4. Quintos vs. Beck

8/12/2019 4. Quintos vs. Beck

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G.R. No. L-46240 November 3, 1939

MARGARITA QUINTOS an ANG!L A. ANSAL"O,plaintifs-appellants,vs.#!$%,deendant-appellee.

The plaintif brought this action to compel the deendant to return her certain urniture whichshe lent him or his use. She appealed rom the judgment o the Court o First Instance o anila whichordered that the deendant return to her the three has heaters and the our electric lamps ound in thepossession o the Sherif o said cit!, that she call or the other urniture rom the said sherif o anilaat her own e"pense, and that the ees which the Sherif ma! charge or the deposit o the urniture bepaidpro rata b! both parties, without pronouncement as to the costs.

The deendant was a tenant o the plaintif and as such occupied the latter#s house on . $. del%ilar street, &o. ''(). *n +anuar! ', '/, upon the novation o the contract o lease between the

plaintif and the deendant, the ormer gratuitousl! granted to the latter the use o the urnituredescribed in the third paragraph o the stipulation o acts, subject to the condition that the deendantwould return them to the plaintif upon the latter#s demand. The plaintif sold the propert! to aria0ope1 and 2osario 0ope1 and on September ', '/, these three noti3ed the deendant o theconve!ance, giving him si"t! da!s to vacate the premises under one o the clauses o the contract olease. There ater the plaintif re4uired the deendant to return all the urniture transerred to him orthem in the house where the! were ound. *n &ovember ), '/, the deendant, throughanother person, wrote to the plaintif reiterating that she ma! call or the urniture in the ground 5oor othe house. *n the (th o the same month, the deendant wrote another letter to the plaintif inormingher that he could not give up the three gas heaters and the our electric lamps because he would usethem until the ')th o the same month when the lease in due to e"pire. The plaintif reused to get theurniture in view o the act that the deendant had declined to ma6e deliver! o all o them. *n&ovember ')th, beore vacating the house, the deendant deposited with the Sherif all the urniturebelonging to the plaintif and the! are now on deposit in the warehouse situated at &o. ')7', 2i1al8venue, in the custod! o the said sherif.

In their seven assigned errors the plaintifs contend that the trial court incorrectl! applied thelaw9 in holding that the! violated the contract b! not calling or all the urniture on &ovember ), '/,when the deendant placed them at their disposal: in not ordering the deendant to pa! them the valueo the urniture in case the! are not delivered: in holding that the! should get all the urniture rom theSherif at their e"penses: in ordering them to pa!-hal o the e"penses claimed b! the Sherif or thedeposit o the urniture: in ruling that both parties should pa! their respective legal e"penses or thecosts: and in den!ing pa! their respective legal e"penses or the costs: and in den!ing the motions orreconsideration and new trial. To dispose o the case, it is onl! necessar! to decide whether thedeendant complied with his obligation to return the urniture upon the plaintif#s demand: whether thelatter is bound to bear the deposit ees thereo, and whether she is entitled to the costs olitigation.lawphi1.net

The contract entered into between the parties is one o commadatum, because under it theplaintif gratuitousl! granted the use o the urniture to the deendant, reserving or hersel theownership thereo: b! this contract the deendant bound himsel to return the urniture to the plaintif,upon the latters demand ;clause ( o the contract, . The deendant was the one who brthe contract ocommodatum, and without an! reason he reused to return and deliver all the uupon the plaintif#s demand. In these circumstances, it is just and e4uitable that he pa! the legae"penses and other judicial costs which the plaintif would not have otherwise dera!ed.

The appealed judgment is modi3ed and the deendant is ordered to return and deliver toplaintif, in the residence to return and deliver to the plaintif, in the residence or house o the la

the urniture described in paragraph o the stipulation o acts and Civil Case &o. /)) ;7>, with the dispositive portion as ollows9

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doc6eted as 02C &-', said 0ots being the sites o the CatholicChurch building, convents, high school building, school g!mnasium,school dormitories, social hall, stonewalls, etc. *n arch 77, '/the $eirs o +uan Galde1 and the $eirs o , the 3rst lot being presentl!occupied b! the convent and the second b! the women#s dormitor!and the sister#s convent.

*n a! , '((, the $eirs o *ctaviano 3led a motion orreconsideration pra!ing the Court o 8ppeals to order theregistration o 0ot in the names o the $eirs o witness, Fructuoso Galde1, who testi3ed on the alleged owno the land in 4uestion ;0ot > b! their predecessor-in-interest, to deendant Gicar or the return land to them: and the reasonable rentals or the use o the land at %'=,===.==

month. *n the other hand, deendant Gicar presented the 2egister o @eeds %rovince o Eenguet, 8tt!. &icanor Sison, who testi3ed that the land in 4uestiocovered b! an! title in the name o !earscontinuousl! and peaceull! and has constructed permanent structures thereo

In Civil Case &o. /)), the parties admitting that the material acts are not insubmitted the case on the sole issue o whether or not the decisions o the Co8ppeals and the Supreme Court touching on the ownership o 0ot 7, which in declared the plaintifs the owners o the land constitute res judicata.

In these two cases , the plaintifs ar4ue that the deendant Gicar is barred rosetting up the deense o ownership andor long and continuous possession olots in 4uestion since this is barred b! prior judgment o the Court o 8ppeals A.2. &o. =??=-2 under the principle o res judicata. %laintifs contend that t4uestion o possession and ownership have alread! been determined b! the C8ppeals ;


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Counsel or the deendant e"cepted to the oregoing judgment, and, b! a writing dated +anuar! ',moved or anew trial on the ground that the 3ndings o act were openl! and maniestl! contrar! to theweight o the evidence. The motion was overruled, the deendant dul! e"cepted, and in due coursesubmitted the corresponding bill o e"ceptions, which was approved and submitted to this court.

The deendant has admitted that agdaleno +imenea as6ed the plaintif or the loan o ten carabaoswhich are now claimed b! the latter, as shown b! two letters addressed b! the said +imenea to Feli" delos Santos: but in her answer the said deendant alleged that the late +imenea onl! obtained threesecond-class carabaos, which were subse4uentl! sold to him b! the owner, Santos: thereore, in orderto decide this litigation it is indispensable that proo be orthcoming that +imenea onl! received threecarabaos rom his son-in-law Santos, and that the! were sold b! the latter to him.

The record discloses that it has been ull! proven rom the testimon! o a suDcient number owitnesses that the plaintif, Santos, sent in charge o various persons the ten carabaos re4uested b! hisather-in-law, agdaleno +imenea, in the two letters produced at the trial b! the plaintif, and that

+imenea received them in the presence o some o said persons, one being a brother o said +imenea,who saw the animals arrive at the hacienda where it was proposed to emplo! them. Four died orinderpest, and it is or this reason that the judgment appealed rom onl! deals with si" survivingcarabaos.

The alleged purchase o three carabaos b! +imenea rom his son-in-law Santos is not evidenced b! an!trustworth! documents such as those o transer, nor were the declarations o the witnesses presentedb! the deendant aDrming it satisactor!: or said reason it can not be considered that +imenea onl!received three carabaos on loan rom his son-in-law, and that he aterwards 6ept them de3nitel! b!virtue o the purchase.

E! the laws in orce the transer o large cattle was and is still made b! means o oDcial documentsissued b! the local authorities: these documents constitute the title o ownership o the carabao orhorse so ac4uired. Furthermore, not onl! should the purchaser be provided with a new certi3cate orcredential, a document which has not been produced in evidence b! the deendant, nor has the loss othe same been shown in the case, but the old documents ought to be on 3le in the municipalit!, or the!should have been delivered to the new purchaser, and in the case at bar neither did the deendantpresent the old credential on which should be stated the name o the previous owner o each o thethree carabaos said to have been sold b! the plaintif.

From the oregoing it ma! be logicall! inerred that the carabaos loaned or given on commodatum tothe now deceased agdaleno +imenea were ten in number: that the!, or at an! rate the si" survivingones, have not been returned to the owner thereo, Feli" de los Santos, and that it is not true that thelatter sold to the ormer three carabaos that the purchaser was alread! using: thereore, as the said si"carabaos were not the propert! o the deceased nor o an! o his descendants, it is the dut! o theadministratri" o the estate to return them or indemni! the owner or their value.

The Civil Code, in dealing with loans in general, rom which generic denomination the speci3c one ocommodatum is derived, establishes prescriptions in relation to the last-mentioned contract b! theollowing articles9

82T. '(=. E! the contract o loan, one o the parties delivers to the other, either an!thing notperishable, in order that the latter ma! use it during a certain period and return it to theormer, in which case it is called commodatum, or mone! or an! other perishable thing, underthe condition to return an e4ual amount o the same 6ind and 4ualit!, in which case it ismerel! called a loan.

Commodatum is essentiall! gratuitous.

8 simple loan ma! be gratuitous, or made under a stipulation to pa! interest.82T. '('. The bailee ac4uires retains the ownership o the thing loaned. The bailee ac4uiresthe use thereo, but not its ruits: i an! compensation is involved, to be paid b! the personre4uiring the use, the agreement ceases to be a commodatum.

82T. '(7. The obligations and rights which arise rom the commodatum pass to the heirs oboth contracting parties, unless the loan has been in consideration or the person o thebailee, in which case his heirs shall not have the right to continue using the thing loaned.

The carabaos delivered to be used not being returned b! the deendant upon demand, there is doubt that she is under obligation to indemni! the owner thereo b! pa!ing him their value.

8rticle ''=' o said code reads9

Those who in ul3lling their obligations are guilt! o raud, negligence, or dela!, and thin an! manner whatsoever act in contravention o the stipulations o the same, shall besubjected to indemni! or the losses and damages caused thereb!.

