SAURA IMPORT & EXPORT V DBP [GR No. L-24968 (APRIL 27, 1972)] Nature: Ponente: Makalintal Facts: Saura applied to the Rehabilitation Finance Corporation (RFC; now DBP) for an industrial loan of P500K to be used as follows: 250K for the construction of a factory building for the manufacture of jute sacks; 240,900 to pay the balance of the purchase price of the jute mill machinery and equipment; and 9,100 as additional working capital Jan. 7, 1954: Resolution No. 145. Approved loan application of P500K to be secured by a 1st mortgage on the bldg to be constructed and land with explicit provision on how proceeds were to be used (above); that Mr. & Mrs. Saura, Arellano, Caolboy, Estabillo and China Engineers shall sign promissory notes jointly with the corp; and that release shall be made at banks discretion subject to availability of funds and the bldgs construction progress Jan. 6: Saura wrote to RFC requesting that instead of having China Engineers sign as co-maker on the promissory notes, Saura would put up a 123,500 bond instead (equal amount as that promised by China); Roca would substitute Arellano Resolution No. 736 designating members of the Board of Governors to re-examine aspects of the loan Saura informed RFC that China had again agreed to sign as a co-signer Loan documents were executed Resolution 3989-RFC decided to reduce the loan to 300K China cancelled its promissory note Saura informed RFC that China will at any time reinstate their signature as co-signer if RFC releases the 500K loan Resolution No. 9083 restored loan to 500K with conditions: (1) DARNR shall certify that the raw material

needed are available in the immediate vicinity and that there is prospect of increased production to provide adequately for the requirements of the factory Saura wrote to RFC that according to the Bureau of Forestry, kenaf will not be available in sufficient quantity this year or probably even next year and asked for the proceeds to 67,586.09 for raw materials and labor RCF replied that Your statement that you will have to rely on the importation of jute and your request that we give you assurance that your company will be able to bring in sufficient jute materials as may be necessary for the operation of your factory wouldnt be in line with our principle in approving the loan Negotiations came to a standstill Deed of mortgage in favor of RFC was cancelled and was thereafter mortgaged to Prudential Bank (to secure its obligation-bought jute machinery) Saura failed to pay its obligation to Prudential, who then sued Saura 1964 (Almost 9 years after): Saura commenced action for damages alleging RFCs failure to release the proceeds approved RTC rendered decision in favor of Saura Issue/s: WON DBP is liable for damages for failure to fulfil its obligation Held: NO Ratio: There was indeed a perfected consensual contract under NCC1934 RFC entertained the loan application on the assumption that the factory to be constructed would utilize locally grown raw materials, principally kenaf The imposition of the conditions set out in Resolution No. 9038 was by no means a deviation from the terms of the agreement but a step in its implementation.

No contradiction with Resolution No. 145

When Saura wrote to RFC asking that out of the loan agreed upon the sum of 67,585.09 be released for raw material and labor was a deviation from the terms laid down in Resolution No. 145. Saura was obviously in no position to comply with RFCs conditions. So instead of doing so, Saura asked that the mortgage be cancelled, which was done. The action thus taken by both parties was in the nature of mutual desistance which is a mode of extinguishing obligations. Dispositive: Reversed. BPI INvestment Corp. vs. CA and ALS mgt.

May 1981). In fact, according ALS, there was overpayment. Also, ALS contends that a perfected loan agreement imposes reciprocal obligations, where the obligation or promise of each party is the consideration of the other party - so neither incurs in delay if the other is not ready to comply. In this case, ALS will not incur delay as long as the total loan is not yet released by BPI. BPI contends that contract of loan is a consensual contract, perfected at the time the contract of mortgage was executed - March 31, 1981 (under Bonnevie v CA). Also, that the loan was actually release on March 31, 1981 and delay in the release is attributable to ALS. Issue: WON the contract of loan is perfected despite nondelivery, if it was agreed upon Held: NO

Facts: Roa obtained a loan from AIDC, predecessor of BPI. He mortgaged his house and lot in New Alabang Village as security for the loan. Roa sold the prop to ALS and Litonjua, 350K cash + 500k-assumption of Roa's indebtedness w/ AIDC. March 1981, AIDC issued a new loan to ALS to be applied to Roa's debt w/same security. It was released August (update of Roa's arreages)-Sept (7K+ - what was left of loan after deducting Roas arreages) 1982. Amortization commenced May 1981 (as stipulated in the contract). June 1984, BPI instituted foreclosure proceedings against ALS for non-payment from May 1981-June 1984. Feb 1985, ALS and Litonjua filed a civil case for damages against BPI. They alleged they were not in arrears because a simple loan is perfected only upon the delivery of the object of the contract. Hence it was perfected only on Sept 1982, the date when BPI released the balance. So payment of monthly amortizations should commence only on Oct 1982 (despite the agreement that it shall commence

