ACME SHOE, RUBBER & PLASTIC CORPORATION AND CHUA PAC, PETITIONERS, VS. HON.

COURT OF APPEALS, PRODUCERS BANK OF THE PHILIPPINES AND REGIONAL SHERIFF OF

FACTS:
Acme Shoe, Rubber & Plastic Corporation, through its general manager Chua Pac, executed a
mortgage in favor of Producers Bank of the Philippines as security for a corporate loan of three million
pesos. A provision in the chattel mortgage agreement states that in case the mortgagor executes
subsequent promissory notes either as renewal of the former note or as extension thereof or as a new loan,
the existing mortgage shall also stand as security for the payment of the said promissory notes.
After the P3,000,000 loan was paid in due time, the petitioner obtained a new loan. Due to financial
constraints, the loan was not settled at maturity. This prompted respondent bank to foreclose the chattel.

ISSUE:
Is it binding to have a clause in a chattel mortgage that purports to likewise extend its coverage to
obligations yet to be contracted?

RULING:
No. A chattel mortgage can only cover obligations existing at the time the mortgage is constituted.
Although a promise expressed in a chattel mortgage to include debts that are yet to be contracted can be a
binding commitment that can be compelled upon, the security itself, however, does not come into existence
or arise until after a chattel mortgage agreement covering the newly contracted debt is executed either by
concluding a fresh chattel mortgage or by amending the old contract conformably with the form prescribed
by the Chattel Mortgage Law.
CENTRAL BANK OF THE PHILIPPINES AND ACTING DIRECTOR ANTONIO T. CASTRO, JR. OF THE
DEPARTMENT OF COMMERCIAL AND SAVINGS BANK, IN HIS CAPACITY AS STATUTORY
RECEIVER OF ISLAND SAVINGS BANK, PETITIONERS, VS. THE HONORABLE COURT OF APPEALS
AND SULPICIO M. TOLENTINO, RESPONDENTS.
G.R. No. L-45710, October 03, 1985

FACTS:
Tolentino acquired an P80,000 loan from Island Savings Bank secured by a real estate mortgage
over his 100-hectare land. Of the approved amount, 17,000 was partially released to which Tolentino
signed the corresponding promissory note.
Subsequently, the Monetary Board of the Central Bank restricted the bank from extending new
loans and investment due to its liquidity. After failing to put up the required capital to restore its solvency,
Island Saving Bank was prohibited to transact business.
In view of the non-payment of 17,000 covered by the promissory note of Tolentino, Island Savings
filed an application for extrajudicial foreclosure of the real estate mortgate.

ISSUE:
Is Tolentino liable to pay the P17,000 debt covered by the promissory note?

RULING:
In so far as the partial release of P17,000.00, which Sulpicio M. Tolentino accepted and executed a
promissory note to cover it, the bank was deemed to have complied with its reciprocal obligation to furnish
a P17,000.00 loan. The promissory note gave rise to Sulpicio M. Tolentino's reciprocal obligation to pay
the P17,000.00 loan when it falls due.
FRANCISCO HERRERA, PLAINTIFF-APPELLANT, VS. PETROPHIL CORPORATION, DEFENDANT-
APPELLEE.
G.R. No. L-48349, December 29, 1986

FACTS:
Herrera and ESSO Standard Eastern, Inc., (substituted by PetroPhil Corporation) entered into a
"Lease Agreement" whereby the former leased to the latter a portion of his property for a period of twenty
(20) years. Petrophil paid to Herrera advance rentals for the first eight years subtracting the amount
constituting the interest or discount for the first eight years. On October 14, 1974, Herrera sued PetroPhil
for the sum of P98,828.03, with interest, claiming this had been illegally deducted from him in violation of
the Usury Law.

ISSUE:
Was there a violation of the Usury Law?