The obligation o the bailee or o his successors to return either the thing loaned or its value, issustained b! the supreme tribunal o Sapin. In its decision o arch 7', '?), it sets out with prthe legal doctrine touching commodatum as ollows9

8lthough it is true that in a contract o commodatum the bailor retains the ownership othing loaned, and at the e"piration o the period, or ater the use or which it was loanebeen accomplished, it is the imperative dut! o the bailee to return the thing itsel to it

owner, or to pa! him damages i through the ault o the bailee the thing should have lost or injured, it is clear that where public securities are involved, the trial court, in deto the claim o the bailor that the amount loaned be returned him b! the bailee in bonsame class as those which constituted the contract, thereb! properl! applies law o topartida ).

ith regard to the third assignment o error, based on the act that the plaintif Santos had notappealed rom the decision o the commissioners rejecting his claim or the recover! o his carais suDcient to estate that we are not dealing with a claim or the pa!ment o a certain sum, thecollection o a debt rom the estate, or pa!ment or losses and damages ;sec. '', Code o Civi%rocedure>, but with the e"clusion rom the inventor! o the propert! o the late +imenea, or romcapital, o si" carabaos which did not belong to him, and which ormed no part o the inheritanc

The demand or the e"clusion o the said carabaos belonging to a third part! and which did notpart o the propert! o the deceased, must be the subject o a direct decision o the court in an action, wherein the right o the third part! to the propert! which he see6s to have e"cluded rominheritance and the right o the deceased has been discussed, and rendered in view o the resuevidence adduced b! the administrator o the estate and o the claimant, since it is so providedsecond part o section / and b! section (= o the Code o Civil %rocedure: the reusal o the

commissioners beore whom the plaintif unnecessaril! appeared can not afect nor reduce theun4uestionable right o ownership o the latter, inasmuch as there is no law nor principle o justauthori1ing the successors o the late +imenea to enrich themselves at the cost and to the prejuFeli" de los Santos.

For the reasons above set orth, b! which the errors assigned to the judgment appealed rom habeen reuted, and considering that the same is in accordance with the law and the merits o theis our opinion that it should be aDrmed and we do hereb! aDrm it with the costs against the aSo ordered.

G.R. No. L-'0''0-'2 O:)ober 31, 19;9

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2espondent judge is said to have acted without jurisdiction, in e"cess o jurisdiction and with graveabuse o discretion because the acts recited in the complaints did not constitute the crime o estaa,and assuming the! did, the! were not within the jurisdiction o the respondent judge.

In a resolution dated a! 7, '(, we re4uired respondents to comment in the petition and issued atemporar! restraining order against the respondent judge rom urther proceeding with Criminal Cases&os. -''', -'? and -7=? or rom enorcing the warrants o arrest he had issued in connection withsaid cases.

Comments b! the respondent judge and the private respondents pra! or the dismissal o the petitionbut the Solicitor Aeneral has maniested that the %eople o the %hilippines have no objection to thegrant o the relies pra!ed or, e"cept the damages. e considered the comments as answers and gavedue course to the petition.

The position o the Solicitor Aeneral is well ta6en. e have to grant the petition in order to preventmaniest injustice and the e"ercise o palpable e"cess o authorit!.

In Criminal Case &o. -''', respondent 2osalinda . 8min charges petitioners Lam Chee Oiong andLam Lap Oieng with estaa through misappropriation o the amount o %)=,===.==. Eut the complaintstates on its ace that said petitioners received the amount rom respondent 2osalinda . 8min Jas aloan.J oreover, the complaint in Civil Case &o. &-), an independent action or the collection o thesame amount 3led b! respondent 2osalinda . 8min with the Court o First Instance o Sulu onSeptember '', '(), li6ewise states that the %)=,===.== was a Jsimple business loanJ which earnedinterest and was originall! demandable si" ;/> months rom +ul! '7, '(. ;8nne" < o the petition.>

In Criminal Case &o. -'?, respondent Tan Chu Oao charges petitioners Lam Chee Oiong, +ose L.C. Lam,8mpang ah and 8nita Lam, alias Long Ta!, with estaa through misappropriation o the amount o%=,===.==. 0i6ewise, the complaint states on its ace that the %=,===.== was Ja simple loan.J So doesthe complaint in Civil Case &o. &-? 3led b! respondent Tan Chu Oao on 8pril /, '(/ with the Court oFirst Instance o Sulu or the collection o the same amount. ;8nne" @ o the petition.>.

In Criminal Case &o. -7=?, respondent 8ugusto Sajor charges petitioners +ose L.C. Lam, 8nita Lam aliasLong Tai ah, Chee Oiong Lam and 2ichard Lam, with estaa through misappropriation o the amount o%7=,===.==. Knli6e the complaints in the other two cases, the complaint in Criminal Case &o. -7=?does not state that the amount was received as loan. $owever, in a sworn statement dated September

7, '(/, submitted to respondent judge to support the complaint, respondent 8ugusto Sajor statesthat the amount was a Jloan.J ;8nne" A o the petition.>.

e agree with the petitioners that the acts alleged in the three criminal complaints do not constituteestaa through misappropriation.

,o the 2evised %enal Code as ollows9

8rt. '). Swindling ;. H 8n! person who shall deraud another b! an! o themeans mentioned herein below shall be punished b!9

""" """ """

'. ith unaithulness or abuse o con3dence namel!9

""" """ """

b> E! misappropriating or converting, to the prejudice o another, mone!, goods, oran! other personal propert! received b! the ofender in trust or on commission, or oradministration, or under an! other obligation involving the dut! to ma6e deliver! o or

to return the same, even though such obligation be totall! or partiall! guaranteed b!a bond: or b! den!ing having received such mone!, goods, or other propert!.

In order that a person can be convicted under the above4uoted provision, it must be proven that he hasthe obligation to deliver or return the same mone!, goods or personal propert! that he received.%etitioners had no such obligation to return the same mone!, i.e., the bills or coins, which the! receivedrom private respondents. This is so because as clearl! stated in criminal complaints, the related civilcomplaints and the supporting sworn statements, the sums o mone! that petitioners received wereloans.

The nature o simple loan is de3ned in 8rticles ' and ') o the Civil Code.

8rt. '. H E! the contract o loan, one o the parties delivers to another, eisomething not consumable so that the latter ma! use the same or a certain return it, in which case the contract is called a commodatum: or mone! or othconsumable thing upon the condition that the same amount o the same 6ind4ualit! shall be paid, in which case the contract is simpl! called a loan or mut


Simple loan ma! be gratuitous or with a stipulation to pa! interest.

In commodatum the bailor retains the ownership o the thing loaned, while in loam ownership passes to the borrower.

8rt. '). H 8 person who receives a loan o mone! or an! other ungible thiac4uires the ownership thereo, and is bound to pa! to the creditor an e4ual ao the same 6ind and 4ualit!.

It can be readil! noted rom the above-4uoted provisions that in simple loan ;mutuum>, as contrcommodatum, the borrower ac4uires ownership o the mone!, goods or personal propert! borroEeing the owner, the borrower can dispose o the thing borrowed ;8rticle 7?, Civil Code> and hwill not be considered misappropriation thereo.

In $.!. vs. &(a)ez, ' %hil. )), )/= ;'''>, this Court held that it is not estaa or a person to rna! his debt or to den! its e"istence.

e are o the opinion and so decide that when the relation is purel! that o dand creditor, the debtor can not be held liable or the crime o estaa, under sarticle, b! merel! reusing to pa! or b! den!ing the indebtedness.

It appears that respondent judge ailed to appreciate the distinction between the two t!pes o lomutuum and commodatum, when he perormed the 4uestioned acts, $e mistoo6 the transactiobetween petitioners and respondents 2osalinda 8min, Tan Chu Oao and 8ugusto Sajor to becommodatum wherein the borrower does not ac4uire ownership over the thing borrowed and hadut! to return the same thing to the lender.

Knder Sec. ?( o the +udiciar! 8ct, the municipal court o a provincial capital, which the unicipo +olo is, has jurisdiction over criminal cases where the penalt! provided b! law does not e"ceeprision correccional or imprisonment or not more than si" ;/> !ears, or 3ne not e"ceeding %/,==both, The amounts allegedl! misappropriated b! petitioners range rom %7=,===.== to %)=,===.penalt! or misappropriation o this magnitude e"ceeds prision correccional or / !ear imprisonm;8rticle '), 2evised %enal Code>, 8ssuming then that the acts recited in the complaints constitcrime o estaa, the unicipal Court o +olo has no jurisdiction to tr! them on the merits. The allofenses are under the jurisdiction o the Court o First Instance.

2espondents %eople o the %hilippines being the sovereign authorit! can not be sued or damagare immune rom such t!pe o suit.

ith respect to the other respondents, this Court is not the proper orum or the consideration oclaim or damages against them.

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This is a petition or review on certiorario the @ecision'o the Court o 8ppeals dated +une 7), '' inC8-A.2. CG &o. ''(' and o its 2esolution 7dated a! ), ', den!ing the motion or reconsiderationo said decision 3led b! petitioner %roducers Ean6 o the %hilippines.

Sometime in '(, private respondent Fran6lin Gives was as6ed b! his neighbor and riend 8ngelesSanche1 to help her riend and townmate, Col. 8rturo @oronilla, in incorporating his business, theSterela ar6eting and Services ;JSterelaJ or brevit!>. Speci3call!, Sanche1 as6ed private respondent todeposit in a ban6 a certain amount o mone! in the ban6 account o Sterela or purposes o itsincorporation. She assured private respondent that he could withdraw his mone! rom said accountwithin a monthPs time. %rivate respondent as6ed Sanche1 to bring @oronilla to their house so that the!could discuss Sanche1Ps re4uest.

*n a! , '(, private respondent, Sanche1, @oronilla and a certain in avor o Sterela. %rivate respondent instructed his wie, rs.Inocencia Gives, to accompan! @oronilla and Sanche1 in opening a savings account in the name oSterela in the Euendia, a6ati branch o %roducers Ean6 o the %hilippines. $owever, onl! Sanche1, rs.Gives and @umagpi went to the ban6 to deposit the chec6. The! had with them an authori1ation letterrom @oronilla authori1ing Sanche1 and her companions, Jin coordination with r. 2uo 8tien1a,J toopen an account or Sterela ar6eting Services in the amount o %7==,===.==. In opening the account,the authori1ed signatories were Inocencia Gives andor 8ngeles Sanche1. 8 passboo6 or Savings8ccount &o. '=-')/( was thereater issued to rs. Gives.

