

with the KSS or a loan in the amount !.%$,$$$'$$ but was reduced to !+9%,

$$$'$$ with a monthly interest o 9) and a monthly amortiation o !#,

#..'"% which includes the principal and interest 9) per annum-, it was

urther stipulated in the contract that any installment or amortiation remain

sue and unpaid shall bear 9)O1+) interest per month' (he Medinas then

e*ecuted a promissory note and a real estate mortae in a/or o the KSS'

(he Medinas re<uested that the loan be increased to !.%$,$$$'$$ and it was

ranted by the KSS' Subse<uently, there was an areement as to the

amended mortae' t was stipulated in the amended mortae that the 1-

mortaor shall pay to the system !#, #..'"% monthly includin principal

and interest' Eurther it was also stipulated in the amended mortae that it

will adapt all the non inconsistent terms and conditions in the rst mortae

contract the compoundin o interest was included to wit 9)O1+)-' 3ith

the ailure o the Medinas to pay, the mortae was e*tra 8udicially

oreclosed and the sheri> issued a certicate o sale in a/or o the KSS' (he

Medinas now contended that the amended mortae superseded the oriinal

mortae contract and that the interest is usurious' 2ence, this petition'

ISSUE: 3hether or not the amended mortae superseded the oriinal

mortae4 3hether or not the interest is usurious4

RULING: #st issue: N*.t is a basic and undamental rule in the

interpretation o contract that i the terms thereo are clear and lea/e no

doubt as to the intention o the contractin parties, the literal meanin o the

stipulations shall control but when the words appear contrary to the e/ident

intention o the parties, the latter shall pre/ail o/er, the ormer' n order to

8ude the intention o the parties, their contemporaneous and subse<uent

acts shall be principally considered' Sy /' Court o ppeals, 1.1 SC6 11"H

:uly .1, 19&#-'

(here appears no ambiuity whatsoe/er in the terms and conditions o the

amendment o the mortae contract herein <uoted earlier' Nn the contrary,

an opposite conclusion cannot be otherwise but absurd'



s correctly stated by the KSS in its brie 6ollo, pp' 1"+1""-, a careul

perusal o the title, preamble and body o the mendment o 6eal ;state

Mortae dated :uly ", 19"+, takin into account the prior,

contemporaneous, and subse<uent acts o the parties, ineluctably shows

that said mendment was ne/er intended to completely supersede the

mortae contract dated pril #, 19"+'

Eirst, the title =mendment o 6eal ;state Mortae= reconies the

e*istence and e>ecti/ity o the pre/ious mortae contract' Second,

nowhere in the aoresaid mendment did the parties maniest their intention

to supersede the oriinal contract' Nn the contrary in the 32;6;S clauses,

the e*istence o the pre/ious mortae contract was ully reconied and the

act that the same was 8ust bein amended as to amount and amortiation is

ully established as to ob/iate any doubt' (hird, the mendment o 6eal

;state Mortae dated :uly ", 19"+ does not embody the act o

con/eyancin the sub8ect properties by way o mortae' n act the

intention o the parties to be bound by the una>ected pro/isions o the

mortae contract o pril #, 19"+ e*pressed in unmistakable lanuae is

clearly e/ident in the last pro/ision o the mendment o 6eal ;state

Mortae dated :uly ", 19"+ which reads

t is hereby e*pressly understood that with the oreoin amendment, all

other terms and conditions o the said real estate mortae dated pril #,

19"+, insoar as they are not inconsistent herewith, are hereby conrmed,

ratied and continued to be in ull orce and e>ect, and that the parties

hereto aree that the amendment be an interal part o said real estate

mortae' ;mphasis supplied-'

re/iew o prior, contemporaneous, and subse<uent acts supports the

conclusion that both contracts are ully subsistin insoar as the latter is not

inconsistent with the ormer' (he act is the KSS, as a matter o policy,

imposes uniorm terms and conditions or all its real estate loans, particularly

with respect to compoundin o interest' s shown in the case at bar, the

oriinal mortae contract embodies the same terms and conditions as in



the additional loan denominated as ccount 5o' .1##+ while the amendment

carries the pro/ision that it shall be sub8ect to the same terms and conditions

as the real estate mortae o pril #, 19"+ e*cept as to amount and

amortiation'

