LAW ON CREDIT TRANSACTIONS CASE DIGEST PDF

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NORTHWESTERN UNIVERSITY COLLEGE OF LAW Laoag City, Ilocos Norte LAW ON CREDIT TRANSACTIONS CASE DIGEST By: JEANETTE P. CALONG JD II JUDGE CHARLES JAVIER CALAPINI Professor TABLE OF CONTENTS 1. PNB vs. MARAÑON, G.R. No. 189316, July 1, 2013 ................................ 1 2. AGNER vs. BPI, G.R. No...

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NORTHWESTERN UNIVERSITY COLLEGE OF LAW Laoag City, Ilocos Norte

LAW ON CREDIT TRANSACTIONS CASE DIGEST By: JEANETTE P. CALONG JD II

JUDGE CHARLES JAVIER CALAPINI Professor

TABLE OF CONTENTS 1. PNB vs. MARAÑON, G.R. No. 189316, July 1, 2013 ................................ 1 2. AGNER vs. BPI, G.R. No. 182963, June 3, 2013 ..................................... 2 3. HOJAS vs. PHIL. AMANAH BANK, G.R. No. 19453, June 5, 2013 ........... 3 4. MALLARI vs. PRUDENTIAL BANK, G.R. No. 197861, June 5, 2013 ......... 5 5. ANG vs. ANG, G.R. No. 201675, June 19, 2013 ...................................... 7 6. LIM vs. DBP, G.R. No. 177050, July 1, 2013 ........................................... 9 7. LIM vs. LAZARO, G.R. No. 185734, July 3, 2013 ................................... 11 8. BONROSTRO vs. LUNA, G.R. No. 172346, July 24, 2013 ...................... 13 9. AGUILAR vs. O’PALLICK, G.R. No. 182280, July 29, 2013 .................... 15 10. BPI vs. SARABIA MANOR HOTEL, G.R. No. 175844, July 29, 2013....... 17 11. NAGTALON vs. UNITED COCONUT, G.R. No. 172504, July 31, 2013.... 19 12. COMSAVINGS vs. CAPISTRANO, G.R. No. 170942, August 28, 2013 .... 21 13. VENZON vs. RURAL BANK, G.R. No. 178031, August 28, 2013 ............ 23 14. BIR vs. LEPANTO CERAMICS, G.R. No. 224764, April 24, 2017 ............ 24 15. DELA PAZ vs. L&J DEVT. CO., G.R. No. 183360, September 8, 2014.... 26 16. BAYSA vs. PLANTILLA, G.R. No. 159271, July 13, 2015 ....................... 27 17. BPI vs. SARDA, G.R. No. 239092, June 26, 2019 .................................. 29 18. FEBTC vs. UNION BANK, G.R. No. 196637, June 3, 2019 ..................... 31 19. PILIPINAS SHELL vs. ROYAL FERRY, G.R. No. 188146, Feb. 1, 2017 ... 33 20. PBCOM vs. BASIC POLYPRINTERS, G.R. No. 187581, Oct. 20, 2014 .... 35

PNB vs. MARAÑON G.R. No. 189316 July 1, 2013 Extent of mortgage. When the principal property is mortgaged, the mortgage shall include all natural or civil fruits and improvements found thereon when the secured obligation becomes due as provided in Article 2127 of the Civil Code.

FACTS: A lot with a building leased to various tenants was subjected to a loan and mortgage by Spouses Montealegre with PNB. The Spouses Montealegre failed to pay the loan and PNB foreclosed on said lot and building. During the auction, sale PNB was the highest bidder. Spouses Marañon filed before the RTC a complaint for Annulment of Title, Reconveyance and Damages against the Montealegres, PNB, the Register of Deeds and Provincial Sherriff. The civil case alleged that the Marañons are rightful owners of the lot and the Montealegres forged their names in a Deed of Sale to transfer the property to the Montealegres. PNB averred it is a mortgagee in good faith and the mortgage is binding and valid. During the trial, Paterio Tolete deposited with the Clerk of Court ₱144,000.00 and ₱30,000.00 with PNB as rental payments. The RTC ruled in favor of the respondents. PNB was also adjudged as a mortgagee in good faith and to respect the lien on the property. Neither parties dissented. Respondents filed an Urgent Motions for Withdrawal of Deposited Rental deposited by Tolete. The RTC granted the motion. PNB appealed to the CA but was unsuccessful. Hence, the instant petition. ISSUE:

Whether or not that the mortgage the RTC decided should be respected should also include the fruits deposited to answer for the debt.

