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CATHO THOLIC VI VICAR AP APOSTOL TOLIC VS VS. CA CA G.R. NO. 80294-95/Sept. 21, 1988/J. Gana!"
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The whole controversy started when the herein petitioner petitioner fled an application or registration o lands 1, 2, 3 and 4 in La Trinidad, Benguet on Septemer !, 1"#2$ The heirs o %uan %uan &alde' &alde' and the the heirs o (gmidio (gmidio )ctaviano )ctaviano fled an an opposition opposition on lots 2 and 3, respectively$ )n *ovemer 1+, 1"#!, the land registration court confrmed the registrale title o the petitioner$ )n appeal y the private respondent heirs, the ourt o -ppeals reversed the decision and cancelled &icar.s title or lots 2 and 3$ The heirs fled a motion or reconsideration, reconsideration, praying that the lots e ordered ordered registered registered under their names$ The ourt o -ppeals denied the motion or lac/ o su0cient merit$ Both parties then came eore the Supreme ourt, however, the S, in a minute resolution, denied oth petitions$ The heirs then fled cases or the recovery and possession o the lots$ uring trial, &icar contended contended that it has een in possession o the suect s uect lots or +! years continuously and peaceully and has constructed permanent structures thereon$ )n the other hand, respondents argue that the petitioner is arred rom setting up the deense o ownership or long and continuous possession y the prior udgment o o the ourt o -ppeals -ppeals under under the principle principle o res res udicata$ udicata$
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%$ether &icar had een in possession o the suect lots merely as aileeorrower in commodatum, a gratuitous loan or use$ He'(%
5rivate respondents were ale to prove that their predecessors6 house was orrowed y petitioner petitioner &icar &icar ater ater the church and the convent were destroy destroyed$ ed$ They never never as/ed or the return o the house, ut when they allowed its ree use, they ecame ailors in commodatum commodatum and the petitioner petitioner the ailee$ The ailees6 ailure ailure to return the suect matter o commodatum to the ailor did not mean adverse possession on the part o the orrower$ The ailee held in trust the property suect matter o commodatum$ commodatum$ The adverse claim claim o petitioner came came only in 1"!1 when when it declared declared the lots or ta7ation purposes$ purposes$ The action o petitioner petitioner &icar y such adverse adverse claim could not ripen into title y way o ordinary ac8uisitive prescription ecause o the asence o ust title$
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R)P*+L P*+LIIC VS. JOS) OS) V. +AGTAS G.R. NO. L-144/Ot. 25, 192/J. Pa(''a
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)n 9ay :, 1"4:, %ose Bagtas orrowed rom the Bureau o -nimal ;ndustry 3 ulls or 1 year or reeding purposes, suect to reeding ee or 1<= o the oo/ value o the ulls$ >pon the e7piration o the contract, Bagtas as/ed or a renewal or another year$ The renewal renewal granted was only or 1 ull$ Bagtas o?ered o?ered to uy the ulls at its oo/ value less depreciation, ut the Bureau told him that he should either return the ulls or uy it at oo/ value$ Bagtas ailed to pay the oo/ value, and so the @epulic commenced an action with the A; 9anila to order the return o the ulls or the payment o its oo/ value$ uring trial, %ose Bagtas died and his wie, Aeliciana Bagtas, having succeeded and appointed as the administrati7 o his estate, proved that two o the ulls have already een returned returned in 1"!2, and that the remaining remaining one died o gunshot during a u/ raid, thus, their oligation have already een e7tinguished since the contract is a commodatum, hence, the loss through ortuitous event should e orne y the owner$ owner$
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hether, depending on the nature o the contract, the respondent is liale or the death o the ull$ He'(%
Ces$ Ces$ ommodatum ommodatum is essentially gratuitous$ owever, in this case, there is a 1<= charge$ charge$ ; this is considered considered compen compensati sation, on, then the contrac contractt would e a lease contract$ >nder -rticle -rticle 1#+1 o the ivil ivil ode, the lessee is is liale as possessor possessor in ad aith ecause he had continuous possession o the ull even ater the e7piry o the contra contract$ ct$ -nd even even i the contr contract act e a comm commodat odatum, um, Bagtas Bagtas is still still liale liale eca ecaus use e -rt$ -rt$ 1"42 1"42 o the the ivi ivill ode ode prov provid ides es that that a ail ailee ee in a cont contra ract ct o commodatum is liale or loss o the thing even i it should e through a ortuitous eventD i he /eeps it longer than the period stipulatedD and i the thing loaned has een delivered with appraisal value, unless there is a stipulation e7empting the ailee rom responsiility in case o a ortuitous event$
. SA*RA IPORT )PORT CO. VS. 3+P G.R. NO. L-2498/Ap' 2, 192/J. aa'nta' #at$% •
