CREDIT TRANSACTION

LOAN
ART 1249
G.R. No. 175490 September 17, 2009
MACALINAO vs BPI
In its Complaint, respondent BPI originally imposed the interest and penalty charges at the rate of
9.25% per month or 111% per annum which was declared as unconscionable by the lower courts for
being clearly excessive, and was thus reduced to 2% per month or 24% per annum but which the CA
modified increased them to 3% per month or 36% per annum based on the Terms and Conditions
Governing the Issuance and Use of the BPI Credit Card, which governs the transaction between
petitioner Macalinao and respondent BPI. The courts may reduce the interest rate as reason and equity
demand, for stipulations demanding interest excessive, iniquitous, unconscionable and exorbitant
interest rates are void for being contrary to morals, if not against the law.
TOPIC: COMMODATUM
G.R. Nos. L-80294-95, 165 SCRA 515 , September 21, 1988
CATHOLIC VICAR vs. CA
Private respondents were able to prove that their predecessors' house was borrowed by petitioner Vicar
after the church and the convent were destroyed and allowed the petitioners for its free use, petitioners
however claims ownership. When respondents allowed the free use of the property they became
bailors in commodatum and the petitioner the bailee and the bailees' failure to return the subject matter
of commodatum to the bailor did not mean adverse possession on the part of the borrower but the
bailee held in trust the property subject matter of commodatum, hence adverse claim could not ripen
into title by way of ordinary acquisitive prescription because of the absence of just title.
G.R. No. L-17474 October 25, 1962
REPUBLIC OF THE PHILIPPINES vs BAGTAS
The appellant had been in possession of the bull even after the expiration of the contract but contends
that since the contract was commodatum the appellee retained ownership or title to the bull, hence, it
should suffer its loss due to force majeure. A contract of commodatum is essentially gratuitous breeding
fee be considered a compensation, then the contract would be a lease of the bull. Even if the contract be
commodatum, the bailee is liable for loss of the things, even if it should be through a fortuitous event if
he keeps it longer than the period stipulated and 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.
G.R. No. L-24968
SAURA vs. DBP

April 27, 1972

The trial court rendered judgment for the plaintiff, ruling that there was a perfected contract between
the parties when the application of Saura, Inc. for a loan was approved by resolution of the defendant,
and the corresponding mortgage was executed and registered and that the defendant was guilty of
breach thereof.
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 perferted until the delivery of the object

of the contract.
G.R. No. L-48349
December 29, 1986
HERRERA vs. PETROPHIL CORPORATION
Pursuant to a contract, the defendant-appellee paid to the plaintfff-appellant advance rentals for the first
eight years, subtracting therefrom the amount of the interest or discount for the first eight years,
Plaintiff-appellant insists 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. The contract between the parties is one of lease and not of loan since 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, hence usury law will
not apply. ( Central Bank Circular No. 905, issued by the CB-MB in 1982, suspended Act No. 2655,
or the USURY Law of 1916)
G.R. No. L-60705 June 28, 1989
INTEGRATED REALTY CORPORATION vs PNB
OBM contends that it had agreed to pay interest only up to the dates of maturity of the certificates of
time deposit and that respondent Santos is not entitled to interest after the maturity dates had expired,
unless the contracts are renewed. When respondent invested his money in time deposits with OBM
they entered into a contract of simple loan or mutuum, not a contract of deposit.
G.R. No. L-20240
December 31, 1965
REPUBLIC OF THE PHILIPPINES vs. GRIJALDO
The appellant maintains that because the loans were secured by a chattel mortgage on the standing
crops on a land owned by him and these crops were lost or destroyed through enemy action his
obligation to pay the loans was thereby extinguished. The chattel mortgage on the crops growing on
appellant's land simply stood as a security for the fulfillment of appellant's obligation, which is the
payment of the loan, and the loss of the crops did not extinguish his obligation to pay, because his
obligation, as a simple loan or mutuum, was to pay a generic thing, the amount of money with interest.
G.R. No. L-23559
October 4, 1971
BRIONES vs. CAMMAYO, ET AL.
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, and erred likewise in not dismissing
the case. 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.
GR No. L-49101 October 24, 1983
BONNEVIE vs CA
Petitioner assails the validity of the mortgage between Lozano and Pbcom arguing that on the day the
deed was executed there was yet no principal obligation to secure, because as the loan of P75,000.00
was not received by the Lozano spouses, so that in the absence of a principal obligation, there is want