RULING: No. Rent as an accessory follows the principal is the general rule. Normally when the principal property is mortgaged and there is failure of the mortgagor to pay, the fruits pass on to the mortgagee as accorded by the Article 2127 of the Civil Code. But this is subject to qualifications. This rule is under the presumption that the mortgagor was the rightful owner to encumber such property. There was no juridical tie made between PNB and the petitioners because of the fraudulent acts of the Montealegres. The building and fruits are not subjected to the lien, only the lot. Thus the rents paid are not subjected to be passed upon to PNB.

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AGNER vs. BPI FAMILY SAVINGS BANK, INC. G.R. No. 182963 June 3, 2013 Interest. While Central Bank Circular No. 905-82 effectively removed the ceiling on interest rates for both secured and unsecured loans, regardless of maturity, nothing in the said circular could possibly be read as granting carte blanche authority to lenders to raise interest rates to levels which would either enslave their borrowers or lead to a hemorrhaging of their assets. In case the stipulation on the interest rate is void for being contrary to morals, if not against the law, it is as if there was no express contract on said interest rate; thus, the interest rate may be reduced as reason and equity demand.

FACTS: Petitioners executed a Promissory Note with Chattel Mortgage in favor of Citimotors, Inc. with interest of 6% per month upon failure of payment of installment of the loan. Citimotors then assigned all its rights, title and interests in the Promissory Note with Chattel Mortgage to ABN AMRO Savings Bank, Inc., which likewise assigned the same to respondent BPI. For failure to pay, respondent filed an action for Replevin and Damages before the RTC. The RTC ruled for the respondent and ordered petitioners to jointly and severally pay an amount plus interest at the rate of 72% per annum. On appeal, the CA affirmed the RTC’s decision. Hence, this case at bar. ISSUE:

Whether or not the 72% interest per annum is valid.

RULING: No. Settled is the principle that stipulated interest rates of three percent (3%) per month and higher are excessive, iniquitous, unconscionable, and exorbitant. While Central Bank Circular No. 905-82, which took effect on January 1, 1983, effectively removed the ceiling on interest rates for both secured and unsecured loans, regardless of maturity, nothing in the said circular could possibly be read as granting carte blanche authority to lenders to raise interest rates to levels which would either enslave their borrowers or lead to a hemorrhaging of their assets. Since the stipulation on the interest rate is void for being contrary to morals, if not against the law, it is as if there was no express contract on said interest rate; thus, the interest rate may be reduced as reason and equity demand.

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HOJAS vs. PHILIPPINE AMANAH BANK G.R. No. 193453 June 5, 2013 Right to repurchase. The general rule in redemption is that it is not sufficient that a person offering to redeem manifests his desire to do so. The statement of intention must be accompanied by an actual and simultaneous tender of payment. This constitutes the exercise of the right to repurchase.

FACTS: Petitioners secured a loan from respondent bank which was secured by a mortgage. For failure to pay, respondent applied for extrajudicial foreclosure of the real properties, which was granted and was thereafter acquired by respondent. The OIC President of respondent bank wrote to petitioners’ son, informing him that although the one-year redemption period would expire on April 21, 1988, by virtue of the bank’s incentive scheme, the redemption period was extended until December 31, 1988. Despite said letter, the OIC of the Project Development Department of respondent bank wrote petitioners that the real properties acquired by respondent would be sold in a public bidding before the end of August, 1988. Thereafter, a public bidding was conducted and the mortgaged properties were awarded to respondent Kue. Subsequently, they were requested to vacate the premises prompting petitioners to file an action for the Determination of True Balance of Mortgage Debt, Annulment/Setting Aside of Extrajudicial Foreclosure of Mortgage and Damages, with Prayer for Preliminary Injunction against respondent. The RTC dismissed the complaint. Aggrieved, the petitioners appealed to the CA but to no avail. Hence, this present petition. ISSUE:

Whether or not petitioners properly exercised their right of redemption in the case at bar.

RULING: No. petitioners’ allegation that they had signified their intention to avail of the incentive scheme which they have equated to their intention to redeem the property, did not amount to an exercise of redemption precluding the bank from making the public sale. In the case of China Banking Corporation vs. Martir, the Court expounded on what constitutes a proper exercise of the right of redemption, to wit: The general rule in redemption is that it is not sufficient that a person offering to redeem manifests his desire to do so. The statement of intention must be accompanied by an actual and simultaneous tender of payment. This constitutes the exercise of the right to repurchase. 3|Page

In several cases decided by the Court where the right to repurchase was held to have been properly exercised, there was an unequivocal tender of payment for the full amount of the repurchase price. Otherwise, the offer to redeem is ineffectual. Bona fide redemption necessarily implies a reasonable and valid tender of the entire repurchase price, otherwise the rule on the redemption period fixed by law can easily be circumvented.