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Saura ;nc$ applied or an industrial loan in the amount o 5!<<,<<<$<< rom the @ehailitation Ainance orp$ EB5F to fnance or the construction o a ute mill actory and to pay the alance o the purchase price o the machineries and e8uipments to e used therein and as additional wor/ing capital$ @A accepted and approved the loan application to e secured y a frst mortgage on the actory uilding to e constructed, the land site thereo, and the machinery and e8uipments to e installed therein$ owever, despite the ormal e7ecution o the loan agreement and upon re e7amination, @A decided to reduce the loan rom 5!<<,<<<$<< to 53<<,<<<$<<$ )n ecemer 1+, 1"!4, @A passed another resolution restoring the loan to the original amount o 5!<<,<<<$<<, however suect to a certifcation rom the ept$ o -griculture and *atural @esources as to the availaility o local raw materials to provide ade8uately or the re8uirements o the actory$ ithout having received the amount eing loaned, and sensing that it could not, in any way otain the ull amount o loan, Saura then as/ed or the cancellation o the mortgage which @A also approved$ *ine years ater the cancellation o the mortgage, Saura sued @A or damages alleging ailure o @A to comply with its oligations to release the proceeds o the loan applied or and approved, therey preventing the plainti? rom completing or paying contractual commitments it had entered into, in connection with its ute mill proect$ The trial court ruled in avor o the petitioner holding that there was a perected contract etween the parties and that the deendant was guilty o reach thereo$
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hether there was a perected contract etween the partiesG He'(%
There was indeed a perected consensual contract, as recogni'ed in -rticle 1"34 o the ivil ode, which provides, H-n accepted promise to deliver something, y way o commodatum or simple loan is inding upon the parties, ut the commodatum or simple loan itsel shall not e perected until the delivery o the oect o the contract$
There was undoutedly o?er and acceptance in this caseI the application o Saura, ;nc$ or a loan o 5!<<,<<<$<< was approved y resolution o the deendant, and the corresponding mortgage was e7ecuted and registered$ But this act alone alls short o resolving the second issue and the asic claim that the deendant ailed to ulfll its oligation and the plainti? is thereore entitled to recover damages$ The action thus ta/en y oth partiesJSaura6s re8uest or cancellation and @A6s suse8uent approval o such cancellationJwas in the nature o mutual desistance J what 9anresa terms Kmutuo disensoKJ which is a mode o e7tinguishing oligations$ ;t is a concept derived rom the principle that since mutual agreement can create a contract, mutual disagreement y the parties can cause its e7tinguishment$ ;n view o such e7tinguishment, said perected consensual contract to deliver did not constitute a real contract o loan$
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#RANCISCO H)RR)RA VS. P)TROPHIL G.R. NO. L-4849/3e. 29, 198/J. C&6
#at$% )n ecemer !, 1"#", errera and 5etrophil entered into a lease agreement wherey the ormer leased to the latter a portion o his property or a period o 2< years, suect to the condition that monthly rentals o 52,"3<$2< should e paid and there should e an advance payment o rentals or the frst eight E:F years o the contract ased on 52,"3<$+< per month discounted at 12= interest per annum eore registration o lease$ 5etrophil paid the advance rentals or the frst : years, sutracting the amount o 51<1,<1<$+3, the amount it computed as constituting the interest or discount or the frst : years, in the total sum o 51:<,2::$4+$ )n -ugust 2<, 1"+<, 5etrophil inormed errera that there had een a mista/e in the computation o the interest, and therey reduced the amount to 5":,:2:$<3$ errera sued 5etrophil or the sum o 5":,:2:$<3, with interest, claiming this had een illegally deducted rom him in violation o the >sury Law$ 5etrophil argued that the amount deducted was not usurious interest ut was given or paying the rentals in advance or : years$ The trial court ruled in avor o 5etrophil$ )n appeal, errera insisted that such interest is violative o the >sury Law, and that he had neither agreed to nor accepted 5etrophil.s computation o the total amount to e deducted or the : years advance rentals$ •
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I$$&e% hether the contract etween the parties o one o loan or lease$ He'(% The contract etween the parties is one o lease, and not o loan$ ;t is clearly denominated a HLease -greement$ *owhere in the contract is there any showing that the parties intended a loan rather than a lease$ The provision or the payment o rentals in advance cannot e construed as a repayment o a loan ecause there was no grant or orearance o money as to constitute an indetedness on the part o the lessor$ )n the contrary, the deendant was discharging is oligation in advance y paying the eight years rentals, and it was or this advance payment that it was getting a reate or discount$
The provision or a discount is not unusual in lease contracts$ -s to its validity, it is settled that the parties may estalish such stipulations, clauses, terms and conditions, as they may want to include, and as long as such agreements are not contrary to law, morals, good customs, pulic policy or pulic order, they shall have the orce o law etween them$ 5.