Eurthermore, it would be contrary to human e*perience and to ordinary

practice or the mortaee to impose less onerous conditions on an

increased loan by the deletion o compound interest e*acted on a lesser

loan'

$!d Issue: No. s to whether or not the interest rates on the loan accounts

o the Medinas are usurious, it has already been settled that the @sury Jaw

applies only to interest by way o compensation or the use or orbearance o

money Jope /' 2ernae, .+ !hil' ".1H Bachrach Motor Co' /' ;spiritu, %+

!hil' .#"H ;<uitable Bankin Corporation /' Jiwana, .+ SC6 +9., March .$,

197$-' nterest by way o damaes is o/erned by rticle ++$9 o the Ci/il

Code o the !hilippines which pro/ides

rt' ++$9' the obliation consists in the payment o a sum o money, and

the debtor incurs in delay, the indemnity or damaes, there bein no

stipulation to the contrary, shall be the payment o the interest areed

upon,'''

n the Bachrach case supra- the Supreme Court ruled that the Ci/il Code

permits the areement upon a penalty apart rom the interest' Should there

be such an areement, the penalty does not include the interest, and as such

the two are di>erent and distinct thins which may be demanded separately'

6eiteratin the same principle in the later case o ;<uitable Bankin Corp'

supra-, where this Court held that the stipulation about payment o such

additional rate partakes o the nature o a penalty clause, which is

sanctioned by law'



Ligut'! vs. CA

FACTS: !etitioners (olomeoJiutan and Jeonidas 0e Jlana obtained a loan

rom Security Bank and (rust Co' in the amount o !1+$, $$$'$$ with a

1%'1&9) interest per annum and to pay a penalty o %) e/ery month on the

outstandin principal and interest in case o deault' !etitioners urther

areed to pay 1$) o the total amount due by way o attorneyPs ees'

0espite se/eral demands rom the bank, the petitioners ailed to settle their

obliation' (he bank then led a complaint beore the 6'('C' which ordered

petitioners to pay the bank its debt with the interest o 1%'1&9) and the

penalty o %)' 3hen the case was ele/ated to the C'' afrmed the 1%'1&9)

interest but reduced the %) penalty to .)' (he petitioners now contended

that the penalty and the interest is ini<uitous and unconscionable' 2ence,

this petition'

ISSUE: 3hether or not the penalty reduced to .) is proper4 3hether or not

the interest is e*cessi/e4

RULING: #st issue: N*. penalty clause, e*pressly reconied by law,F1$G

is an accessory undertakin to assume reater liability on the part o an

oblior in case o breach o an obliation' t unctions to strenthen the

coerci/e orce o the obliationF11G and to pro/ide, in e>ect, or what could

be the li<uidated damaes resultin rom such a breach' (he oblior would

then be bound to pay the stipulated indemnity without the necessity o proo



on the e*istence and on the measure o damaes caused by the breach'F1+G

lthouh a court may not at liberty inore the reedom o the parties to

aree on such terms and conditions as they see t that contra/ene neither

law nor morals, ood customs, public order or public policy, a stipulated

penalty, ne/ertheless, may be e<uitably reduced by the courts i it is

ini<uitous or unconscionable or i the principal obliation has been partly or

irreularly complied with'F1.G

(he <uestion o whether a penalty is reasonable or ini<uitous can be partly

sub8ecti/e and partly ob8ecti/e' ts resolution would depend on such actors

as, but not necessarily conned to, the type, e*tent and purpose o the

penalty, the nature o the obliation, the mode o breach and its

conse<uences, the super/enin realities, the standin and relationship o the

parties, and the like, the application o which, by and lare, is addressed to

the sound discretion o the court' n 6ial Commercial Bankin Corp' /s'