A loan contract is not a consensual contract but a real contract. It is perfected only upon the delivery of the object of the contract. The contract in Bonnevie declared by this Court as a perfected consensual contract falls under the first clause of A1934. It is an accepted promise to deliver something by way of simple loan. A contract of loan involves a reciprocal obligation, wherein the obligation or promise of each party is the consideration for that of the other. The promise of BPIIC to extend and deliver the loan is upon the consideration that ALS and Litonjua shall pay the monthly amortization. So neither party incurs in delay, if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. Therefore, in computing the amount due as of the date when BPIIC extrajudicially caused the foreclosure of the mortgage, the starting date is October 13, 1982 and not May 1, 1981. We can not properly declare BPIIC in bad faith because ALS made irregular payments, but, BPIIC was negligent in relying merely on the entries found in the deed of

mortgage, without checking and correspondingly adjusting its records on the amount actually released to ALS and the date when it was released. So nominal damages 25K is awarded. Naguiat v. CA Facts 1. Queano asked for a loan with Naguiat = 200k 2. Naguiat indorsed to Queano, Associated Bank check for the amount of 95k which was earlier issued to Naguiat by the corporate resources financing Corporation 3. She also issued her own filmanbank Check to the order of Queano for 95k (95x2 = 190) 4. To secure the loan, Queano executed a deed of real estate mortgage in favor of Naguiat and surrendered to her the owners duplicates of the titles covering the mortgage 5. Queano then issued a promissory note for 200k with interest 12% per annum payable on Sept 11, 1980 6. Queano also issued a Security Bank check postdated 11 Sept for 200k and payable to the order of Naguiat 7. However upon presentment on Sept 1,, Security Bank dishonored the check for insufficiency of funds. Queano, the next day, asked Security Bank to stop payment of her postdated check but the bank rejected the request to its policy not to honor such requests if the check is drawn against insufficient funds 8. Naguiat sent a demand letter which Queano received and shortly after she sent Reubenfeldt to meet with Naguiat. At the meeting, Queano told Naguiat that she did not receive the proceeds of the loan, adding that the checks were retained by Ruebenfeldt who purportedly was Naguiats agent. 9. Naguiat applied for extrajudicial foreclosure of the mortgage with the sheriff who then scheduled the foreclosure. 3 days before, QUEANO filed a case before the RTC seeking the annulment of the mortgage deed. Court stopped the auction sale.

10.RTC deed of real estate mortgage null and void and ordered Naguiat to return to Queano the duplicates of her titles 11.Naguiat appealed before CA which CA affirmed Issue: W/N Queano is liable to Naguiat (for payment of loan) Held: NO Ratio 1. Naguiat claims that the mortgage deed enjoys the presumption that the recitals of facts are true 2. SC says this is a question of fact, not of law! 3. The findings of the TC and CA are supported by the evidence on record. CA is correct in ruling that the presumption of truthfulness of the recitals in a public document was DEFEATED by the clear and convincing evidence in this case that pointed to the absence of consideration. 4. No evidence was submitted by Naguiat that the checks she issued or endorsed were actually encashed/deposited. 5. The mere issuance of the checks did not result in the perfection of the contract of loan. 6. It is only after the checks have produced the effect of payment that the contract of loan may be deemed perfected 1934: 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 perfected until the delivery of the object of contract 7. A loan contract is a real contract, not consensual and as such is perfected only upon the delivery of the object of the contract 8. The objects of the contract are the loan proceeds which Queano would enjoy ONLY upon encashment of the checks signed or indorsed by Naguiat. 9. If indeed the checks were encashed or deposited, Naguiat would have certainly presented the corresponding documentary evidence, such as the

returned checks and bank records which Naguiat failed to give. 10.Thus, mortgage is null and void. The consideration of the mortgage contract is the same as that of the principal contract from which it receives life and without which cannot exist as an independent contract. A mortgage contract being a mere accessory contract, its validity would depend on the validity of the loan secured by it. CIFC v. CA, Alegre On April 25, 1991, Vicente Alegre, invested with CIFC, a quasi-banking institution, is engaged in money market operations, five hundred thousand (P500,000.00) pesos, in cash. Petitioner issued a promissory note worth P516,238.67 (covering private respondent's placement plus interest at twenty and a half 20.5%) which was to mature on May 27, 1991. On May 27, 1991, CIFC issued BPI Check (the CHECK) worth P514,390.94 in favor of Alegre as proceeds of his matured investment plus interest. The CHECK was drawn from petitioner's current account with the Bank of the Philippine Islands (BPI). On June 17, 1991, Alegres wife deposited the CHECK with Rizal Commercial Banking Corp. (RCBC), in Palawan. BPI dishonored the CHECK and took custody of it pending an investigation of several counterfeit checks drawn against CIFC's checking account. BPI used the check to trace the perpetrators of the forgery. Alegre notified CIFC of the dishonored CHECK and demanded, on several occasions, that he be paid in cash. CIFC refused the request and instructed private respondent to wait for its ongoing bank reconciliation with BPI. Alegre made a formal demand for the payment of his money market placement. But CFIC required an impossible condition that the original check must first be surrendered. February 25, July 13, 1992, CIFC On July 27, 1993,