Subse4uentl!, private respondent learned that Sterela was no longer holding oDce in the addresspreviousl! given to him. 8larmed, he and his wie went to the Ean6 to veri! i their mone! was stillintact. The ban6 manager reerred them to r. 2uo 8tien1a, the assistant manager, who inormed themthat part o the mone! in Savings 8ccount &o. '=-')/( had been withdrawn b! @oronilla, and thatonl! %=,===.== remained therein. $e li6ewise told them that rs. Gives could not withdraw saidremaining amount because it had to answer or some postdated chec6s issued b! @oronilla. 8ccordingto 8tien1a, ater rs. Gives and Sanche1 opened Savings 8ccount &o. '=-')/(, @oronilla openedCurrent 8ccount &o. '=-=7= or Sterela and authori1ed the Ean6 to debit Savings 8ccount &o. '=-')/(or the amounts necessar! to cover overdrawings in Current 8ccount &o. '=-=7=. In opening said

current account, Sterela, through @oronilla, obtained a loan o %'(),===.== rom the Ean6. To coverpa!ment thereo, @oronilla issued three postdated chec6s, all o which were dishonored. 8tien1a alsosaid that @oronilla could assign or withdraw the mone! in Savings 8ccount &o. '=-')/( because he wasthe sole proprietor o Sterela.)

%rivate respondent tried to get in touch with @oronilla through Sanche1. *n +une 7, '(, he receiveda letter rom @oronilla, assuring him that his mone! was intact and would be returned to him. *n8ugust ', '(, @oronilla issued a postdated chec6 or Two $undred Twelve Thousand %esos;%7'7,===.==> in avor o private respondent. $owever, upon presentment thereo b! privaterespondent to the drawee ban6, the chec6 was dishonored. @oronilla re4uested private respondent topresent the same chec6 on September '), '( but when the latter presented the chec6, it was againdishonored./

%rivate respondent reerred the matter to a law!er, who made a written demand upon @oronilla or thereturn o his clientPs mone!. @oronilla issued another chec6 or %7'7,===.== in private respondentPsavor but the chec6 was again dishonored or insuDcienc! o unds. (

%rivate respondent instituted an action or recover! o sum o mone! in the 2egional Trial Court ;2TC> in%asig, etro anila against @oronilla, Sanche1, @umagpi and petitioner. The case was doc6eted as Civil

Case &o. ?). $e also 3led criminal actions against @oronilla, Sanche1 and @umagpi in the 2TC.$owever, Sanche1 passed awa! on arch '/, '?) while the case was pending beore the trial court.*n *ctober , '), the 2TC o %asig, Eranch ')(, promulgated its @ecision in Civil Case &o. ?), thedispositive portion o which reads9

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two to withdraw rom said account. $ence, the authorit! to withdraw thererom remained e"clusivel!with @oronilla, who was the sole proprietor o Sterela, and who alone had legal title to the savingsaccount.'(%etitioner points out that no evidence other than the testimonies o private respondent andrs. Gives was presented during trial to prove that private respondent deposited his %7==,===.== inSterelaPs account or purposes o its incorporation. '?$ence, petitioner should not be held liable orallowing @oronilla to withdraw rom SterelaPs savings account.1a*+,phi1.net

%etitioner also asserts that the Court o 8ppeals erred in aDrming the trial courtPs decision since the3ndings o act therein were not accord with the evidence presented b! petitioner during trial to provethat the transaction between private respondent and @oronilla was a mutuum, and that it committedno wrong in allowing @oronilla to withdraw rom SterelaPs savings account.'

Finall!, petitioner claims that since there is no wrongul act or omission on its part, it is not liable or theactual damages sufered b! private respondent, and neither ma! it be held liable or moral ande"emplar! damages as well as attorne!Ps ees.7=

%rivate respondent, on the other hand, argues that the transaction between him and @oronilla is not amutuum but an accommodation,7'since he did not actuall! part with the ownership o his %7==,===.==and in act as6ed his wie to deposit said amount in the account o Sterela so that a certi3cation can beissued to the efect that Sterela had suDcient unds or purposes o its incorporation but at the sametime, he retained some degree o control over his mone! through his wie who was made a signator! tothe savings account and in whose possession the savings account passboo6 was given. 77

$e li6ewise asserts that the trial court did not err in 3nding that petitioner, 8tien1aPs emplo!er, is liableor the return o his mone!. $e insists that 8tien1a, petitionerPs assistant manager, connived with@oronilla in derauding private respondent since it was 8tien1a who acilitated the opening o SterelaPscurrent account three da!s ater rs. Gives and Sanche1 opened a savings account with petitioner orsaid compan!, as well as the approval o the authorit! to debit SterelaPs savings account to cover an!overdrawings in its current account.7

There is no merit in the petition.

8t the outset, it must be emphasi1ed that onl! 4uestions o law ma! be raised in a petition or review3led with this Court. The Court has repeatedl! held that it is not its unction to anal!1e and weigh allover again the evidence presented b! the parties during trial.7The CourtPs jurisdiction is in principle

limited to reviewing errors o law that might have been committed b! the Court o 8ppeals. 7)oreover,actual 3ndings o courts, when adopted and con3rmed b! the Court o 8ppeals, are 3nal andconclusive on this Court unless these 3ndings are not supported b! the evidence on record. 7/There isno showing o an! misapprehension o acts on the part o the Court o 8ppeals in the case at bar thatwould re4uire this Court to review and overturn the actual 3ndings o that court, especiall! since theconclusions o act o the Court o 8ppeals and the trial court are not onl! consistent but are also ampl!supported b! the evidence on record.

&o error was committed b! the Court o 8ppeals when it ruled that the transaction between privaterespondent and @oronilla was a commodatum and not a mutuum. 8 circumspect e"amination o therecords reveals that the transaction between them was a commodatum. 8rticle ' o the Civil Codedistinguishes between the two 6inds o loans in this wise9

E! the contract o loan, one o the parties delivers to another, either something not consumable so thatthe latter ma! use the same or a certain time and return it, in which case the contract is called acommodatum: or mone! or other consumable thing, upon the condition that the same amount o thesame 6ind and 4ualit! shall be paid, in which case the contract is simpl! called a loan or mutuum.


Simple loan ma! be gratuitous or with a stipulation to pa! interest.

In commodatum, the bailor retains the ownership o the thing loaned, while in simple loan, ownershippasses to the borrower.

The oregoing provision seems to impl! that i the subject o the contract is a consumable thing, suchas mone!, the contract would be a mutuum. $owever, there are some instances where a commodatumma! have or its object a consumable thing. 8rticle '/ o the Civil Code provides9

Consumable goods ma! be the subject o commodatum i the purpose o the contract is not theconsumption o the object, as when it is merel! or e"hibition.

Thus, i consumable goods are loaned onl! or purposes o e"hibition, or when the intention o parties is to lend consumable goods and to have the ver! same goods returned at the end o thagreed upon, the loan is a commodatum and not a mutuum.

The rule is that the intention o the parties thereto shall be accorded primordial consideration indetermining the actual character o a contract.7(In case o doubt, the contemporaneous andsubse4uent acts o the parties shall be considered in such determination. 7?

8s correctl! pointed out b! both the Court o 8ppeals and the trial court, the evidence shows thprivate respondent agreed to deposit his mone! in the savings account o Sterela speci3call! opurpose o ma6ing it appear Jthat said 3rm had suDcient capitali1ation or incorporation, with tpromise that the amount shall be returned within thirt! ;=> da!s.J 7%rivate respondent merel!JaccommodatedJ @oronilla b! lending his mone! without consideration, as a avor to his good Sanche1. It was however clear to the parties to the transaction that the mone! would not be remrom SterelaPs savings account and would be returned to private respondent ater thirt! ;=> da!

@oronillaPs attempts to return to private respondent the amount o %7==,===.== which the lattedeposited in SterelaPs account together with an additional %'7,===.==, allegedl! representing inon the mutuum, did not convert the transaction rom a commodatum into a mutuum because sunot the intent o the parties and because the additional %'7,===.== corresponds to the ruits o lending o the %7==,===.==. 8rticle ') o the Civil Code e"pressl! states that JBthe bailee incommodatum ac4uires the use o the thing loaned but not its ruits.J $ence, it was onl! proper @oronilla to remit to private respondent the interest accruing to the latterPs mone! deposited wpetitioner.

&either does the Court agree with petitionerPs contention that it is not solidaril! liable or the retprivate respondentPs mone! because it was not priv! to the transaction between @oronilla and respondent. The nature o said transaction, that is, whether it is a mutuum or a commodatum, bearing on the 4uestion o petitionerPs liabilit! or the return o private respondentPs mone! becthe actual circumstances o the case clearl! show that petitioner, through its emplo!ee r. 8tiewas partl! responsible or the loss o private respondentPs mone! and is liable or its restitution.

%etitionerPs rules or savings deposits written on the passboo6 it issued rs. Gives on behal o Sor Savings 8ccount &o. '=-')/( e"pressl! states thatH

J7. @eposits and withdrawals must be made b! the depositor personall! or upon his written autdul! authenticated, and neither a deposit nor a withdrawal will be permitted e"cept upon theproduction o the depositor savings ban6 boo6 in which will be entered b! the Ean6 the amountdeposited or withdrawn.J=

Said rule notwithstanding, @oronilla was permitted b! petitioner, through 8tien1a, the 8ssistantanager or the Euendia Eranch o petitioner, to withdraw thererom even without presenting tpassboo6 ;which 8tien1a ver! well 6new was in the possession o rs. Gives>, not just once, buttimes. Eoth the Court o 8ppeals and the trial court ound that 8tien1a allowed said withdrawalsbecause he was part! to @oronillaPs JschemeJ o derauding private respondent9

R R R

Eut the scheme could not have been e"ecuted successull! without the 6nowledge, help andcooperation o 2uo 8tien1a, assistant manager and cashier o the a6ati ;Euendia> branch o thdeendant ban6. Indeed, the evidence indicates that 8tien1a had not onl! acilitated the commithe raud but he li6ewise helped in devising the means b! which it can be done in such mannerma6e it appear that the transaction was in accordance with ban6ing procedure.