Court o ppeals,F1#G 8ust an e*ample, the Court has tempered the penalty

chares ater takin into account the debtors pitiul situation and its o>er to

settle the entire obliation with the creditor bank' (he stipulated penalty

miht likewise be reduced when a partial or irreular perormance is made

by the debtor'F1%G (he stipulated penalty miht e/en be deleted such as

when there has been substantial perormance in ood aith by the oblior,

F1"G when the penalty clause itsel su>ers rom atal inrmity, or when

e*ceptional circumstances so e*ist as to warrant it'F17G

(he Court o ppeals, e*ercisin its ood 8udment in the instant case, has

reduced the penalty interest rom %) a month to .) a month which

petitioner still disputes' Ki/en the circumstances, not to mention the

repeated acts o breach by petitioners o their contractual obliation, the

Court sees no coent round to modiy the rulin o the appellate court''

$!d issue: N*. nent the stipulated interest o 1%'1&9) per annum,

petitioners, or the rst time, <uestion its reasonableness and prays that the

Court reduce the amount' (his contention is a resh issue that has not been

raised and /entilated beore the courts below' n any e/ent, the interest



stipulation, on its ace, does not appear as bein that e*cessi/e' (he essence

or rationale or the payment o interest, <uite oten reerred to as cost o

money, is not e*actly the same as that o a surchare or a penalty' penalty

stipulation is not necessarily preclusi/e o interest, i there is an areement

to that e>ect, the two bein distinct concepts which may separately be

demanded'F1&G 3hat may 8ustiy a court in not allowin the creditor to

impose ull surchares and penalties, despite an e*press stipulation thereor

in a /alid areement, may not e<ually 8ustiy the non?payment or reduction

o interest' ndeed, the interest prescribed in loan nancin arranements is

a undamental part o the bankin business and the core o a bankIs

e*istence'

E'ster! Shippi!g Li!es vs. CAFACTS: (he damaes were incurred by the plainti> as the insurer o the

consinee due to the damaes su>ered by the one drum to be deli/ered in

consineePs warehouse' (he Court o ppeals held that the deendants were

liable in the amount o !19, $.+'9% with leal interest o 1+) per annum and

rom the date o the lin o the complaint' (he deendants assailed this

decision contendin that the interest should be rom the date o 8udment

and at the rate o ") per annum' 2ence, this petition'

ISSUE: 3hether or not the applicable rate is 1+) per annum and it should

be computed rom the nal 8udment4

RULING: YES.n the =rst roup=, the basic issue ocuses on the application

o either the ") under the Ci/il Code- or 1+) under the Central Bank

Circular- interest per annum' t is easily discernible in these cases that there



has been a consistent holdin that the Central Bank Circular imposin the

1+) interest per annum applies only to loans or orbearance 1" o money,

oods or credits, as well as to 8udments in/ol/in such loan or orbearance

o money, oods or credits, and that the ") interest under the Ci/il Code

o/erns when the transaction in/ol/es the payment o indemnities in the

concept o damae arisin rom the breach or a delay in the perormance o

obliations in eneral' Nbser/e, too, that in these cases, a common time

rame in the computation o the ") interest per annum has been applied,

i'e', rom the time the complaint is led until the ad8uded amount is ully

paid'

(he =second roup=, did not alter the pronounced rule on the application o

the ") or 1+) interest per annum, 17dependin on whether or not the

amount in/ol/ed is a loan or orbearance, on the one hand, or one o

indemnity or damae, on the other hand' @nlike, howe/er, the =rst roup=

which remained consistent in holdin that the runnin o the leal interest

should be rom the time o the lin o the complaint until ully paid, the

=second roup= /aried on the commencement o the runnin o the leal

interest'

Malayan held that the amount awarded should bear leal interest rom the

date o the decision o the court a <uo,e*plainin that =i the suit were or

damaes, Iunli<uidated and not known until denitely ascertained, assessed

and determined by the courts ater proo,I then, interest Ishould be rom the

date o the decision'I= merican ;*press nternational /' C, introduced a

di>erent time rame or reckonin the ") interest by orderin it to be

=computed rom the nality o the- decision until paid'= (he 5akpil and Sons

case ruled that 1+) interest per annum should be imposed rom the nality

o the decision until the 8udment amount is paid'

(he ostensible discord is not difcult to e*plain' (he actual circumstances

may ha/e called or di>erent applications, uided by the rule that the courts

are /ested with discretion, dependin on the e<uities o each case, on the

award o interest' 5onetheless, it may not be unwise, by way o clarication



and reconciliation, to suest the ollowin rules o thumb or uture

uidance'

