1. THE PEOPLE OF THE PHILIPPINE ISLANDS, plaintiII-appellee, vs.

VENANCIO CONCEPCION,
deIendant-appellant. 1922 November 29 En Banc G.R. No. 19190

FACTS:

By telegrams and a letter oI conIirmation to the manager oI the Appari branch oI the Philippine National Bank,
Venancio Conception, President oI the Philippine National Bank, between April 10, 1919, and May 7, 1919,
authorized an extension oI credit in Iavor oI "Puno y Conception, S. en C." in the amount oI P300,000. This
special authorization was essential in view oI the memorandum order oI President Conception dated May 17,
1918, limiting the discretional power oI the local manager at Appari, Cagayan, to grant loans and discount
negotiable documents to P5,000, which, in certain cases, could be increased to P10,000. Pursuant to this
authorization, credit aggregating P300,000, was granted the Iirm oI "Puno y Conception, S. en C.," the only
security required consisting oI six demand notes. The notes, together with the interest, were taken up and paid
by July 17, 1919.
Section 35 oI Act No. 2747, reads as Iollows: "The National Bank shall not, directly or indirectly, grant loans to
any oI the members oI the board oI directors oI the bank nor to agents oI the branch banks."

ISSUE:
I. Was the granting oI a credit oI P300,000 to the copartnership "Puno y Concepcion, S. en C." by Venacio
Concepcion, President oI the Philippine National Bank, a "loan" within the meaning oI section 35 oI Act No.
2747?
II. Was the granting oI a credit oI P300,000 to the copartnership "Puno y Conception, S. en C.," by Venancio
Conception, President oI the Philippine National Bank, a "loan" or a "discount."


HELD:
1. The documents oI record do not prove that the authority to make a loan was given, but only show the
concession oI a credit. In this statement oI Iact, counsel is correct, Ior the exhibits in question speak
oI a "credito" (credit) and not oI a "prestamo" (loan).
The "credit" oI an individual means his ability to borrow money by virtue oI the conIidence or trust
reposed by a lender that he will pay what he may promise. (Donnell vs. Jones |1848|, 13 Ala., 490;
Bouvier's Law Dictionary.) A "loan" means the delivery by one party and the receipt by the other
party oI a given sum oI money, upon an agreement, express or implied, to repay the sum oI money,
upon an agreement, express or implied, to repay the sum loaned, with or without interest. (Payne vs.
Gardiner |1864|, 29 N.Y., 146, 167.) The concession oI a "credit" necessarily involves the granting
oI "loans" up to the limit oI the amount Iixed in the "credit."

I. Discounts are Iavored by bankers because oI their liquid nature, growing, as they do, out oI an actual,
live transaction. But in its last analysis, to discount a paper is only a mode oI loaning money, with,
however, these distinctions: (1) In a discount, interest is deducted in advance, while in a loan,
interest is taken at the expiration oI a credit; (2) a discount is always on double-name paper; a loan is
generally on single-name paper.
Conceding, without deciding, that, as ruled by the Insular Auditor, the law covers loans and not
discounts, yet the conclusion is inevitable that the demand notes signed by the Iirm "Puno y
Concepcion, S. en C." were not discount paper but were mere evidences oI indebtedness, because (1)
interest was not deducted Irom the Iace oI the notes, but was paid when the notes Iell due; and (2)
they were single-name and not double-name paper.





2. PRODUCERS BANK OF THE PHILIPPINES (now FIRST INTERNATIONAL BANK), petitioner, vs.
HON. COURT OF APPEALS AND FRANKLIN VIVES, respondents. 2003 Feb 19 2nd Division G.R.
No. 115324

FACTS:

Sometime in 1979, private respondent Franklin Vives was asked by his neighbor and Iriend Angeles
Sanchez to help her Iriend and townmate, Col. Arturo Doronilla, in incorporating his business, the
Sterela Marketing and Services ("Sterela" Ior brevity). SpeciIically, Sanchez asked private respondent to
deposit in a bank a certain amount oI money in the bank account oI Sterela Ior purposes oI its
incorporation. She assured private respondent that he could withdraw his money Irom said account
within a month`s time. Private respondent asked Sanchez to bring Doronilla to their house so that they
could discuss Sanchez`s request.|3|
On May 9, 1979, private respondent, Sanchez, Doronilla and a certain Estrella Dumagpi, Doronilla`s private
secretary, met and discussed the matter. ThereaIter, relying on the assurances and representations oI Sanchez
and Doronilla, private respondent issued a check in the amount oI Two Hundred Thousand Pesos (P200,000.00)
in Iavor oI Sterela. Private respondent instructed his wiIe, Mrs. Inocencia Vives, to accompany Doronilla and
Sanchez in opening a savings account in the name oI Sterela in the Buendia, Makati branch oI Producers Bank
oI the Philippines. However, only Sanchez, Mrs. Vives and Dumagpi went to the bank to deposit the check.
They had with them an authorization letter Irom Doronilla authorizing Sanchez and her companions, "in
coordination with Mr. RuIo Atienza," to open an account Ior Sterela Marketing Services in the amount oI
P200,000.00. In opening the account, the authorized signatories were Inocencia Vives and/or Angeles Sanchez.
A passbook Ior Savings Account No. 10-1567 was thereaIter issued to Mrs. Vives.|4|

Subsequently, private respondent learned that Sterela was no longer holding oIIice in the address
previously given to him. Alarmed, he and his wiIe went to the Bank to veriIy iI their money was still
intact. The bank manager reIerred them to Mr. RuIo Atienza, the assistant manager, who inIormed them
that part oI the money in Savings Account No. 10-1567 had been withdrawn by Doronilla, and that only
P90,000.00 remained therein. He likewise told them that Mrs. Vives could not withdraw said remaining
amount because it had to answer Ior some postdated checks issued by Doronilla. According to Atienza,
aIter Mrs. Vives and Sanchez opened Savings Account No. 10-1567, Doronilla opened Current Account
No. 10-0320 Ior Sterela and authorized the Bank to debit Savings Account No. 10-1567 Ior the amounts
necessary to cover overdrawings in Current Account No. 10-0320. In opening said current account,
Sterela, through Doronilla, obtained a loan oI P175,000.00 Irom the Bank. To cover payment thereoI,
Doronilla issued three postdated checks, all oI which were dishonored. Atienza also said that Doronilla
could assign or withdraw the money in Savings Account No. 10-1567 because he was the sole proprietor
oI Sterela.|5|

Private respondent tried to get in touch with Doronilla through Sanchez. On June 29, 1979, he received a
letter Irom Doronilla, assuring him that his money was intact and would be returned to him. On August
13, 1979, Doronilla issued a postdated check Ior Two Hundred Twelve Thousand Pesos (P212,000.00)
in Iavor oI private respondent. However, upon presentment thereoI by private respondent to the drawee
bank, the check was dishonored. Doronilla requested private respondent to present the same check on
September 15, 1979 but when the latter presented the check, it was again dishonored.|6|

Private respondent reIerred the matter to a lawyer, who made a written demand upon Doronilla Ior the
return oI his client`s money. Doronilla issued another check Ior P212,000.00 in private respondent`s
Iavor but the check was again dishonored Ior insuIIiciency oI Iunds.|7|

Private respondent instituted an action Ior recovery oI sum oI money in the Regional Trial Court (RTC)
in Pasig, Metro Manila against Doronilla, Sanchez, Dumagpi and petitioner.


ISSUE:

THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THAT THE TRANSACTION
BETWEEN THE DEFENDANT DORONILLA AND RESPONDENT VIVES WAS ONE OF SIMPLE
LOAN AND NOT ACCOMMODATION

HELD:
No error was committed by the Court oI Appeals when it ruled that the transaction between private
respondent and Doronilla was a commodatum and not a mutuum. A circumspect examination oI the records
reveals that the transaction between them was a commodatum. Article 1933 oI the Civil Code distinguishes
between the two kinds oI loans in this wise:
By the contract oI loan, one oI the parties delivers to another, either something not consumable so that the
latter may use the same Ior a certain time and return it, in which case the contract is called a commodatum;
or money or other consumable thing, upon the condition that the same amount oI the same kind and quality
shall be paid, in which case the contract is simply called a loan or mutuum.
Commodatum is essentially gratuitous.
Simple loan may be gratuitous or with a stipulation to pay interest.
In commodatum, the bailor retains the ownership oI the thing loaned, while in simple loan, ownership
passes to the borrower.
The Ioregoing provision seems to imply that iI the subject oI the contract is a consumable thing, such as
money, the contract would be a mutuum. However, there are some instances where a commodatum may
have Ior its object a consumable thing. Article 1936 oI the Civil Code provides:
Consumable goods may be the subject oI commodatum iI the purpose oI the contract is not the consumption
oI the object, as when it is merely Ior exhibition.
Thus, iI consumable goods are loaned only Ior purposes oI exhibition, or when the intention oI the parties is
to lend consumable goods and to have the very same goods returned at the end oI the period agreed upon,
the loan is a commodatum and not a mutuum.
The rule is that the intention oI the parties thereto shall be accorded primordial consideration in determining
the actual character oI a contract.|27| In case oI doubt, the contemporaneous and subsequent acts oI the
parties shall be considered in such determination.|28|

3. COLITO T. PAJUYO, petitioner, vs. COURT OF APPEALS and EDDIE GUEVARRA,
respondents.2004 Jun 31st DivisionG.R. No. 146364

FACTS:
In June 1979, petitioner Colito T. Pajuyo ("Pajuyo") paid P400 to a certain Pedro Perez Ior the rights over a
250-square meter lot in Barrio Payatas, Quezon City. Pajuyo then constructed a house made oI light
materials on the lot. Pajuyo and his Iamily lived in the house Irom 1979 to 7 December 1985.
On 8 December 1985, Pajuyo and private respondent Eddie Guevarra ("Guevarra") executed a Kasunduan
or agreement. Pajuyo, as owner oI the house, allowed Guevarra to live in the house Ior Iree provided
Guevarra would maintain the cleanliness and orderliness oI the house. Guevarra promised that he would
voluntarily vacate the premises on Pajuyo`s demand.
In September 1994, Pajuyo inIormed Guevarra oI his need oI the house and demanded that Guevarra vacate
the house. Guevarra reIused.
The MTC ruled that the subject oI the agreement between Pajuyo and Guevarra is the house and not the lot.
Pajuyo is the owner oI the house, and he allowed Guevarra to use the house only by tolerance. Thus,
Guevarra`s reIusal to vacate the house on Pajuyo`s demand made Guevarra`s continued possession oI the
house illegal.
The RTC upheld the Kasunduan, which established the landlord and tenant relationship between Pajuyo and
Guevarra. The terms oI the Kasunduan bound Guevarra to return possession oI the house on demand.
The Court oI Appeals reversed the MTC and RTC rulings, which held that the Kasunduan between Pajuyo
and Guevarra created a legal tie akin to that oI a landlord and tenant relationship. The Court oI Appeals
ruled that the Kasunduan is not a lease contract but a commodatum because the agreement is not Ior a price
certain.

