CATHOLIC VICAR APOSTOLIC v.

CA

G.R. No. L-80294-95 September 21, 1988

Gancayco, J.

Doctrine:

The bailees’ failure to return the subject matter of commodatum to the bailor does not mean adverse
possession on the part of the borrower. The bailee held in trust the property subject matter of
commodatum.

Facts:

Catholic Vicar Apostolic of the Mountain Province (VICAR for brevity) filed an application for registration
of title over Lots 1, 2, 3, and 4, said Lots being the sites of the Catholic Church building, convents, high
school building, school gymnasium, school dormitories, social hall, stonewalls, etc. The Heirs of Juan
Valdez and the Heirs of Egmidio Octaviano filed their Answer/Opposition on Lots Nos. 2 and 3,
respectively, asserting ownership and title thereto since their predecessors’ house was borrowed by
petitioner Vicar after the church and the convent were destroyed.. After trial on the merits, the land
registration court promulgated its Decision confirming the registrable title of VICAR to Lots 1, 2, 3, and 4.

The Heirs of Juan Valdez appealed the decision of the land registration court to the then Court of Appeals,
The Court of Appeals reversed the decision. Thereupon, the VICAR filed with the Supreme Court a petition
for review on certiorari of the decision of the Court of Appeals dismissing his application for registration
of Lots 2 and 3.

Issue:

Whether or not the failure to return the subject matter of commodatum constitutes an adverse
possession on the part of the owner

Held:

No. The bailees’ failure to return the subject matter of commodatum to the bailor did not mean adverse
possession on the part of the borrower. The bailee held in trust the property subject matter of
commodatum.

Petitioner repudiated the trust by declaring the properties in its name for taxation purposes.
REPUBLIC OF THE PHILIPPINES, plaintiff-appellee, vs. JOSE V. BAGTAS, defendant. FELICIDAD M.
BAGTAS, Administratrix of the Intestate Estate left by the late Jose V. Bagtas, petitioner-appellant 1962-
10-25 | G.R. No. L-17474

DOCTRINE:

A bailee in a contract of commodatum is liable for loss of the thing, even if it should be through a
fortuitous event: (2) If he keeps it longer than the period stipulated (3) If the thing loaned has been
delivered with appraisal of its value, unless there is a stipulation exempting the bailee from responsibility
in case of a fortuitous event.

FACTS

•On 8 May 1948 Jose V. Bagtas borrowed from the Republic of the Philippines through the Bureau of
Animal Industry three bulls: a Red Sindhi with a book value of P1,176.46, a Bhagnari, of P1,320.56 and a
Sahiniwal, of P744.46, for a period of one year from 8 May 1948 to 7 May 1949 for breeding purposes
subject to a government charge of breeding fee of 10% of the book value of the bulls.

•On 7 May 1949 of the contract, the borrower asked for a renewal for another period of one year.
However, the Secretary of Agriculture and Natural Resources approved a renewal thereof of only one bull
for another year from 8 May 1949 to 7 May 1950 and requested the return of the other two.

•On 25 March 1950 Jose V. Bagtas wrote to the Director of Animal Industry that he would pay the value
of the three bulls. On 17 October 1950 he reiterated his desire to buy them at a value with a deduction
of yearly depreciation to be approved by the Auditor General. On 19 October 1950 the Director of Animal
Industry advised him that the book value of the three bulls could not be reduced and that they either be
returned or their book value paid not later than 31 October 1950. Jose V. Bagtas failed to pay the book
value of the three bulls or to return them.

•On 20 December 1950 in the Court of First Instance of Manila the Republic of the Philippines commenced
an action against him praying that he be ordered to return the three bulls loaned to him or to pay their
book value in the total sum of P3,241.45 and the unpaid breeding fee in the sum of P499.62.

•On 26 June 1959, son of the appellant by the late defendant, returned the Sindhi and Bhagnari bulls to
Roman Remorin, Superintendent of the NVB Station, Bureau of Animal Industry, Bayombong, Nueva
Vizcaya, as evidenced by a memorandum receipt signed by the latter.