' 3hen an obliation, reardless o its source, i'e', law, contracts, <uasi?

contracts, delicts or <uasi?delicts 1& is breached, the contra/enor can be

held liable or damaes' 19 (he pro/isions under (itle QA on =0amaes= o

the Ci/il Code o/ern in determinin the measure o reco/erable damaes'

+$

' 3ith reard particularly to an award o interest in the concept o actual

and compensatory damaes, the rate o interest, as well as the accrual

thereo, is imposed, as ollows

1' 3hen the obliation is breached, and it consists in the payment o a sum

o money, i'e', a loan or orbearance o money, the interest due should be

that which may ha/e been stipulated in writin' +1 Eurthermore, the interest

due shall itsel earn leal interest rom the time it is 8udicially demanded' ++

n the absence o stipulation, the rate o interest shall be 1+) per annum to

be computed rom deault, i'e', rom 8udicial or e*tra8udicial demand under

and sub8ect to the pro/isions o rticle 11"9 +. o the Ci/il Code'

+' 3hen an obliation, not constitutin a loan or orbearance o money, is

breached, an interest on the amount o damaes awarded may be imposed

at the discretion o the court +# at the rate o ") per annum' +% 5o interest,

howe/er, shall be ad8uded on unli<uidated claims or damaes e*cept when

or until the demand can be established with reasonable certainty' +"

ccordinly, where the demand is established with reasonable certainty, the

interest shall bein to run rom the time the claim is made 8udicially or

e*tra8udicially rt' 11"9, Ci/il Code- but when such certainty cannot be so

reasonably established at the time the demand is made, the interest shall

bein to run only rom the date the 8udment o the court is made at which

time the <uantication o damaes may be deemed to ha/e been reasonably

ascertained-' (he actual base or the computation o leal interest shall, in

any case, be on the amount nally ad8uded'



.' 3hen the 8udment o the court awardin a sum o money becomes nal

and e*ecutory, the rate o leal interest, whether the case alls under

pararaph 1 or pararaph +, abo/e, shall be 1+) per annum rom such

nality until its satisaction, this interim period bein deemed to be by then

an e<ui/alent to a orbearance o credit'

32;6;EN6;, the petition is partly K65(;0' (he appealed decision is

EE6M;0 with the MN0EC(N5 that the leal interest to be paid is SQ

!;6C;5( ")- on the amount due computed rom the decision, dated

$. Eebruary 19&&, o the court a <uo' (3;JA; !;6C;5( 1+)- interest, in

lieu o SQ !;6C;5( ")-, shall be imposed on such amount upon nality o

this decision until the payment thereo'

SN N60;6;0'

Produ"ers B'!, vs. CA



FACTS: !ri/ate respondent Eranklin Ai/es was asked by his riend neles

Sanche to lend money in a/or o Col' 0oronilla or the incorporation o its

business,Sterela Marketin Ser/ices Stela-' @pon an areement made by

Eranklin Ai/es, neles Sanche, Col' 0oronilla and ;strella 0umapi

0oronillaPs pri/ate secretary-, it was areed that the amount o !+$$,

$$$'$$ to be i/en to 0oronilla will be returned 1 month thereater' Eranklin

Ai/es then asked his wie to accompany 0oronilla and Sanche in openin a

sa/ins bank in Makati branch o the !roducers bank o the !hilippines'

2owe/er, only 0umapi, Mrs' Ai/es and Sanche went to the branch' (hey

had an authoriation letter rom 0oronilla to open a sa/ins account with the

help o 6uotiena, branch assistant manaer' 3hen pri/ate respondent

learned that Sterela was no loner holdin ofce in the addressed that was

i/en to them, they immediately went to the bank and check i their money

was still intact' Mr' tiena inormed them that only !9$, $$$'$$ was let in

their account and the same cannot be withdrawn because 0oronilla issued

postdated check o/er that account' 3hen 0oronilla issued postdated check

in a/or o pri/ate respondent, such check was dishonored and pri/ate

respondent respondent led a case aainst 0umapi, Sanche, 0oronilla and

petitioner !roducers bank because o tiena conni/in with other

deendants' (he 6'('C' and the C'' ruled that the petitioner !roducers bank

is liable because o tiena' (he petitioner then arued that it could not be

held liable because tye contract is one o mutuum and not o a commodatum

and due to that act, they are not pri/y to the contract thus cannot be held

liable' 2ence, this petition'