INT)GRAT)3 R)ALT7 CORP. VS. PN+
G.R. NO. L-005/J&ne 28, 1989/J. Rea'a(" #at$% @aul Santos made a time deposit with )verseas Ban/ o 9anila in the amount o 5!<<,<<<$<< and he was issued a certifcate thereto$ )n another date, Santos again made a time deposit with )B9 in the amount o 52<<,<<<$<<, wherein he was issued another certifcate o time deposit$ The petitioner ;ntegrated @ealty orp$, thru its president @aul Santos, applied or a loan andMor credit line with 5*B$ To secure the said loan, Santos e7ecuted a eed o -ssignment o the two E2F time deposits in avor o 5*B, which the )B9 gave its conormity thru a letter dated -ugust 11, 1":+$ owever, ater the due dates o the time deposit certifcates, )B9 did not pay 5*B, which prompted the latter to fle a complaint to collect rom ;@ and Santos the loan o 5+<<,<<<$<<$ ;t impleaded )B9 as a deendant to compel it to redeem and pay to it Santos. time deposit certifcates with interest plus damages$ ;n their -nswer to the complaint, ;@ and Santos alleged that 5*B has no cause o action against them ecause their oligation to 5*B was ully paid or e7tinguished upon the irrevocale assignment o the time deposit certifcates$ )n the other hand, )B9 denied /nowledge o the time deposit certifcates alleging that the same does not appear in its oo/s o account$ )n %anuary 3<, 1"+#, the trial court rendered udgment in avor o the plainti? 5*B$ )n appeal, the ourt o -ppeals, modifed the decision o the lower court and deleted the portion o the udgment ordering )B9 to pay ;@ and Santos whatever amounts they will pay to 5*B$ •
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I$$&e% hether the liaility o ;@ and Santos with 5*B should e deemed to have een paid y virtue o the deed o assignment made y the ormer in avor o 5*B$ He'(% The acts and circumstances leading to the e7ecution o the deed o assignment, as ound y the court a 8uo and the respondent court, yield said conclusion that it is in act a pledge$ The deed o assignment has satisfed the re8uirements o a contract o pledgeI E1F that it e constituted to secure the ulflment o a principal oligationD E2F that the pledgor e the asolute owner o the thing pledgedD E3F that eh persons constituting the pledge have the ree disposal o their property, and in the asence thereo, that they e legally authori'ed or the purpose$ The urther re8uirement that the thing pledged e placed in the possession o the creditor, or o a third person y common agreement was complied with y the e7ecution o the deed o assignment in avor o 5*B$
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R)P*+LIC VS. CA
G.R. NO. L-4145/N". 2, 198/J. Paa$ #at$% •
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The heirs o omingo Baloy applied or a registration o title or their land$ Their claim is anchored on their possessory inormation title ac8uired y omingo Baloy though the Spanish 9ortgage Law, coupled with their continuous, adverse and pulic possession over the land in 8uestion$ The irector o Lands opposed the registration alleging that such land ecame pulic land through the operation o -ct *o$ :2+ o the 5hilippine ommission$ )n *ovemer 2#, 1"<2, pursuant to the e7ecutive order o the 5resident o the >$S$, the area was declared within the >$S$ *aval @eservation$ The trial court denied the application or registration, thus the heirs elevated the case to the ourt o -ppeals$ The appellate court reversed the decision o the lower court approving the application or registration pursuant to Sec$ 1" o -ct 4"# Epossessory inormation secured regularly so long ago y payment o ta7es since 1"#!F$
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hether the occupancy o the >S *avy over the suect land is in the concept o an owner, hence, such possession cannot e ac8uired y prescription$ He'(%
learly, the occupancy o the >S *avy was not in the concept o owner$ ;t parta/es o the character o a commodatum $ ;t cannot thereore militate against the title o omingo Baloy and his successorsininterest$ )ne.s ownership o a thing may e lost y prescription y reason o another.s possession i such possession e under claim o ownership, not where the possession is only intended to e transient, as in the case o the >S *avy.s occupation o the land concerned, in which case, the owner is not divested o his title, although it cannot e e7ercised in the meantime$