• The appellant contends that the Sahiniwal bull was accidentally killed during a raid by the Huks in
November 1953 upon the surrounding barrios of Hacienda Felicidad Intal, Baggao, Cagayan, where the
animal was kept, and that as such death was due to force majeure she is relieved from the duty of the
returning the bull or paying its value to the appellee.

ISSUE: Whether the estate of estate of Jose V. Bagtas liable for the bull that was unreturned and loss due
to fortuitous events.

HELD: Yes. The contention is without merit. The loan by the appellee to the late defendant Jose V. Bagtas
of the three bulls for breeding purposes for a period of one year from 8 May 1948 to 7 May 1949, later on
renewed for another year as regards one bull, was subject to the payment by the borrower of breeding
fee of 10% of the book value of the bulls. The appellant contends that the contract was commodatum and
that, for that reason, as the appellee retained ownership or title to the bull it should suffer its loss due to
force majeure. A contract of commodatum is essentially

gratuitous. If the breeding fee be considered a compensation, then the contract would be a lease of the
bull. Under article 1671 of the Civil Code the lessee would be subject to the responsibilities of a possessor
in bad faith, because she had continued possession of the bull after the expiry of the contract. And even
if the contract be commodatum, still the appellant is liable, because article 1942 of the Civil Code provides
that a bailee in a contract of commodatum is liable for loss of the thing, even if it should be through a
fortuitous event: (2) If he keeps it longer than the period stipulated (3) If the thing loaned has been
delivered with appraisal of its value, unless there is a stipulation exempting the bailee from responsibility
in case of a fortuitous event. The original period of the loan was from 8 May 1948 to 7 May 1949. The
loan of one bull was renewed for another period of one year to end on 8 May 1950. But the appellant
kept and used the bull until November 1953 when during a Huk raid it was killed by stray bullets.
Furthermore, when lent and delivered to the deceased husband of the appellant the bulls had each an
appraised book value, to wit: the Sindhi, at P1,176.46; the Bhagnari, at P1,320.56 and the Sahiniwal; at
P744.46. It was not stipulated that in case of loss of the bull due to fortuitous event the late husband of
the appellant would be exempt from liability.
SAURA IMPORT & EXPORT CO., INC., plaintiff-appellee, vs. DEVELOPMENT BANK OF THE PHILIPPINES,
defendant-appellant. G.R. No. L-24968 | 1972-04-27

DOCTRINE: An accepted promise to deliver something, by way of commodatum or simple loan is binding
upon the parties, but the commodatum or simple loan itself shall not be perfected until the delivery of
the object of the contract.

FACTS:

Saura, Inc. applied to the RFC, for an industrial loan of P500,000.00 which approved by the latter and to
be secured by a mortgage. Loan documents were executed: the promissory note and the corresponding
deed of mortgage, which was duly registered. Subsequently in a meeting of RFC board to which the
President of Saura, Inc. was present, the loan was reduced to 300,000. Saura Inc. however that the loan
of 500,000 be approved. RFC accepted and approved the loan application subject to some conditions
which Saura admitted it could not comply with. Correspondence and negotiations came to a halt and
Saura, Inc. did not pursue further and instead requested the cancellation of mortgage and was delivered
to the President of Saura, Inc. Almost nine years after the mortgage in favor of RFC was cancelled at the
request of Saura, Inc., the latter commenced the present suit for damages, alleging failure of RFC (DBP)
to comply with its obligation to release the proceeds of the loan applied for and approved, thereby
preventing the plaintiff from completing or paying contractual commitments it had entered into, in
connection with its jute mill project.

ISSUES

1. Whether there was there a perfected consensual contract?

2. Whether there was a real contract of loan which would warrant recovery of damages arising out
of breach of such contract?

HELD

1. Yes.

There was indeed a perfected consensual contract, as recognized in Article 1934 of the Civil Code, which
provides: An accepted promise to deliver something, by way of commodatum or simple loan is binding
upon the parties, but the commodatum or simple loan itself shall not be perfected until the delivery of
the object of the contract. There was undoubtedly offer and acceptance in this case: the application of
Saura, Inc. for a loan of P500,000.00 was approved by resolution of the defendant, and the corresponding
mortgage was executed and registered. But this fact alone falls short of resolving the basic claim that the
defendant failed to fulfill its obligation and the plaintiff is therefore entitled to recover damages.