To begin with, the deposit was made in deendantPs Euendia branch precisel! because 8tien1a

6e! oDcer therein. The records show that plaintif had suggested that the %7==,===.== be depohis ban6, the anila Ean6ing Corporation, but @oronilla and @umagpi insisted that it must be indeendantPs branch in a6ati or Jit will be easier or them to get a certi3cationJ. In act beore introduced to plaintif, @oronilla had alread! prepared a letter addressed to the Euendia branchmanager authori1ing 8ngeles E. Sanche1 and compan! to open a savings account or Sterela inamount o %7==,===.==, as Jper coordination with r. 2uo 8tien1a, 8ssistant anager o the Ea"J ;


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8tien1a is the brother-in-law o a certain 2omeo irasol, a riend and business associate [email protected]

Then there is the matter o the ownership o the und. Eecause o the JcoordinationJ between @oronillaand 8tien1a, the latter 6new beore hand that the mone! deposited did not belong to @oronilla nor toSterela. 8side rom such ore6nowledge, he was e"plicitl! told b! Inocencia Gives that the mone!belonged to her and her husband and the deposit was merel! to accommodate @oronilla. 8tien1a evendeclared that the mone! came rom rs. Gives.

8lthough the savings account was in the name o Sterela, the ban6 records disclose that the onl! onesempowered to withdraw the same were Inocencia Gives and 8ngeles E. Sanche1. In the signature cardpertaining to this account ;


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Sirvase notar 4ue de no estar li4uidada esta cuenta el dia = del corriente, procederemosjudicialmente contra Gd. para reclamar la devolucion del camarin ! los daUos ! perjuiciosocasionados a la compaUia por su incumplimiento al contrato.

Somos de Gd. atentos ! S. S.

SIT$, E F. I. $IA$8

Treasurer.

Aeneral anagers

0KN*& 2IC< I00S I&C.

8ccording to 0a alta de pago del al4uiler a4ui estipulado por dos meses consecutivos dlugar a la terminacion de este arrendamieno ! a la perdida del derecho de ret4ue nos hemos reservado, como si naturalmente hubiera e"pirado el terminoello, pudiendo en su virtud dicho Sr. Aon1ale1 S! Chiam tomar posesion de ladesahuciarnos de la misma.

Cuarto. Mue !o, Eenito Aon1ale1 S! Chiam, a mi ve1 otorgo 4ue acepto esta escritura eprecisos terminos en 4ue la dejan otorgada los con!uges Severino Tolentino ! %otenciaanio.

4ueda obligado dEenito Aon1ales S! Chiam a retrovendornos la 3nca arriba descrita: pero si transcurre pla1o de cinco ;)> aUos sin ejercitar al derecho de retracto 4ue nos hemos reservado, 4uedara esta venta absoluta e irrevocable.

0anguage cannot be clearer. The purpose o the contract is e"pressed clearl! in said 4uotation tthere can certainl! be not doubt as to the purpose o the plaintif to sell the propert! in 4uestionreserving the right onl! to repurchase the same. The intention to sell with the right to repurchascannot be more clearl! e"pressed.

It will be noted rom a reading o said sale opacto de retro, that the vendor, recogni1ing the asale o the propert!, entered into a contract with the purchaser b! virtue o which she became tJtenantJ o the purchaser. That contract o rent appears in said 4uoted document above as ollo

Tercero. Mue durante el e"presado termino del retracto tendremos en arrendamiento larriba descrita, sujeto a condiciones siguientes9

;a> moneda 3cada mes.


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;(> e are not unmindul o the act that sales withpacto de retroare not avored and that the court willnot construe an instrument to one o sale withpacto de retro, with the stringent and onerous efectwhich ollows, unless the terms o the document and the surrounding circumstances re4uire it.

hile it is general rule that parol evidence is not admissible or the purpose o var!ing the terms o acontract, but when an issue is s4uarel! presented that a contract does not e"press the intention o theparties, courts will, when a proper oundation is laid thereor, hear evidence or the purpose oascertaining the true intention o the parties.

In the present case the plaintifs allege in their complaint that the contract in 4uestion is a pacto deretro. The! admit that the! signed it. The! admit the! sold the propert! in 4uestion with the right torepurchase it. The terms o the contract 4uoted b! the plaintifs to the deendant was a JsaleJwithpacto de retro, and the plaintifs have shown no circumstance whatever which would justi! us inconstruing said contract to be a mere JloanJ with guarant!. In ever! case in which this court hasconstrued a contract to be a mortgage or a loan instead o a sale withpacto de retro, it has done so,either because the terms o such contract were incompatible or inconsistent with the theor! that saidcontract was one o purchase and sale. ;*lino vs.edina, supra: %adilla vs.0insangan,supra:anlagnit vs.@! %uico, %hil., 7): 2odrigue1 vs.%amintuan and @e +esus, ( %hil., ?(/.>

In the case o %adilla vs.0insangan the term emplo!ed in the contract to indicate the nature o theconve!ance o the land was JpledgedJ instead o JsoldJ. In the case o anlagnit vs.@! %uico, while thevendor used to the terms Jsale and transer with the right to repurchase,J !et in said contract hedescribed himsel as a JdebtorJ the purchaser as a JcreditorJ and the contract as a JmortgageJ. In thecase o #odriguez vs. Pamintuan and %e Jesusthe person who e"ecuted the instrument, purporting onits ace to be a deed o sale o certain parcels o land, had merel! acted under a power o attorne! romthe owner o said land, Jauthori1ing him to borrow mone! in such amount and upon such terms andconditions as he might deem proper, and to secure pa!ment o the loan b! a mortgage.J In the caseo Villa vs. !antiago ;? %hil., ')(>, although a contract purporting to be a deed o sale was e"ecuted,the supposed vendor remained in possession o the land and invested the mone! he had obtained romthe supposed vendee in ma6ing improvements thereon, which act justi3ed the court in holding that thetransaction was a mere loan and not a sale. In the case o Cu/ugan vs. !antos ; %hil., (=>, thepurchaser accepted partial pa!ments rom the vendor, and such acceptance o partial pa!ments isabsolutel! incompatible with the idea o irrevocabilit! o the title o ownership o the purchaser at thee"piration o the term stipulated in the original contract or the e"ercise o the right o repurchase.J

2eerring again to the right o the parties to var! the terms o written contract, we 4uote rom the

dissenting opinion o Chie +ustice Ca!etano S. 8rellano in the case o Aovernment o the %hilippineIslands vs.%hilippine Sugar 'The Chie +ustice said in discussing that 4uestion9

8ccording to article '7?7 o the Civil Code, in order to judge o the intention o the contracting parties,consideration must chie5! be paid to those acts e"ecuted b! said parties which are contemporar! withand subse4uent to the contract. 8nd according to article '7?, however general the terms o a contractma! be, the! must not be held to include things and cases diferent rom those with regard to which the

interested parties agreed to contract. JThe Supreme Court o the %hilippine Islands held the paroevidence was admissible in that case to var! the terms o the contract between the Aovernmen%hilippine Islands and the %hilippine Sugar


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the


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hile actual 3ndings o the Court o 8ppeals are conclusive on the parties and not reviewable b!the Supreme Court, and carr! more weight when these aDrm the actual 3ndings o the trial court, Bwedeem it more e"pedient to resolve the instant petition on its merits.

;sic>

C82 Illegible ;Sgd> @oming N. EaligadY

The language o the receipt could not be an! clearer. It indicates that the mone! delivered to0iwanag was or a speci3c purpose, that is, or the purchase o cigarettes, and in the event thecigarettes cannot be sold, the mone! must be returned to 2osales.

Thus, even assuming that a contract o partnership was indeed entered into b! and between the

parties, we have ruled that when mone! or propert! have been received b! a partner or a speci3cpurpose ;such as that obtaining in the instant case> and he later misappropriated it, such partner isguilt! o estaa.B(

&either can the transaction be considered a loan, since in a contract o loan once the mone! isreceived b! the debtor, ownership over the same is transerred.B?Eeing the owner, the borrower candispose o it or whatever purpose he ma! deem proper.

In the instant petition, however, it is evident that 0iwanag could not dispose o the mone! as shepleased because it was onl! delivered to her or a single purpose, namel!, or the purchase ocigarettes, and i this was not possible then to return the mone! to 2osales. Since in this case therewas no transer o ownership o the mone! delivered, 0iwanag is liable or conversion under 8rt. '),par. ';b> o the 2evised %enal Code.

@*!R!OR!, in view o the oregoing, the appealed decision o the Court o 8ppeals dated&ovember 7, ', is 8FFI2


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'), at which 2amon Saura, %resident o Saura, Inc., was present, it was decided to reduce the loanrom %)==,===.== to %==,===.==. 2esolution &o. ? was approved as ollows9

2 re4uestingJassurances ;rom 2FC> that m! compan! and associates will be able to bring in suDcient jute

materials as ma! be necessar! or the ull operation o the jute mill:J and ;> as6ing that releasloan be made as ollows9

a> For the pa!ment o the receipt or jute millmachineries with the %rudential Ean6

Trust Compan! %7)=,===.==

;For immediate release>

b> For the purchase o materials and e4uip-ment per attached list to enable the jutemill to operate '?7,'.'

c> For raw materials and labor /(,)?/.=

'> %7),===.== to be released on the open-ing o the letter o credit or raw juteor [7),===.==.

7> %7),===.== to be released upon arrivalo raw jute.

> %'(,)?/.= to be released as soon as themill is read! to operate.

*n +anuar! 7), ')) 2FC sent to Saura, Inc. the ollowing repl!9

@ear Sirs9

This is with reerence to !our letter o +anuar! 7', ')), regthe release o !our loan under consideration o %)==,===. 8in our letter o @ecember 77, '), the releases o the loanrevived, are proposed to be made rom time to time, subjecavailabilit! o unds towards the end that the sac6 actor! splaced in actual operating status. e shall be able to act onre4uest or revised purpose and manner o releases upon reappraisal o the securities ofered or the loan.

ith respect to our re4uirement that the @epartment o 8gand &atural 2esources certi! that the raw materials neededavailable in the immediate vicinit! and that there is prospecincreased production thereo to provide ade4uatel! there4uirements o the actor!, we wish to reiterate that the bathe original approval is to develop the manuacture o sac6sbasis o the locall! available raw materials. Lour statement will have to rel! on the importation o jute and !our re4uestgive !ou assurance that !our compan! will be able to bringsuDcient jute materials as ma! be necessar! or the operat!our actor!, would not be in line with our principle in approloan.

ith the oregoing letter the negotiations came to a standstill. Saura, Inc. did not pursue the murther. Instead, it re4uested 2FC to cancel the mortgage, and so, on +une '(, ')) 2FC e"ecutcorresponding deed o cancellation and delivered it to 2amon F. Saura himsel as president o SInc.