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ARGARITA :*INTOS VS. +)C; G.R. NO. L-4240/N". , 198/J. I
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5lainti? Nuintos and deendant Bec/ entered into a contract o lease, wherey the latter occupied the ormer.s house in 9$$ el 5ilar St$, 9anila$ )n %anuary 14, 1"3#, the contract o lease was novated, wherein Nuintos gratuitously granted to Bec/ the use o urnitures, suect to the condition that Bec/ would return them to the plainti? upon demand$ Thereater, Nuintos sold the property to 9aria and @osario Lope'$ Bec/ was notifed o the conveyance and given #< days to vacate the premises$ ;n addition, Nuintos re8uired Bec/ to return all the urniture transerred to him, ut Bec/ wrote a letter inorming plainti? that he could not give up the 3 gas heaters and 4 electric lamps ecause he would use them until the lease is due to e7pire$ 5lainti? reused to get the urniture in view o the act that the deendant had declined to ma/e delivery o all o them$ )n *ovemer 1!, eore vacating the house, the deendant deposited with the Sheri? all the urniture elonging to the plainti? and they were deposited in the warehouse, in the custody o the sheri?$ Thus, plainti? rought this action to compel the deendant to return the urniture which she lent him or his use and to appeal rom the udgment o the A; o 9anila ordering that plainti? call or the other urniture rom the Sheri? at her own e7pense and that the ees which the Sheri? may charge or the deposit o the urniture e paid pro rata y oth parties$
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hether deendant Bec/ complied with his oligation o returning the urniture to Nuintos when it deposited the urniture to the sheri?$ He'(%
The contract entered into etween the parties is one o commodatum, ecause under it the plainti? gratuitously granted the use o the urniture to the deendant, reserving or hersel the ownership thereoD y this contract the deendant ound himsel to return the urniture to the plainti?, upon the latter.s demand$ The oligation voluntarily assumed y the deendant to return the urniture upon the plainti?.s demand, means that he should return all o them to the plainti? at the latter.s residence or house$ The deendant did not comply with this oligation when he merely placed them at the disposal o the plainti?, retaining or his eneft the three gas heaters and the our electric lamps$
The provisions o -rt$ 11#" o the ivil ode cited y counsel or the parties are not s8uarely applicale$ The trial court, thereore, erred when it came to the legal conclusion that the plainti? ailed to comply with her oligation to get the urniture when they were o?ered to her$ -s the deendant had voluntarily underta/en to return all the urniture to the plainti?, upon the latter.s demand, the ourt could not legally compel her to ear the e7penses occasioned y the deposit o the urniture at the deendant6s ehest$ The latter, as ailee, was not entitled to place the urniture on depositD nor was the plainti? under a duty to accept the o?er to return the urniture, ecause the deendant wanted to retain the three gas heaters and the our electric lamps$ The costs in oth instances should e orne y the deendant ecause the plainti? is the prevailing party$ The deendant was the one who reached the contract o commodatum, and without any reason he reused to return and deliver all the urniture upon the plainti?.s demand$ ;n these circumstances, it is ust and e8uitale that he pay the legal e7penses and other udicial costs which the plainti? would not have otherwise derayed$
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R)P*+LIC VS. JOS) GRIJAL3O G.R. NO. L-20240/3e. 1, 195/J. =a'(a