2. None.

Evidently Saura, Inc. realized that it could not meet the conditions required by RFC, and so wrote its letter
asking that out of the loan agreed upon the sum of P67,586.09 be released "for raw materials and labor."
This was a deviation from the terms laid down in Resolution No. 145 and embodied in the mortgage
contract, implying as it did a diversion of part of the proceeds of the loan to purposes other than those
agreed upon. When RFC turned down the request in its letter the negotiations which had been going on
for the implementation of the agreement reached an impasse. Saura, Inc. obviously was in no position to
comply with RFC's conditions. So instead of doing so and insisting that the loan be released as agreed
upon, Saura, Inc. asked that the mortgage be cancelled. The action thus taken by both parties was in the
nature of mutual desistance — what Manresa terms "mutuo disenso"

— which is a mode of extinguishing obligations. It is a concept

that derives from the principle that since mutual agreement can create a contract, mutual disagreement
by the parties can cause its extinguishment.
FRANCISCO HERRERA, plaintiff-appellant, vs. PETROPHIL CORPORATION, defendant-appellee. G.R. No.
L-48349 | 1986-12-29

DOCTRINE:

The elements of usury are (1) a loan, express or implied; (2) an understanding between the parties that
the money lent shall or may be returned; that for such loan a greater rate or interest that is allowed by
law shall be paid, or agreed to be paid, as the case may be; and (4) a corrupt intent to take more than the
legal rate for the use of money loaned. Unless these four things concur in every transaction, it is safe to
affirm that no case of usury can be declared.

FACTS:

On December 5, 1969, the plaintiff-appellant and ESSO Standard Eastern. Inc., (Petrophil Corporation)
entered into a "Lease Agreement" whereby the former leased to the latter a portion of his property for a
period of twenty (20) years from said date. On December 31, 1969, pursuant to the said contract, the

PETROPHIL CORPORATION

paid to the

HERRERA

advance rentals for the first eight years, subtracting therefrom the amount of P101,010.73, the amount it
computed as constituting the interest or discount for the first eight years, in the total sum P180,288.47.
On August 20, 1970, the defendant-appellee, explaining that there had been a mistake in computation,
paid to the appellant the additional sum of P2,182.70, thereby reducing the deducted amount to only
P98,828.03. On October 14, 1974, the plaintiff-appellant sued the defendant-appellee for the sum of
P98,828.03, with interest, claiming this had been illegally deducted from him in violation of the Usury Law.
Plaintiff-appellant now prays for a reversal of that judgment, insisting that the lower court erred in the
computation of the interest collected out of the rentals paid for the first eight years; that such interest
was excessive and violative of the Usury Law; and that he had neither agreed to nor accepted the
defendant-appellant's computation of the total amount to be deducted for the eight years advance
rentals. The defendant maintains that the correct amount of the discount is P98,828.03 and that the same
is not excessive and above that allowed by law.

ISSUE:

Whether or not the contract is a loan

HELD:

No As its title plainly indicates, the contract between the parties is one of lease and not of loan. It is clearly
denominated a "LEASE AGREEMENT." Nowhere in the contract is there any showing that the parties
intended a loan rather than a lease. The provision for the payment of rentals in advance cannot be
construed as a repayment of a loan because there was no grant or forbearance of money as to constitute
an indebtedness on the part of the lessor. On the contrary, the defendant-appellee was discharging its
obligation in advance by paying the eight years rentals, and it was for this advance payment that it was
getting a rebate or discount.

There is no usury in this case because no money was given by the defendant-appellee to the plaintiff-
appellant, nor did it allow him to use its money already in his possession.

There was neither loan nor forbearance but a mere discount which the plaintiff-appellant allowed the
defendant-appellee to deduct from the total payments because they were being made in advance for
eight years. The discount was in effect a reduction of the rentals which the lessor had the right to
determine, and any reduction thereof, by any amount, would not contravene the Usury Law.

