Colinares vs CA Entrustor: Philippine Banking Corpoartion Entrustee: Colinares and Veloso Facts: Colinares and Veloso were contracted

by the Carmelite Sisters of Cagayan de Oro City to renovate the latters convent for 40,000 pesos. In order to pursue with the construction project due to lack of budget, Colinares applied for a commercial letter of credit with the Phil. Banking Corp. (PBC) to cover the full invoice value of the goods. They signed a pro-formal trust receipt as security. A case in violation of P.D. 115 (trust receipt law) in relation to Art. 315 of the RPC (estafa), was filed against Colinares for their failure to comply with the demand made by the Bank against them. Issue: Whether or not there was a breach of contract against the trustees. Ruling: SC court said that. - Colinares are contractors and are not importers acquiring the goods for re-sale, but obtained the goods for their construction project. The practice of banks of making borrowers sign trust receipts to facilitate collection of loans and place them under the threats of criminal prosecution should they be unable to pay t may be unjust and inequitable, if not reprehensible. Such agreement is contract of adhesion which borrowers have no option but to sign lest their loan be disapproved. Francisco v. Gorgonio GR No. L-59519 July 20, 1982 FACTS: Spouses Adela and Luis Francisco represented by their daughter Zenaida Boiser, in a contract agreed to lease a piece of land owned by Ching Siao and Lim O. Chu where a building should be constructed by the Franciscos. The contract provided, among others: the deposit to the account of the lessor-petitioner, Francsico the amount of 150k representing 30K goodwill money and 120K advanced rental and a stipulation that in case the parties will not agree as to the terms and conditions of the final contract of lease, the prelease contract shall be declared null and void and the petitioner shall return the deposit plus legal interest. Before final occupancy, Francisco declared the pre-lease contract null and void, leased the premises to another lessee and offered to return the150K deposit. Ching Siao and Lim O. Chu refused to accept so that Francisco was prompted to make a consignation of the money with the Court. Ching Siao and lim O. Chu then filed a complaint, hence respondent judge Gorgonio ruled in their favor with an order to pay the amount of deposit plus compensatory interests. Issue: Is the petitioner liable for payment of interest despite tender of payment before demand?

Held: No. The award for interests in an action for the recovery of a sum of money partakes of a nature of an award for damages. Thus, Article2209 of the Civil Code provides: Art. 2209. If the obligation consists in the payment of a sum of money, and the debtor incurs in delay, the in demnity for damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and in the absence of stipulation, the legal interest, which is six percent per annum. Clearly, the indemnity for interest on a monetary obligation attaches only whenthe obligor incurs delay, that is, when he is in default, it being a fundamental principle of law that: Those obliged to deliver or to dosomething incur in delay from the time the obligee judicially orextrajudicially demands from them the fulfillment of their obligation.(Art. 1169, Civil Code.) In the case at bar, it is not disputed that no demands, judicial or extrajudicial, were made by private respondents on defendant Boiser(Francisco) for the return of the amount of P150,000.00. There could not have been any because of the nature of the action filed by privaterespondents, which is for specific performance. Hence, there is nodelay of the latter's obligation, assum ing that she be eventuallyrequired in the decision of the Court to return the same. Thus, nointerest is due where there was tender of payment prior to anydemand to pay or perform the agreed act.

No interest is due where there was tender of paymentprior to demand to pay or perform an agreed act. Adebt orcannot be considered in delay who offered a check backedbysufficient deposit or ready to pay cash if the cre ditor chosethatmeans of payment.

STATE INVESTMENT VS. COURT OF APPEALS 198 SCRA 392

FACTS: On 5 April 1982, respondent spouses Rafael and Refugio Aquino pledged certain shares of stock to petitioner State Investment House Inc. (State) in order to secure a loan of P120,000.00. Prior to the execution of the pledge, respondent spouses Jose and Marcelina Aquino signed an agreement with petitioner State for the latters purchase of receivables amounting to P375,000.00. When the 1st Account fell due, respondent spouses paid the same partly with their own funds and partly from the proceeds of another loan which they obtained also from petitioner State designated as the 2nd Account. This new loan was secured by the same pledge agreement executed in relation to the 1st Account. When the new loan matured, State demanded payment. Respondents expressed willingness to pay, requesting that upon payment, the shares of stock pledged be released. Petitioner State denied the request on the ground that the loan which it had extended to the spouses Jose and Marcelina Aquino has remained unpaid.