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;n the year 1"43, %ose Orialdo otained fve loans rom the Ban/ o Taiwan, Ltd$, in Bacolod ity in the total sum o 51,2:1$"+ with interest at the rate o #= per annum, compounded 8uarterly$ These loans are evidenced y fve promissory notes e7ecuted y the appellant in avor o the Ban/ o Taiwan$ To secure the payment o the loans, the appellant e7ecuted a chattel mortgaged on the standing crops on his land /nown as acienda ampugas in inigiran, *egros )ccidental$ By virtue o &esting )rder 54 and under the authority provided or in the Trading with the (nemy -ct, the assets in the 5hilippines o the Ban/ o Taiwan were vested in the Oovernment o the >nited States$ These assets, including the loans in 8uestion, were suse8uently transerred to the @epulic o the 5hilippines y the >S Oovernment y way o a transer agreement$ Thereater, the @epulic o the 5hilippines, represented y the hairman o the Board o Li8uidators demanded or the payment o the account in 8uestion$ Aailing to pay the oligation despite written demand, a complaint was fled against the appellant eore the %ustice o the 5eace ourt in inigiran, *egros )ccidental$ The inerior court, ater hearing, dismissed the case on the ground that the action had prescried$ owever, on appeal to the A; o *egros )ccidental, the trial court ruled in avor o the @epulic ordering the appellant to pay the appellee the sum o 52,3++$23 plus corresponding interest$
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hether the @epulic can collect rom appellant Orialdo$ He'(%
The oligation o the appellant under the fve promissory notes was not to deliver a determinate thing namely, the crops to e harvested rom his land, or the value o the crops that would e harvested rom his land$ @ather, his oligation was to pay a generic thing P the amount o money representing the total sum o the fve loans, with interest$ The transaction etween the appellant and the Ban/ o Taiwan was a series o fve contracts o simple loan o sums o money$ HBy a contact o EsimpleF loan, one o the parties delivers to another$$$money or other consumale thing upon the condition that the same amount o the same /ind and 8uality shall e paid$ E-rticle 1"33, ivil odeF The oligation o the appellant under the fve promissory notes evidencing the loans in 8uestion is to pay the value thereo, that is, to deliver a sum o money P a clear case o an oligation to deliver, a generic thing$ -rticle 12#3 o the ivil ode providesI
H;n an oligation to deliver a generic thing, the loss or destruction o anything o the same /ind does not e7tinguish the oligation$
The chattel mortgage on the crops growing on appellant.s land simply stood as a security or the ulflment o appellant.s oligation covered y the fve promissory notes, and the loss o the crops did not e7tinguish his oligation to pay, ecause the account could still e paid rom other sources aside rom the mortgaged crops$
9.
#)LI 3)LOS SANTOS VS. AG*STINA JARRA G.R. NO. L-4150/#e>. 10, 1910/J. T"e$
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;n the latter part o 1"<1, 9agdaleno %imenea orrowed and otained rom plainti? Aeli7 e los Santos ten frstclass caraaos to e used at the animal power mill o his hacienda without recompense or remuneration ut under the
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sole condition that they should e returned to him as soon as the wor/ at the mill was terminated$ owever, %imenea did not return the caraaos notwithstanding the act that the plainti? claimed their return ater the wor/ at the mill was fnished$ Suse8uently, %imenea died and -gustina arra was appointed y the court as administrati7 o %imenea.s estate$ 5lainti? presented his claim to the commissioners o %imenea.s estate or the return o his ten caraaos ut the commissioners reected his claim, hence, he was prompted to fle an action against -gustina %arra or the return o the ten frstclass caraaos loaned to the late %imenea, or their present value, and to pay the costs$ ;n her -nswer, deendant %arra admitted that the late %imenea as/ed the plainti? to loan him ten caraaos, ut that he only otained three secondclass animals, which were aterwards transerred y sale y the plainti? to %imenea$ -ter trial on the merits, the trial court ruled in avor o the plainti? ordering the deendant to return the remaining # second and third class caraaos, or the value thereo at the rate o 512< each$
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hether the contract is one o a commodatum, hence, deendant must return the caraaos to the plainti? or pay or their value$ He'(%