ISSUE:
WHETHER THE COURT OF APPEALS ERRED OR ABUSED ITS AUTHORITY AND DISCRETION
TANTAMOUNT TO LACK OF JURISDICTION in ruling that the Kasunduan voluntarily entered into by
the parties was in Iact a commodatum, instead oI a Contract oI Lease as Iound by the Metropolitan Trial
Court and in holding that "the ejectment case Iiled against deIendant-appellant is without legal and Iactual
basis".

HELD:
We do not subscribe to the Court oI Appeals` theory that the Kasunduan is one oI commodatum.
In a contract oI commodatum, one oI the parties delivers to another something not consumable so that the
latter may use the same Ior a certain time and return it.|63| An essential Ieature oI commodatum is that it is
gratuitous. Another Ieature oI commodatum is that the use oI the thing belonging to another is Ior a certain
period.|64| Thus, the bailor cannot demand the return oI the thing loaned until aIter expiration oI the period
stipulated, or aIter accomplishment oI the use Ior which the commodatum is constituted.|65| II the bailor
should have urgent need oI the thing, he may demand its return Ior temporary use.|66| II the use oI the thing
is merely tolerated by the bailor, he can demand the return oI the thing at will, in which case the contractual
relation is called a precarium.|67| Under the Civil Code, precarium is a kind oI commodatum.|68|
The Kasunduan reveals that the accommodation accorded by Pajuyo to Guevarra was not essentially
gratuitous. While the Kasunduan did not require Guevarra to pay rent, it obligated him to maintain the
property in good condition. The imposition oI this obligation makes the Kasunduan a contract diIIerent Irom
a commodatum. The eIIects oI the Kasunduan are also diIIerent Irom that oI a commodatum. Case law on
ejectment has treated relationship based on tolerance as one that is akin to a landlord-tenant relationship
where the withdrawal oI permission would result in the termination oI the lease.|69| The tenant`s
withholding oI the property would then be unlawIul. This is settled jurisprudence.
Even assuming that the relationship between Pajuyo and Guevarra is one oI commodatum, Guevarra as
bailee would still have the duty to turn over possession oI the property to Pajuyo, the bailor. The obligation
to deliver or to return the thing received attaches to contracts Ior saIekeeping, or contracts oI commission,
administration and commodatum.|70| These contracts certainly involve the obligation to deliver or return
the thing received.|71|
Guevarra turned his back on the Kasunduan on the sole ground that like him, Pajuyo is also a squatter.
Squatters, Guevarra pointed out, cannot enter into a contract involving the land they illegally occupy.
Guevarra insists that the contract is void.
Guevarra should know that there must be honor even between squatters. Guevarra Ireely entered into the
Kasunduan. Guevarra cannot now impugn the Kasunduan aIter he had beneIited Irom it. The Kasunduan
binds Guevarra.
The Kasunduan is not void Ior purposes oI determining who between Pajuyo and Guevarra has a right to
physical possession oI the contested property. The Kasunduan is the undeniable evidence oI Guevarra`s
recognition oI Pajuyo`s better right oI physical possession. Guevarra is clearly a possessor in bad Iaith. The
absence oI a contract would not yield a diIIerent result, as there would still be an implied promise to vacate.


4. G.R. No. L-17474 October 25, 1962
5. REPUBLIC OF THE PHILIPPINES, plaintiff-appellee,
vs.
JOSE V. BAGTAS, defendant,
FELICIDAD M. BAGTAS, Administratrix of the Intestate Estate Ieft by the Iate Jose V. Bagtas, petitioner-appellant.
6. D. T. Reyes, Liaison and Associates for petitioner-appellant.
Office of the Solicitor General for plaintiff-appellee.
7. PADILLA,
8. The Court of Appeals certified this case to this Court because only questions of law are raised.
9. On 8 May 1948 Jose V. Bagtas borrowed from the Republic of the Philippines through the Bureau of Animal ndustry three
bulls: a Red Sindhi with a book value of P1,176.46, a Bhagnari, of P1,320.56 and a Sahiniwal, of P744.46, for a period of
one year from 8 May 1948 to 7 May 1949 for breeding purposes subject to a government charge of breeding fee of 10% of
the book value of the bulls. Upon the expiration on 7 May 1949 of the contract, the borrower asked for a renewal for another
period of one year. However, the Secretary of Agriculture and Natural Resources approved a renewal thereof of only one
bull for another year from 8 May 1949 to 7 May 1950 and requested the return of the other two. On 25 March 1950 Jose V.
Bagtas wrote to the Director of Animal ndustry that he would pay the value of the three bulls. On 17 October 1950 he
reiterated his desire to buy them at a value with a deduction of yearly depreciation to be approved by the Auditor General.
On 19 October 1950 the Director of Animal ndustry advised him that the book value of the three bulls could not be reduced
and that they either be returned or their book value paid not later than 31 October 1950. Jose V. Bagtas failed to pay the
book value of the three bulls or to return them. So, on 20 December 1950 in the Court of First nstance of Manila the
Republic of the Philippines commenced an action against him praying that he be ordered to return the three bulls loaned to
him or to pay their book value in the total sum of P3,241.45 and the unpaid breeding fee in the sum of P199.62, both with
interests, and costs; and that other just and equitable relief be granted in (civil No. 12818).
10. On 5 July 1951 Jose V. Bagtas, through counsel Navarro, Rosete and Manalo, answered that because of the bad peace and
order situation in Cagayan Valley, particularly in the barrio of Baggao, and of the pending appeal he had taken to the
Secretary of Agriculture and Natural Resources and the President of the Philippines from the refusal by the Director of
Animal ndustry to deduct from the book value of the bulls corresponding yearly depreciation of 8% from the date of
acquisition, to which depreciation the Auditor General did not object, he could not return the animals nor pay their value and
prayed for the dismissal of the complaint.
11. After hearing, on 30 July 1956 the trial court render judgment
12. . . . sentencing the latter (defendant) to pay the sum of P3,625.09 the total value of the three bulls plus the breeding fees in
the amount of P626.17 with interest on both sums of (at) the legal rate from the filing of this complaint and costs.
13. On 9 October 1958 the plaintiff moved ex parte for a writ of execution which the court granted on 18 October and issued on
11 November 1958. On 2 December 1958 granted an ex-parte motion filed by the plaintiff on November 1958 for the
appointment of a special sheriff to serve the writ outside Manila. Of this order appointing a special sheriff, on 6 December
1958, Felicidad M. Bagtas, the surviving spouse of the defendant Jose Bagtas who died on 23 October 1951 and as
administratrix of his estate, was notified. On 7 January 1959 she file a motion alleging that on 26 June 1952 the two bull
Sindhi and Bhagnari were returned to the Bureau Animal of ndustry and that sometime in November 1958 the third bull, the
Sahiniwal, died from gunshot wound inflicted during a Huk raid on Hacienda Felicidad ntal, and praying that the writ of
execution be quashed and that a writ of preliminary injunction be issued. On 31 January 1959 the plaintiff objected to her
motion. On 6 February 1959 she filed a reply thereto. On the same day, 6 February, the Court denied her motion. Hence,
this appeal certified by the Court of Appeals to this Court as stated at the beginning of this opinion.
14. t is true that on 26 June 1952 Jose M. Bagtas, Jr., son of the appellant by the late defendant, returned the Sindhi and
Bhagnari bulls to Roman Remorin, Superintendent of the NVB Station, Bureau of Animal ndustry, Bayombong, Nueva
Vizcaya, as evidenced by a memorandum receipt signed by the latter (Exhibit 2). That is why in its objection of 31 January
1959 to the appellant's motion to quash the writ of execution the appellee prays "that another writ of execution in the sum of
P859.53 be issued against the estate of defendant deceased Jose V. Bagtas." She cannot be held liable for the two bulls
which already had been returned to and received by the appellee.
15. The appellant contends that the Sahiniwal bull was accidentally killed during a raid by the Huk in November 1953 upon the
surrounding barrios of Hacienda Felicidad ntal, Baggao, Cagayan, where the animal was kept, and that as such death was
due to force majeure she is relieved from the duty of returning the bull or paying its value to the appellee. The contention is
without merit. The loan by the appellee to the late defendant Jose V. Bagtas of the three bulls for breeding purposes for a
period of one year from 8 May 1948 to 7 May 1949, later on renewed for another year as regards one bull, was subject to
the payment by the borrower of breeding fee of 10% of the book value of the bulls. The appellant contends that the contract
was commodatum and that, for that reason, as the appellee retained ownership or title to the bull it should suffer its loss due
to force majeure. A contract of commodatum is essentially gratuitous.
1
f the breeding fee be considered a compensation,
then the contract would be a lease of the bull. Under article 1671 of the Civil Code the lessee would be subject to the
responsibilities of a possessor in bad faith, because she had continued possession of the bull after the expiry of the contract.
And even if the contract be commodatum, still the appellant is liable, because article 1942 of the Civil Code provides that a
bailee in a contract of commodatum
16. . . . is liable for loss of the things, even if it should be through a fortuitous event:
17. (2) f he keeps it longer than the period stipulated . . .
18. (3) f 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;
19. The original period of the loan was from 8 May 1948 to 7 May 1949. The loan of one bull was renewed for another period of
one year to end on 8 May 1950. But the appellant kept and used the bull until November 1953 when during a Huk raid it was
killed by stray bullets. Furthermore, when lent and delivered to the deceased husband of the appellant the bulls had each an
appraised book value, to with: the Sindhi, at P1,176.46, the Bhagnari at P1,320.56 and the Sahiniwal at P744.46. t was not
stipulated that in case of loss of the bull due to fortuitous event the late husband of the appellant would be exempt from
liability.
20. The appellant's contention that the demand or prayer by the appellee for the return of the bull or the payment of its value
being a money claim should be presented or filed in the intestate proceedings of the defendant who died on 23 October
1951, is not altogether without merit. However, the claim that his civil personality having ceased to exist the trial court lost
jurisdiction over the case against him, is untenable, because section 17 of Rule 3 of the Rules of Court provides that
21. After a party dies and the claim is not thereby extinguished, the court shall order, upon proper notice, the legal
representative of the deceased to appear and to be substituted for the deceased, within a period of thirty (30) days, or within
such time as may be granted. . . .
22. and after the defendant's death on 23 October 1951 his counsel failed to comply with section 16 of Rule 3 which provides
that
23. Whenever a party to a pending case dies . . . it shall be the duty of his attorney to inform the court promptly of such death . .
. and to give the name and residence of the executory administrator, guardian, or other legal representative of the deceased
. . . .
24. The notice by the probate court and its publication in the 'oz de Manila that Felicidad M. Bagtas had been issue letters of
administration of the estate of the late Jose Bagtas and that "all persons having claims for monopoly against the deceased
Jose V. Bagtas, arising from contract express or implied, whether the same be due, not due, or contingent, for funeral
expenses and expenses of the last sickness of the said decedent, and judgment for monopoly against him, to file said claims
with the Clerk of this Court at the City Hall Bldg., Highway 54, Quezon City, within six (6) months from the date of the first
publication of this order, serving a copy thereof upon the aforementioned Felicidad M. Bagtas, the appointed administratrix
of the estate of the said deceased," is not a notice to the court and the appellee who were to be notified of the defendant's
death in accordance with the above-quoted rule, and there was no reason for such failure to notify, because the attorney
who appeared for the defendant was the same who represented the administratrix in the special proceedings instituted for
the administration and settlement of his estate. The appellee or its attorney or representative could not be expected to know
of the death of the defendant or of the administration proceedings of his estate instituted in another court that if the attorney
for the deceased defendant did not notify the plaintiff or its attorney of such death as required by the rule.
25. As the appellant already had returned the two bulls to the appellee, the estate of the late defendant is only liable for the sum
of P859.63, the value of the bull which has not been returned to the appellee, because it was killed while in the custody of
the administratrix of his estate. This is the amount prayed for by the appellee in its objection on 31 January 1959 to the
motion filed on 7 January 1959 by the appellant for the quashing of the writ of execution.
26. Special proceedings for the administration and settlement of the estate of the deceased Jose V. Bagtas having been
instituted in the Court of First nstance of Rizal (Q-200), the money judgment rendered in favor of the appellee cannot be
enforced by means of a writ of execution but must be presented to the probate court for payment by the appellant, the
administratrix appointed by the court.
27. ACCORDNGLY, the writ of execution appealed from is set aside, without pronouncement as to costs.
28. Bengzon, C.J., Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Paredes, Dizon, Regala and Makalintal, JJ., concur.
Barrera, J., concurs in the result.
29.
30. Footnotes
31.
1
Article 1933 of the Civil Code.