RULING:
None. To constitute usury, "there must be loan or forbearance; the loan must be of money or
something circulating as money; it must be repayable absolutely and in all events; and something must be
exacted for the use of the money in excess of and in addition to interest allowed by law."
There is no usury in this case because no money was given by PetroPhil to the Herrera, nor did it
allow him to use its money already in his possession. There was neither loan nor forbearance but a mere
discount which Herrera allowed PetroPhil to deduct from the total payments because they were being made
in advance for eight years. The discount was in effect a reduction of the rentals which the lessor had the
right to determine, and any reduction thereof, by any amount, would not contravene the Usury Law.
OLIVIA M. NAVOA AND ERNESTO NAVOA, PETITIONERS, VS. COURT OF APPEALS, TERESITA
DOMDOMA AND EDUARDO DOMDOMA, RESPONDENTS.
G.R. No. 59255, December 29, 1995

FACTS:
Private respondent alleged that petitioner obtained from her a ring valued at P15,000.00 and
issued as security thereof a check for the same amount with the condition that if the ring was not returned
within fifteen days the ring would be considered sold. When private respondent deposited the check after
holding it for sometime the same was dishonored for lack of funds. Private respondent sought to collect the
amount of P15,000.00 plus interest until fully paid.
On January 3, 1978 petitioners filed a motion to dismiss the complaint on the ground that the
complaint stated no cause of action and that plaintiffs had no capacity to sue.

ISSUE:
Should the complaint be dismissed for want of cause of action?

RULING:
No. If a defendant moves to dismiss the complaint on the ground of lack of cause of action, such as
what petitioners did in the case at bar, he is regarded as having hypothetically admitted all the averments
thereof. The test of sufficiency of the facts found in a complaint as constituting a cause of action is whether
or not admitting the facts alleged the court can render a valid judgment upon the same in accordance with
the prayer thereof.
From the facts of the case, the ring was considered sold to petitioner and despite the sale the latter
failed to pay the price therefor even as the former was given ample time to pay the agreed amount covered
by a check. Clearly, respondent Domdoma's right under the agreement with petitioner Navoa was violated
by the latter.
THE PEOPLE OF THE PHILIPPINE ISLANDS, PLAINTIFF AND APPELLEE, VS. VENANCIO
CONCEPCION, DEFENDANT AND APPELLANT.
G. R. No. 19190, November 29, 1922

FACTS:
Venancio Concepcion, President of the Philippine National Bank, authorized an extension of credit
in favor of Puno y Concepcion in the amount of P300,000 wherein Venancio Concepcion is a co-partner.
He was charged in violation of section 35 of Act No. 2747 and was found guilty.

Section 35 of Act No. 2747 states that, "The National Bank shall not, directly or indirectly, grant
loans to any of the members of the board of directors of the bank nor to agents of the branch banks."

ISSUE:
Was the granting of a credit of P300,000 to the co-partnership a "loan" within the meaning of
section 35 of Act No. 2747 so as to hold Venancio Conception liable?

RULING:
Yes. The credit of an individual means his ability to borrow money by virtue of the confidence or
trust reposed by a lender that he will pay what he may promise. A loan means the delivery by one party and
the receipt by the other party of a given sum of money, upon an agreement, express or implied, to repay
the sum loaned, with or without interest. The concession of a credit necessarily involves the granting of
loans up to the limit of the amount fixed in the credit.
RAOUL S.V. BONNEVIE AND HONESTO V. BONNEVIE, PETITIONERS, VS. THE HONORABLE COURT
OF APPEALS AND THE PHILIPPINE BANK OF COMMERCE, RESPONDENTS.
G.R. No. L-49101, October 24, 1983

FACTS:
Spouses Lozano mortgaged their property to secure the payment of a loan with Philippine Bank of
Communication (PBCom). Two days after the execution of the deed of mortgage, the spouses sold the
property to Bonnevie for and in consideration of P100,000, P75,000 of which is to be paid to PBCom.
Bonnevie defaulted payments to PBCom prompting the latter to foreclose the property. The latter now
assails the validity of the mortgage between Lozano and PBcom contending that on the day the deed was
executed there was yet no principal obligation to secure 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.

ISSUE:
Was there a perfected contract of loan?

RULING:
Yes. It is clear that the mortgage deed was executed for and on condition of the loan granted to the
Lozano spouses. 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. The contract of loan in this case was perfected at the
same time the contract of mortgage was executed. The promissory note executed is only a proof of
indebtedness and does not indicate lack of consideration of the mortgage at the time of its execution.
SAURA IMPORT & EXPORT CO., INC., PLAINTIFF-APPELLEE, VS. DEVELOPMENT BANK OF THE
PHILIPPINES, DEFENDANT-APPELLANT.
G.R. No. L-24968, April 27, 1972

FACTS:
Saura Inc. applied a loan of P500,000 to the Rehabilitation Finance Corp. (RFC) secured by a
mortgage of a factory building. RFC accepted and approved the loan application subject to some conditions
which Saura admitted it could not comply with. Without having received the amount being loaned, and
sensing that it could not at anyway obtain the full amount of loan, Saura Inc. then asked for cancellation of
the mortgage which RFC also approved. Nine years after the cancellation of the mortgage, Saura sued
RFC for damages for its non-fulfillment of obligations arguing that there was indeed a perfected consensual
contract between them.