It appears that the cancellation was re4uested to ma6e wa! or the registration o a mortgage ce"ecuted on 8ugust /, '), over the same propert! in avor o the %rudential Ean6 and Trust Cunder which contract Saura, Inc. had up to @ecember ' o the same !ear within which to pa! iobligation on the trust receipt heretoore mentioned. It appears urther that or ailure to pa! thobligation the %rudential Ean6 and Trust Co. sued Saura, Inc. on a! '), ')).

*n +anuar! , '/, ahnost !ears ater the mortgage in avor o 2FC was cancelled at the re4Saura, Inc., the latter commenced the present suit or damages, alleging ailure o 2FC ;as predo the deendant @E%> to compl! with its obligation to release the proceeds o the loan applied


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approved, thereb! preventing the plaintif rom completing or pa!ing contractual commitments it hadentered into, in connection with its jute mill project.

The trial court rendered judgment or the plaintif, ruling that there was a perected contract betweenthe parties and that the deendant was guilt! o breach thereo. The deendant pleaded below, andreiterates in this appeal9 ;'> that the plaintif#s cause o action had prescribed, or that its claim hadbeen waived or abandoned: ;7> that there was no perected contract: and ;> that assuming there was,the plaintif itsel did not compl! with the terms thereo.

e hold that there was indeed a perected consensual contract, as recogni1ed in 8rticle ' o theCivil Code, which provides9

82T. '). 8n accepted promise to deliver something, b! wa! o commodatum orsimple loan is binding upon the parties, but the commodatum or simple loan itselshall not be pererted until the deliver! o the object o the contract.

There was undoubtedl! ofer and acceptance in this case9 the application o Saura, Inc. or a loan o%)==,===.== was approved b! resolution o the deendant, and the corresponding mortgage wase"ecuted and registered. Eut this act alone alls short o resolving the basic claim that the deendantailed to ul3ll its obligation and the plaintif is thereore entitled to recover damages.

It should be noted that 2FC entertained the loan application o Saura, Inc. on the assumption that theactor! to be constructed would utili1e locall! grown raw materials, principall! 8enaf. There is noserious dispute about this. It was in line with such assumption that when 2FC, b! 2esolution &o. =?approved on @ecember '(, '), restored the loan to the original amount o %)==,===.==. it imposedtwo conditions, to wit9 J;'> that the raw materials needed b! the borrower-corporation to carr! out itsoperation are available in the immediate vicinit!: and ;7> that there is prospect o increased productionthereo to provide ade4uatel! or the re4uirements o the actor!.J The imposition o those conditionswas b! no means a deviation rom the terms o the agreement, but rather a step in its implementation.

There was nothing in said conditions that contradicted the terms laid down in 2FC 2esolution &o. '),passed on +anuar! (, '), namel! H Jthat the proceeds o the loan shall be utili1ed e9clusivel/or theollowing purposes9 or construction o actor! building H %7)=,===.==: or pa!ment o the balance opurchase price o machiner! and e4uipment H %7=,==.==: or wor6ing capital H %,'==.==.J on a par with insurance policies and lie annuities.


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The eventualgain o Aome1 in this transaction is not interest within the meaning o Ksur! 0aws.Interest is some additional mone! to be paid in an! event, which is not the case herein, because Aome1might have gotten less i the +apanese occupation had e"tended to the end o ') or i the liberationorces had chosen to permit the circulation o the +apanese notes.

oreover, 2oUo argues, the deal was immoral because ta6ing advantage o his superior 6nowledge owar developments Aome1 imposed on him this onerous obligation. In the 3rst place, the Court o8ppeals ound that he voluntar! agreed to sign and signed the document without having been misledas to its contents and Jin so ar as 6nowledge o war events was concernedJ both parties were onJe4ual ootingJ. In the second place although on *ctober ), ' it was possible to surmise theimpending 8merican invasion, the date o victor! or liberation was an!bod!#s guess. In the third placethere was the possibilit! that upon-re-occupation the %hilippine Aovernment would not invalidate the

+apanese currenc!, which ater all had been orced upon the people in e"change or valuable goods andpropert!. The odds were about even when 2oUo and Aome1 pla!ed their bargaining game. There wasno overreaching, nor unair advantage.

8gain 2oUo alleges it is immoral and against public order or a man to obtain our thousand pesos inreturn or an investment o ort! pesos ;his estimate o the value o the +apanese mone! he borrowed>.8ccording to his line o reasoning it would be immoral or the homeowner to recover ten thousandpesos ;%'=,===, when his house is burned, because he invested onl! about one hundred pesos or theinsurance polic!. 8nd when the holder o a sweepsta6es tic6et who paid onl! our pesos luc6il! obtainsthe 3rst pri1e o one hundred thousand pesos or over, the whole business is immoral or against publicorder.

In this connection we should e"plain that this decision does not cover situations where borrowers o+apanese 3at currenc! promised to repa! Jthe same amountJ or promised to return the same number opesos Jin %hilippines currenc!J or Jin the currenc! prevailing ater the war.J There ma! be room orargument when those litigations come up or adjudication. 8ll we sa! here and now is that the contractin 4uestion is legal and obligator!.

8 minor point concerns the personalit! o the plaintif, the wie o +ose 0. Aome1. e opine with theCourt o 8ppeals that the matter involve a deect in procedure which does not amount to prejudicialerror.

hereore, the appealed judgment will be aDrmed with costs. So ordered.

0oran" C.J." zaeta" 'uason" 0ontema/or and #e/es" JJ." concur.

G.R. No. L-132& Se()ember 9, 1949

MARIANO N!OMU$!NO an AGU!"A G. "! N!OMU$!NO,plaintifs-appellants,vs.!"IL#!RTO A. NAR$ISO an MAURA SUAR!/,deendants-appellees.

*n &ovember ', '?, appellant ariano &epomuceno e"ecuted a mortgage in avor o the appelleeson a parcel o land situated in the municipalit! o 8ngeles, %rovince o %ampanga, to secure thepa!ment within the period o seven !ears rom the date o the mortgage o the sum o %7,===together with interest thereon at the rate o ? per cent per annum.

*n September =, ', that is to sa!, more than two !ears beore the maturit! o said mortgage, theparties e"ecuted a notarial document entitled J%artial &ovation o ContractJ whereb! the! modi3ed theterms o said mortgage as ollows9

;'> From @ecember ?, '', to +anuar! ', ', the interest on the mortgage shall be at / percent per annum, unpaid interest also pa!ing interest also pa!ing interest at the same rate.

;7> From +anuar! ', ', up to the end o the war, the mortgage debt shall li6ewise bearinterest at / per cent. Knpaid interest during this period shall however not bear an! interest.

;> 8t the end o the war the interest shall again become ? per cent in accordance with theoriginal contract o mortgage.

;> hile the war goes on, the mortgagor, his administrators or assigns, cannot redeem thepropert! mortgaged.

;)> hen the mortgage lapses on &ovember ', '), the mortgage ma! continue orten !ears i the mortgagor so chooses, but during this period he ma! pa! onl! one halcapital.

*n +ul! 7', ', the mortgagor ariano &epomuceno and his wie 8gueda A. de &epomuceno their complaint in this case against the mortgagees, which complaint, as amended on Septemb', alleged the e"ecution o the contract o mortgage and its principal novation as above indand

(. That as per 8nne" E, &o. , it is provided that the mortgagor cannot redeem the promortgaged while the war goes on: and that notwithstanding the said provision the hereplaintifs-mortgagors are now willing to pa! the amount o the indebtedness together wcorresponding interest due thereon:

?. That on +ul! ', ', the mortgagors-plaintifs went to the house o the mortgageedeendants to tender pa!ment o the balance o the mortgage debt with their correspo

interest, but said spouses deendants reuse and still reuse to accept pa!ment:. That because o this reusal o the deendants to accept tender o pa!ment on the mconsideration, the plaintifs sufered and still sufer damages in the amount o %),===:

'=. That the plaintifs are now and have deposited with the Cler6 o Court o First Insta%ampanga the amount o %77,)/ or the pa!ment o the mortgage debt and the interthereon:

hereore, it is more respectull! pra!ed that this $onorable Court will issue an order iollowing tenor9

;a> *rdering the deendants to accept tender o pa!ment rom the plaintifs:

;(> *rdering deendants to e"ecute the corresponding deed o release o mortgage:

;c> *rdering deendants to pa! damages in the amount o %),===: and

;d> *rdering deendants to pa! the amount o %,=== as attorne!#s ee and the costs oand an! other remed! just and e4uitable in the premises.

8ter the trial the court sustained the deense that the complaint had been prematurel! present

dismissed it with costs.8ppellants contend that the stipulation in the contract o September =, ', that Jwhile the won the mortgagor, his administrators or assigns cannot redeem the propert! mortgaged,J is agpublic polic! and thereore null and void. The! cite and rel! on article '7)) o the Civil Code, wprovides9

82T. '7)). H The contracting parties ma! establish an! pacts, clauses, and conditionsma! deem advisable, provided the! are not contrar! to law, morals, or public order.

The! argue that Jit would certainl! be against public polic! and a restraint on the reedom o coto compel a debtor not to release his propert! rom a lien H even i he wanted to b! the pa!menindebtedness H while the war goes on, which was undoubtedl! o a ver! uncertain duration.J

The 3rst two paragraphs o article ''7) o the Civil Code provide9

82T. ''7). H *bligation or the perormance o which a da! certain has been 3"ed shademandable onl! when the da! arrives.

8 da! certain is understood to be one which must necessaril! arrive, even though its dun6nown.

8rticle ''7( sa!s9

82T. ''7(. henever a term or the perormance o an obligation is 3"ed, it is presumehave been established or the bene3t o the creditor and that o the debtor, unless romtenor or rom other circumstances it should appear that the term was established or tbene3t o one or the other.