Republic of the Philippines vs. 1ose Bagtas, Felicidad Bagtas, administratrix of the intestate estate
left by 1ose Bagtas 6 SCRA 262

Facts:
On May 8, 1948, Jose Bagtas borrowed Irom the Bureau oI Animal Industry 3 bulls Ior 1 year Ior breeding
purposes, subject to breeding Iee Ior 10 oI the book value oI the bulls. Upon the expiration oI the contract,
Bagtas asked Ior a renewal Ior another year. The renewal granted was only Ior 1 bull. Bagtas oIIered to buy the
bulls at book value less depreciation, but the Bureau told him that he should either return the bulls or pay Ior
their book value. Bagtas Iailed to pay the book value, and so the Republic commenced an action with the CFI
Manila to order the return oI the bulls oI the payment oI book value. Felicidad Bagtas, the surviving spouse and
administratrix oI the decedent`s estate, stated that the 2 bulls have already been returned in 1952, and that the
remaining one died oI gunshot during a Huk raid. As regards the two bulls, is was proven that they were
returned and thus, there is no more obligation on the part oI the appellant. As to the bull not returned, Felicidad
contends that the obligation is extinguished since the contract is that oI a commodatum and that the loss through
Iortuitous event should be borne by the owner.
Issue:
Whether, depending on the nature oI the contract, the respondent is liable Ior the death oI the bull
Held:
A contract oI commodatum is essentially gratuitous. II the breeding Iee be considered a compensation, then the
contract would be a lease oI the bull. Under article 1671 oI the Civil Code the lessee would be subject to the
responsibilities oI a possessor in bad Iaith, because she had continued possession oI the bull aIter the expiry oI
the contract. And even iI the contract be commodatum, still the appellant is liable, because article 1942 oI the
Civil Code provides that a bailee in a contract oI commodatum
. . . is liable Ior loss oI the things, even iI it should be through a Iortuitous event:
(2) II he keeps it longer than the period stipulated . . .
(3) II the thing loaned has been delivered with appraisal oI its value, unless there is a stipulation exempting
the bailee Irom responsibility in case oI a Iortuitous event;
The loan oI one bull was renewed Ior another period oI one year to end on 8 May 1950. But the appellant kept
and used the bull until November 1953 when during a Huk raid it was killed by stray bullets. Furthermore,
when lent and delivered to the deceased husband oI the appellant the bulls had each an appraised book value. It
was not stipulated that in case oI loss oI the bull due to Iortuitous event the late husband oI the appellant would
be exempt Irom liability.
Special proceedings Ior the administration and settlement oI the estate oI the deceased Jose V. Bagtas having
been instituted in the Court oI First Instance oI Rizal (Q-200), the money judgment rendered in Iavor oI the
appellee cannot be enIorced by means oI a writ oI execution but must be presented to the probate court Ior
payment by the appellant, the administratrix appointed by the court.

5. G.R. No. 154878 March 16, 2007
CAROLYN M. GARCIA, Petitioner,
vs.
RICA MARIE S. THIO, Respondent.
D E C S O N
CORONA
Assailed in this petition for review on certiorari
1
are the June 19, 2002 decision
2
and August 20, 2002 resolution
3
of the Court of Appeals (CA) in
CA-G.R. CV No. 56577 which set aside the February 28, 1997 decision of the Regional Trial Court (RTC) of Makati City, Branch 58.
Sometime in February 1995, respondent Rica Marie S. Thio received from petitioner Carolyn M. Garcia a crossed check
4
dated February 24,
1995 in the amount of US$100,000 payable to the order of a certain Marilou Santiago.
5
Thereafter, petitioner received from respondent every
month (specifically, on March 24, April 26, June 26 and July 26, all in 1995) the amount of US$3,000
6
and P76,500
7
on July 26,
8
August 26,
September 26 and October 26, 1995.
n June 1995, respondent received from petitioner another crossed check
9
dated June 29, 1995 in the amount of P500,000, also payable to the
order of Marilou Santiago.
10
Consequently, petitioner received from respondent the amount of P20,000 every month on August 5, September 5,
October 5 and November 5, 1995.
11

According to petitioner, respondent failed to pay the principal amounts of the loans (US$100,000 and P500,000) when they fell due. Thus, on
February 22, 1996, petitioner filed a complaint for sum of money and damages in the RTC of Makati City, Branch 58 against respondent,
seeking to collect the sums of US$100,000, with interest thereon at 3% a month from October 26, 1995 and P500,000, with interest thereon at
4% a month from November 5, 1995, plus attorney's fees and actual damages.
12

Petitioner alleged that on February 24, 1995, respondent borrowed from her the amount of US$100,000 with interest thereon at the rate of 3%
per month, which loan would mature on October 26, 1995.
13
The amount of this loan was covered by the first check. On June 29, 1995,
respondent again borrowed the amount of P500,000 at an agreed monthly interest of 4%, the maturity date of which was on November 5,
1995.
14
The amount of this loan was covered by the second check. For both loans, no promissory note was executed since petitioner and
respondent were close friends at the time.
15
Respondent paid the stipulated monthly interest for both loans but on their maturity dates, she
failed to pay the principal amounts despite repeated demands.
16
awphi.n t
Respondent denied that she contracted the two loans with petitioner and countered that it was Marilou Santiago to whom petitioner lent the
money. She claimed she was merely asked by petitioner to give the crossed checks to Santiago.
17
She issued the checks for P76,000 and
P20,000 not as payment of interest but to accommodate petitioner's request that respondent use her own checks instead of Santiago's.
18

n a decision dated February 28, 1997, the RTC ruled in favor of petitioner.
19
t found that respondent borrowed from petitioner the amounts of
US$100,000 with monthly interest of 3% and P500,000 at a monthly interest of 4%:
20