ISSUE:
Was there a real contract of loan which would permit recovery of damages arising from breach?

RULING:
The action thus taken by both parties—Saura's request for cancellation and RFC's subsequent
approval of such cancellation—was in the nature of mutual desistance — what Manresa terms "mutuo
disenso"— which is a mode of extinguishing obligations. It is a concept derived from the principle that since
mutual agreement can create a contract, mutual disagreement by the parties can cause its extinguishment.
In view of such extinguishment, said perfected consensual contract to deliver did not constitute a real
contract of loan.
POLO S. PANTALEON, PETITIONER, VS. AMERICAN EXPRESS INTERNATIONAL, INC.,
RESPONDENT.
G.R. No. 174269, August 25, 2010

FACTS:
Pantaleon instituted an action for damages against herein respondent when it failed to provide the
necessary apology demanded by the former for the humiliation and inconvenience he had experienced due
to the delays in obtaining approval for his credit card purchases.

ISSUE:
May AMEX be held liable for breach of contract of loan when it allegedly incurred delay in
approving the petitioner’s credit card transaction?

RULING:
No. The issuance of a credit card is but an offer to extend a line of open account credit. It is
unilateral and supported by no consideration.
From the loan agreement perspective, the contractual relationship begins to exist only upon the
meeting of the offer and acceptance of the parties involved. In more concrete terms, when cardholders use
their credit cards to pay for their purchases, they merely offer to enter into loan agreements with the credit
card company. Only after the latter approves the purchase requests that the parties enter into binding loan
contracts.
CAROLYN M. GARCIA, PETITIONER, V.S. RICA MARIE S. THIO, Respondent.
G.R. No. 154878, March 16, 2007

FACTS:
On different dates, private respondent received from petitioner two crossed checks payable to the
order of Marilou Santiago. On the other hand, several checks were received by the petitioner from private
respondent in various amounts.
For failure of private respondent to pay the principle amounts of the alleged loans, she instituted a
complaint for sum of money and damages.

ISSUE:
Was there a perfected contract of loan?

RULING:
Yes. A loan is a real contract, not consensual, and as such is perfected only upon the delivery of
the object of the contract. Upon delivery of the object of the contract of loan (in this case the money
received by the debtor when the checks were encashed) the debtor acquires ownership of such money or
loan proceeds and is bound to pay the creditor an equal amount.
Although respondent did not physically received the proceeds of the checks, these instruments
were placed in her control and possession under an arrangement whereby she actually re-lent the amounts
to Santiago.
CELESTINA T. NAGUIAT, PETITIONER, VS. COURT OF APPEALS AND AURORA QUEAÑO,
RESPONDENTS.
G.R. No. 118375, October 03, 2003

FACTS:
Queañoapplied with Naguiat for a loan secured by a Real Estate Mortgage. After notary of the
mortgage deed, Queaño issued a promissory note and a postdated check for the loaned amount payable
to Naguiat.
Upon presentment of the check on its maturity date, it was dishonored for lack of funds. After
informing Queaño of the matter and demand of payment, Naguiat applied for the extrajudicial foreclosure of
the mortgage, however, Queaño filed a case to seek the annulment of mortgage deed assailing that she
had not received the loan proceeds.

ISSUE:
Was there a perfected contract of loan to maintain the existence and validity of the real estate
mortgage?

RULING:
None. A loan contract is a real contract, as such, is perfected only upon the delivery of the object of
the contract. In this case, the objects of the contract are the loan proceeds which Queaño would enjoy only
upon the encashment of the checks signed or indorsed by Naguiat. If indeed the checks were encashed or
deposited, Naguiat would have certainly presented the corresponding documentary evidence, such as the
returned checks and the pertinent bank records. Since Naguiat presented no such proof, it follows that the
checks were not encashed or credited to Queaño's account.
The consideration of the mortgage contract is the same as that of the principal contract from which
it receives life, and without which it 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.