Carolyn M.

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

Saura Import &Export Co., Inc v. DBP

G.R. No. L-24968 April 27, 1972

Facts: Saura Inc. applied to the Rehabilitation Finance Corp (before its
conversion to DBP) for a loan of 500k secured by a first mortgage of
the factory building to finance for the construction of a jute mill factory
and purchase of factory implements. RFC accepted and approved the
loan application subject to some conditions which Saura admitted it
could not comply with. Without having received the amount being
loaned, and sensing that it could not at anyway obtain the full amount
of loan, Saura Inc. then asked for cancellation of the mortgage which
RFC also approved. Nine years after the cancellation of the mortgage,
Saura sued RFC for damages for its non-fulfillment of obligations
arguing that there was indeed a perfected consensual contract
between them.
Issue: Was there a perfected consensual contract? Was there a real
contract of loan which would warrant recovery of damages arising out
of breach of such contract?
Held: On the first issue, yes, there was indeed a perfected consensual
contract, as recognized in Article 1934 of the Civil Code. There was
undoubtedly offer and acceptance in this case: the application of
Saura, Inc. for a loan of P500,000.00 was approved by resolution of
the defendant, and the corresponding mortgage was executed and
registered. But this fact alone falls short of resolving the second issue
and the basic claim that the defendant failed to fulfill its obligation and
the plaintiff is therefore entitled to recover damages. The action thus
taken by both partiesSaura's request for cancellation and RFC's
subsequent approval of such cancellationwas in the nature of mutual
desistance what Manresa terms "mutuo disenso" which is a mode
of extinguishing obligations. It is a concept derived from the principle
that since mutual agreement can create a contract, mutual
disagreement by the parties can cause its extinguishment. In view of
such extinguishment, said perfected consensual contract to deliver did
not constitute a real contract of loan.

FACTS:
Frank Roa obtained a loan at 16 1/4% interest rate per annum from
Ayala Investment and Development Corporation. For security, Roa's
house and lot were mortgaged. Later, Roa sold the house and lot to
ALS and Antonio Litonjua, who assumed Roa's debt to Ayala
Investment. Ayala Investment, however, granted a new loan to be
applied to Roa's debt, secured by the same property at a different
interest rate of 20% per annum.
When ALS and Litonjua failed to pay, BPIIC, successor to Ayala
Investment, filed for foreclosure of mortgage.
ISSUE:
o

W/N a contract of loan is a consensual contract

HELD:
A loan contract is not a consensual contract but a real contract. It is
perfected upon delivery of the object of the contract. Although a
perfected consensual contract can give rise to an action for damages,
it does not constitute a real contract which requires delivery for
perfection. A perfected real contract gives rise only to obligations on
the part of the borrower.
In the present case, the loan contract was only perfected on the date
of the second release of the loan.

A 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. Only when a
party has performed his part of the contract can he demand that the
other party also fulfills his own obligation and if the latter fails, default
sets in.
PANTALEON vs AMERICAN EXPRESS INTERNATIONAL
FACTS:
Afer the Amsterdam incident that happened involving the delay of
American Express Card to approve his credit card purchases worth
US$13,826.00 at the Coster store, Pantaleon commenced a
complaint for moral and exemplary damages before the RTC
against American Express. He said that he and his family
experienced inconvenience and humiliation due to the delays in
credit authorization. RTC rendered a decision in favor of
Pantaleon.
CA reversed the award of damages in favor of Pantaleon, holding
that AmEx had not breached its obligations to Pantaleon, as the
purchase at Coster deviated from Pantaleon's established charge
purchase pattern.
ISSUE and RULING: 1.Whether or not AmEx had committed a
breach of its obligations to Pantaleon. Yes. The popular notion that
credit card purchases are approved within seconds, there really
is no strict, legally determinative point of demarcation on how
long must it take for a credit card company to approve or
disapprove a customers purchase, much less one specifically