WHEREFORE, finding preponderance of evidence to sustain the instant complaint, judgment is hereby rendered in favor of [petitioner],
sentencing [respondent] to pay the former the amount of:
1. [US$100,000.00] or its peso equivalent with interest thereon at 3% per month from October 26, 1995 until fully paid;
2. P500,000.00 with interest thereon at 4% per month from November 5, 1995 until fully paid.
3. P100,000.00 as and for attorney's fees; and
4. P50,000.00 as and for actual damages.
For lack of merit, [respondent's] counterclaim is perforce dismissed.
With costs against [respondent].
T S SO ORDERED.
21

On appeal, the CA reversed the decision of the RTC and ruled that there was no contract of loan between the parties:
A perusal of the record of the case shows that [petitioner] failed to substantiate her claim that [respondent] indeed borrowed money from her.
There is nothing in the record that shows that [respondent] received money from [petitioner]. What is evident is the fact that
[respondent] received a MetroBank [crossed] check dated February 24, 1995 in the sum of US$100,000.00, payable to the order of Marilou
Santiago and a CityTrust [crossed] check dated June 29, 1995 in the amount of P500,000.00, again payable to the order of Marilou Santiago,
both of which were issued by [petitioner]. The checks received by [respondent], being crossed, may not be encashed but onIy deposited
in the bank by the payee thereof, that is, by MariIou Santiago herseIf.
t must be noted that crossing a check has the following effects: (a) the check may not be encashed but only deposited in the bank; (b) the
check may be negotiated only onceto one who has an account with the bank; (c) and the act of crossing the check serves as warning to the
holder that the check has been issued for a definite purpose so that he must inquire if he has received the check pursuant to that purpose,
otherwise, he is not a holder in due course.
Consequently, the receipt of the [crossed] check by [respondent] is not the issuance and delivery to the payee in contemplation of law since the
latter is not the person who could take the checks as a holder, i.e., as a payee or indorsee thereof, with intent to transfer title thereto. Neither
could she be deemed as an agent of Marilou Santiago with respect to the checks because she was merely facilitating the transactions between
the former and [petitioner].
With the foregoing circumstances, it may be fairly inferred that there were really no contracts of loan that existed between the parties. x x x
(emphasis supplied)
22

Hence this petition.
23

As a rule, only questions of law may be raised in a petition for review on certiorari under Rule 45 of the Rules of Court. However, this case falls
under one of the exceptions, i.e., when the factual findings of the CA (which held that there were no contracts of loan between petitioner and
respondent) and the RTC (which held that there were contracts of loan) are contradictory.
24

The petition is impressed with merit.
A loan is a real contract, not consensual, and as such is perfected only upon the delivery of the object of the contract.
25
This is evident in Art.
1934 of the Civil Code which provides:
An accepted promise to deliver something by way of commodatum or simple loan is binding upon the parties, but the commodatum or simple
Ioan itseIf shaII not be perfected untiI the deIivery of the object of the contract. (Emphasis supplied)
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.
26

t is undisputed that the checks were delivered to respondent. However, these checks were crossed and payable not to the order of respondent
but to the order of a certain Marilou Santiago. Thus the main question to be answered is: who borrowed money from petitioner respondent or
Santiago?
Petitioner insists that it was upon respondent's instruction that both checks were made payable to Santiago.
27
She maintains that it was also
upon respondent's instruction that both checks were delivered to her (respondent) so that she could, in turn, deliver the same to Santiago.
28

Furthermore, she argues that once respondent received the checks, the latter had possession and control of them such that she had the choice
to either forward them to Santiago (who was already her debtor), to retain them or to return them to petitioner.
29

We agree with petitioner. Delivery is the act by which the res or substance thereof is placed within the actual or constructive possession or
control of another.
30
Although respondent did not physically receive 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.
Several factors support this conclusion.
First, respondent admitted that petitioner did not personally know Santiago.
31
t was highly improbable that petitioner would grant two loans to a
complete stranger without requiring as much as promissory notes or any written acknowledgment of the debt considering that the amounts
involved were quite big. Respondent, on the other hand, already had transactions with Santiago at that time.
32

Second, Leticia Ruiz, a friend of both petitioner and respondent (and whose name appeared in both parties' list of witnesses) testified that
respondent's plan was for petitioner to lend her money at a monthly interest rate of 3%, after which respondent would lend the same amount to
Santiago at a higher rate of 5% and realize a profit of 2%.
33
This explained why respondent instructed petitioner to make the checks payable to
Santiago. Respondent has not shown any reason why Ruiz' testimony should not be believed.
Third, for the US$100,000 loan, respondent admitted issuing her own checks in the amount of P76,000 each (peso equivalent of US$3,000) for
eight months to cover the monthly interest. For the P500,000 loan, she also issued her own checks in the amount of P20,000 each for four
months.
34
According to respondent, she merely accommodated petitioner's request for her to issue her own checks to cover the interest
payments since petitioner was not personally acquainted with Santiago.
35
She claimed, however, that Santiago would replace the checks with
cash.
36
Her explanation is simply incredible. t is difficult to believe that respondent would put herself in a position where she would be
compelled to pay interest, from her own funds, for loans she allegedly did not contract. We declared in one case that:
n the assessment of the testimonies of witnesses, this Court is guided by the rule that for evidence to be believed, it must not only proceed
from the mouth of a credible witness, but must be credible in itself such as the common experience of mankind can approve as probable under
the circumstances. We have no test of the truth of human testimony except its conformity to our knowledge, observation, and experience.
Whatever is repugnant to these belongs to the miraculous, and is outside of juridical cognizance.
37

Fourth, in the petition for insolvency sworn to and filed by Santiago, it was respondent, not petitioner, who was listed as one of her (Santiago's)
creditors.
38

Last, respondent inexplicably never presented Santiago as a witness to corroborate her story.
39
The presumption is that "evidence willfully
suppressed would be adverse if produced."
40
Respondent was not able to overturn this presumption.
We hold that the CA committed reversible error when it ruled that respondent did not borrow the amounts of US$100,000 and P500,000 from
petitioner. We instead agree with the ruling of the RTC making respondent liable for the principal amounts of the loans.
We do not, however, agree that respondent is liable for the 3% and 4% monthly interest for the US$100,000 and P500,000 loans respectively.
There was no written proof of the interest payable except for the ;erbal agreement that the loans would earn 3% and 4% interest per month.
Article 1956 of the Civil Code provides that "[n]o interest shall be due unless it has been expressly stipulated in writing."
Be that as it may, while there can be no stipulated interest, there can be legal interest pursuant to Article 2209 of the Civil Code. t is well-
settled 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 may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially
demanded. n the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from judicial or
extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.
41

Hence, respondent is liable for the payment of legal interest per annum to be computed from November 21, 1995, the date when she received
petitioner's demand letter.
42
From the finality of the decision until it is fully paid, the amount due shall earn interest at 12% per annum, the
interim period being deemed equivalent to a forbearance of credit.
43

The award of actual damages in the amount of P50,000 and P100,000 attorney's fees is deleted since the RTC decision did not explain the
factual bases for these damages.
HEREFORE, the petition is hereby GRANTED and the June 19, 2002 decision and August 20, 2002 resolution of the Court of Appeals in CA-
G.R. CV No. 56577 are REVERSED and SET ASIDE. The February 28, 1997 decision of the Regional Trial Court in Civil Case No. 96-266 is
AFFIRMED with the MODIFICATION that respondent is directed to pay petitioner the amounts of US$100,000 and P500,000 at 12% per
annum interest from November 21, 1995 until the finality of the decision. The total amount due as of the date of finality will earn interest of 12%
per annum until fully paid. The award of actual damages and attorney's fees is deleted.
SO ORDERED.
RENATO C. CORONA
Associate Justice
WE CONCUR:

Carolyn Garcia v. Rica Marie Thio, G.R. No. 154878, March 16, 2007,
FACTS: Rica received Irom Carolyn a crossed check in the amount oI $100,000.00 payable to the order
oI Marilou Santiago. ThereaIter, Carolyn received Irom Rica payments. Again, Rica received a check in the
amount oI P500,000.00 Irom Carolyn and payable to the order oI Marilou and payments were again made by
her representing interests. There was Iailure to pay the principal amounts hence, a complaint Ior sum oI money
with damages was Iiled. Rica contended that she had no obligation to her as it was Marilou who was indebted as
she was merely asked to deliver the checks to Marilou and that the check payments she issued were merely
intended to accommodate Marilou. The RTC ruled in Iavor oI Carolyn but the CA reversed on the ground that
there was no contract between Rica and Carolyn. On appeal, the SC
Held: There was a contract oI loan between Carolyn and Rica.
A loan is a real contract, not consensual, and as such is perIected only upon the delivery oI the object oI the
contract. This is evident in Art. 1934 oI the Civil Code which provides:
An accepted promise to deliver something by way oI commodatum or simple loan is binding
upon the parties, but the commodatum or simple loan itselI shall not be perIected until the
delivery oI the object oI the contract. (Emphasis supplied)
Upon delivery oI the object oI the contract oI loan (in this case the money received by the debtor when the
checks were encashed) the debtor acquired ownership oI such money or loan proceeds and is bound to pay the
creditor an equal amount. (Naguiat v. CA, G.R. No. 118375, October 3, 2003, 412 SCRA 591).
It is undisputed that the checks were delivered to Rica. However, these checks were crossed and payable not to
the order oI Rica but to the order oI a certain Marilou Santiago.
The Court agree with petitioner. Delivery is the act by which the res or substance thereoI is placed within the
actual or constructive possession or control oI another. (BuenaIlor v. CA, G.R. No. 142021, November 29, 2000,
346 SCRA 563). Although Rica did not physically receive the proceeds oI the checks, these instruments were
placed in her control and possession under an arrangement whereby she actually re-lent the amounts to Marilou.
Several Iactors support this conclusion.
1. Carolyn did not know personally Marilou. This was admitted by Rica, hence, it is not possible Ior
Carolyn to grant loans in such big sum oI money even without any acknowledgment oI debt. It was Rica
who had transactions with Marilou.
2. It is unbelievable that Rica would put herselI in a position where she would be compelled to pay interest
out oI her own Iunds Ior loans she never contracted.
3. When Marilou Iiled a petition Ior insolvency, it was Rica who was listed as a debtor.
Hence, Rica is the debtor and not Marilou. In !eople v. Mala, G.R. No.152351, September 18, 2003,
411 SCRA 327 and !eople v. Dayag, 155 Phil. 421 (1974), it was ruled that:
In the assessment oI the testimonies oI witnesses, this Court is guided by the rule that Ior
evidence to be believed, it must not only proceed Irom the mouth oI a credible witness, but must
be credible in itselI such as the common experience oI mankind can approve as probable under
the circumstances. We have no test oI the truth oI human testimony except its conIormity to our
knowledge, observation, and experience. Whatever is repugnant to these belongs to the
miraculous, and is outside oI juridical cognizance.
o interest if there is no written agreement to pay it; exception.
Whether the debtor is liable to pay interest since there was no written agreement to pay interest, the SC
Held: No, because no interest shall be due unless it has been expressly stipulated in writing. (Art. 1956, NCC).
Be that as it may, while there can be no stipulated interest, there can be legal interest pursuant to Article 2209 oI
the Civil Code. It is well-settled:
When the obligation is breached, and it consists in the payment oI a sum oI money, i.e., a loan or
Iorbearance oI money, the interest due should be that which may have been stipulated in writing.
Furthermore, the interest due shall itselI earn legal interest Irom the time it is judicially
demanded. In the absence oI stipulation, the rate oI interest shall be 12 per annum to be
computed Irom deIault, i.e., Irom judicial or extrajudicial demand under and subject to the
provisions oI Article 1169 oI the Civil Code. (Eusebio-Calderon v. People, G.R. No. 158495,
October 21, 2004, 441 SCRA 137; Eastern Shipping Lines, Inc. v. CA, G.R. No. 97412, July 12,
1994, 234 SCRA 78; Garcia v. Thio, G.R. No. 154878, March 16, 2007).
Hence, Rica is liable Ior the payment oI legal interest per annum to be computed Irom the date when she
received the demand letter. From the Iinality oI the decision until it is Iully paid, the amount due shall earn
interest at 12 per annum, the interim period being deemed equivalent to a Iorbearance oI credit. (Cabrera v.
People, G.R. 150618, July 24, 2003, 407 SCRA 247).


6. Quintos v. Beck , 69 Phil 108 (1939)
a . F A C T S :
Under the contract oI lease oI a house, Beck was gratuitouslygr ant ed t he use oI t he Iur nit ur e
descr ibed in t he cont r act oI lease, subject to the condition that Iormer would return them to Quintos
uponthe latter`s demand. ThereaIter, Quintos required Beck to return allthe Iurniture since he has
already sold the property. However, Beckcould not give up the 3 gas heaters and the 4 electric lamps
becausehe would use them until the lease was due to expire. Quintos reIusedto get the Iurniture in view oI the
Iact that Beck had declined to makedelivery oI all oI them. On the 15th
oI the month, Beck deposited all theIurniture in warehouse in the custody oI the sheriII
b . I S S U E :
Whether or not Beck has complied with his obligation
c . H E L D :
No. The contract entered into between oI the parties is one oI commodatum because under it, Quintos
gratuitously granted the useoI the Iurniture to Beck reserving Ior himselI the ownership thereoI. Bythis
contract, Beck bound himselI to return the Iurniture to Quintosupon demand. Beck did not comply with
his obligation when he merelyplaced them at the disposal oI the sheriII and retaining Ior his beneIitt he 3 gas
heat er s and 4 elect r ic lamps. Hence, t he court could not l e g a l l y c o mp e l Qu i nt o s t o be a r
t he e xp e ns e s o c c a s i o ne d by t he deposit; nor was Quintos under a duty to accept the return oI the
otherIurniture.
G.R. No. L-46240 November 3, 1939
MARGARITA QUINTOS and ANGEL A. ANSALDO, plaintiffs-appellants,
vs.
BECK, defendant-appellee.
Mauricio Carlos for appellants.
Felipe Buencamino, Jr. for appellee.
IMPERIAL,
The plaintiff brought this action to compel the defendant to return her certain furniture which she lent him for his use. She appealed from the
judgment of the Court of First nstance of Manila which ordered that the defendant return to her the three has heaters and the four electric
lamps found in the possession of the Sheriff of said city, that she call for the other furniture from the said sheriff of Manila at her own expense,
and that the fees which the Sheriff may charge for the deposit of the furniture be paid pro rata by both parties, without pronouncement as to the
costs.
The defendant was a tenant of the plaintiff and as such occupied the latter's house on M. H. del Pilar street, No. 1175. On January 14, 1936,
upon the novation of the contract of lease between the plaintiff and the defendant, the former gratuitously granted to the latter the use of the
furniture described in the third paragraph of the stipulation of facts, subject to the condition that the defendant would return them to the plaintiff
upon the latter's demand. The plaintiff sold the property to Maria Lopez and Rosario Lopez and on September 14, 1936, these three notified the
defendant of the conveyance, giving him sixty days to vacate the premises under one of the clauses of the contract of lease. There after the
plaintiff required the defendant to return all the furniture transferred to him for them in the house where they were found. On November 5, 1936,
the defendant, through another person, wrote to the plaintiff reiterating that she may call for the furniture in the ground floor of the house. On
the 7th of the same month, the defendant wrote another letter to the plaintiff informing her that he could not give up the three gas heaters and
the four electric lamps because he would use them until the 15th of the same month when the lease in due to expire. The plaintiff refused to get
the furniture in view of the fact that the defendant had declined to make delivery of all of them. On November 15th, before vacating the house,
the defendant deposited with the Sheriff all the furniture belonging to the plaintiff and they are now on deposit in the warehouse situated at No.
1521, Rizal Avenue, in the custody of the said sheriff.
n their seven assigned errors the plaintiffs contend that the trial court incorrectly applied the law: in holding that they violated the contract by
not calling for all the furniture on November 5, 1936, when the defendant placed them at their disposal; in not ordering the defendant to pay
them the value of the furniture in case they are not delivered; in holding that they should get all the furniture from the Sheriff at their expenses;
in ordering them to pay-half of the expenses claimed by the Sheriff for the deposit of the furniture; in ruling that both parties should pay their
respective legal expenses or the costs; and in denying pay their respective legal expenses or the costs; and in denying the motions for
reconsideration and new trial. To dispose of the case, it is only necessary to decide whether the defendant complied with his obligation to return
the furniture upon the plaintiff's demand; whether the latter is bound to bear the deposit fees thereof, and whether she is entitled to the costs of
litigation.lawp hi.n et
The contract entered into between the parties is one of commadatum, because 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 latters demand (clause 7 of the contract, Exhibit A; articles 1740, paragraph 1, and 1741 of the Civil Code). 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 eletric lamps. The provisions of article 1169 of the Civil Code cited by counsel for the
parties are not squarely applicable. 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.
As the defendant had voluntarily undertaken to return all the furniture to the plaintiff, upon the latter's demand, the Court could not legally
compel her to bear the expenses occasioned by the deposit of the furniture at the defendant's behest. The latter, as bailee, was not entitled to
place the furniture on deposit; nor was the plaintiff under a duty to accept the offer to return the furniture, because the defendant wanted to
retain the three gas heaters and the four electric lamps.
As to the value of the furniture, we do not believe that the plaintiff is entitled to the payment thereof by the defendant in case of his inability to
return some of the furniture because under paragraph 6 of the stipulation of facts, the defendant has neither agreed to nor admitted the
correctness of the said value. Should the defendant fail to deliver some of the furniture, the value thereof should be latter determined by the trial
Court through evidence which the parties may desire to present.
The costs in both instances should be borne by the defendant because the plaintiff is the prevailing party (section 487 of the Code of Civil
Procedure). The defendant was the one who breached the contract of commodatum, and without any reason he refused to return and deliver all
the furniture upon the plaintiff's demand. n these circumstances, it is just and equitable that he pay the legal expenses and other judicial costs
which the plaintiff would not have otherwise defrayed.
The appealed judgment is modified and the defendant is ordered to return and deliver to the plaintiff, in the residence to return and deliver to
the plaintiff, in the residence or house of the latter, all the furniture described in paragraph 3 of the stipulation of facts Exhibit A. The expenses
which may be occasioned by the delivery to and deposit of the furniture with the Sheriff shall be for the account of the defendant. the defendant
shall pay the costs in both instances. So ordered..

THIRD DIVISION

[G.R. No. 173654-765, August 28, 2008]

PEOPLE OF THE PHILIPPINES, PETITIONERS, VS. TERESITA PUIG AND ROMEO
PORRAS, RESPONDENT.