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MALLARI vs. PRUDENTIAL BANK G.R. No. 197861 June 5, 2013 Stipulation as to the interest rate. The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.

FACTS: Petitioner obtained from respondent bank a loan evidenced by a Promissory Note subject to an interest rate of 21% per annum, attorney’s fees equivalent to 15%, and in case of default, a penalty and collection charges of 12% per annum of the total amount due which was secured by a Deed of Assignment over petitioner’s time deposit account. Petitioners obtained again a loan from respondent subject to 23% interest per annum with the same penalties in case of default. Petitioners executed a Deed of Real Estate Mortgage to answer for the said loan. Petitioners failed to settle their loan obligations with respondent bank prompting the latter to file a petition for the extrajudicial foreclosure before the RTC. On the other hand, petitioners filed a complaint for annulment of mortgage alleging that there were onerous terms and conditions imposed by respondent bank when it tried to unilaterally increase the charges and interest over and above those stipulated. However, the RTC dismissed the complaint. On appeal, the CA affirmed the lower court’s decision. Hence, this present petition. ISSUE:

Whether or not the 23% per annum interest rate and the 12% per annum penalty charge on petitioners' loan are excessive or unconscionable.

RULING: No. In Bacolor vs. Banco Filipino Savings and Mortgage Bank, the Court held that the interest rate of 24% per annum on a loan agreed upon by the parties, may not be considered as unconscionable and excessive. As such, the Court ruled that the borrowers cannot renege on their obligation to comply with what is incumbent upon them under the contract of loan as the said contract is the law between the parties and they are bound by its stipulations. Based on the above jurisprudence, the Court finds that the 24% per annum interest rate provided for in the subject mortgage contracts for a loan may not be considered unconscionable. Moreover, considering that the mortgage agreement was freely entered into by both parties, the same is the law between them and they are bound to comply with the provisions contained therein.

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The Court also do not find the stipulated 12% per annum penalty charge excessive or unconscionable. In Ruiz vs. CA, the Court held that the 1% surcharge on the principal loan for every month of default is valid. This surcharge or penalty stipulated in a loan agreement in case of default partakes of the nature of liquidated damages under Art. 2227 of the New Civil Code, and is separate and distinct from interest payment. Also referred to as a penalty clause, it is expressly recognized by law. It is an accessory undertaking to assume greater liability on the part of an obligor in case of breach of an obligation.

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ANG vs. ANG G.R. No. 201675 June 19, 2013 Validity of mortgage. The Civil Code provides that in order for a mortgage to be valid, the mortgagor must be the absolute owner of the thing mortgaged.

FACTS: Sunrise Marketing Bacolod, Inc. (SMBI) is a duly registered corporation owned by the Ang family. Herein parties, Juanito Ang and Roberto Ang are siblings. Nancy Ang, the sister of Juanito and Roberto, agreed to extend a loan. Nancy issued a check in the amount of $1,000,000.00 payable to "Juanito Ang and/or Anecita Ang and/or Roberto Ang and/or Rachel Ang." Juanito and Anecita executed a Settlement Agreement and Real Estate Mortgage. Under the foregoing instruments, Juanito and Anecita admitted that they, together with Roberto and Rachel, obtained a loan from Nancy and such loan shall be secured by: (a) Juanito and Anecita’s fifty percent share over a parcel of land registered in the name of SMBI; (b) a parcel of land registered in the name of Juanito Ang; (c) Juanito’s fifty percent share in seven parcels of land registered in his and Roberto’s name; (d) a parcel of land registered in the name of Roberto; (e) a parcel of land registered in the name of Rachel; and (f) Roberto and Rachel’s fifty percent share in two parcels of land registered in the name of their son. Thereafter, Juanito filed a derivative suit before the RTC. He alleged that the intentional and malicious refusal of defendants Sps. Roberto and Rachel Ang to settle their 50% share of the total obligation will definitely affect the financial viability of plaintiff SMBI. The RTC ruled in favor of petitioners. On appeal, the CA reversed the appealed decision and held that that the loan extended by Nancy was not SMBI’s corporate obligation. Hence, the present petition. ISSUE:

Whether or not the loan is a corporate loan.

