Garcia v. Thio (2007) Corona, J.

Thio received a crossed check from Garcia for $100,000 payable to a certain Marilou Santiago. Thereafter, Garcia received checks from Thio every month ($3,000 and $76,500). Once again, Thio received another crossed check for $500,000 from Garcia, also payable to Marilou Santiago. Then Garcia received $20,000 from Thio every month . According to Garcia, Thio failed to pay the principal amounts of the loans when they fell due. He filed a complaint for a sum of money and damages in the RTC. Garcia alleges: o Thio borrowed $100,000 with 3% monthly interest. Loan covered by 1st check. o Thio borrowed again: $500,000 at 4% monthly interest. Loan covered by 2nd check. o No promissory notes since they were friends at the time. o Thio paid the monthly interest but failed to pay the principal. o It was upon Thios instructions that the checks be made payable to Santiago. And once delivered to Thio, she would deliver the checks to Santiago. o Once Thio received the checks, she had possession and control so she had the choice to forward, retain, or return the checks. Defense of Thio: o Denied the 2 loans and that it was Marilou Santiago who borrowed the money. o Claims that she was merely asked by Garcia to give the crossed checks to Santiago.

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Thio admits Garcia did not personally know Santiago. A friend of both Garcia and Thio testified of Thios plan to borrow and lend money to realize profit of 2% Thio admitted issuing her own checks to cover the monthly interest. She says this was to accommodate Garcias request that Thio issue her own checks since she did not know Santiago. In Santiagos petition for insolvency, it was Thio who was listed as a creditor, not Garcia. Thio never presented Santiago as a witness. Presumption is that evidence wilfully suppressed would be adverse if produced.

Re: interest rate No written proof of the interest payable, just the verbal agreement that the interest would be 3% & 4%. NCC 1956: No interest shall be due unless it has been expressly stipulated in writing. While there is no stipulated interest, NCC 2209 provides that when an obligation is breached and consists in the payment of money (loan or forbearance) and in the absence of stipulation in writing, interest rate shall be 12% per annum. Thio is liable for payment of legal interest per annum to be computed from the date when she received Garcias demand letter. From finality of decision until fully paid, amount due shall earn interest at 12% per annum, the interim period deemed equivalent to a forbearance of credit. Saura Import & Export Co Inc v. DBP (1972) Makalintal, J. Saura Inc applied to the Rehabilitation Finance Corp (before its conversion to DBP) for an industrial loan of P500,000 RFC passed a resolution 145 approving the loan to be secured by a mortgage on the factory buildings to be constructed, the land site, and the machinery. But Saura wrote to RFC wanting a modification of the terms: o That in lieu of having China Engineers sign as co-maker of the promissory note, Saura would put up a bond for P123,500. In view of such request, RFC approved Resolution 736 designating its Board of Governors to re-examine all the aspects of the approved loan/ o Saura wrote RFC that China engineers had again agreed to act as co-signer for the loan and asked that the necessary documents be prepared in accordance with terms in Resolution 145.

In a meeting of the RFC Board of Governors, it was decided to reduce the loan from P500,000 to P300,000 (Resolution 3989). o Then FR Halling (who signed the promissory notes for China Engineers), wrote RFC that they no longer wanted to avail the loan. Saura took exception to the cancellation of the loan and informed RFC that China Engineers will reinstate the promissory note if RFC releases the P500,000. RFC passed Resolution 9083 restoring the loan to P500,000 but a certification by the DENR was needed that the raw materials (kenaf) are available in the immediate vicinity and that there is prospect of increased production of the raw materials. This is what moved RFC to approve the loan application. In RFCs letter to Saura: o The basis of the original approval is to develop the manufacture of sacks on the basis of the locally available raw materials. o The statement that Saura will have to rely on importation of jute would not be in line with the principle in approving the loan. Almost 9 yrs after the mortgage in favour of RFC was cancelled at the request of Saura, Saura commenced the present suit for damages, alleging failure of RFC to comply with its obligation to release the proceeds of the loan.

Ratio:

Issue: Who borrowed the money: Thio or Santiago? How much interest? Held: Thio; legal interest (12% per annum) consistent with NCC 2209 Ratio: Re: Who borrowed A loan is a real contract, not consensual, and as such is only perfected upon delivery of the object of the contract (Art. 1934). Upon delivery of the object of the contract, the debtor acquires ownership and is bound to pay the creditor. Delivery is the act by which the res or substance is places within the actual or constructive possession or control of another. Although Thio did not physically receive the proceeds of the checks, these instruments were placed in her control and possession under the arrangement where she re-lent the amounts to Santiago.

There was a perfected consensual contract. o There was an offer and acceptance. Application of Saura was approved by a resolution of the defendant, and the corresponding mortgage was executed and registered. o It should be noted that RFC entertained the loan application on the assumption that the factory would utilize locally grown raw materials, principally kenaf. The imposition of those conditions was not a deviation from the terms of the agreement, rather a step in its implementation. There was nothing in the conditions that contradicted the termsi ni RFC 145. Saura asking that out of the loan agreed upon, some be released for raw material and labor was a deviation from the terms in Resolution 145. When RFC turned down the request, the implementation of the agreement reached an impasse. Instead of complying with RFCs request, Saura asked that the mortgage be cancelled. ---> the action of both was in the nature of mutual desistance MUTUAL DESISTANCE: mode of extinguishing obligations o Since mutual agreement can create a contract, mutual disagreement can cause its extinguishment

Subsequent conduct of Saura confirms this desistance: o Did not protest any alleged breach by RFC o Request for cancellation of mortgage carried no reservation of rights, even applied with DBP for another loan o Only after 9 yrs did it bring an action for damages

BPI can only demand for payment of the amortization after Sept 13 bec it was only then that it complied with its obligation under the loan contract.

BPI Investment Corp v. CA and ALS Management & Devt Corp (2002) Quisumbing, J. Frank Roa got a loan at 16.25% interest rate per annum from Ayala Investment for the construction of a house. The house and lot were mortgaged to Ayala Investment (predecessor of BPI Investment) to secure the loan. Then, Roa sold the house and lot to ALS and Litonjua for P850,000. They paid P350,000 and assumed the P500,000 balance of Roas debt with Ayala. Ayala however, was not willing to extend the same interest rate, instead wanted 20% per annum and service fee of 1% per annum. March 1981, ALS executed a mortgage deed with the stipulation that mortgage payment starts on May 1, 1981. September 13, 1982, BPI released to ALS and Litonjua P7,000 purporting to be what was left of their loan after full payment of Roas loan. In June, BPI instituted foreclosure proceedings against ALS bec of failure to pay the mortgage indebtedness from May 1, 1981 to June 30, 1984. ALS and Litonjua filed a civil case against BPI alleging they were not in arrears in their payment but in fact made an overpayment as of June 30, 1984, maintaining that they should not be made to pay amortization before the actual release of the P500,000 loan. Only the total of P464,000 was released. Applying legal compensation, P35,000 should be applied to the initial monthly amortization.

Ratio:

A loan contract is not a consensual contract but a real contract. It is perfected only upon the delivery of the object. In this case, the contract was perfected on Sept 13, 1982, the date of the second release of the loan. Following the intention of the parties on the commencement of the amortization, ALS and Litonjuas obligation to pay started only on Oct 13, a month after perfection of the contract. A contract of loan involves reciprocal obligations. The promise by BPI to deliver the loan is upon the consideration that ALS will pay the monthly amortization on May 1. Neither party incurs in delay is the other does not or is not ready to comply.