It will be noted that the original contract o mortgage provided or interest at ? per cent per annthat the principal together with the interest was pa!able within the period o seven !ears rom&ovember ', '?. Eut b! mutual agreement o the parties that term was modi3ed on Septem


17/47

', b! reducing the interest to / per cent per annum rom @ecember ?, '', until the end o thewar and b! stipulating that the mortgagor shall not pa! of the mortgage while the war went on.

e 3nd nothing immoral or violative o public order in that stipulation. The mortgagees apparentl! didnot want to have their prewar credit paid with +apanese militar! notes, and the mortgagor voluntaril!agreed not to do so in consideration o the reduction o the rate o interest.

It was a perectl! e4uitable and valid transaction, in conormit! with the provision o the Civil Codehereinabove 4uoted.

8ppellants were bound b! said contract and appellees were not obligated to receive the pa!mentbeore it was due. $ence the latter had reason not to accept the tender o pa!ment made to them b!the ormer.

The judgment is aDrmed, with costs against the appellants.

IRST "I+ISION

!QUITA#L! $I #AN%,D A.2. &o. '('))

AIM!! *rdering B '7X per annum or the peso loans:

7> ?X per annum or the dollar loans. The basis or the pa!ment o thedollar obligation is the conversion rate o %7/.)= per dollar availed o atthe time o incurring o the obligation in accordance with 8rticle '7)= othe Civil Code o the %hilippines:

$> @ismissing B,B7(the Februar! ), 7== dbecame 3nal and e"ecutor! as to both parties and a writ o e"ecution against


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*n arch 7/, 7==,


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erroneous, (e:a )7e e5orb)an) a?ar o ama8e, as it was inconsistent with e"isting law andjurisprudence.B)(

T*! ROMISSOR< NOT!S @!R! +ALI"

The 2TC upheld the validit! o the promissor! notes despite respondentsP assertion that thosedocuments were contracts o adhesion.

8 contract o adhesion is a contract whereb! almost all o its provisions are drated b! one part!.B)?The participation o the other part! is limited to aD"ing his signature or his WadhesionY to thecontract. B)For this reason, contracts o adhesion are strictl! construed against the part! who dratedit.B/=

It is erroneous, however, to conclude that contracts o adhesion are invalid per se.The! are, onthe contrar!, as binding as ordinar! contracts. 8 part! is in realit! ree to accept or reject it. 8 contracto adhesion becomes void onl! when the dominant part! ta6es advantage o the wea6ness o the otherpart!, completel! depriving the latter o the opportunit! to bargain on e4ual ooting.B/'

That was not the case here. 8s the trial court noted, i the terms and conditions ofered b!


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The 2TC ound that respondents did not pa! ,2espondent.

T7e $ae

%an %aci3c Service Contractors, Inc. and 2icardo F. @el 2osario ;petitioners> 3led this %etition o

2eview

'

assailing the Court o 8ppealsP ;C8> @ecision

7

dated = +une 7==) in C8-A.2. CG &o. /well as the 2esolutiondated ) *ctober 7==) den!ing the otion or 2econsideration. In the assdecision, the C8 modi3ed the '7 8pril ' @ecision o the 2egional Trial Court o a6ati Cit!, ) ;2TC> b! ordering to pa! petitioners %',)'/,=').=( with inthe legal rate o '7X per annum starting / a! ' until the amount is ull! paid.

T7e a:)

%an %aci3c Service Contractors, Inc. ;%an %aci3c> is engaged in contracting mechanical wor6s onairconditioning s!stem. *n 7 &ovember '?, %an %aci3c, through its %resident, 2icardo F. @el;@el 2osario>, entered into a contract o mechanical wor6s ;Contract> with respondent or %7=,/%an %aci3c and respondent also agreed on nine change orders or %7,/77,/'=.=. Thus, the totaconsideration or the whole project was%7,'','=.=./The Contract stipulated, among others%an %aci3c shall be entitled to a price adjustment in case o increase in labor costs and prices omaterials under paragraphs (=.'(and (=.7?o the JAeneral Conditions or the Construction o %

Tower II


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%an %aci3c made several demands or pa!ment on the price adjustment but respondent merel! 6ept onpromising to release the same. eanwhile, the %'.? million loan matured and respondent demandedpa!ment plus interest and penalt!. %an %aci3c reused to pa! the loan. %an %aci3c insisted that it wouldnot have incurred the loan i respondent released the price adjustment on time. %an %aci3c alleged thatthe promissor! note did not e"press the true agreement o the parties. %an %aci3c maintained thatthe %'.? million was to be considered as an advance pa!ment on the price adjustment. Thereore, therewas reall! no consideration or the promissor! note: hence, it is null and void rom the beginning. '/

2espondent stood 3rm that it would not release an! amount o the price adjustment to %an %aci3c but itwould ofset the price adjustment with %an %aci3cPs outstanding balance o %,77/,'?/.=', representingthe loan, interests, penalties and collection charges. '(

%an %aci3c reused the ofsetting but agreed to receive the reduced amount o %,(=,)(.=( asrecommended b! the TCAI null and void:

*rdering the deendant to pa! the plaintifs the ollowing amounts9

a. %',?,'''.'= representing unpaid balance o the adjustment price, with interestthereon at the legal rate o twelve ;'7X> percent per annum starting a! /, ',the date when the complaint was 3led, until the amount is ull! paid:

%'==,===.== representing moral damages:

%)=,===.== representing e"emplar! damages: and

%)=,===.== as and or attorne!Ps ees.

7. @ismissing deendantPs counterclaim, or lac6 o merit: and

ith costs against the deendant.S* *2@


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8 perusal o the assailed decision shows that the C8 made a distinction between the consent given b!the owner o the project or the liabilit! or the price adjustments, and the consent or the imposition othe ban6 lending rate. Thus, while the C8 held that petitioners consulted respondent or priceadjustment on the basic contract price, petitioners, nonetheless, are not entitled to the imposition o'?X interest on the adjusted price, as petitioners never inormed or sought the approval o respondentor such imposition.7

e disagree.

It is settled that the agreement or the contract between the parties is the ormal e"pression o thepartiesP rights, duties, and obligations. It is the best evidence o the intention o the parties. Thus, whenthe terms o an agreement have been reduced to writing, it is considered as containing all the termsagreed upon and there can be, between the parties and their successors in interest, no evidence osuch terms other than the contents o the written agreement. =

The escalation clause o the contract provides9

C$8&A


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Certi3cate o Title &o. S-??, in avor o the Spouses


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In enacting 2epublic 8ct &o. (/), 6nown as the JTruth in 0ending 8ct,J the State see6s to protect itsciti1ens rom a lac6 o awareness o the true cost o credit b! assuring the ull disclosure o such costs.Section , in connection with Section ;>'/o the said law, gives a detailed enumeration o the speci3cinormation re4uired to be disclosed, among which are the interest and other charges incident to thee"tension o credit. Section /'(o the same law imposes on an!one who willull! violates theseprovisions, sanctions which include civil liabilit!, and a 3ne andor imprisonment.

8lthough an! action see6ing to impose either civil or criminal liabilit! had alread! prescribed, this Courtrowns upon the underhanded manner in which the Spouses


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= The 2TC rendered a @ecision on *ctober 7( 7=== 3nding that the respondent issued a chec6


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=

To secure the pa!ment o the loan, %antaleon issued a promissor! note(that states9

I, 2ogelio S. %antaleon, hereb! ac6nowledge the receipt o *&< I00I*& T* $K&@2-month period.

From September ?, ' to +anuar! , '(, the petitioners paid the ollowing amounts to the

respondent9

September ?, ']]]]]]

%7=,===.==

*ctober ?,')]]]]]]].

%/==,===.==

&ovember ?,')]]]]].

%')?,((7.==

+anuar! , '(]]]]]]].

%=,===.==''

8s o +anuar! , '(, the petitioners had alread! paid a total o %','=?,((7.==. $owever, therespondent ound that the petitioners still had an outstanding balance o %',/,')'.== as o +anuar! ,'(, to which it applied a X monthl! interest.'7Thus, on 8ugust 7?, '(, the respondent 3led a

complaint or sum o mone! with the 2TC to enorce the unpaid balance, plus X monthl!interest, %=,===.== in attorne!Ps ees, %',===.== per court appearance and costs o suit.'

In their 8nswer dated *ctober /, '?, the petitioners admitted the loan o %',7=,===.==, but deniedthe stipulation on the X monthl! interest, arguing that the interest was not provided in the promissor!note. %antaleon also denied that he made himsel personall! liable and that he made representationsthat the loan would be repaid within si" ;/> months. '

T$< 2TC 2K0I&A

The 2TC rendered a @ecision on *ctober 7(, 7=== 3nding that the respondent issued a chec6or %',===,===.== in avor o the petitioners or a loan that would earn an interest o X or %=per month, or a total o%7=,===.== or a /-month period. It noted that the petitioners made sevpa!ments amounting to%',77?,((7.==, but the! were still indebted to the respondent or %,)7as o Februar! 11,')' ater considering the X monthl! interest. The 2TC observed that %2was a one-man corporation o %antaleon and used this circumstance to justi! the piercing o thcorporate 3ction. Thus, the 2TC ordered the petitioners to jointl! and severall! pa! the respondeamount o %,)7/,''(.== plus X per month interest rom Februar! '', ' until ull! paid. '/

The petitioners elevated the case to the C8 via an ordinar! appeal under 2ule ' o the 2ules oinsisting that there was no e"press stipulation on the X monthl! interest.

T$< C8 2K0I&A

The C8 decided the appeal on a! ), 7==. The C8 ound that the parties agreed to a X moninterest principall! based on the board resolution that authori1ed %antaleon to transact a loan wapproved interest o not more than X per month. The appellate court, however, noted that theinterest o X per month, or ?X per annum, was unreasonable and should be reduced to '7Xannum. The C8 aDrmed the 2TCPs 3nding that %2IS8 was a mere instrumentalit! o %antaleon

justi3ed the piercing o the veil o corporate 3ction. Thus, the C8 modi3ed the 2TC @ecision b! a '7X per annum interest, computed rom the 3ling o the complaint until 3nalit! o judgment, thereater, '7X rom 3nalit! until ull! paid.'(

8ter the C8#s denial'?o their motion or reconsideration,'the petitioners 3led the present petreview on certiorari under 2ule ) o the 2ules o Court.