Integrated Realty Corp vs PNB

GR No. 60705, 28 June 1989

174 SCRA 295

FACTS

Raul Santos made a time deposit with OBM in the amount of P500H and he was issued a certificate
of time deposits. On another date, Santos again made a time deposit with OBM in the amount of P200H,
he was again issued a CTD. IRC, thru its president Raul Santos, applied for a loan and/or credit line (P700H)
with PNB. To secure such, Santos executed a Deed of Assignment of the 2 time deposits. After due dates
of the time deposit certificates, OBM did not pay PNB. PNB then demanded payment from IRC and Santos,
but they replied that the loan was deemed paid with the irrevocable assignment of the time deposit
certificates.

PB then filed with RTC to collect from IRC and Santos with interest. The trial court ruled in favor of
PNB ordering IRC and Santos to pay PNB the total amount of P700H plus interest of 9% PA, 2% additional
interest and 1& PA penalty interest. On appeal, the CA ordered OBM to pay IRC and Santos whatever amts
they will to PNB with interest.

IRC and Santos now claim that OBM should reimburse them for whatever amts they may be
adjudged to pay PNB by way of compensation for damages incurred.
ISSUE

Whether or not the claim of IRC and Santos will prosper.

HELD

The Court held in the affirmative. The 2 time deposits matured on 11 January 1968 and 6 February
1968, respectively. However, OBM was not allowed and suspended to operate only on 31 July 1968 and
resolved on 2 August 1968. There was a yet no obstacle to the faithful compliance by OBM of its liabilities.
For having incurred in delay in the performance of its obligation, OBM should be held for damages. OBM
contends that it had agreed to pay interest only up to the dates of maturity of the CTD and that Santos is
not entitled to interest after maturity dates had expired.

While it is true that under Article 1956 of the CC, no interest shall be due unless it has been
expressly stipulated in writing, this applies only to interest for the use of money. It does not comprehend
interest paid as damages. OBM is being required to pay such interest, not as interest income stipulated in
the CTD, but as damages fro failure and delay in the payment of its obligations which thereby compelled
IRC and Santos to resort to the courts.

The applicable rule is that LI, in the nature of damages for non-compliance with an obligation to
puy sum of money, is recoverable from the date judicially or extra-judicially demand is made.
Republic vs CA 146 scra 15

FACTS:

The Heirs of Domingo Baloy, (private respondents), applied for a registration of title for their land. Their
claim is based on their possessory information title acquired by Domingo Baloy through the Spanish
Mortgage Law, coupled with their continuous, adverse and public possession of the land in question. The
Director of Lands opposed the registration alleging that such land became public land through the
operation of Act 627 of the Philippine Commission. On Nov 26, 1902, pursuant to the executive order of
the President of U.S., the area was declared within the US Naval Reservation. The CFI denied respondents'
application for registration. CA, reversed the decision. Petitioners herein filed their Motion for
Reconsideration, said MR was denied, hence this petition for review on certiorari.

ISSUE: Whether or not private respondents' rights by virtue of their possessory information title was lost
by prescription.

RULING: No. A communication which contains an official statement of the position of the Republic of the
Philippines with regard to the status of the land in question recognizes the fact that Domingo Baloy and/or
his heirs have been in continuous possession of said land since 1894 as attested by an "Informacion
Possessoria" Title, which was granted by the Spanish Government. Hence, the disputed property is private
land and this possession was interrupted only by the occupation of the land by the U.S. Navy in 1945. The
heirs of the late Domingo P. Baloy, are now in actual possession, and this has been so since the
abandonment by the U.S. Navy. The occupancy of the U.S. Navy was not in the concept of owner. It holds
of the character of a commodatum. It cannot affect the title of Domingo Baloy. One's ownership of a thing
may be lost by prescription by reason of another's possession if such possession be under claim of
ownership, not where the possession is only intended to be temporary, as in the case of the U.S. Navy's
occupation of the land concerned, in which case the owner is not divested of his title, although it cannot
be exercised in the meantime.