D E C I S I O N

CHICO-NAZARIO, J.:

This is a Petition for Review under Rule 45 of the Revised Rules of Court with petitioner People of the
Philippines, represented by the Office of the Solicitor General, praying for the reversal of the Orders dated
30 January 2006 and 9 June 2006 of the Regional Trial Court (RTC) of the 6
th
Judicial Region, Branch 68,
Dumangas, Iloilo, dismissing the 112 cases of Qualified Theft filed against respondents Teresita Puig and
Romeo Porras, and denying petitioner's Motion for Reconsideration, in Criminal Cases No. 05-3054 to 05-
3165.

The following are the factual antecedents:

On 7 November 2005, the Iloilo Provincial Prosecutor's Office filed before Branch 68 of the RTC in
Dumangas, Iloilo, 112 cases of Qualified Theft against respondents Teresita Puig (Puig) and Romeo Porras
(Porras) who were the Cashier and Bookkeeper, respectively, of private complainant Rural Bank of
Pototan, Inc. The cases were docketed as Criminal Cases No. 05-3054 to 05-3165.

The allegations in the Informations
[1]
filed before the RTC were uniform and pro-forma, except for the
amounts, date and time of commission, to wit:
INFORMATION
That on or about the 1
st
day of August, 2002, in the Municipality of Pototan, Province of Iloilo, Philippines,
and within the jurisdiction of this Honorable Court, above-named [respondents], conspiring,
confederating, and helping one another, with grave abuse of confidence, being the Cashier and
Bookkeeper of the Rural Bank of Pototan, Inc., Pototan, Iloilo, without the knowledge and/or consent of
the management of the Bank and with intent of gain, did then and there willfully, unlawfully and
feloniously take, steal and carry away the sum of FIFTEEN THOUSAND PESOS (P15,000.00), Philippine
Currency, to the damage and prejudice of the said bank in the aforesaid amount.
After perusing the Informations in these cases, the trial court did not find the existence of probable cause
that would have necessitated the issuance of a warrant of arrest based on the following grounds:
(1) the element of `taking without the consent of the owners' was missing on the ground that it is
the depositors-clients, and not the Bank, which filed the complaint in these cases, who are the
owners of the money allegedly taken by respondents and hence, are the real parties-in-interest; and
(2) the Informations are bereft of the phrase alleging "/epen/ence, guar/ianship or vigilance
between the respon/ents an/ the offen/e/ party that woul/ have create/ a high /egree of
confi/ence between them which the respon/ents coul/ have abuse/."
It added that allowing the 112 cases for Qualified Theft filed against the respondents to push through
would be violative of the right of the respondents under Section 14(2), Article III of the 1987 Constitution
which states that in all criminal prosecutions, the accused shall enjoy the right to be informed of the
nature and cause of the accusation against him. Following Section 6, Rule 112 of the Revised Rules of
Criminal Procedure, the RTC dismissed the cases on 30 January 2006 and refused to issue a warrant of
arrest against Puig and Porras.

A Motion for Reconsideration
[2]
was filed on 17 April 2006, by the petitioner.

On 9 June 2006, an Order
[3]
denying petitioner's Motion for Reconsideration was issued by the RTC,
finding as follows:
Accordingly, the prosecution's Motion for Reconsideration should be, as it hereby, DENIED. The Order
dated January 30, 2006 STANDS in all respects.
Petitioner went directly to this Court via Petition for Review on Certiorari under Rule 45, raising the sole
legal issue of:
WHETHER OR NOT THE 112 INFORMATIONS FOR QUALIFIED THEFT SUFFICIENTLY ALLEGE THE ELEMENT
OF TAKING WITHOUT THE CONSENT OF THE OWNER, AND THE QUALIFYING CIRCUMSTANCE OF GRAVE
ABUSE OF CONFIDENCE.
Petitioner prays that judgment be rendered annulling and setting aside the Orders dated 30 January 2006
and 9 June 2006 issued by the trial court, and that it be directed to proceed with Criminal Cases No. 05-
3054 to 05-3165.

Petitioner explains that under Article 1980 of the New Civil Code, "fixed, savings, and current deposits of
money in banks and similar institutions shall be governed by the provisions concerning simple loans."
Corollary thereto, Article 1953 of the same Code provides that "a person who receives a loan of money or
any other fungible thing acquires the ownership thereof, and is bound to pay to the creditor an equal
amount of the same kind and quality." Thus, it posits that the depositors who place their money with the
bank are considered creditors of the bank. The bank acquires ownership of the money deposited by its
clients, making the money taken by respondents as belonging to the bank.

Petitioner also insists that the Informations sufficiently allege all the elements of the crime of qualified
theft, citing that a perusal of the Informations will show that they specifically allege that the respondents
were the Cashier and Bookkeeper of the Rural Bank of Pototan, Inc., respectively, and that they took
various amounts of money with grave abuse of confidence, and without the knowledge and consent of the
bank, to the damage and prejudice of the bank.

Parenthetically, respondents raise procedural issues. They challenge the petition on the ground that a
Petition for Review on Certiorari via Rule 45 is the wrong mode of appeal because a finding of probable
cause for the issuance of a warrant of arrest presupposes evaluation of facts and circumstances, which is
not proper under said Rule.

Respondents further claim that the Department of Justice (DOJ), through the Secretary of Justice, is the
principal party to file a Petition for Review on Certiorari, considering that the incident was indorsed by the
DOJ.

We find merit in the petition.

The dismissal by the RTC of the criminal cases was allegedly due to insufficiency of the Informations and,
therefore, because of this defect, there is no basis for the existence of probable cause which will justify
the issuance of the warrant of arrest. Petitioner assails the dismissal contending that the Informations for
Qualified Theft sufficiently state facts which constitute (a) the qualifying circumstance of grave abuse of
confidence; and (b) the element of taking, with intent to gain and without the consent of the owner, which
is the Bank.

In determining the existence of probable cause to issue a warrant of arrest, the RTC judge found the
allegations in the Information inadequate. He ruled that the Information failed to state facts constituting
the qualifying circumstance of grave abuse of confidence and the element of taking without the consent of
the owner, since the owner of the money is not the Bank, but the depositors therein. He also cites People
v. Koc Song,
[4]
in which this Court held:
There must be allegation in the information and proof of a relation, by reason of dependence,
guardianship or vigilance, between the respondents and the offended party that has created a high degree
of confidence between them, which the respondents abused.
At this point, it needs stressing that the RTC Judge based his conclusion that there was no probable cause
simply on the insufficiency of the allegations in the Informations concerning the facts constitutive of the
elements of the offense charged. This, therefore, makes the issue of sufficiency of the allegations in the
Informations the focal point of discussion.

Qualified Theft, as defined and punished under Article 310 of the Revised Penal Code, is committed as
follows, viz:
ART. 310. Qualified Theft. - The crime of theft shall be punished by the penalties next higher by two
degrees than those respectively specified in the next preceding article, if committed by a domestic
servant, or with grave abuse of confidence, or if the property stolen is motor vehicle, mail matter or
large cattle or consists of coconuts taken from the premises of a plantation, fish taken from a fishpond or
fishery or if property is taken on the occasion of fire, earthquake, typhoon, volcanic eruption, or any other
calamity, vehicular accident or civil disturbance. (Emphasis supplied.)
Theft, as defined in Article 308 of the Revised Penal Code, requires the physical taking of another's
property without violence or intimidation against persons or force upon things. The elements of the crime
under this Article are:
1. Intent to gain;
2. Unlawful taking;
3. Personal property belonging to another;
4. Absence of violence or intimidation against persons or force upon things.
To fall under the crime of Qualified Theft, the following elements must concur:
1. Taking of personal property;
2. That the said property belongs to another;
3. That the said taking be done with intent to gain;
4. That it be done without the owner's consent;
5. That it be accomplished without the use of violence or intimidation against persons, nor of force
upon things;
6. That it be done with grave abuse of confidence.
On the sufficiency of the Information, Section 6, Rule 110 of the Rules of Court requires, inter alia, that
the information must state the acts or omissions complained of as constitutive of the offense.

On the manner of how the Information should be worded, Section 9, Rule 110 of the Rules of Court, is
enlightening:
Section 9. Cause of the accusation. The acts or omissions complained of as constituting the offense and
the qualifying and aggravating circumstances must be stated in ordinary and concise language and not
necessarily in the language used in the statute but in terms sufficient to enable a person of common
understanding to know what offense is being charged as well as its qualifying and aggravating
circumstances and for the court to pronounce judgment.
It is evident that the Information need not use the exact language of the statute in alleging the acts or
omissions complained of as constituting the offense. The test is whether it enables a person of common
understanding to know the charge against him, and the court to render judgment properly.
[5]


The portion of the Information relevant to this discussion reads:
[A]bove-named [respondents], conspiring, confederating, and helping one another, with grave abuse of
confidence, being the Cashier and Bookkeeper of the Rural Bank of Pototan, Inc., Pototan, Iloilo,
without the knowledge and/or consent of the management of the Bank x x x.
It is beyond doubt that tellers, Cashiers, Bookkeepers and other employees of a Bank who come into
possession of the monies deposited therein enjoy the confidence reposed in them by their employer.
Banks, on the other hand, where monies are deposited, are considered the owners thereof. This is very
clear not only from the express provisions of the law, but from established jurisprudence. The relationship
between banks and depositors has been held to be that of creditor and debtor. Articles 1953 and 1980 of
the New Civil Code, as appropriately pointed out by petitioner, provide as follows:
Article 1953. A person who receives a loan of money or any other fungible thing acquires the ownership
thereof, and is bound to pay to the creditor an equal amount of the same kind and quality.