ISSUE: 3hether or not the contract is one o commodatum4

RULING: YES. 5o error was committed by the Court o ppeals when it

ruled that the transaction between pri/ate respondent and 0oronilla was a

commodatum and not a mutuum' circumspect e*amination o the records

re/eals that the transaction between them was a commodatum' rticle 19..

o the Ci/il Code distinuishes between the two kinds o loans in this wise



By the contract o loan, one o the parties deli/ers to another, either

somethin not consumable so that the latter may use the same or a certain

time and return it, in which case the contract is called a commodatumH or

money or other consumable thin, upon the condition that the same amount

o the same kind and <uality shall be paid, in which case the contract is

simply called a loan or mutuum'

Commodatum is essentially ratuitous'

Simple loan may be ratuitous or with a stipulation to pay interest'

n commodatum, the bailor retains the ownership o the thin loaned, while

in simple loan, ownership passes to the borrower'

(he oreoin pro/ision seems to imply that i the sub8ect o the contract is a

consumable thin, such as money, the contract would be a mutuum'

2owe/er, there are some instances where a commodatum may ha/e or its

ob8ect a consumable thin' rticle 19." o the Ci/il Code pro/ides

Consumable oods may be the sub8ect o commodatum i the purpose o the

contract is not the consumption o the ob8ect, as when it is merely or

e*hibition'

(hus, i consumable oods are loaned only or purposes o e*hibition, or

when the intention o the parties is to lend consumable oods and to ha/e

the /ery same oods returned at the end o the period areed upon, the loan

is a commodatum and not a mutuum'

(he rule is that the intention o the parties thereto shall be accorded

primordial consideration in determinin the actual character o a contract'+7

n case o doubt, the contemporaneous and subse<uent acts o the parties

shall be considered in such determination'+&

s correctly pointed out by both the Court o ppeals and the trial court, the

e/idence shows that pri/ate respondent areed to deposit his money in the

sa/ins account o Sterela specically or the purpose o makin it appear

=that said rm had sufcient capitaliation or incorporation, with the

promise that the amount shall be returned within thirty .$- days'=+9 !ri/ate

respondent merely =accommodated= 0oronilla by lendin his money without



consideration, as a a/or to his ood riend Sanche' t was howe/er clear to

the parties to the transaction that the money would not be remo/ed rom

SterelaPs sa/ins account and would be returned to pri/ate respondent ater

thirty .$- days'

0oronillaPs attempts to return to pri/ate respondent the amount o

!+$$,$$$'$$ which the latter deposited in SterelaPs account toether with an

additional !1+,$$$'$$, alleedly representin interest on the mutuum, did

not con/ert the transaction rom a commodatum into a mutuum because

such was not the intent o the parties and because the additional !1+,$$$'$$

corresponds to the ruits o the lendin o the !+$$,$$$'$$' rticle 19.% o

the Ci/il Code e*pressly states that =FtGhe bailee in commodatum ac<uires

the use o the thin loaned but not its ruits'= 2ence, it was only proper or

0oronilla to remit to pri/ate respondent the interest accruin to the latterPs

money deposited with petitioner'

5either does the Court aree with petitionerPs contention that it is not

solidarily liable or the return o pri/ate respondentPs money because it was

not pri/y to the transaction between 0oronilla and pri/ate respondent' (he

nature o said transaction, that is, whether it is a mutuum or a commodatum,

has no bearin on the <uestion o petitionerPs liability or the return o

pri/ate respondentPs money because the actual circumstances o the case

clearly show that petitioner, throuh its employee Mr' tiena, was partly

responsible or the loss o pri/ate respondentPs money and is liable or its

restitution'