contracted upon by the parties. One hour appears to be patently

unreasonable length of time to approve or disapprove a credit
card purchase. The culpable failure of AmEx herein is not the
failure to timely approve petitioners purchase, but the more
elemental failure to tomely act on the same, whether favorably or
unfavorably. Even assuming that AmExs credit authorizers did not
have sufficient basis on hand to make a judgment, we see no
reason why it could not have promptly informed Pantaleon the
reason for the delay, and duly advised him that resolving the
same could take sometime.
2.Whether or not AmEx is liable for damages.
Yes. The reason why Pantaleon is entitled to damages is not
simply because AmEx incurred delay, but because the delay, for
which culpability lies under Arcle 1170, led to the particular
injuries under Article 2217 of the Civil Code for which moral
damages are remunerative. The somewhat unusual attending
circumstances to the purchase at Coster that there was a
deadline for thecompletion of that purchase by petitioner before
any delay would redound to the injury o hisseveral traveling
companions gave rise to the moral shock, mental anguish,
serious anxiety,wounded eelings and social humiliaon
sustained by Pantaleon, as concluded by the RTC.

digests: credit transactions

1st
digests
1.
G.R.

memo
in

from
credit

Saura
Import
&Export
No.
L-24968

the
transactions
Co.,
April

Inc
27,

Ant...
(partial)
v.

DBP
1972

Facts: Saura Inc. applied to the Rehabilitation Finance Corp (before its
conversion to DBP) for a loan of 500k secured by a first mortgage of
the factory building to finance for the construction of a jute mill factory
and purchase of factory implements. RFC accepted and approved the
loan application subject to some conditions which Saura admitted it
could not comply with. Without having received the amount being
loaned, and sensing that it could not at anyway obtain the full amount
of loan, Saura Inc. then asked for cancellation of the mortgage which
RFC also approved. Nine years after the cancellation of the mortgage,
Saura sued RFC for damages for its non-fulfillment of obligations
arguing that there was indeed a perfected consensual contract
between
them.
Issue: Was there a perfected consensual contract? Was there a real
contract of loan which would warrant recovery of damages arising out
of
breach
of
such
contract?
Held: On the first issue, yes, there was indeed a perfected consensual

contract, as recognized in Article 1934 of the Civil Code. There was

undoubtedly offer and acceptance in this case: the application of
Saura, Inc. for a loan of P500,000.00 was approved by resolution of
the defendant, and the corresponding mortgage was executed and
registered. But this fact alone falls short of resolving the second issue
and the basic claim that the defendant failed to fulfill its obligation and
the plaintiff is therefore entitled to recover damages. The action thus
taken by both partiesSaura's request for cancellation and RFC's
subsequent approval of such cancellationwas in the nature of mutual
desistance what Manresa terms "mutuo disenso" which is a mode
of extinguishing obligations. It is a concept derived from the principle
that since mutual agreement can create a contract, mutual
disagreement by the parties can cause its extinguishment. In view of
such extinguishment, said perfected consensual contract to deliver did
not
constitute
a
real
contract
of
loan.
2.
GR

No.

Bonnevie
L-49101

v.
October

CA
1983

24,

Facts: Spouses Lozano mortgaged their property to secure the

payment of a loan amounting to 75K with private respondent Philippine
Bank of Communication (PBCom). The deed of mortgage was executed
on 12-6-66, but the loan proceeeds were received only on 12-12-66.
Two days after the execution of the deed of mortgage, the spouses
sold the property to the petitioner Bonnevie for and in consideration of
100k25K of which payable to the spouses and 75K as payment to
PBCom. Afterwhich, Bonnevie defaulted payments to PBCom
prompting the latter to auction the property after Bonnivie failed to
settle despite subsequent demands, in order to recover the amount
loaned. The latter now assails the validity of the mortgage between
Lozano and Pbcom arguing that on the day the deed was executed
there was yet no principal obligation to secure as the loan of
P75,000.00 was not received by the Lozano spouses, so that in the
absence of a principal obligation, there is want of consideration in the
accessory contract, which consequently impairs its validity and fatally
affects
its
very
existence.
Issue:

Was

there

perfected

contract

of

loan?

