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<p>SIMPLE LOAN OR MUTUUM</p> <p>G.R. No. L-20240</p> <p>December 31, 1965</p> <p>REPUBLIC OF THE PHILIPPINES, plaintiff-appellee, vs. JOSE GRIJALDO, defendant-appellant. FACTS: In the year 1943 appellant Jose Grijaldo obtained five loans from the branch office of the Bank of Taiwan, Ltd. in Bacolod City, in the total sum of P1,281.97 with interest at the rate of 6% per annum, compounded quarterly. These loans are evidenced by five promissory notes executed by the appellant in favor of the Bank of Taiwan, Ltd., as follows: On June 1, 1943, P600.00; on June 3, 1943, P159.11; on June 18, 1943, P22.86; on August 9, 1943,P300.00; on August 13, 1943, P200.00, all notes without due dates, but because the loans were due one year after they were incurred. To secure the payment of the loans the appellant executed a chattel mortgage on the standing crops on his land, Lot No. 1494 known as Hacienda Campugas in Hinigiran, Negros Occidental. By virtue of Vesting Order No. P-4, dated January 21, 1946, and under the authority provided for in the Trading with the Enemy Act, as amended, 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 dated July 20, 1954. These assets were among the properties that were placed under the administration of the Board of Liquidators created under Executive Order No. 372, dated November 24, 1950, and in accordance with Republic Acts Nos. 8 and 477 and other pertinent laws. On September 29, 1954 the appellee, 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 the account in question. The record shows that the appellant had actually received the written demand for payment, but he failed to pay. On January 17, 1961 the appellee filed a complaint in the Justice of the Peace Court of Hinigaran, Negros Occidental, to collect from the appellant the unpaid account in question. The Justice of the Peace Of Hinigaran, after hearing, dismissed the case on the ground that the action had prescribed. The appellee appealed to the Court of First Instance of Negros Occidental and on March 26, 1962 the</p> <p>court a quo rendered a decision ordering the appellant to pay the appellee the sum of P2,377.23 as of December 31, 1959, plus interest at the rate of 6% per annum compounded quarterly from the date of the filing of the complaint until full payment was made. The appellant was also ordered to pay the sum equivalent to 10% of the amount due as attorney's fees and costs. The appellant appealed directly to this Court. During the pendency of this appeal the appellant Jose Grijaldo died. Upon motion by the Solicitor General this Court, in a resolution of May 13, 1963, required Manuel Lagtapon, Jacinto Lagtapon, Ruben Lagtapon and Anita L. Aguilar, who are the legal heirs of Jose Grijaldo to appear and be substituted as appellants in accordance with Section 17 of Rule 3 of the Rules of Court. ISSUE: Whether or not the obligation to pay is extinguished. The appellant likewise 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 a land owned by him and these crops were lost or destroyed through enemy action his obligation to pay the loans was thereby extinguished. HELD: This argument is untenable. The terms of the promissory notes and the chattel mortgage that the appellant executed in favor of the Bank of Taiwan, Ltd. do not support the claim of appellant. 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.</p> <p>SECTRANS 2010/ ATTY. AGUINALDO</p> <p>1</p> <p>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.</p> <p>CA ruled that the P2 million downpayment shall include interest computed at the time the disputed amount was considered a loan. Thus, this petition.</p> <p>Issue: Whether or not the interest should be limited to the 1st six months as contained in the MOA?</p> <p>Frias vs San Diego-Sison G.R. No. 155223 April 4, 2007 Facts Petitioner is the owner of a house and lot in Ayala Alabang. Petitioner and Dra. Flora San Diego-Sison (Respondent) entered into a Memorandum of Agreement (MOA) over the cited property with the following terms: 1. The land is to be sold for P 6.4 million. 2. Petitioner will receive P3 million from respondent as downpayment. 3. In light of the downpayment, respondent had 6 st months (1 ) to notify the Petitioner of her intention to purchase the land. However, the balance is to be paid within another 6 months. 4. Prior to the first six months, the Petitioner may still offer the cited land to other persons provided that the P3 million downpayment shall be returned to the Respondent including interest based on prevailing compounded bank interest. 5. Nevertheless, in case there are no other buyers within the first 6 months, no interest shall be charged on the P3 million. 6. However, in the event that on the 6th month the Respondent does not purchase the land, the Petitioner has a period of another 6 months nd (2 ) within which to pay the sum of P3 million with interest for the last six months only. The downpayment shall be treated as loan granted by the Respondent. Petitioner received from Respondent P2 million in cash and P1 million in a post-dated check which was subsequently considered as stale. Therefore, only P2 million was received as downpayment. Before the check became stale, Petitioner gave Respondent the TCT and the Deed of Absolute Sale of the land. Subsequently, Respondent decided not to purchase the property and notified Petitioner of this reminding the latter that the amount of P2 million should be considered as a loan payable within six months as stipulated in the MOA with interest computed from such notification. Petitioner subsequently failed to return the P2 million pesos.</p> <p>Ruling: No. SC ruled in favour of Respondent. The SC opined that if the terms of an agreement are clear and leave no doubt as to the intention of the contracting parties, the literal meaning of its stipulations shall prevail. It is further required that the various stipulations of a contract shall be interpreted together. In this case, the phrase "for the last six months only" should be taken in the context of the entire agreement. The MOA speaks of 2 periods of six months each. o The 1st six-months was given to Respondent to make up her mind whether or not to purchase Petitioner's property. o The 2nd six-months was given to Petitioner to pay the P2 million loan (downpayment) in the event that Respondent decided not to buy the property in which case interest will be charged "for the last six months only", referring to the 2nd six-month period. o This means that no interest will be charged for the 1st six-months while Respondent contemplating on whether to buy the property, nd but only for the 2 six-months after Respondent had decided not to buy the property. This is the meaning of the phrase "for the last six months only". o Certainly, there is nothing in their agreement that suggests that interest will be charged for 6 months only even if it takes defendant-appellant an eternity to pay the loan This does NOT mean that interest will no longer be charged after the 2nd six-month period since such stipulation was made on the logical and reasonable expectation that such amount would be paid within the date stipulated. Therefore, the monetary interest for the last 6 months continued to accrue until actual payment of the loaned amount. 