QUINTOS VS BECK 69 PHIL 108

Facts:

Quintos and Beck entered into a contract of lease, whereby the latter occupied the former’s house. On
Jan 14, 19 !, the contract of lease was no"ated, wherein the Q#intos $ratuitously $ranted to Beck the use
of the furniture, sub%ect tothe condition that Beck should return the furnitures to Quintos upon demand.
&hereafter, Quintos sold the property to 'aria and (osario )ope*. Beck was noti+ed of the con"eyance and
$i"en him ! days to "acate the premises. - addition, Quintos re/uired Beck to return all the furniture.
Beck refused to return $as heaters and 4 electric lamps since he would use them until the lease was
due to e0pire. Quintos refused to $et the furniture since Beck had declined to return all of them. Beck
deposited all the furniture belon$in$ to Q#intos to the sheri .

ISSUE: WON

Beck complied with his obli$ation of returnin$ the furnitures to Quintos when it deposited the furnitures
to the sheri .

RULING:

&he contract entered into between the parties is one of

commadatum

, because under it the plainti $ratuitously $ranted the use of the furniture to the defendant, reser"in$
for herself the ownership thereof2 by this contract the defendant bound himself to return the furniture
to the plainti , upon the latters demand 3clause of the contract, 50hibit 62 articles 1 4 ,
para$raph 1, and 1 41 of the 7i"il 7ode8. &he obli$ation "oluntarily assumed by the defendant to return
the furniture upon the plainti s demand, means that he should return all of them to theplainti at
the latter s residence or house. &he defendant did not comply with this obli$ation when he merely
placed them at the disposal of the plainti , retainin$ for his bene+t the three $as heaters and the four
eletric lamps.6s the defendant had "oluntarily undertaken to return all the furniture to the plainti , upon
the latter s demand, the 7ourt could not le$ally compel her to bear the e0penses occasioned by the
deposit of the furniture at the defendant s behest. &he latter, as bailee, was nt entitled to place the
furniture on deposit2 nor was the plainti under a duty to accept the o er to return the furniture,
because the defendant wanted to retain the three $as heaters and the four electric lamps.

Republic vs Grijaldo

Facts:

y
Grijaldo obtained five loans from the Bank of Taiwanin the total sum of P1,281.97 with interest at therats
of 6% per annum compounded quarterly. Thesewere evidenced by five promissory notes.

These loans were crop loans and was considered tobe due one year after they were incurred.

s a security for the payment of the loans, a chattelmortgage was executed on the standing crops of hisland.

The assets in the Bank of Taiwan were vested in theUS Gov·t which were subsequently transferred to
theRepublic of the Philippines

RP is now demanding the payment of the account.

ustice of Peace dismisses the case on the ground ofprescription. C

rendered a decision ordering theappellant to pay the appellee

Defendant·s contentions:

1)

The appellee has no cause of action againstappellant since the transaction was with TaiwanBank.2)

That if the appellee has a cause of action at all, ithad prescribed3)

The lower court erred in ordering the appellant topay P2,377.23

Issue:

Can RP still collect from Grijaldo?

Held:

Yes

Ratio:

The obligation of the contract was not to deliver adeterminate thing, it was a generic thing ² the amount
ofmoney representing the total sum of his loans. Thedestruction of anything of the same kind does not
extinguishthe obligation. The loss of the crops did not extinguish hisobligation to pay because the account
could still be paid fromother sources aside from the mortgaged crops.

Also,prescription does not run against the State.

Delos Santos v. Jarra Digest

G.R. No. L-4150 February 10, 1910

Facts: The Plaintiff Felix delos Santos filed this suit against Agustina Jarra. Jarra was the administratix of
the estate of Jimenea. Plaintiff alleged that he owned 10 1st class carabaos which he lent to his father-in-
law Jimenea to be used in the animal-power mill without compensation. This was done on the condition
of their return after the work at the latter’s mill is terminated. When delos Santos demanded the return
of the animals Jimenea refused, hence this suit.

Issue: W/N the contracts is one of a commodatum

Ruling: YES. The carabaos were given on commodatum as these were delivered to be used by defendant.
Upon failure of defendant to return the cattle upon demand, he is under the obligation to indemnify the
plaintiff by paying him their value. Since the 6 carabaos were not the property of the deceased or of any
of his descendants, it is the duty of the administratrix of the estate to either return them or indemnify the
owner thereof of their value.