Held: Yes. From the recitals of the mortgage deed itself, it is clearly

seen that the mortgage deed was executed for and on condition of the
loan granted to the Lozano spouses. The fact that the latter did not
collect from the respondent Bank the consideration of the mortgage on
the date it was executed is immaterial. A contract of loan being a
consensual contract, the herein contract of loan was perfected at the
same time the contract of mortgage was 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.
4.
GR

No.

Pajuyo
146364

v.
June

3,

CA
2004

Facts: Pajuyo entrusted a house to Guevara for the latter's use

provided he should return the same upon demand and with the
condition that Guevara should be responsible of the maintenance of
the property. Upon demand Guevara refused to return the property to
Pajuyo. The petitioner then filed an ejectment case against Guevara
with the MTC who ruled in favor of the petitioner. On appeal with the
CA, the appellate court reversed the judgment of the lower court on
the ground that both parties are illegal settlers on the property thus
have no legal right so that the Court should leave the present situation
with respect to possession of the property as it is, and ruling further
that the contractual relationship of Pajuyo and Guevara was that of a
commodatum.
Issue: Is the contractual relationship of Pajuyo and Guevara that of a
commodatum?
Held: No. The Court of Appeals theory that the Kasunduan is one of
commodatum is devoid of merit. In a contract of commodatum, one of
the parties delivers to another something not consumable so that the
latter may use the same for a certain time and return it. An essential
feature of commodatum is that it is gratuitous. Another feature of
commodatum is that the use of the thing belonging to another is for a
certain period. Thus, the bailor cannot demand the return of the thing
loaned until after expiration of the period stipulated, or after

accomplishment of the use for which the commodatum is constituted.

If the bailor should have urgent need of the thing, he may demand its
return for temporary use. If the use of the thing is merely tolerated by
the bailor, he can demand the return of the thing at will, in which case
the contractual relation is called a precarium. Under the Civil Code,
precarium is a kind of commodatum. The Kasunduan reveals that the
accommodation accorded by Pajuyo to Guevarra was not essentially
gratuitous. While the Kasunduan did not require Guevarra to pay rent,
it obligated him to maintain the property in good condition. The
imposition of this obligation makes the Kasunduan a contract different
from a commodatum. The effects of the Kasunduan are also different
from that of a commodatum. Case law on ejectment has treated
relationship based on tolerance as one that is akin to a landlord-tenant
relationship where the withdrawal of permission would result in the
termination of the lease. The tenants withholding of the property
would then be unlawful.
public v. Bagtas
Facts: Bagtas borrowed three bulls from the Bureau of Animal Industry for one year
for breeding purposes subject to payment of breeding fee of 10% of book value of
the bull. Upon expiration, Bagtas asked for renewal. The renewal was granted only
to one bull. Bagtas offered to buy the bulls at its book value less depreciation but
the Bureau refused. The Bureau said that Bagtas should either return or buy it at
book value. Bagtas proved that he already returned two of the bulls, and the other
bull died during a Huk raid, hence, obligation already extinguished. He claims that
the contract is a commodatum hence, loss through fortuitous event should be borne
by the owner.

Issue: WON Bagtas is liable for the death of the bull.

Held: Yes. Commodatum is essentially gratuitous. However, in this case, there is a
10% charge. If this is considered compensation, then the case at bar is a lease.
Lessee is liable as possessor in bad faith because the period already lapsed.
Even if this is a commodatum, Bagtas is still liable because the fortuitous event
happened when he held the bull and the period stipulated already expired and he is
liable because the thing loaned was delivered with appraisal of value and there was
no contrary stipulation regarding his liability in case there is a fortuitous event.