T$< %


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In the present case, the respondent issued a chec6 or %',===,===.==. In turn, %antaleon, in hispersonal capacit! and as authori1ed b! the Eoard, e"ecuted the promissor! note 4uoted above. Thus,the %',===,===.== loan shall be pa!able within si" ;/> months, or rom +anuar! ?, ' up to +une ?,'. @uring this period, the loan shall earn an interest o %=,===.== per month, or a total obligationo %',7=,===.== or the si"-month period. @e no)e )7a) )7 a8ree m :an be :om()e a) 4n)ere) (er mon)7, b) no :7 ra)e o n)ere) ?a )(a)e n )7e (romor no)era)7er a 5e m eHvaen) )o )7 ra)e ?a a8ree (on.

8rticle ')/ o the Civil Code speci3call! mandates that Jno interest shall be due unless it has beene"pressl! stipulated in writing.J Knder this provision, the pa!ment o interest in loans or orbearance omone! is allowed onl! i9 ;'> there was an e"press stipulation or the pa!ment o interest: and ;7> theagreement or the pa!ment o interest was reduced in writing. The concurrence o the two conditions isre4uired or the pa!ment o interest at a stipulated rate. Thus, we held in 'an v. Valdehueza7and Chingv. :icdao7)that collection o interest without an! stipulation in writing is prohibited b! law. 1avvphi1

8ppl!ing this provision, we 3nd that the interest o %=,===.== per month corresponds onl! to the si"

;/>-month period o the loan, or rom +anuar! ?, ' to +une ?, ', as agreed upon b! the parties inthe promissor! note. Thereater, the interest on the loan should be at the legal interest rate o'7Xperannum, consistent with our ruling in Eastern !hipping 3ines" &nc. v. Court of Appeals97/

hen the obligation is breached, and it consists in the pa!ment o a sum o mone!, i.e., a loan ororbearance o mone!, the interest due should be that which ma! have been stipulated in writing.Furthermore, the interest due shall itsel earn legal interest rom the time it is judiciall! demanded. In)7e aben:e o )(a)on, )7e ra)e o n)ere) 7a be 12 (er annm )o be :om()erom ea), i.e., rom judicial or e"trajudicial demand under and subject to the provisions o 8rticle''/ o the Civil Code.J ;

e reiterated this ruling in !ecurit/ an8 and 'rust Co. v. #'C60a8ati" r. ;1,7(!ulit v. Court ofAppeals,7? Crismina Aarments, Inc. v. Court o 8ppeals,7 basic instances, namel!9 a>

separate and distinct corporate personalit! deeats public convenience, as when the corporate used as a vehicle or the evasion o an e"isting obligation: b> in raud cases, or when the corporentit! is used to justi! a wrong, protect a raud, or deend a crime: or c> is used in alter ego cawhere a corporation is essentiall! a arce, since it is a mere alter ego or business conduit o a pwhere the corporation is so organi1ed and controlled and its afairs so conducted as to ma6e it an instrumentalit!, agenc!, conduit or adjunct o another corporation. /In the absence o malicaith, or a speci3c provision o law ma6ing a corporate oDcer liable, such corporate oDcer cannmade personall! liable or corporate liabilities.(

In the present case, we see no competent and convincing evidence o an! wrongul, raudulent unlawul act on the part o %2IS8 to justi! piercing its corporate veil. hile %antaleon denied liabilit! in his 8nswer, he made himsel accountable in the promissor! note J in his personal capand as authorized (/ the oard #esolutionJ o %2IS8.?ith this statement o personal liabilit!the absence o an! representation on the part o %2IS8 that the obligation is all its own becauseparate corporate identit!, we see no occasion to consider piercing the corporate veil as matethe case.

@*!R!OR!, in light o all the oregoing, we hereb! R!+!RS!and S!T ASI"!the @ecision da! ), 7== o the Court o 8ppeals in C8-A.2. CG &o. //7(. The petitionersP loan o %',===,==shall bear interest o%=,===.== per month or si" ;/> months rom @ecember ?, ' as indicatthe promissor! note. 8n! portion o this loan, unpaid as o the end o the si"-month pa!ment peshall thereater bear interest at '7X per annum. The total amount due and unpaid, including acinterests, shall bear interest at '7X per annum rom the 3nalit! o this @ecision. 0et this casebe R!MAN"!"to the 2egional Trial Court, Eranch (, 8ntipolo Cit! or the proper computationamount due as herein directed, with due regard to the pa!ments the petitioners have alread! reCosts against the respondent.

S* *2@


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G.R. No. 1;322; anar 20, 2009

S!#ASTIAN SIGA-AN,%etitioner,vs.ALI$IA +ILLANU!+A,2espondent.

Eeore Ks is a %etition'or 2eview on Certiorariunder 2ule ) o the 2ules o Court see6ing to set asidethe @ecision,7dated '/ @ecember 7==), and 2esolution,dated ' +une 7==/ o the Court o 8ppeals inC8-A.2. CG &o. ('?', which aDrmed in totothe @ecision,dated 7/ +anuar! 7==', o the 0as %inasCit! 2egional Trial Court, Eranch 7)), in Civil Case &o. 0%-?-==/?.

The acts gathered rom the records are as ollows9

*n = arch '?, respondent 8licia Gillanueva 3led a complaint)or sum o mone! against petitionerSebastian Siga-an beore the 0as %inas Cit! 2egional Trial Court ;2TC>, Eranch 7)), doc6eted as CivilCase &o. 0%-?-==/?. 2espondent alleged that she was a businesswoman engaged in suppl!ing oDcematerials and e4uipments to the %hilippine &av! *Dce ;%&*> located at Fort Eoniacio, Taguig Cit!,while petitioner was a militar! oDcer and comptroller o the %&* rom '' to '/.

2espondent claimed that sometime in '7, petitioner approached her inside the %&* and ofered toloan her the amount o %)=,===.==. Since she needed capital or her business transactions with the%&*, she accepted petitionerPs proposal. The loan agreement was not reduced in writing. 8lso, therewas no stipulation as to the pa!ment o interest or the loan./

*n ' 8ugust ', respondent issued a chec6 worth %)==,===.== to petitioner as partial pa!ment othe loan. *n ' *ctober ', she issued another chec6 in the amount o %7==,===.== to petitioner aspa!ment o the remaining balance o the loan. %etitioner told her that since she paid a total amounto %(==,===.== or the%)=,===.== worth o loan, the e"cess amount o %'/=,===.== would be appliedas interest or the loan. &ot satis3ed with the amount applied as interest, petitioner pestered her to pa!additional interest. %etitioner threatened to bloc6 or disapprove her transactions with the %&* i shewould not compl! with his demand. 8s all her transactions with the %&* were subject to the approval opetitioner as comptroller o the %&*, and earing that petitioner might bloc6 or undul! in5uence thepa!ment o her vouchers in the %&*, she conceded. Thus, she paid additional amounts in cash andchec6s as interests or the loan. She as6ed petitioner or receipt or the pa!ments but petitioner told

her that it was not necessar! as there was mutual trust and con3dence between them. 8ccording to hercomputation, the total amount she paid to petitioner or the loan and interest accumulatedto%',7==,===.==. (

Thereater, respondent consulted a law!er regarding the propriet! o pa!ing interest on the loandespite absence o agreement to that efect. $er law!er told her that petitioner could not validl! collectinterest on the loan because there was no agreement between her and petitioner regarding pa!ment ointerest. Since she paid petitioner a total amount o %',7==,===.== or the %)=,===.== worth o loan,and upon being advised b! her law!er that she made overpa!ment to petitioner, she sent a demandletter to petitioner as6ing or the return o the e"cess amount o %//=,===.==. %etitioner, despitereceipt o the demand letter, ignored her claim or reimbursement.?

2espondent pra!ed that the 2TC render judgment ordering petitioner to pa! respondent;'> %//=,===.== plus legal interest rom the time o demand: ;7> %==,===.== as moral damages:;> %)=,===.== as e"emplar! damages: and ;> an amount e4uivalent to 7)X o %//=,===.== asattorne!Ps ees.

In his answer'=to the complaint, petitioner denied that he ofered a loan to respondent. $e averred thatin '7, respondent approached and as6ed him i he could grant her a loan, as she needed mone! to3nance her business venture with the %&*. 8t 3rst, he was reluctant to deal with respondent, becausethe latter had a spott! record as a supplier o the %&*. $owever, since respondent was an ac4uaintanceo his oDcemate, he agreed to grant her a loan. 2espondent paid the loan in ull. ''

Subse4uentl!, respondent again as6ed him to give her a loan. 8s respondent had been able to pa! theprevious loan in ull, he agreed to grant her another loan. 0ater, respondent re4uested him torestructure the pa!ment o the loan because she could not give ull pa!ment on the due date. $eacceded to her re4uest. Thereater, respondent pleaded or another restructuring o the pa!ment o theloan. This time he rejected her plea. Thus, respondent proposed to e"ecute a promissor! note wherein

g gpostdated chec6s to guarantee the pa!ment o her obligation. Kpon his approval o respondentre4uest or restructuring o the loan, respondent e"ecuted a promissor! note dated '7 Septembwherein she admitted having borrowed an amount o %',7=,===.==, inclusive o interest, rompetitioner and that she would pa! said amount in arch '). 2espondent also issued to him spostdated chec6s amounting to %',7=,===.== as guarantee o compliance with her obligation.Subse4uentl!, he presented the si" chec6s or encashment but onl! one chec6 was honored. $edemanded that respondent settle her obligation, but the latter ailed to do so. $ence, he 3led crcases or Giolation o the Eouncing Chec6s 0aw ;Eatas %ambansa Elg. 77> against respondent. Tcases were assigned to the etropolitan Trial Court o a6ati Cit!, Eranch /) ;eTC>.'7

%etitioner insisted that there was no overpa!ment because respondent admitted in the latterPspromissor! note that her monetar! obligation as o '7 September ' amounted to %',7=,==inclusive o interests. $e argued that respondent was alread! estopped rom complaining that sshould not have paid an! interest, because she was given several times to settle her obligation

ailed to do so. $e maintained that to rule in avor o respondent is tantamount to concluding thloan was given interest-ree. Eased on the oregoing averments, he as6ed the 2TC to dismissrespondentPs complaint.