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 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.</p> <p>SECTRANS 2010/ ATTY. AGUINALDO</p> <p>2</p> <p>Art. 1956. No interest shall be due when not expressly stipulated in writing. ARWOOD INDUSTRIES, INC. vs. D.M. Consunji, Inc. FACTS: Petitioner and respondent, as owner and contractor, respectively entered into an Agreement for the construction of petitioners condominium. Despite the completion of the project, petitioner was not able to pay respondent the full amount and left a balance. Repeated demands were left unheeded prompting respondent to file a civil case against petitioner, with a prayer among others that the full amount be paid with interest of 2% per month, from Nov. 1990 up to the time of payment. RTC ruled in favor of respondent. Petitioner appealed to the CA, particularly opposing the imposition of the 2% interest. The CA ruled in favor of the 2% interest. Petitioners contention- The imposition of the interest is without basis because (1) although it was written in the Agreement, it was not mentioned by the RTC in the dispositive portion and (2) the interest does not apply to the respondents claim but to the monthly progress billing. ISSUE: WON the RTC and Ca is correct in imposing a 2% per month interest on the monetary award or the balance of the contract price. HELD: Yes. The Agreement between the parties is the formal expression of the parties rights, duties and obligations. It is the best evidence of the intention of the parties. Consequently, upon the fulfillment by respondent of its obligation to complete the construction project, petitioner had the correlative duty to pay for respondents services. However, petitioner refused to pay the balance of the contract price. From the moment respondent completed the construction of the condominium project and petitioner refused to pay in full, there was delay on the part of petitioner. Delay in the performance of an obligation is looked upon with disfavor because, when a party to a contract incurs delay, the other party who performs his part of the contract suffers damages thereby. Obviously, respondent suffered damages brought about by the failure of petitioner to comply with its obligation on time. And, sans elaboration of the matter at hand, damages take the form of interest. Accordingly, the appropriate measure of damages in this case is the payment of interest at the rate agreed upon, which is 2% interest for every month of delay. It must be noted that the Agreement provided the contractor, respondent in this case, two options in case of delay in monthly payments, to wit: a) suspend work on the project until payment is remitted by the owner or b) continue the work but the owner shall be required to pay interest at a rate of two percent (2%) per month or a fraction thereof.</p> <p>Evidently, respondent chose the latter option, as the condominium project was in fact already completed. The payment of the 2% monthly interest, therefore, cannot be jettisoned overboard. Since the Agreement stands as the law between the parties, this Court cannot ignore the existence of such provision providing for a penalty for every months delay. Facta legem facunt inter partes. Neither can petitioner impugn the Agreement to which it willingly gave its consent. From the moment petitioner gave its consent, it was bound not only to fulfill what was expressly stipulated in the Agreement but also all the consequences which, according to their nature, may be in keeping with good faith, usage and law. Petitioners attempt to mitigate its liability to respondent should thus fail. As a last-ditch effort to evade liability, petitioner argues that the amount of P962,434.78 claimed by respondent and later awarded by the lower courts does not refer to monthly progress billings, the delayed payment of which would earn interest at 2% per month. Petitioner appears confused by a semantics problem. Monthly progress billings certainly form part of the contract price. If the amount claimed by respondent is not the monthly progress billings provided in the contract, what then does such amount represent? Petitioner has not in point of fact convincingly supplied an answer to this query. Neither has petitioner shown any effort to clarify the meaning of monthly progress billings to support its position. This leaves us no choice but to agree with respondent that the phrase monthly progress billings refers to a portion of the contract price payable by the owner (petitioner) of the project to the contractor (respondent) based on the percentage of completion of the project or on work accomplished at a particular stage. It refers to that portion of the contract price still to be paid as work progresses, after the downpayment is made. This definition is, indeed, not without basis. Articles 6.02 and 6.03 of the Agreement, which respectively provides that the (b)alance shall be paid in monthly progress payments based on actual value of the work accomplished and that the progress payments shall be reduced by a portion of the downpayment made by the OWNER corresponding to the value of the work completed give sense to respondents interpretation of monthly progress billings. SONCUYA V. AZARRAGA ROYAL SHIRT FACTORY, INC. v CO FACTS:</p> <p>SECTRANS 2010/ ATTY. AGUINALDO</p> <p>3</p> <p>-</p> <p>-</p> <p>-</p> <p>The parties entered into a contract wherein it is stipulated that 350 pairs of ballet shoes will be sold by Co and that Co had 9 days from delivery of the shoes to make his choice of 2 alternatives: a) consider the sale for the shoes closed at a flat rate, or b) return the remaining unsold ones to Royal. Co failed to return the unsold pairs after 9 days and actually began making partial payments...</p>