Ces$ The caraaos were loaned or given on commodatum as these were delivered to e used y deendant$ hen deendant ailed to return the caraaos upon demand y the plainti?, there is no dout that deendant is under the oligation to indemniy the owner thereo y paying him their value$ Since the : caraaos were not the property o the deceased nor o any o his descendants, it is the duty o the administrati7 o the estate to return them or to indemniy the owner or their value$
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A*R)LIO +RION)S VS. PRIITIVO CAA7O G.R. NO. L-2559/Ot. 4, 191/J. 36"n
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-urelio O$ Briones fled an action in the 9unicipal ourt o 9anila against 5rimitivo, *icasio, 5edro, ilario and -rtemio, all surnamed ammayo, to recover
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rom them, ointly and severally, the amount o 51,!<<$<<, plus damages$ eendants e7ecuted a real estate mortgage as security or the loan o 51,2<<$<< given to 5rimitivo, upon the usurious agreement that deendant pays to the plainti? and that the plainti? as in act reserved and secured himsel out o the alleged loan an interest o 53<<$<< or one year$ -lthough the mortgage contract was e7ecuted or securing the payment o 51,!<<$<< or a period o one year, without interest, the truth and the real act is that plainti? delivered to deendant 5rimitivo only the sum o 51,2<<$<< and withheld the sum o 53<<$<< which was intended as advance interest or one year$ )n account o said loan o 51,2<<$<<, 5rimitivo paid to the plainti? during the period rom )ctoer 1"!! to %uly 1"!# the total sum o 533<$<< which plainti?, illegally and unlawully reused to ac/nowledge as part payment o the account ut as in interest o the said loan or an e7tension o another term o one year$ The trial court ruled in avor o the plainti? ordering deendant to pay the plainti? the sum o 51,1:<$<< with interest thereon as the legal rate rom )ctoer 1#, 1"#2 until ully paid$
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hether the creditor Eplainti?F is entitled to collect rom the detor EdeendantF the amount representing the principal oligation and the interests due thereonG He'(%
The ourt held that even i the contract o loan is declared usurious, the creditor is entitled to collect the money actually loaned and the legal interest due thereon$ The ourt li/ewise declared that, in any event, the detor in a usurious contract o loan should pay the creditor the amount which he ustly owes him citing support o this ruling its previous decisions in Oo hioco Supra, -guilar vs$ @uiato, and elgado vs$ u8ue$ ;t was recogni'ed and held that under -ct 2#!!, a usurious contract is voidD that the creditor had no right o action to recover the interest in e7cess o the lawul rateD ut that this did not mean that the detor may /eep the principal received y him as loan P thus unustly enriching himsel in the damage o the creditor$ ;n simple loan with stipulation o usurious interest, the prestation o the detor to pay the principal det, which is the cause o the contract E-rticle 13!<, ivil odeF, is not illegal$ The illegality lies only as to the prestation to pay the stipulated interestD hence, eing separale, the latter only should e deemed void, since it is the only one that is illegal$
+ae(", J., "n&n%
The >sury law is clear that he may recover only all interests, including o course, the legal part thereo, with legal interests rom the date o udicial demand, without maintaining that he can also recover the principal he has already paid to the lender$ Ca$t" #enan(", an( C"nept"n, JJ., ($$entn%
;n a contract which is tainted with usury, that is, with a stipulation Ewhether written or unwrittenF to pay usurious interest, the prestation to pay such interest is an integral part o the cause o the contract$ ;t is also the controlling cause, or a usurer lends his money not ust to have it returned ut indeed, to ac8uire in coordinate gain$ -rticle l"!+, which declares the contract itsel P not merely the stipulation to pay usurious interest void, necessarily regards the prestation to pay usurious interest as an integral part o the cause, ma/ing it illegal$
15.