8ter trial, the 2TC rendered a @ecision on 7/ +anuar! 7==' holding that respondent made anoverpa!ment o her loan obligation to petitioner and that the latter should reund the e"cess amthe ormer. It ratiocinated that respondentPs obligation was onl! to pa! the loaned amounto %)=,===.==, and that the alleged interests due should not be included in the computation orespondentPs total monetar! debt because there was no agreement between them regarding po interest. It concluded that since respondent made an e"cess pa!ment to petitioner in the amo %//=,===.== through mista6e, petitioner should return the said amount to respondent pursuathe principle o solutio inde(iti.'

The 2TC also ruled that petitioner should pa! moral damages or the sleepless nights and wouneelings e"perienced b! respondent. Further, petitioner should pa! e"emplar! damages b! wa!e"ample or correction or the public good, plus attorne!Ps ees and costs o suit.

The dispositive portion o the 2TC @ecision reads9

$ *rdering deendant to pa! plaintif the amount o %)=,===.== as e"emplar! damag

;> *rdering deendant to pa! plaintif the amount e4uivalent to 7)X o %//=,===.== aattorne!Ps ees: and

;)> *rdering deendant to pa! the costs o suit. '

%etitioner appealed to the Court o 8ppeals. *n '/ @ecember 7==), the appellate court promulg@ecision aDrming in totothe 2TC @ecision, thus9

$


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or b! virtue o damages or dela! or ailure to pa! the principal loan on which interest is demanded.'

8rticle ')/ o the Civil Code, which reers to monetar! interest, 7=speci3call! mandates that nointerest shall be due unless it has been e"pressl! stipulated in writing. 8s can be gleaned rom theoregoing provision, pa!ment o monetar! interest is allowed onl! i9 ;'> there was an e"pressstipulation or the pa!ment o interest: and ;7> the agreement or the pa!ment o interest was reducedin writing. The concurrence o the two conditions is re4uired or the pa!ment o monetar! interest.

Thus, we have held that collection o interest without an! stipulation thereor in writing is prohibited b!law.7'

It appears that petitioner and respondent did not agree on the pa!ment o interest or the loan. &eitherwas there convincing proo o written agreement between the two regarding the pa!ment o interest.2espondent testi3ed that although she accepted petitionerPs ofer o loan amounting to %)=,===.==,there was, nonetheless, no verbal or written agreement or her to pa! interest on the loan.77

%etitioner presented a handwritten promissor! note dated '7 September ' 7wherein respondentpurportedl! admitted owing petitioner Jcapital and interest.J 2espondent, however, e"plained that itwas petitioner who made a promissor! note and she was told to cop! it in her own handwriting: that allher transactions with the %&* were subject to the approval o petitioner as comptroller o the %&*: thatpetitioner threatened to disapprove her transactions with the %&* i she would not pa! interest: thatbeing unaware o the law on interest and earing that petitioner would ma6e good o his threats i shewould not obe! his instruction to cop! the promissor! note, she copied the promissor! note in her ownhandwriting: and that such was the same promissor! note presented b! petitioner as alleged proo otheir written agreement on interest.7%etitioner did not rebut the oregoing testimon!. It is evident thatrespondent did not reall! consent to the pa!ment o interest or the loan and that she was merel!tric6ed and coerced b! petitioner to pa! interest. $ence, it cannot be gainull! said that suchpromissor! note pertains to an e"press stipulation o interest or written agreement o interest on theloan between petitioner and respondent.

%etitioner, nevertheless, claims that both the 2TC and the Court o 8ppeals ound that he andrespondent agreed on the pa!ment o (X rate o interest on the loan: that the agreed (X rate ointerest was dul! admitted b! respondent in her testimon! in the Eatas %ambansa Elg. 77 cases he 3ledagainst respondent: that despite such judicial admission b! respondent, the 2TC and the Court o8ppeals, citing 8rticle ')/ o the Civil Code, still held that no interest was due him since the

agreement on interest was not reduced in writing: that the application o 8rticle ')/ o the Civil Codeshould not be absolute, and an e"ception to the application o such provision should be made when theborrower admits that a speci3c rate o interest was agreed upon as in the present case: and that itwould be unair to allow respondent to pa! onl! the loan when the latter ver! well 6new and evenadmitted in the Eatas %ambansa Elg. 77 cases that there was an agreed (X rate o interest on theloan.7)

e have careull! e"amined the 2TC @ecision and ound that the 2TC did not ma6e a ruling therein thatpetitioner and respondent agreed on the pa!ment o interest at the rate o (X or the loan. The 2TCclearl! stated that although petitioner and respondent entered into a valid oral contract o loanamounting to %)=,===.==, the!, nonetheless, never intended the pa!ment o interest thereon. 7/hilethe Court o 8ppeals mentioned in its @ecision that it concurred in the 2TCPs ruling that petitioner andrespondent agreed on a certain rate o interest as regards the loan, we consider this as merel! aninadvertence because, as earlier elucidated, both the 2TC and the Court o 8ppeals ruled that petitioneris not entitled to the pa!ment o interest on the loan. The rule is that actual 3ndings o the trial courtdeserve great weight and respect especiall! when aDrmed b! the appellate court.7(e ound nocompelling reason to disturb the ruling o both courts.

%etitionerPs reliance on respondentPs alleged admission in the Eatas %ambansa Elg. 77 cases that the!had agreed on the pa!ment o interest at the rate o (X deserves scant consideration. In the said case,respondent merel! testi3ed that ater pa!ing the total amount o loan, petitioner ordered her to pa!interest.7?2espondent did not categoricall! declare in the same case that she and respondent madean e9pressstipulation in writing as regards pa!ment o interest at the rate o (X. 8s earlier discussed,monetar! interest is due onl! i there was ane9pressstipulation in writing or the pa!ment o interest.

There are instances in which an interest ma! be imposed even in the absence o e"press stipulation,verbal or written, regarding pa!ment o interest. 8rticle 77= o the Civil Code states that i the

'7X per annum ma! be imposed as indemnit! or damages i no stipulation on the pa!ment o was agreed upon. 0i6ewise, 8rticle 77'7 o the Civil Code provides that interest due shall earn leinterest rom the time it is judiciall! demanded, although the obligation ma! be silent on this po

8ll the same, the interest under these two instances ma! be imposed onl! as a penalt! or damabreach o contractual obligations. It cannot be charged as a compensation or the use or orbeamone!. In other words, the two instances appl! onl! to compensator! interest and not to moneinterest.7The case at bar involves petitionerPs claim or monetar! interest.

Further, said compensator! interest is not chargeable in the instant case because it was not duproven that respondent deaulted in pa!ing the loan. 8lso, as earlier ound, no interest was dueloan because there was no written agreement as regards pa!ment o interest.

Aproposthe second assigned error, petitioner argues that the principle o solutio inde(itidoes nappl! to the instant case. Thus, he cannot be compelled to return the alleged e"cess amount parespondent as interest.=

Knder 8rticle '/= o the Civil Code, i the borrower o loan pa!s interest when there has been nstipulation thereor, the provisions o the Civil Code concerning solutioinde(itishall be applied7') o the Civil Code e"plains the principle o solutio inde(iti. Said provision provides that i sois received when there is no right to demand it, and it was undul! delivered through mista6e, thobligation to return it arises. In such a case, a creditor-debtor relationship is created under a 4ucontract whereb! the pa!or becomes the creditor who then has the right to demand the return pa!ment made b! mista6e, and the person who has no right to receive such pa!ment becomesobligated to return the same. The 4uasi-contract o solutio inde(itihar6s bac6 to the ancient prthat no one shall enrich himsel unjustl! at the e"pense o another. 'The principle o solutioinde(itiapplies where ;'> a pa!ment is made when there e"ists no binding relation between thewho has no dut! to pa!, and the person who received the pa!ment: and ;7> the pa!ment is mathrough mista6e, and not through liberalit! or some other cause. 7e have held that the princio solutio inde(itiapplies in case o erroneous pa!ment o undue interest.

It was dul! established that respondent paid interest to petitioner. 2espondent was under no duma6e such pa!ment because there was no e"press stipulation in writing to that efect. There wabinding relation between petitioner and respondent as regards the pa!ment o interest. The pa!

was clearl! a mista6e. Since petitioner received something when there was no right to demand has an obligation to return it.

e shall now determine the propriet! o the monetar! award and damages imposed b! the 2TCCourt o 8ppeals.

2ecords show that respondent received a loan amounting to %)=,===.== rom petitioner. 2esissued two chec6s with a total worth o %(==,===.== in avor o petitioner as pa!ment o theloan.)These chec6s were subse4uentl! encashed b! petitioner./*bviousl!, there was an e"ceo %'/=,===.== in the pa!ment or the loan. %etitioner claims that the e"cess o %'/=,===.== seinterest on the loan to which he was entitled. 8side rom issuing the said two chec6s, respondenpaid cash in the total amount o %'(),===.== to petitioner as interest .(8lthough no receipts rethe same were presented because petitioner reused to issue such to respondent, petitioner,nonetheless, admitted in his 2epl!-8Ddavit?in the Eatas %ambansa Elg. 77 cases that respondhim a total amount o %'(),===.== cash in addition to the two chec6s. Section 7/ 2ule '= o to criminal cases or violation o Eatas %ambansa Elg. 77 arespondent. In the said cases, the eTC ound respondent guilt! o violating Eatas %ambansa Eor issuing 3ve dishonored chec6s to petitioner. &onetheless, respondentPs conviction therein doafect our ruling in the instant case. The two chec6s, subject matter o this case, totaling %(==,=

which respondent claimed as pa!ment o the %)=,===.== worth o loan, were not among the 3veh 6 d t b di h d b d i th 3 i i l F th th TC d th t

G.R. No. 1;2231 ebrar 12, 200;
http://www.lawphil.net/judjuris/juri2009/jan2009/gr_173227_2009.html#rnt19http://www.lawphil.net/judjuris/juri2009/jan2009/gr_173227_2009.html#rnt20http://www.lawphil.net/judjuris/juri2009/jan2009/gr_173227_2009.html#rnt21http://www.lawphil.net/judjuris/juri2009/jan2009/gr_173227_2009.html#rnt22

4. Quintos vs. Beck

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