1992, Alegre filed a complaint for recovery of a sum of money against the petitioner with the Regional Trial Court of Makati (Alegre v CFIC)

filed against BPI, a BPI filed a separate separate civil collection suit action for against Vicente collection of a Alegre with the RTC. sum of money (BPI v Alegre) with the RTC. Vicente Alegre (CIFC v BPI) allegedly was BPI allegedly behind the forgery unlawfully of several CIFC deducted from checks amounting CIFC's checking to P1,724,364.58. account, BPI admitted to the counterfeit checks fact of the amounting to Compromise P1,724,364.58. The Agreement where it action included the would honor the prayer to collect CHECK thus the the amount of the claim was dishonored CHECK decreased by paid to Vicente P514K. Alegre. CIFC and BPI The records are entered into a silent on the Compromise outcome of this Agreement* and case. agreed for -END- BPI to pay CIFC P1,724,364.58 + litigation expenses, debit the sum of P514,390.94 from CIFC current account Alegres CHECK. -In case CIFC is adjudged liable to Vicente Alegre in Alegre v CIFC (see first column) CIFC can no longer go

In response to Alegre's complaint, CIFC filed a motion for leave of court to file a third-party complaint against BPI. BPI was impleaded by CIFC to enforce a right, for contribution and indemnity, with respect to Alegre's claim. On July 23, 1992, the trial court granted CIFC's motion.

BPI moved to after BPI. dismiss the third- -ENDparty complaint on the ground of pendency of another action (CIFC v BPI). So trial court dismissed the third-party complaint. TC during hearing found that BPI encashed and deducted the said amount from the account of CIFC, proceeds in its custody in accordance with the Compromise Agreement 5 it entered with CIFC to end the litigation in CIFC v BPI. -to be continued belowjudgment in favor of Vicente Alegre. CIFC appealed from the adverse decision of the trial court. The respondent court affirmed the decision of the trial court. ISSUE: WHETHER OR NOT ARTICLE 1249 OF THE NEW CIVIL CODE APPLIES IN THE PRESENT CASE. YES. HELD: CIFC contends that the provisions of the Negotiable Instruments Law (NIL) are the pertinent laws to govern its money market transaction with private respondent, and not September 27, 1993, RTC-Makati, Branch 132, rendered

paragraph 2 of Article 1249 of the Civil Code and was already discharged from the liability of paying the value of the CHECK: 1. There was "ACCEPTANCE" of the subject check by BPI, the drawee bank, as defined under the Negotiable Instruments Law, and therefore, BPI, the drawee bank, became primarily liable for the payment of the check. 2. BPI has not validly DISHONORED the subject check; and 3. The act of BPI of debiting/deducting the value of the check from its account amounted to liability under the subject check based on Section 137 of the Negotiable Instruments Law, which states: Liability of drawee retaining or destroying bill Where a drawee to whom a bill is delivered for acceptance destroys the same, or refuses to return the bill accepted or non-accepted to the Holder,within twenty-four hours after such deliveryhe will be deemed to have accepted the same. Since BPI accepted the instrument, the bank became primarily liable for the payment of the CHECK. Art. 1249 of the New Civil Code deals with a mode of extinction of an obligation and expressly provides for the medium in the "payment of debts." It provides that: The payment of debts in money shall be made in the currency stipulated, and if it is not possiblein the currency, which is legal tender in the Philippines. The delivery of promissory notes payable to order, or bills of exchange or other mercantile documents shall produce the effect of payment only when they have been cashed, or when through the fault of the creditor they have been impaired. Accdg to Perez vs. Court of Appeals, a "money market is a market dealing in standardized short-term credit instruments (involving large amounts) where lenders and borrowers do not deal directly with each other but through a middle man or dealer in open market. In a money market transaction, the investor is a lender who loans his money to a borrower through a middleman or dealer. Here the money market transaction between CIFC and Alegre is in the nature of a loan. Thus upon the dishonor by BPI of

CIFCs payment check to Alegre, Alegre could immediately file an action for the recovery of the value of the check. In a loan transaction, the obligation to pay a sum certain in money may be paid in money, which is the legal tender or, by the use of a check. A check is not a legal tender, and therefore cannot constitute valid tender of payment. August 12, 1927 SEVERINO TOLENTINO and POTENCIANA MANIO v BENITO GONZALEZ SY CHIAM FACTS: ANTECEDENT FACTS: Sometime prior to the 28th day of

P16,965.09, hence the vendor (Luzon Rice Mill) of issued TCT in favor of T and M.

November, 1922, the Tolentino and Manio (T and M) purchased from Luzon Rice Mills, Inc., a piece or parcel of land with the camarin located thereon, in Tarlac for P25,000, payable in three installments at 12 % interest rate: 1st installment - P2,000 May 2, 1921