of consideration in the accessory contract, which consequently impairs its validity and fatally affects its
very existence. A contract of loan being a consensual contract, the herein contract of loan was
perfected at the same time the contract of mortgage was executed and the fact that the latter did not
collect from the respondent Bank the consideration of the mortgage on the date it was executed is
immaterial.
GR No. 146364 June 3, 2004
PAJUYO vs. CA
Pajuyo entrusted a house to Guevara for the latter's use provided he should return the same upon
demand and with the condition that Guevara should be responsible of the maintenance of the property,
however, after some time and upon demand Guevara refused to return the property to Pajuyo.
An essential feature of commodatum is that it is gratuitous and the Kasunduan reveals that the
accommodation accorded by Pajuyo to Guevarra was not essentially gratuitous because it obligated
Guevarra to maintain the property in good condition.
GR No. 172227 June 29, 2011
SPOUSES PALADA vs SOLIDBANK CORPORATION
Spouses Palada applied for a 3M loan secured with a deed of real estate mortgage of several properties
with the respondent Solidbank, but received only 1M because petitioners became collaterally deficient,
but due to failure of the petitioners to pay their obligation, Solidbank foreclosed said properties covered
by the mortgage and sold the same. A loan contract is perfected upon the delivery of the object of the
contract.
CA-G.R. CV NO. 77418, August 11, 2006
PUA vs. SPOUSES BAUTISTA
Spouses Bautista contracted a loan with petitioner, with a stipulation on interest pegged at 20% per
annum and due to failure to pay, the recomputed amount of 1.02M became 2M, which, for the
respondents is excessive and unconscionable. Elementary is the rule that when the obligation is
breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the
interest due should be that which the parties freely agreed upon or may have stipulated in writing, and
which would govern their contract of loan.
GR No-50550-52 October 31, 1979
YAM vs MALIK
Petitioners question the ruling of the lower court that several cases of estafa filed against the petitioners
should be admitted for trial in his sala on the ground of non-payment of a loan. When the relation is
purely that of debtor and creditor, the debtor can not be held liable for the crime of estafa, under Art.
315 of the Revised Penal Codes by merely refusing to pay or by denying the indebtedness.
GR No. 90676 June 19, 1991
STATE INVEST MENT HOUSE vs. CA
Private respondents pledged shares of stock to petitioner to secure a loan upon maturity respondents
expressed willingness to pay requesting that upon payment the shares of stocks pledged be released, but
petitioner denied on the ground that the loan had remained, and during execution, the petitioner refused

to accept payment demanding that interests be paid. The respondents may not be in default in view of
their expressed willingness to pay the same upon demand and the refusal of the petitioner to accept,
however, their tender of payment should have been properly consigned with the court, but it must be
stressed that the appropriate measure for damages in case of delay in discharging an obligation
consisting of the payment of a sum or money, is the payment of penalty interest at the rate agreed upon;
or the legal interest, only if they are in default.
GR No. 76101-02 September 30, 1991
TIO KHE CHIO vs CA
Petitioner questions the decision of the CA which set aside the lower court's decision arguing that the
latter has erred in fixing the legal interest on 12% per annum rather than the mandated 6%, when the
petitioner's shipped bags of imported fishmealsinsured with respondent insurance company were found
out to be damaged thus rendering the fishmeals useless. If the obligation consists in the payment of a
sum of money and the debtor incurs in delay, the indemnity for damages, there being no stipulation to
the contrary, shall be the payment of interest agreed upon, and in the absence of stipulation, the legal
interest which is 6% per annum.
GR No. 101444 May 9, 1995
AC ENTERPRISES INC vs. CONSTRUCTION INDUSTRY ARBITRATION COMMISSION
Petitioner insists that it is entitled to the interest rate of 12% per annum on the monetary award given
them by the Construction Industry Arbitration Commission (CIAC) and contends that under Executive
Order No. 1008 dated February 4, 1985 and the Rules of Procedure Governing Construction
Arbitration, arbitral awards are final and "inappealable (sic)" and pursuant to our ruling in Eastern
Shipping Lines, Inc. v. Court of Appeals, monetary awards in all judgments that became final and
executory, regardless of the nature of the obligation, shall bear legal interest of 12% per annum.
In Reformina v. Tomol, Jr., 139 SCRA 260 (1985), we made clear that the award of legal interest at
12% per annum under said Central Bank Circular shall be adjudged only in cases involving the loan or
forbearance of money, but, in Eastern Shipping Lines, Inc., we held that when the judgment awarding a
sum of money becomes final and executory, the monetary award shall earn interest at 12% per annum
from the date of such finality until its satisfaction, regardless of whether the case involves a loan or
forbearance of money on the reason that this interim period is deemed to be by then equivalent to a
forbearance of credit.
GR No. 168736 April 19, 2006
SPOUSES CUYCO vs. SPOUSES CUYCO
Petitioners, obtained a loan of 1.5M at a rate of 18% interest per annum and secured by real estate
mortgage over a parcel of land with improvements from respondents, subsequent loans were also
obtained, however the contracts covering some of the loans were not expressed as to whether they were
still covered by the same mortgage. An obligation is not secured by a mortgage unless it comes fairly
within the terms of the mortgage contract.
GR No. 168736 April 19, 2006
SPOUSES CUYCO vs. SPOUSES CUYCO
Petitioners defaulted payments, so that the respondents sued for foreclosure and sale of the property to
settle the obligations of the petitioners, hence, RTC rendered judgment ordering the petitioners to settle
the amount of loans plus interests compounded, the interest of 18% shall also earn the legal interest of

12%. but the CA clarified that the mortgage could only cover those loans contracts that were expressly
stating so, and that payment of the principal obligation 18% per annum shall discharge the property
mortgage. Section 2, Rule 68 of the Rules of Court provides that If upon the trial in such action
(foreclosure for payment or sale) the court shall find the facts set forth in the complaint to be true, it
shall ascertain the amount due to the plaintiff upon the mortgage debt or obligation, including interest
and other charges as approved by the court, and costs, hence the payment of the principal amount and
the interest plus other incidental costs would discharge the mortgage.