Mina vs Pascual

Facts:
Francisco Fontanilla and Andres Fontanilla were brothers. Francisco Fontanilla acquired during his
lifetime, on March 12, 1874, a lot. Andres Fontanilla, with the consent of his brother Francisco, erected a
warehouse on a part of the said lot, embracing 14 meters of its frontage by 11 meters of its depth.
Francisco Fontanilla, the former owner of the lot, being dead, the herein plaintiffs, Alejandro Mina, et al.,
were recognized without discussion as his heirs. Andres Fontanilla, the former owner of the warehouse,
also having died, the children of Ruperta Pascual were recognized, though it is not said how, and
consequently are entitled to the said building, or rather, as Ruperta Pascual herself stated, to only six-
sevenths of

one-half

of it, the other half belonging, as it appears, to the plaintiffs themselves, and the remaining one-seventh
of the first one-half to the children of one of the plaintiffs, Elena de Villanueva.

Ruperta Pascual, as the guardian of her minor children, the herein defendants, petitioned the Curt of First
Instance of Ilocos Norte for authorization to sell "the six-sevenths of the

one-half

of the warehouse, of 14 by 11 meters, together with

its

lot. The warehouse, together with the lot on which it stands, was sold to Cu Joco, the other defendant in
this case

Issue: WoN there exist a contract of commodatum

Held:

although both litigating parties may have agreed in their idea of the commodatum, on account of its not
being, as indeed it is not, a question of fact but of law Contracts are not to be interpreted in conformity
with the name that the parties thereto agree to give them, but must be construed, duly considering their
constitutive elements, as they are defined and denominated by law. By the contract of loan, one of the
parties delivers to the other, either anything not perishable, in order that the latter may use it during the

certain period and return it to the former, in which case it is called commodatum It is, therefore, an
essential feature of the commodatum that the use of the thing belonging to another shall BE for a certain
period.

Francisco Fontanilla did not fix any definite period or time during which Andres Fontanilla could have the
use of the lot whereon the latter was to erect a stone warehouse of considerable value, and so it is that
for the past thirty years of the lot has been used by both Andres and his successors in interest.
G.R. No. L-23559 October 4, 1971 AURELIO G. BRIONES,

plaintiff-appellee, vs.

PRIMITIVO P. CAMMAYO, ET AL.,

defendants-appellants.

DIZON,

J.:

FACTS:

Plaintiff filed an action against the defendants to recover from them the amount of P1, 500.00, plus
damages, attorney's fees and costs of suit. The defendants answered that a mortgage contract was
executed for securing the payment of P1,500.00 for a period of one year, without interest, but the plaintiff
delivered to the defendant Primitivo only the sum of P1,200.00 and withheld the sum of P300.00 which
was intended as advance interest for one year; that on account of said loan of P1,200.00, defendant
Primitivo paid to the plaintiff the total sum of P330.00 which plaintiff, illegally and unlawfully refuse to
acknowledge as part payment of the account but as an interest of the said loan for an extension of another
term of one year; and that said contract of loan entered into between plaintiff and defendant Primitivo is
a usurious contract. Briones deniewwd the allegations of the counterclaim. The Municipal Court rendered
judgment sentencing the defendants to pay the plaintiff with interests thereon plus attorney's fees. The
Court of First Instance of Manila also ordered the defendants to pay the plaintiff. Defendants claim that
the trial court erred in sentencing them to pay the principal of the loan notwithstanding its finding that
the same was tainted with usury. It is not now disputed that the contract of loan in question was tainted
with usury.

ISSUE:

Whether the creditor is entitled to collect from the debtor the amount representing the principal
obligation in a contract of loan tainted with usury

HELD:

Yes. Under the Usury Law a usurious contract is void and the creditor had no right of action to recover
the interest in excess of the lawful rate but this did not mean that the debtor may keep the principal
received by him as loan — thus unjustly enriching himself to the damage of the creditor. The Usury Law,
by its letter and spirit, did not deprive the lender of his right to recover from the borrower the money
actually loaned to and enjoyed by the latter. In simple loan with stipulation of usurious interest, the
prestation of the debtor to pay the principal debt, which is the cause of the contract, is not illegal. The
illegality lies only as to the prestation to pay the stipulated interest; hence, being separable, the latter
only should be deemed void, since it is the only one that is illegal. The principal debt remaining without
stipulation for payment of interest can be recovered by judicial action. And in case of such demand, and
the debtor incurs in delay, the debt earns interest from the date of the demand. Such interest is not due
to stipulation, for there was none, the same being void. Rather, it is due to the general provision of law
that in obligations to pay money, where the debtor incurs in delay, he has to pay interest by way of
damages.