RULING: No. The CA correctly concluded that the loan was not a corporate obligation, but a personal debt of the Ang brothers and their spouses. The check was issued to "Juanito Ang and/or Anecita Ang and/or Roberto Ang and/or Rachel Ang" and not SMBI. The proceeds of the loan were used for payment of the obligations of the other corporations owned by the Angs as well as the purchase of real properties for the Ang brothers. SMBI was never a party to the Settlement Agreement or the Mortgage. It was never named as a co-debtor or guarantor of the loan. Both instruments were executed by Juanito and Anecita in their personal capacity, and not in their capacity as directors or officers of SMBI. Thus, SMBI is under no legal obligation to satisfy the obligation. 7|Page

The fact that Juanito and Anecita attempted to constitute a mortgage over their share in a corporate asset cannot affect SMBI. The Civil Code provides that in order for a mortgage to be valid, the mortgagor must be the absolute owner of the thing mortgaged. Corporate assets may be mortgaged by authorized directors or officers on behalf of the corporation as owner, as the transaction of the lawful business of the corporation may reasonably and necessarily require.

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LIM vs. DEVELOPMENT BANK OF THE PHILIPPINES G.R. No. 177050 July 1, 2013 Interest. No interest shall be due unless it has been expressly stipulated in writing.

FACTS: Petitioners obtained a loan from respondent DBP to finance their cattle raising business. Petitioners likewise executed a Promissory Note undertaking to pay the annual amortization with an interest rate of 9% per annum and penalty charge of 11% per annum. Another loan from DBP was obtained by petitioners with a Promissory Note with an interest rate of 12% per annum and a penalty charge of 1/3% per month on the overdue amortization. To secure the loans, petitioners executed a mortgage over their real properties in favor of DBP. Petitioners’ business collapsed and as a result, they failed to pay the loan amortizations. Petitioners requested for debt restructuring agreement. However, petitioners received a letter from respondent granting the request including the additional interest computed at straight 18.5% from date of receipt of notice of approval. Petitioners, in a letter, asked for the restoration of their previous agreement but to no avail. Petitioners then asked about the status of the Restructuring Agreement as well as the computation of the accrued interest and advances but the bank could not provide any definite answer. Petitioners filed before the RTC a Complaint against DBP for Annulment of Foreclosure and Damages with Prayer for Issuance of a Writ of Preliminary Injunction and/or Temporary Restraining Order. Petitioners alleged that DBP’s acts and omissions prevented them from fulfilling their obligation; thus, they prayed that they be discharged from their obligation and that the foreclosure of the mortgaged properties be declared void. The RTC ruled in favor of petitioners. However, the CA reversed the decision. Now, petitioners seek the reinstatement of the RTC Decision which declared their obligation fully extinguished and the foreclosure proceedings of their mortgaged properties void. Relying on the Principle of Constructive Fulfillment, petitioners insist that their obligation should be deemed fulfilled since DBP prevented them from performing their obligation by charging excessive interest and penalties not stipulated in the Promissory Notes. ISSUE:

Whether or not the imposition of additional interest and penalties is valid.

RULING: No. As to the imposition of additional interest and penalties not stipulated in the Promissory Notes, this should not be allowed. Article 1956 of the Civil Code specifically states that "no interest shall be due unless it has been expressly 9|Page

stipulated in writing." Thus, the payment of interest and penalties in loans is allowed only if the parties agreed to it and reduced their agreement in writing. A perusal of the promissory notes, however, failed to justify respondent bank’s computation of both interest and penalty under the same provision in each of the promissory notes. Respondent bank also admitted that the additional interests and penalties being charged petitioners were not based on the stipulations in the Promissory Notes but were imposed unilaterally as a matter of its internal banking policies. This banking policy, however, has been declared null and void in Philippine National Bank vs. CA, 196 SCRA 536 (1991). The act of respondent bank in unilaterally changing the stipulated interest rate is violative of the principle of mutuality of contracts under Art. 1308 of the Civil Code and contravenes Art. 1956 of the Civil Code. As in the PNB cases, petitioners herein never agreed in writing to pay the additional interest, or the penalties, as fixed by respondent bank; hence respondent bank’s imposition of additional interest and penalties is null and void.

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LIM vs. LAZARO G.R. No. 185734 July 3, 2013 Judicial deposit. The lien or security obtained by an attachment even before judgment is in the nature of a vested interest which affords specific security for the satisfaction of the debt put in suit.

FACTS: Petitioner filed a complaint for a sum of money with a prayer for the issuance of a writ of preliminary attachment against the respondents. The RTC granted the writ of preliminary attachment application and upon the posting of the required bond, issued the corresponding writ. Three parcels of land owned by the respondent spouses were levied upon. The parties later entered into a Compromise Agreement whereby respondents agreed to pay petitioner the amount of ₱2,351,064.80 on an installment basis. The RTC rendered a decision on the basis of the compromise. Respondents then filed an Omnibus Motion, seeking to lift the writ of preliminary attachment annotated on the subject TCTs. In granting the Motion, the RTC ruled that a writ of pre...