Case Number: G.R. No.

L-46240, November 3, 1939

Case Name: Quintos vs Beck

Facts
Beck is a tenant of defendant Margarita Quintos. As such, Beck occupied
Quintos’ house. Quintos granted Beck the use of the furniture found on the
leased house, among these were three gas heaters and four electric lamps,
subject to the condition that the defendant would return them to the plaintiff
upon the latter's demand. Thereafter, Quintos sold the property to Maria and
Rosario Lopez. Beck was notified of the conveyance and given him 60 days to
vacate the premises. In addition, Quintos required Beck to return all the
furniture. Beck refused to return 3 gas heaters and 4 electric lamps since he
would use them until lthe lease was due to expire. Quintos refused to get the
furniture in view of the fact that the defendant had declined to make delivery of
all of them. Consequently, Quintos brought an action to compel Beck to return
her certain furniture which she lent him for his use. The trial court ruled in
favour of Beck holding that Quintos failed to comply with her obligation to get
the furniture when they were offered to her. On appeal of the case, the Court of
First Instance of Manila affirmed the lower court’s decision. Hence, this petition.

Issue
Whether or not the trial court erred in ruling that Quintos failed to comply
with her obligation to get the furniture when they were offered to her.

Held
Yes. The contract entered into between the parties is one of commadatum.
Under it the plaintiff gratuitously granted the use of the furniture to the
defendant, reserving for herself the ownership thereof. By this contract the
defendant bound himself to return the furniture to the plaintiff, upon the latter’s
demand. The obligation voluntarily assumed by the defendant to return the
furniture upon the plaintiff's demand, means that he should return all of them
to the plaintiff at the latter's residence or house. The defendant did not comply
with this obligation when he merely placed them at the disposal of the plaintiff,
retaining for his benefit the three gas heaters and the four electric lamps. The
trial court, therefore, erred when it came to the legal conclusion that the plaintiff
failed to comply with her obligation to get the furniture when they were offered
to her.

Case Number: G.R. No. 123031 October 12, 1999

Case Name: Cebu International Finance Corporation v. Court of Appeals

Facts

,
 Cebu International Finance Corporation (CIFC) is a quasi-banking
institution engaged in money market operations. Private respondent, Vicente
Alegre, invested with Cebu International Finance Corporation (CIFC) Php
500,000.00 in cash. CIFC issued promissory note which covered private
respondent’s placement. CIFC issued BPI Check No. 513397 (the Check) in favor
of private respondent as proceeds of his matured investment. Private
respondent’s wife deposited the Check with RCBC but BPI dishonoured it,
annotating therein that the “Check is subject of an investigation”. BPI took
possession of the Check pending investigation of several counterfeit checks
drawn against CIFC’s checking account. Private respondent demanded from
CIFC that he be paid in cash but the latter refused. Private respondent Alegre
filed a case for recovery of a sum of money against CIFC. CIFC asserts that since
BPI accepted the instrument, the bank became primarily liable for the payment
of the Check. When BPI offset the value of the Check against the losses from the
forged checks allegedly committed by private respondent, the Check was deemed
paid.

Issue
Whether or not petitioner CIFC is discharged from the liability of paying
the value of the Check.

Held
No. In a money market transaction, the investor is a lender who loans his
money to a borrower through a middleman or dealer. A check is not legal tender,
and therefore cannot constitute valid tender of payment. Since a negotiable
instrument is only substitute for money and not money, the delivery of such an
instrument does not by itself, operate as payment. Mere delivery of checks does
not discharge the obligation under a judgment. The obligation is not
extinguished and remains suspended until the payment by commercial
document is actually realized. (Article 1249)

Case Number: G.R. No. 26085, August 12, 1927

Case Name: Tolentino vs. Gonzalez Sy Chiam

Facts
Tolentino purchased land from Luzon Rice Mills for Php 25,000 payable in
three installments. Tolentino defaulted on the balance so the owner sent a letter
of demand to him. To pay, Tolentino applied for loan from Gonzalez on condition
that he would execute a pacto de retro sale on the property in favor of Gonzalez.
Upon maturation of loan, Tolentino defaulted, subsequently Gonzalez demanded
recovery of the land. Tolentino contends that the pacto de retro sale is a mortgage
and not an absolute sale.

Issue
Whether or not the contention of Tolentino is tenable
 Held
No. The Supreme Court held that upon its terms, the deed of pacto de retro
sale is an absolute sale with right of repurchase (a conditional sale) and not a
mortgage (a loan). It has been the uniform theory of this court, due to the severity
of a contract of pacto de retro, to declare the same to be a mortgage and not a
sale whenever the interpretation of such a contract justifies that conclusion.
There must be something, however, in the language of the contract or in the
conduct of the parties which shows clearly and beyond doubt that they intended
the contract to be a "mortgage" and not a pacto de retro. Thus, Gonzalez is the
owner of the land and Tolentino is only holding it as a tenant by virtue of a
contract of lease.