G'r"i' vs. Thio

FACTS: Carolyn Karcia issued a crossed check in a/or o 6ica Marie S' (hio

in the amount o R1$$, $$$'$$ but it is payable in the order o Marilou

Santiao, who was not known to the !etitioner' nother crossed check were

issued in a/or (hio in the amount o !%$$, $$$'$$ which is also payable in

the order o Marilou Santiao' 3hen the loan ell due and (hio was not able

to pay the loan, aruin that it is Santiao who had loaned with Karcia,

Karcia led a case aainst (hio or a collection o sum o money' (he 6'('C'

ruled in a/or o Karcia rantin the collection o the unpaid amount o the

loan with .) with respect to the R1$$, $$$'$$ loan and #) with respect to

!%$$, $$$'$$ loan' 3hen the case was ele/ated to the C'', the C''

rendered a decision in a/or o (hiocontendin that it was Santiao who

obtained loan rom Karcia and not (hio' 2ence, this petition'

ISSUE: 3hether or not, the .) and #) rant by 6'('C' is /alid4

RULING: N*. 3ith respect to whom obtained the loan, it was (hio because

she has control o/er the money'

As to the i!terest. 3e do not, howe/er, aree that respondent is liable or

the .) and #) monthly interest or the @SR1$$,$$$ and !%$$,$$$ loans

respecti/ely' (here was no written proo o the interest payable e*cept or

the /erbal areement that the loans would earn .) and #) interest per

month' rticle 19%" o the Ci/il Code pro/ides that FnGo interest shall be due

unless it has been e*pressly stipulated in writin'



Be that as it may, while there can be no stipulated interest, there can be

leal interest pursuant to rticle ++$9 o the Ci/il Code' t is well?settled that

3hen the obliation is breached, and it consists in the payment o a sum o

money, i'e', a loan or orbearance o money, the interest due should be that

which may ha/e been stipulated in writin' Eurthermore, the interest due

shall itsel earn leal interest rom the time it is 8udicially demanded' n the

absence o stipulation, the rate o interest shall be 1+) per annum to be

computed rom deault, i'e', rom 8udicial or e*tra8udicial demand under and

sub8ect to the pro/isions o rticle 11"9 o the Ci/il Code'F#1G

2ence, respondent is liable or the payment o leal interest per annum to be

computed rom 5o/ember +1, 199%, the date when she recei/ed petitioners

demand letter'F#+G Erom the nality o the decision until it is ully paid, the

amount due shall earn interest at 1+) per annum, the interim period bein

deemed e<ui/alent to a orbearance o credit'F#.G



P'1u2o vs. CA

FACTS: n :une 1979, petitioner Colito (' !a8uyo =!a8uyo=- paid !#$$ to a

certain !edro !ere or the rihts o/er a +%$?s<uare meter lot in Barrio

!ayatas, ueon City' !a8uyo then constructed a house made o liht

materials on the lot' !a8uyo and his amily li/ed in the house rom 1979 to 7

0ecember 19&%' Nn & 0ecember 19&%, !a8uyo and pri/ate respondent ;ddie

Kue/arra =Kue/arra=- e*ecuted a Tasunduan or areement' !a8uyo, as

owner o the house, allowed Kue/arra to li/e in the house or ree pro/ided

Kue/arra would maintain the cleanliness and orderliness o the house'

Kue/arra promised that he would /oluntarily /acate the premises on !a8uyoPs

demand' n September 199#, !a8uyo inormed Kue/arra o his need o the

house and demanded that Kue/arra /acate the house' Kue/arra reused'

(he trial court ruled in a/or o o !a8uyo but the C'' ruled otherwise statin

that the kasunduan is a commodatum' 2ence, this petition'

ISSUE: 3hether or not the kasunduan is commodatum4

RULING: N*.n a contract o commodatum, one o the parties deli/ers to

another somethin not consumable so that the latter may use the same or a

certain time and return it'". n essential eature o commodatum is that it is

ratuitous' nother eature o commodatum is that the use o the thin

belonin to another is or a certain period'"# (hus, the bailor cannot

demand the return o the thin loaned until ater e*piration o the period



stipulated, or ater accomplishment o the use or which the commodatum is

constituted'"% the bailor should ha/e urent need o the thin, he may

demand its return or temporary use'"" the use o the thin is merely

tolerated by the bailor, he can demand the return o the thin at will, in

which case the contractual relation is called a precarium'"7 @nder the Ci/il

Code, precarium is a kind o commodatum'"&

(he Tasunduan re/eals that the accommodation accorded by !a8uyo to

Kue/arra was not essentially ratuitous' 3hile the Tasunduan did not re<uire

Kue/arra to pay rent, it obliated him to maintain the property in ood

condition' (he imposition o this obliation makes the Tasunduan a contract

di>erent rom a commodatum' (he e>ects o the Tasunduan are also

di>erent rom that o a commodatum' Case law on e8ectment has treated

relationship based on tolerance as one that is akin to a landlord?tenant

relationship where the withdrawal o permission would result in the

termination o the lease'"9 (he tenantPs withholdin o the property would

then be unlawul' (his is settled 8urisprudence'