Lopez v. Del Rosario

44 PHIL 98

Facts:

> Benita Del Rosario is the owner of a bonded warehouse in Manila where copra and other merchandise
are deposited.

> Among those who had copra deposited in the warehouse was Froilan Lopez, the owner of 14 warehouse
receipts with a declared value of P107,990.40 in his name.

> Del Rosario secured insurance on the warehouse and its contents with 5 different insurance companies
in the amount of P404,800.

> All policies were in the name of Del Rosario, except for one (with Nat’l Insurance Co.) for 40T, in favor
of Compania Copra de Tayabas.

> The warehouse and its contents were destroyed by fire. When Bayne, a fire loss adjuster, failed to
effect a settlement between the Insurance companies and Del Rosario, the latter authorized Atty. Fisher
to negotiate with the Companies.

> An agreement was reached to submit the matter to arbitration. The claims by different people who
had stored copra in the warehouse were settled with the exception of Friolan Lopez.

> A case was filed in CFI by Lopez. The court awarded him the sum of P88,492.21 with legal interest.
Issue:

Whether or not Del Rosario acted as the agent of Lopez in taking out the insurance on the contents of the
warehouse or whether she acted as the reinsurer of the copra.

Held:

She acted as the agent of Lopez.

The agency can be deduced from the warehouse receipts, the insurance policies and the circumstances
surrounding the transaction. Under any aspect, Del Rosario is liable. The law is that a policy effected by
a bailee and covering by its terms in his own property and property held in trust, inures, in the event of
loss, equally and proportionately to the benefit of all owners of the property insured. Even if one secured
insurance covering his own goods and goods stored with him, and even if the owner of the stored goods
did not request or know the insurance, and did not ratify it before the payment of the loss, it has been
held by a reputable court that the warehouseman is liable to the owner of such stored goods for his share.

Zobel v. city of manila

CREDIT TRANSACTIONS: INTEREST

G.R. No. L-59096 October 11, 1985PACITA F. REFORMINA and HEIRS OFFRANCISCO REFORMINA,
petitioners,

vs

THE HONORABLE VALERIANOP. TOMOL, JR., as Judge of the Court of First Instance, Branch XI, CEBU
CITY,SHELL REFINING COMPANY (PHILS.),INC., and MICHAEL,INCORPORATED,

respondents.

FACTS

This is a a Petition for Review on certiorariof the Resolution of CFI-Cebu Judge Tomolfor an action for
Recovery of Damages forinjury to Person and Loss of Property.On June 7, 1972, judgment was renderedby
the Court of First instance of Cebu inCivil Case No. R-11279,

the dispositiveportion of which reads—WHEREFORE, judgment is hereby renderedin favor of the plaintiffs
and third partydefendants and against the defendantsand third party plaintiffs as follows:Ordering
defendants and third partyplaintiffs Shell and Michael, Incorporated topay jointly and severally the
followingpersons:(g) Plaintiffs Pacita andFrancisco

Reformina

the sum of P131,084.00 which is the value of the boatF B Pacita Ill together with its accessories,fishing
gear and equipment minusP80,000.00 which is the value of theinsurance recovered and the amount of
P10,000.00 a month as the estimatedmonthly loss suffered by them as a resultof the fire of May 6, 1969
up to the timethey are actually paid or already the totalsum of P370,000.00 as of June 4,1972

with legal interest

from the filing of the complaint until paid and to payattorney's fees of P5,000.00 with costsagainst
defendants and third partyplaintiffs.On appeal to the then Court of Appeals, thetrial court's judgment was
modified toreads as follows—WHEREFORE. the judgment appealed fromis modified such that defendants-
appellants Shell Refining Co. (Phils.), Inc.and Michael, Incorporated are herebyordered to pay ... The two
(2) defendants-appellants are also directed to payP100,000.00 with legal interests from thefiling of the
complaint until paid ascompensatory and moral damages andP41,000.00 compensation for the value of
the lost boat

with legal interest

from thefiling of the complaint until fully paid toPacita F.