Case Number: G.R. No. 90828. September 5, 2000

Case Name: Colinares vs Court of Appeals

Facts
Petitioners Melvin Colinares and Lordino Veloso were contracted by the
Carmelite Sisters of Cagayan de Oro City to renovate the latter's convent at
Camaman-an, Cagayan de Oro City. Petitioners obtained various construction
materials from CM Builders Centre for the said project. Afterwards, petitioners
applied for a commercial letter of credit with the Philippine Banking Corporation
(PBC), Cagayan de Oro City Branch in favor of CM Builders Centre. PBC
approved the letter of credit to cover the full invoice value of the goods. Petitioners
signed the pro-forma trust receipt as security. However, petitioners failed to pay
the whole amount on its due date. Several demand letters were sent to them.
Petitioners proposed that the terms of payment of the loan shall be modified.
Pending approval of the said proposal, petitioners paid some amounts.
Concurrently with the separate demand for attorney's fees by PBC's legal
counsel, PBC continued to demand payment of the balance. Consequently,
petitioners were charged with violation of P.D. No.115 (Trust Receipts Law) in
relation to Article 315 of the Revised Penal Code. During trial, petitioners insisted
that the transaction was that of an ordinary loan. The trial court convicted the
petitioners for the offense charged. On appeal, the Court of Appeals affirmed the
conviction of petitioners and increased the penalty imposed.

Issue
Whether or not the nature of the contract was a trust receipt agreement.

Held
No. This Court ruled that a thorough examination of the facts obtaining in
the case at bar revealed that the transaction intended by the parties was a simple
loan, not a trust receipt agreement. Petitioners are not importers acquiring the
good for re-sale, contrary to the express provision embodied in the trust receipt.
They are contractors who obtained the fungible goods for their construction
project. At no time did title over the construction materials pass to the bank, but
directly to the petitioners from CM Builders Centre. This impressed upon, the
trust receipt in question vagueness and ambiguity, which should not be the basis
for criminal prosecution in the event of violation of its provisions. 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 it, may be unjust and inequitable, if not reprehensible. Such agreements are
contracts of adhesion which borrowers have no option but to sign lest their loan
be disapproved. The resort to this scheme leaves poor and hapless borrowers at
the mercy of banks, and is prone to misinterpretation, as had happened in this
case. Eventually, PBC showed its true colors and admitted that it was only after
collection of the money, as manifested by its Affidavit of Desistance. Petitioners
were acquitted.

Case Number: G.R. No. L-20240; December 31, 1965

Case Name: Republic of the Philippines v. Jose Grijaldo

Facts
Jose Grijaldo, defendant – appellant, obtained five loans from the branch
of the Bank of Taiwan in Bacolod City. The loans were evidenced by five
promissory notes executed by the appellant in favor of the Bank of Taiwan. To
secure the payment of the loans, Grijaldo executed a chattel mortgage on the
standing crops on his land. The assets in the Philippines of the Bank of Taiwan,
Ltd. were vested in the Government of the United States. Pursuant to the
Philippine Property Act of 1946 of the United States, these assets including the
loans in question, were subsequently transferred to the Republic of the
Philippines by the Government of the United States under Transfer Agreement
of 20 July 1954. Republic of the Philippines, represented by the Chairman of the
Board of Liquidators, made a written extrajudicial demand upon the appellant
for the payment of account in question. Republic filed a complaint in the Justice
of the Peace of Court of Hinigaran, Negros Occidental, to collect from the
appellant the unpaid account in question. The court a quo rendered a decision
ordering Grijaldo to pay the Republic of the Philippines the sum of P2,377.23 as
of 31 December 1959 plus interest at the rate of 6% per annum compounded
quarterly. Grijaldo contends that Republic of the Philippines has no cause of
action against him since the contract of loan was instituted with the Bank of
Taiwan. Appellant maintains, in support of his contention that the appellee has
no cause of action, that because the loans were secured by a chattel mortgage
on the standing crops on the land owned by him and those crops were lost or
destroyed through enemy action his obligation to pay the loans was thereby
extinguished||.
Issue
Whether or not the obligation of Grijaldo was extinguished.

Held
No. The obligation of the appellant under the five promissory notes was
not to deliver a determinate thing namely, the crops to be harvested from his
land, or the value of the crops that would be harvested from his land. Rather,
his obligation was to pay a generic thing — the amount of money representing
the total sum of the five loans, with interest. The transaction between the
appellant and the Bank of Taiwan, Ltd. was a series of five contracts of simple
loan of sums of money. "By a contract of (simple) loan, one of the parties delivers
to another ... money or other consumable thing upon the condition that the same
amount of the same kind and quality shall be paid." (Article 1933, Civil Code)
The obligation of the appellant under the five promissory notes evidencing the
loans in questions is to pay the value thereof; that is, to deliver a sum of money
— a clear case of an obligation to deliver, a generic thing. Article 1263 of the Civil
Code provides: “In an obligation to deliver a generic thing, the loss or destruction
of anything of the same kind does not extinguish the obligation.” The chattel
mortgage on the crops growing on appellant's land simply stood as a security for
the fulfillment of appellant's obligation covered by the five promissory notes, and
the loss of the crops did not extinguish his obligation to pay, because the account
could still be paid from other sources aside from the mortgaged crops.