;/en assumin that the relationship between !a8uyo and Kue/arra is one o

commodatum, Kue/arra as bailee would still ha/e the duty to turn o/er

possession o the property to !a8uyo, the bailor' (he obliation to deli/er or

to return the thin recei/ed attaches to contracts or saekeepin, or

contracts o commission, administration and commodatum'7$ (hese

contracts certainly in/ol/e the obliation to deli/er or return the thin

recei/ed'71

Kue/arra turned his back on the Tasunduan on the sole round that like him,

!a8uyo is also a s<uatter' S<uatters, Kue/arra pointed out, cannot enter into

a contract in/ol/in the land they illeally occupy' Kue/arra insists that the

contract is /oid'

Kue/arra should know that there must be honor e/en between s<uatters'

Kue/arra reely entered into the Tasunduan' Kue/arra cannot now impun

the Tasunduan ater he had beneted rom it' (he Tasunduan binds

Kue/arra'



(he Tasunduan is not /oid or purposes o determinin who between !a8uyo

and Kue/arra has a riht to physical possession o the contested property'

(he Tasunduan is the undeniable e/idence o Kue/arraPs reconition o

!a8uyoPs better riht o physical possession' Kue/arra is clearly a possessor

in bad aith' (he absence o a contract would not yield a di>erent result, as

there would still be an implied promise to /acate'

Kue/arra contends that there is =a pernicious e/il that is souht to be

a/oided, and that is allowin an absentee s<uatter who sic- makes sic- a

prot out o his illeal act'=7+ Kue/arra bases his arument on the

preerential riht i/en to the actual occupant or caretaker under

!roclamation 5o' 1.7 on socialied housin'

BPI F'mi2 B'!, vs. Fr'!"o '!d CAFACTS: (e/este o, Eirst Metro n/estment Corporation EMC- and Eranco

opened an account beore B! EB' (hese accounts were current, sa/ins

and time deposit' EMC deposited !1$$, $$, $$$'$$ in its time deposit' Eranco

then deposited !%$$, $$$'$$ each in his current and sa/ins account and !1,

$$$, $$$'$$ in his time deposit account' (he !+, $$$, $$$'$$ that was used

to open the account o Eranco was issued by (e/esteco throuh debitin it

rom !&$, $$$, $$$'$$ in time deposit account o EMC pursuant to authority

to debit' EMC then inormed B! EB that the sinatures o its ofcers in the

authority to debit were ored' ctin on their interest, the bank led a case

beore the 6'('C' o Makati or arnishment o the account o Eranco without

Eranco bein impleaded on the case' 3hen Eranco was apprised by the said

case, he led a motion or dischare o order o arnishment o/er his



account which was ranted by 6'('C' makati' 2owe/er, B! EB reused to

heed such order' Eranco also led a case o payment o accrued interest

beore 6'('C' Manila which was ranted' (he 6'('C' also ordered B! EB to

lit the reein order o/er the account o Eranco' 2ence, this petition'

ISSUE: 3hether or not, B! EB has the riht to reee ErancoPs account'

RULING: Arti"e 334. (he possession o mo/able property ac<uired in ood

aith is e<ui/alent to a title' 5e/ertheless, one who has lost any mo/able or

has been unlawully depri/ed thereo, may reco/er it rom the person in

possession o the same'

the possessor o a mo/able lost or o which the owner has been unlawully

depri/ed, has ac<uired it in ood aith at a public sale, the owner cannot

obtain its return without reimbursin the price paid thereor'