On 29, June 1984, Atty. Rolando Salonga sent to respondent spouses a Notice of Notarial Sale stating that upon request of State and by virtue of the pledge agreement, he would sell at public auction the shares of stock pledged to State. This prompted respondents to file a case before the Regional Trial Court of Quezon City alleging that the intended foreclosure sale was illegal because from the time the obligation under the 2nd

Account became due, they had been able and willing to pay the same, but petitioner had insisted that respondents pay even the loan account of Jose and Marcelino Aquino, which had not been secured by the pledge. It was further alleged that their failure to pay their loan was excused because the Petitioner State itself had prevented the satisfaction of the obligation.

On January 29, 1985, the trial court rendered a decision in favor of the plaintiff ordering State to immediately release the pledge and to deliver to respondents the share of stock upon payment of the loan. The CA affirmed in toto the decision of the trial court. Held: The payment of regular interest constitutes the price or cost of the use of money and thus, until the principal sum due is returned to the creditor, regular interest continues to accrue since the debtor continues to use such principal amount. (State Investment House, Inc. v. Court of Appeals, G.R. No. 90676, June 19, 1991, 198 SCRA 390, 398). It has been held that for a debtor to continue in possession of the principal of the loan and to continue to use the same after the maturity of the loan without payment of the monetary interest, would constitute unjust enrichment on the part of the debtor at the expense of the creditor. Tio Khe Chio v. CAGR No. 76101-02 September 30, 1991 Facts: Tio Khe Chio shipped bags of imported fishmeals and insured the same with respondent insurance company Eastern Assurance & SuretyCorp (EASCO). During transit, the bags were found out to be damagedthus rendering the fishmeals useless. Petitioner filed a claim before theEASCO which denied the same, prompting the former to sue the latterat CFI Cebu who ordered EASCO to pay the petitioner's claim forinsurance with damages. Upon execution, respondent filed a petitionfor certiorari with the CA who set aside the lower court's decisionarguing that the latter has erred in fixing the legal interest on 12% perannum rather than the mandated 6%. Issue: What should the legal interest be for damages arising from lossof property? Held: Article 2209 of the Civil Code provides that if the obligation consists in the payment of a sum of money andthe debtor incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of interest agreedupon, and in the absence of stipulation, the legal interest which is 6%per annum. The adjusted rate mentioned in the Circular No. 416, from which theCFI based its decision, refers only to loans or forbearances of money,goods or credits and court judgments thereon but not to court judgments for damages arising from inj ury to persons and loss of property which does not involve a loan.

Circular No. 416 of the Central Bank which took effect on July 29, 1974 pursuant to Presidential Decree No. 116 (Usury Law) raised the legal rate of interest from six (6%) percent to twelve (12%) percent. The adjusted rate mentioned in the circular refers only to loans or forbearances of money, goods or credits and court judgments thereon but not to court judgments for damages arising from injury to persons and loss of property which does not involve a loan. Eastern Shipping vs CA GR No. 97412, 12 July 1994 234 SCRA 78 FACTS Two fiber drums were shipped owned by Eastern Shipping from Japan. The shipment as insured with a marine policy. Upon arrival in Manila unto the custody of metro Port Service, which excepted to one drum, said to be in bad order and which damage was unknown the Mercantile Insurance Company. Allied Brokerage Corporation received the shipment from Metro, one drum opened and without seal. Allied delivered the shipment to the consignees warehouse. The latter excepted to one drum which contained spillages while the rest of the contents was adulterated/fake. As consequence of the loss, the insurance company paid the consignee, so that it became subrogated to all the rights of action of consignee against the defendants Eastern Shipping, Metro Port and Allied Brokerage. The insurance company filed before the trial court. The trial court ruled in favor of plaintiff an ordered defendants to pay the former with present legal interest of 12% per annum from the date of the filing of the complaint. On appeal by defendants, the appellate court denied the same and affirmed in toto the decision of the trial court. ISSUE (1) Whether the applicable rate of legal interest is 12% or 6%. (2) Whether the payment of legal interest on the award for loss or damage is to be computed from the time the complaint is filed from the date the decision appealed from is rendered. HELD (1.) a. In a loan, the interest due should be that stipulated in writing and in the absence thereof, the rate shall be 12% per annum. b. In case of other obligations, interest on the amount of damages may be imposed at the courts discretion at the rate of 6% per annum. c. When the money judgment becomes final and executory, the rate of legal interest shall be 12% per annum from such finality until its satisfaction, the interim period being an equivalent to a forbearance of credit. (2) From the date the judgment is made. Where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or EJ but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date of judgment of the court is made.

The Court held that it should be computed from the decision rendered by the court a quo.