Article 1980. Fixed, savings, and current deposits of money in banks and similar institutions shall be
governed by the provisions concerning loan.
In a long line of cases involving Qualified Theft, this Court has firmly established the nature of possession
by the Bank of the money deposits therein, and the duties being performed by its employees who have
custody of the money or have come into possession of it. The Court has consistently considered the
allegations in the Information that such employees acted with grave abuse of confidence, to the damage
and prejudice of the Bank, without particularly referring to it as owner of the money deposits, as sufficient
to make out a case of Qualified Theft. For a graphic illustration, we cite Roque v. People,
[6]
where the
accused teller was convicted for Qualified Theft based on this Information:
That on or about the 16th day of November, 1989, in the municipality of Floridablanca, province of
Pampanga, Philippines and within the jurisdiction of his Honorable Court, the above-named accused
ASUNCION GALANG ROQUE, being then employed as teller of the Basa Air Base Savings and Loan
Association Inc. (BABSLA) with office address at Basa Air Base, Floridablanca, Pampanga, and as such was
authorized and reposed with the responsibility to receive and collect capital contributions from its
member/contributors of said corporation, and having collected and received in her capacity as teller of the
BABSLA the sum of TEN THOUSAND PESOS (P10,000.00), said accused, with intent of gain, with grave
abuse of confidence and without the knowledge and consent of said corporation, did then and
there willfully, unlawfully and feloniously take, steal and carry away the amount of P10,000.00, Philippine
currency, by making it appear that a certain depositor by the name of Antonio Salazar withdrew from his
Savings Account No. 1359, when in truth and in fact said Antonio Salazar did not withdr[a]w the said
amount of P10,000.00 to the damage and prejudice of BABSLA in the total amount of P10,000.00,
Philippine currency.
In convicting the therein appellant, the Court held that:
[S]ince the teller occupies a position of confidence, and the bank places money in the teller's possession
due to the confidence reposed on the teller, the felony of qualified theft would be committed.
[7]

Also in People v. Sison,
[8]
the Branch Operations Officer was convicted of the crime of Qualified Theft
based on the Information as herein cited:
That in or about and during the period compressed between January 24, 1992 and February 13, 1992,
both dates inclusive, in the City of Manila, Philippines, the said accused did then and there wilfully,
unlawfully and feloniously, with intent of gain and without the knowledge and consent of the owner
thereof, take, steal and carry away the following, to wit:

Cash money amounting to P6,000,000.00 in different denominations belonging to the PHILIPPINE
COMMERCIAL INTERNATIONAL BANK (PCIBank for brevity), Luneta Branch, Manila represented by its
Branch Manager, HELEN U. FARGAS, to the damage and prejudice of the said owner in the aforesaid
amount of P6,000,000.00, Philippine Currency.

That in the commission of the said offense, herein accused acted with grave abuse of confidence and
unfaithfulness, he being the Branch Operation Officer of the said complainant and as such he had free
access to the place where the said amount of money was kept.

The judgment of conviction elaborated thus:

The crime perpetuated by appellant against his employer, the Philippine Commercial and Industrial Bank
(PCIB), is Qualified Theft. Appellant could not have committed the crime had he not been holding the
position of Luneta Branch Operation Officer which gave him not only sole access to the bank vault xxx.
The management of the PCIB reposed its trust and confidence in the appellant as its Luneta Branch
Operation Officer, and it was this trust and confidence which he exploited to enrich himself to the damage
and prejudice of PCIB x x x.
[9]

From another end, People v. Locson,
[10]
in addition to People v. Sison, described the nature of
possession by the Bank. The money in this case was in the possession of the defendant as receiving teller
of the bank, and the possession of the defendant was the possession of the Bank. The Court held therein
that when the defendant, with grave abuse of confidence, removed the money and appropriated it to his
own use without the consent of the Bank, there was taking as contemplated in the crime of Qualified
Theft.
[11]


Conspicuously, in all of the foregoing cases, where the Informations merely alleged the positions of the
respondents; that the crime was committed with grave abuse of confidence, with intent to gain and
without the knowledge and consent of the Bank, without necessarily stating the phrase being assiduously
insisted upon by respondents, "of a relation by reason of dependence, guardianship or vigilance,
between the respondents and the offended party that has created a high degree of confidence
between them, which respondents abused,"
[12]
and without employing the word "owner" in lieu of the
"Bank" were considered to have satisfied the test of sufficiency of allegations.

As regards the respondents who were employed as Cashier and Bookkeeper of the Bank in this case, there
is even no reason to quibble on the allegation in the Informations that they acted with grave abuse of
confidence. In fact, the Information which alleged grave abuse of confidence by accused herein is even
more precise, as this is exactly the requirement of the law in qualifying the crime of Theft.

In summary, the Bank acquires ownership of the money deposited by its clients; and the employees of the
Bank, who are entrusted with the possession of money of the Bank due to the confidence reposed in
them, occupy positions of confidence. The Informations, therefore, sufficiently allege all the essential
elements constituting the crime of Qualified Theft.

On the theory of the defense that the DOJ is the principal party who may file the instant petition, the
ruling in obilia Products, Inc. v. Hajime Umezawa
[13]
is instructive. The Court thus enunciated:
In a criminal case in which the offended party is the State, the interest of the private complainant or the
offended party is limited to the civil liability arising therefrom. Hence, if a criminal case is dismissed by the
trial court or if there is an acquittal, a reconsideration of the order of dismissal or acquittal may be
undertaken, whenever legally feasible, insofar as the criminal aspect thereof is concerned and may be
made only by the public prosecutor; or in the case of an appeal, by the State only, through the OSG. x x
x.
On the alleged wrong mode of appeal by petitioner, suffice it to state that the rule is well-settled that in
appeals by certiorari under Rule 45 of the Rules of Court, only errors of law may be raised,
[14]
and herein
petitioner certainly raised a question of law.

As an aside, even if we go beyond the allegations of the Informations in these cases, a closer look at the
records of the preliminary investigation conducted will show that, indeed, probable cause exists for the
indictment of herein respondents. Pursuant to Section 6, Rule 112 of the Rules of Court, the judge shall
issue a warrant of arrest only upon a finding of probable cause after personally evaluating the resolution
of the prosecutor and its supporting evidence. Soliven v. Makasiar,
[15]
as reiterated in Allado v.
Driokno,
[16]
explained that probable cause for the issuance of a warrant of arrest is the existence of such
facts and circumstances that would lead a reasonably discreet and prudent person to believe that an
offense has been committed by the person sought to be arrested.
[17]
The records reasonably indicate that
the respondents may have, indeed, committed the offense charged.

Before closing, let it be stated that while it is truly imperative upon the fiscal or the judge, as the case
may be, to relieve the respondents from the pain of going through a trial once it is ascertained that no
probable cause exists to form a sufficient belief as to the guilt of the respondents, conversely, it is also
equally imperative upon the judge to proceed with the case upon a showing that there is a prima facie
case against the respondents.

HEREFORE, premises considered, the Petition for Review on Certiorari is hereby GRANTED. The Orders
dated 30 January 2006 and 9 June 2006 of the RTC dismissing Criminal Cases No. 05-3054 to 05-3165
are REVERSED and SET ASIDE. Let the corresponding Warrants of Arrest issue against herein
respondents TERESITA PUIG and ROMEO PORRAS. The RTC Judge of Branch 68, in Dumangas, Iloilo, is
directed to proceed with the trial of Criminal Cases No. 05-3054 to 05-3165, inclusive, with reasonable
dispatch. No pronouncement as to costs.

SO ORDERED.

nares-Santiago, (Chairperson), Austria-artinez, Reyes, and Leonardo-De Castro, JJ., concur.


8. THRD DVSON
BP FAMLY BANK,
Petitioner,
- versus -
AMADO FRANCO and COURT OF APPEALS,
Respondents.
[%%
Present:
YNARES-SANTAGO, J.,
Chairperson,
AUSTRA-MARTNEZ,
CHCO-NAZARO,
NACHURA, and
REYES, JJ.
Promulgated:
November 23, 2007
x------------------------------------------------------------------------------------x
DECSON
NACHURA, J.:
Banks are exhorted to treat the accounts of their depositors with meticulous care and utmost fidelity. We reiterate this exhortation in the case at
bench.
Before us is a Petition for Review on Certiorari seeking the reversal of the Court of Appeals (CA) Decision
1
in CA-G.R. CV No. 43424 which
affirmed with modification the judgment
2
of the Regional Trial Court, Branch 55, Manila (Manila RTC), in Civil Case No. 90-53295.
This case has its genesis in an ostensible fraud perpetrated on the petitioner BP Family Bank (BP-FB) allegedly by respondent Amado Franco
(Franco) in conspiracy with other individuals,
3
some of whom opened and maintained separate accounts with BP-FB, San Francisco del Monte
(SFDM) branch, in a series of transactions.
On August 15, 1989, Tevesteco Arrastre-Stevedoring Co., nc. (Tevesteco) opened a savings and current account with BP-FB. Soon
thereafter, or on August 25, 1989, First Metro nvestment Corporation (FMC) also opened a time deposit account with the same branch of BP-
FB with a deposit of P100,000,000.00, to mature one year thence.
Subsequently, on August 31, 1989, Franco opened three accounts, namely, a current,
4
savings,
5
and time deposit,
6
with BP-FB. The current
and savings accounts were respectively funded with an initial deposit of P500,000.00 each, while the time deposit account had P1,000,000.00
with a maturity date of August 31, 1990. The total amount of P2,000,000.00 used to open these accounts is traceable to a check issued by
Tevesteco allegedly in consideration of Franco's introduction of Eladio Teves,
7
who was looking for a conduit bank to facilitate Tevesteco's
business transactions, to Jaime Sebastian, who was then BP-FB SFDM's Branch Manager. n turn, the funding for the P2,000,000.00 check
was part of the P80,000,000.00 debited by BP-FB from FMC's time deposit account and credited to Tevesteco's current account pursuant to
an Authority to Debit purportedly signed by FMC's officers.
t appears, however, that the signatures of FMC's officers on the Authority to Debit were forged.
8
On September 4, 1989, Antonio Ong,
9
upon
being shown the Authority to Debit, personally declared his signature therein to be a forgery. Unfortunately, Tevesteco had already effected
several withdrawals from its current account (to which had been credited the P80,000,000.00 covered by the forged Authority to Debit)
amounting to P37,455,410.54, including the P2,000,000.00 paid to Franco.
On September 8, 1989, impelled by the need to protect its interests in light of FMC's forgery claim, BP-FB, thru its Senior Vice-President,
Severino Coronacion, instructed Jesus Arangorin
10
to debit Franco's savings and current accounts for the amounts remaining therein.
11