LIA LA? VS. OL7PIC SA?ILL G.R. NO. L-01/a! 28, 1984/J. e'en"-Heea
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)n Septemer +, 1"!+, Liam Law loaned 51<,<<<$<< without interest to )lympic Sawmill and (llino Lee hi, as the latter.s managing partner$
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The loan ecame ultimately due on %anuary 31, 1"#<, ut was not paid on that date with the detors as/ing or an e7tention o three months, or up to -pril 3<, 1"#<$ )n 9arch 1+, the parties e7ecuted another loan document where it included payment o the 51<,<<<$<< was e7tended to -pril 3<, ut the oligation was increased y 5#,<<<$<< which ormed part o the principal oligation to answer or the attorney.s ees, legal interest, and other cost incident thereto to e paid unto the creditor and his successorsininterest upon the termination o the agreement$ The deendant again ailed to pay their oligation$ )n Septemer 23, 1"#<, the plainti? instituted a collection case eore the A; o Bulacan$ The deendants admitted the 51<,<<<$<< principal oligation ut claimed that the additional 5#,<<<$<< constituted usurious interest$ )n %une 2#, 1"#1, The trial court ruled in avor o the plainti? ordering deendants to pay the plainti? the amount o 51<,<<<$<< plus the additional sum o 5#,<<<$<<$
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hether the allegation that the 5#,<<<$<< constituted usurious interest should have een admitted y plainti? as it was not denied specifcally and under oath$ He'(%
Section " o the >sury Law provides that, Hthe person or corporation sued shall fled its answer in writing under oath to any complaint rought or fled against said person or corporation eore competent court to recover the money or other personal or real property, seeds or agricultural products, charged or received in violation o the provisions o this -ct$ The lac/ o ta/ing an oath to an answer to a complaint will mean the admission o the acts contained in the latter$
1.
+ANCO #ILIPINO VS. HON. IG*)L NAVARRO G.R. NO. L-4591/J&'! 28, 198/J. e'en"-Heea
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)n 9ay 2<, 1"+!, respondent Alorante el &alle Ethe orrowerF, otained a loan rom petitioner Banco Ailipino in the sum o 541,3<<$<< secured y a real estate mortgage, payale and to e amorti'ed within 1! years at 12= interest annually$ Stamped on the promissory notate evidencing the loan is an (scalation lause which is ased upon entral Ban/ ircular *o$ 4"4$ Said clause authori'es Banco Ailipino to correspondingly increase the interest rate stipulated in the contract without advance notice to the orrower in the event law should e enacted increasing the lawul rates o interest that may e charged on this particular /ind o loan$ )n the strength o said circular, the an/ gave notice to the orrower o the increase o interest rate on the loan rom 12= to 1+= per annum e?ective 9arch 1, 1"+#$ ontending that ircular *o$ 4"4 is not the law contemplated in the (scalation lause o the promissory note, the orrower fled suit against Banco Ailipino or declaratory relie, praying that the (scalation lause e declared null and void$. ;n its udgment, the trial court nullifed the (scalation lause and ordered the an/ to desist rom enorcing the increased rate o interest on the orrower.s loan$ it reasoned out that Banco Ailipino cannot legally impose a higher rate o interest eore the e7piration o the 1!year period in which the loan is to e paid other than the 12= per annum in orce at the time o the e7ecution o the loan$
I$$&e%
hether Banco Ailipino can increase the interest rate on the loan rom 12= to 1+= per annum under the (scalation lause$ He'(%
*o$ hile an (scalation lause li/e the one in 8uestion can ordinarily e held valid, nevertheless, petitioner Banco Ailipino cannot rely thereon to raise the interest on the orrower.s loan rom 12= to 1+= per annum ecause ircular *o$ 4"4 o the 9onetary Board was not the Hlaw contemplated y the parties, nor should said circular e held as applicale to loans secured y registered real estate in the asence o any such specifc indication and in contravention o the policy ehind the >sury Law$
1.