B!?EBs arument is unsound' (o bein with, the mo/able property

mentioned in rticle %%9 o the Ci/il Code pertains to a specic or

determinate thin'F.$G determinate or specic thin is one that is

indi/idualied and can be identied or distinuished rom others o the same

kind'F.1G

n this case, the deposit in Erancos accounts consists o money which, albeit

characteried as a mo/able, is eneric and unible'F.+G (he <uality o bein

unible depends upon the possibility o the property, because o its nature

or the will o the parties, bein substituted by others o the same kind, not

ha/in a distinct indi/iduality'F..G

Sinicantly, while rticle %%9 permits an owner who has lost or has been

unlawully depri/ed o a mo/able to reco/er the e*act same thin rom the

current possessor, B!?EB simply claims ownership o the e<ui/alent amount

o money, i'e', the /alue thereo, which it had mistakenly debited rom EMCs

account and credited to (e/estecos, and subse<uently traced to Erancos

account' n act, this is what B!?EB did in lin the Makati Case aainst

Eranco, et al' t staked its claim on the money itsel which passed rom one

account to another, commencin with the ored uthority to 0ebit'



t bears emphasiin that money bears no earmarks o peculiar ownership,

F.#G and this characteristic is all the more maniest in the instant case which

in/ol/es money in a bankin transaction one awry' ts primary unction is to

pass rom hand to hand as a medium o e*chane, without other e/idence o

its title'F.%G Money, which had passed throuh /arious transactions in the

eneral course o bankin business, e/en i o traceable oriin, is no

e*ception'

(hus, inasmuch as what is in/ol/ed is not a specic or determinate personal

property, B!?EBs illustrati/e e*ample, ostensibly based on rticle %%9, is

inapplicable to the instant case'

(here is no doubt that B!?EB owns the deposited monies in the accounts o

Eranco, but not as a leal conse<uence o its unauthoried transer o EMCs

deposits to (e/estecos account' B!?EB con/eniently orets that the deposit

o money in banks is o/erned by the Ci/il Code pro/isions on simple loan or

mutuum'F."G s there is a debtor?creditor relationship between a bank and

its depositor, B!?EB ultimately ac<uired ownership o Erancos deposits, but

such ownership is coupled with a correspondin obliation to pay him an

e<ual amount on demand'F.7G lthouh B!?EB owns the deposits in Erancos

accounts, it cannot pre/ent him rom demandin payment o B!?EBs

obliation by drawin checks aainst his current account, or askin or the

release o the unds in his sa/ins account' (hus, when Eranco issued checks

drawn aainst his current account, he had e/ery riht as creditor to e*pect

that those checks would be honored by B!?EB as debtor'

More importantly, B!?EB does not ha/e a unilateral riht to reee the

accounts o Eranco based on its mere suspicion that the unds therein were

proceeds o the multi?million peso scam Eranco was alleedly in/ol/ed in' (o

rant B!?EB, or any bank or that matter, the riht to take whate/er action it

pleases on deposits which it supposes are deri/ed rom shady transactions,

would open the oodates o public distrust in the bankin industry'

3ith respect to its liability or interest on Erancos current account, B!?EB

arues that its non?compliance with the Makati 6(Cs Nrder Jitin the Nrder



o ttachment and the leal conse<uences thereo, is a matter that ouht to

be taken up in that court'

(he arument is tenuous' 3e aree with the succinct holdin o the appellate

court in this respect' (he Manila 6(Cs order to pay interests on Erancos

current account arose rom B!?EBs un8ustied reusal to comply with its

obliation to pay Eranco pursuant to their contract o mutuum' n other

words, rom the time B!?EB reused Erancos demand or the release o the

deposits in his current account, specically, rom May 17, 199$, interest at

the rate o 1+) bean to accrue thereon'F.9G

@ndeniably, the Makati 6(C is /ested with the authority to determine the

leal conse<uences o B!?EBs non?compliance with the Nrder Jitin the

Nrder o ttachment' 2owe/er, such authority does not preclude the Manila

6(C rom rulin on B!?EBs liability to Eranco or payment o interest based

on its continued and un8ustied reusal to perorm a contractual obliation

upon demand' ter all, this was the core issue raised by Eranco in his

complaint beore the Manila 6(C'

credits digested cases from case 1 - 12

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