Reformina

and the heirs of Francisco

Reformina
. The liability of thetwo defendants for an the awards issolidary.Petitioners' motion for the
reconsiderationof the questioned Resolution having beendenied, they now come before Us throughthe
instant petition praying for the settingaside of the said Resolution and for adeclaration that the judgment
in their favorshould bear legal interest at the rate of twelve (12%) percent per annum pursuantto Central
Bank Circular No. 416 dated July29, 1974.

ISSUE

How much, by way of legal interest, shoulda judgment debtor pay the judgmentcreditor?WON legal
interest meant 6% as providedfor under Article 2209 of the Civil Code .What kind of judgment is covered
underUSURY Law?

RULING

Article 2209 of the Civil Code is applicablein case at bar. It must be noted that thedecision herein sought
to be executed isone rendered in an Action for Damages forinjury to persons and loss of property anddoes
not involve any loan, much lessforbearances of any money, goods orcredits. As correctly argued by the
privaterespondents, the law applicable to the saidcase is Article 2209 of the New Civil Codewhich reads—
Art. 2209. If the obligation consists in thepayment of a sum of money, and thedebtor incurs in delay, the
indemnity fordamages, there being no stipulation to thecontrary, shall be the payment of interestagreed
upon, and in the absence of stipulation, the legal interest which is sixpercent per annum. The above
provision remains untoucheddespite the grant of authority to theCentral Bank by Act No. 2655, as
amended. To make Central Bank Circular No. 416applicable to any case other than thosespecifically
provided for by the Usury Lawwill make the same of doubtfulconstitutionality since the Monetary
Boardwill be exercising legislative functions

which was beyond the intendment of P.D.No. 116.Central Bank Circular No. 416 whichprovides —By virtue
of the authority granted to itunder Section 1 of Act 2655, as amended,otherwise known as the "Usury
Law" theMonetary Board in its Resolution No. 1622dated July 29, 1974,

has prescribed thatthe rate of interest for the

loan or forbearance of a

ny money, goods, orcredits and the rate allowed

in judgments,

in the absence of expresscontract as to such rate of interest,shall be twelve (12%) per cent perannum.

This Circular shall take effect immediately. (Italics supplied) The judgments spoken of and referred toare
Judgments in litigations involving loansor forbearance of any 'money, goods orcredits. Any other kind of
monetary judgment which has nothing to do with, norinvolving loans or forbearance of anymoney, goods
or credits does not fall within the coverage of the said law for it isnot within the ambit of the authority
granted to the Central Bank.
Liam Law vs Olympic Sawmill Co. and Elino Lee Chi 129 SCRA 449 (1984)

March 15, 2016

Ponente: J. Melencio-Herrera

FACTS

Liam Law loaned P10,000.00 without interest to the Olympic Sawmill Co. and Elino Lee Chi, as the
managing partner. When the loan became due, the debtors asked for extension and another loan was
executed, extending the payment of the loan and adding P6,000.00 as answer for attorney’s fees, legal
interest and other cost incident thereto.

Law filed a collection case when the defendants were unable to pay the second time. The CFI of Bulacan
decided in favor of the plaintiff. On appeal, the Court of Appeals endorsed the case to the Supreme Court,
stating that the issue involved was one of law.

ISSUE

Whether or not the agreement to pay P6,000.00 in addition to the principal obligation is lawful.

HELD

Yes. Article 1354 of the Civil Code states that:

Article 1354. Although the cause is not stated in the contract, it is presumed that it exists and
is lawful, unless the debtor proves the contrary.
 In relation to the case, the agreement of the parties relative to the P6,000.00 obligation, without
an evidentiary hearing, it has to be concluded that defendants had not proven that the P6,000.00
obligation was illegal. Hence, it is presumed that the agreement of the parties relative to the P6,000.00
exists and is lawful.

banco filipino vs Navarro

PNB V. IAC and magsalang