PN+ VS. IAC SPS. AGLASANG G.R. NO. 522/a@ 14, 1990/J. Paa$
#at$% The petitioner an/ e7tended fnancial assistance to the private respondents in the orm o loans, the total amount o which is 5:2,#:2$3" as emodied in the •
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promissory notes that the latter have e7ecuted on various dates, the payment o which to come rom the proceeds o sugar sales o the private respondents$ The promissory notes ore 12= interest per annum plus 1= interest as penalty charge o deault in the payments$ The private respondents li/ewise mortgaged several real estate properties in avor o the petitioner an/ as security o their loans$ owever, when the price o sugar went down in 1"++, the private respondents incurred defcits in the payment o their loans$ )n ecemer 1, 1"+", the 9onetary Board o the entral Ban/, y virtue o 5 11#, issued B ircular *o$ +
I$$&e% hether or not the revised rate o interest imposed on the loans o the private respondents is legal$ He'(% (scalation lause is a valid provision in the loan agreement provided that P E1F the increased rate imposed or charged does not e7ceed the ceiling f7ed y law o the 9onetary BoardD E2F the increase is made e?ective not earlier than the e?ectivity o the law or regulation authori'ing such an increaseD and E3F the remaining maturities o the loans are more than +3< days as o the e?ectivity o the law or regulation authori'ing such an increase$
Aor an (scalation lause to e valid, it must include a deescalation clause$ There can e an increase in interest i increased y law or y the 9onetary BoardD and in order or such stipulation to e valid, it must include a provision or reduction o the stipulated interest Hin the event that the applicale ma7imum rate o interest is reduced y law or y the 9onetary Board, as provide or in 5 *o$ 1#:4, promulgated on 9arch 1+, 1":<$ There is no 8uestion that 5*B oard resolution dated 9ay 2:, 1":< contains such deescalation clause$ 18. PN+ VS. CA A+ROSIO PA3ILLA G.R. NO. 88880/Ap' 0, 1991/J. G"-AB&n" #at$% •
5rivate respondent -mrosio 5adilla applied or and was granted a credit line o 5321$: 9illion y petitioner 5*B$ This loan was or a term o 2 years at 1:=
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interest per annum and was secured y real estate mortgage and two promissory notes e7ecuted in avor o petitioner an/ y the private respondent$ The credit agreement and the promissory notes, in e?ect, provide that private respondent agrees to e ound y Hincreases to the interest rate stipulated, provided it is within the limits provided or y law$ onQict in this case arose when petitioner an/ unilaterally increased the interest rate rom 1:= toI 32= on %uly 1":4D 41= on )ctoer 1":4D and 4:= on *ovemer 1":4, or three E3F times within the span o one year$ This was done despite the numerous letters o re8uest made y the private respondent that the interest rate e increased only to 21= or 24=$ Thus, private respondent fled a complaint against petitioner with the @T which, however, dismissed the case or lac/ o merit$ )n appeal, the ourt o -ppeals rendered a decision in avor o the private respondent reversing the trial court.s decision$
I$$&e%
hether the an/, within the term o the loan which it granted to the private respondent, may unilaterally change or increase the interest rate stipulated therein at will and as oten as it pleased$ R&'n%
*)$ -lthough under Sec$ 2 o 5 11#, the 9onetary Board is authori'ed to prescrie the ma7imum rate o interest or loans and to change such rates whenever warranted y prevailing economic and social conditions, y e7press provision, it may not do so Hotener than once every 12 months$ ; the 9onetary Board cannot, much less can 5*B, e?ect increases on the interest rates more than once a year$ Based on the credit agreement and promissory notes e7ecuted etween the parties, although private respondent did agree to increase on the interest rates allowed y law, no law was passed warranting petitioner to e?ect increase on the interest rates on the e7isting loan o private respondent or the months o %uly to *ovemer o 1":4$ *either there eing any document e7ecuted and delivered y private respondent to e?ect such increase$ Aor escalation clauses to e valid and warrant the increase o the interest rates on loans, there must eI E1F increase was made y law or y the 9onetary BoardD E2F stipulation must include a clause or the reduction o the stipulated interest rate in the event that the ma7imum interest is lowered y law or y the 9onetary oard$ ;n this case, 5*B merely relied on its own Board @esolutions, which are not laws nor resolutions o the 9onetary Board$ espite the suspension o the >sury Law, imposing a ceiling on interest rates, this does not authori'e an/s to unilaterally and successively increase interest rates in violation o Sec$ 2 5 11#$ ;ncrease unilaterally e?ected y 5*B was in violation o the 9utuality o ontracts under -rt$ 13<:$ This provides that the validity and compliance o the parties to the contract cannot e let to the will o one o the contracting parties$ ;ncreases made
are thereore void$ ;ncrease on the stipulated interest contravenes -rt$ 1"!#, which provides that, Hno interest een e7pressly stipulated in writing$ 5@ never agreed imposed y 5*B in e7cess o 24= per annum$ ;nterest correctly ound y -, is induitaly e7cessive$ RRR
rates made y 5*B also shall e due unless it has in writing to pay interest rate imposed y 5*B, as