However, Franco's time deposit account could not be debited due to the capacity limitations of BP-FB's computer.
12

n the meantime, two checks
13
drawn by Franco against his BP-FB current account were dishonored upon presentment for payment, and
stamped with a notation "account under garnishment." Apparently, Franco's current account was garnished by virtue of an Order of Attachment
issued by the Regional Trial Court of Makati (Makati RTC) in Civil Case No. 89-4996 (Makati Case), which had been filed by BP-FB against
Franco et al.,
14
to recover the P37,455,410.54 representing Tevesteco's total withdrawals from its account.
Notably, the dishonored checks were issued by Franco and presented for payment at BP-FB prior to Franco's receipt of notice that his
accounts were under garnishment.
15
n fact, at the time the Notice of Garnishment dated September 27, 1989 was served on BP-FB, Franco
had yet to be impleaded in the Makati case where the writ of attachment was issued.
t was only on May 15, 1990, through the service of a copy of the Second Amended Complaint in Civil Case No. 89-4996, that Franco was
impleaded in the Makati case.
16
mmediately, upon receipt of such copy, Franco filed a Motion to Discharge Attachment which the Makati RTC
granted on May 16, 1990. The Order Lifting the Order of Attachment was served on BP-FB on even date, with Franco demanding the release
to him of the funds in his savings and current accounts. Jesus Arangorin, BP-FB's new manager, could not forthwith comply with the demand
as the funds, as previously stated, had already been debited because of FMC's forgery claim. As such, BP-FB's computer at the SFDM
Branch indicated that the current account record was "not on file."
With respect to Franco's savings account, it appears that Franco agreed to an arrangement, as a favor to Sebastian, whereby P400,000.00
from his savings account was temporarily transferred to Domingo Quiaoit's savings account, subject to its immediate return upon issuance of a
certificate of deposit which Quiaoit needed in connection with his visa application at the Taiwan Embassy. As part of the arrangement,
Sebastian retained custody of Quiaoit's savings account passbook to ensure that no withdrawal would be effected therefrom, and to preserve
Franco's deposits.
On May 17, 1990, Franco pre-terminated his time deposit account. BP-FB deducted the amount of P63,189.00 from the remaining balance of
the time deposit account representing advance interest paid to him.
These transactions spawned a number of cases, some of which we had already resolved.
FMC filed a complaint against BP-FB for the recovery of the amount of P80,000,000.00 debited from its account.
17
The case eventually
reached this Court, and in BP Family Savings Bank, nc. v. First Metro nvestment Corporation,
18
we upheld the finding of the courts below that
BP-FB failed to exercise the degree of diligence required by the nature of its obligation to treat the accounts of its depositors with meticulous
care. Thus, BP-FB was found liable to FMC for the debited amount in its time deposit. t was ordered to pay P65,332,321.99 plus interest at
17% per annum from August 29, 1989 until fully restored. n turn, the 17% shall itself earn interest at 12% from October 4, 1989 until fully paid.
n a related case, Edgardo Buenaventura, Myrna Lizardo and Yolanda Tica (Buenaventura, et al.),
19
recipients of a P500,000.00 check
proceeding from the P80,000,000.00 mistakenly credited to Tevesteco, likewise filed suit. Buenaventura et al., as in the case of Franco, were
also prevented from effecting withdrawals
20
from their current account with BP-FB, Bonifacio Market, Edsa, Caloocan City Branch. Likewise,
when the case was elevated to this Court docketed as BP Family Bank v. Buenaventura,
21
we ruled that BP-FB had no right to freeze
Buenaventura, et al.'s accounts and adjudged BP-FB liable therefor, in addition to damages.
Meanwhile, BP-FB filed separate civil and criminal cases against those believed to be the perpetrators of the multi-million peso scam.
22
n the
criminal case, Franco, along with the other accused, except for Manuel Bienvenida who was still at large, were acquitted of the crime of Estafa
as defined and penalized under Article 351, par. 2(a) of the Revised Penal Code.
23
However, the civil case
24
remains under litigation and the
respective rights and liabilities of the parties have yet to be adjudicated.
Consequently, in light of BP-FB's refusal to heed Franco's demands to unfreeze his accounts and release his deposits therein, the latter filed
on June 4, 1990 with the Manila RTC the subject suit. n his complaint, Franco prayed for the following reliefs: (1) the interest on the remaining
balance
25
of his current account which was eventually released to him on October 31, 1991; (2) the balance
26
on his savings account, plus
interest thereon; (3) the advance interest
27
paid to him which had been deducted when he pre-terminated his time deposit account; and (4) the
payment of actual, moral and exemplary damages, as well as attorney's fees.
BP-FB traversed this complaint, insisting that it was correct in freezing the accounts of Franco and refusing to release his deposits, claiming
that it had a better right to the amounts which consisted of part of the money allegedly fraudulently withdrawn from it by Tevesteco and ending
up in Franco's accounts. BP-FB asseverated that the claimed consideration of P2,000,000.00 for the introduction facilitated by Franco between
George Daantos and Eladio Teves, on the one hand, and Jaime Sebastian, on the other, spoke volumes of Franco's participation in the
fraudulent transaction.
On August 4, 1993, the Manila RTC rendered judgment, the dispositive portion of which reads as follows:
WHEREFORE, in view of all the foregoing, judgment is hereby rendered in favor of [Franco] and against [BP-FB], ordering the latter to pay to
the former the following sums:
1. P76,500.00 representing the legal rate of interest on the amount of P450,000.00 from May 18, 1990 to October 31, 1991;
2. P498,973.23 representing the balance on [Franco's] savings account as of May 18, 1990, together with the interest thereon in accordance
with the bank's guidelines on the payment therefor;
3. P30,000.00 by way of attorney's fees; and
4. P10,000.00 as nominal damages.
The counterclaim of the defendant is DSMSSED for lack of factual and legal anchor.
Costs against [BP-FB].
SO ORDERED.
28

Unsatisfied with the decision, both parties filed their respective appeals before the CA. Franco confined his appeal to the Manila RTC's denial of
his claim for moral and exemplary damages, and the diminutive award of attorney's fees. n affirming with modification the lower court's
decision, the appellate court decreed, to wit:
WHEREFORE, foregoing considered, the appealed decision is hereby AFFRMED with modification ordering [BP-FB] to pay [Franco]
P63,189.00 representing the interest deducted from the time deposit of plaintiff-appellant. P200,000.00 as moral damages and P100,000.00 as
exemplary damages, deleting the award of nominal damages (in view of the award of moral and exemplary damages) and increasing the award
of attorney's fees from P30,000.00 to P75,000.00.
Cost against [BP-FB].
SO ORDERED.
29

n this recourse, BP-FB ascribes error to the CA when it ruled that: (1) Franco had a better right to the deposits in the subject accounts which
are part of the proceeds of a forged Authority to Debit; (2) Franco is entitled to interest on his current account; (3) Franco can recover the
P400,000.00 deposit in Quiaoit's savings account; (4) the dishonor of Franco's checks was not legally in order; (5) BP-FB is liable for interest
on Franco's time deposit, and for moral and exemplary damages; and (6) BP-FB's counter-claim has no factual and legal anchor.
The petition is partly meritorious.
We are in full accord with the common ruling of the lower courts that BP-FB cannot unilaterally freeze Franco's accounts and preclude him
from withdrawing his deposits. However, contrary to the appellate court's ruling, we hold that Franco is not entitled to unearned interest on the
time deposit as well as to moral and exemplary damages.
First. On the issue of who has a better right to the deposits in Franco's accounts, BP-FB urges us that the legal consequence of FMC's forgery
claim is that the money transferred by BP-FB to Tevesteco is its own, and considering that it was able to recover possession of the same when
the money was redeposited by Franco, it had the right to set up its ownership thereon and freeze Franco's accounts.
BP-FB contends that its position is not unlike that of an owner of personal property who regains possession after it is stolen, and to illustrate
this point, BP-FB gives the following example: where X's television set is stolen by Y who thereafter sells it to Z, and where Z unwittingly
entrusts possession of the TV set to X, the latter would have the right to keep possession of the property and preclude Z from recovering
possession thereof. To bolster its position, BP-FB cites Article 559 of the Civil Code, which provides:
Article 559. The possession of movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any movable or
has been unlawfully deprived thereof, may recover it from the person in possession of the same.
f the possessor of a movable lost or of which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner
cannot obtain its return without reimbursing the price paid therefor.
BP-FB's argument is unsound. To begin with, the movable property mentioned in Article 559 of the Civil Code pertains to a specific or
determinate thing.
30
A determinate or specific thing is one that is individualized and can be identified or distinguished from others of the same
kind.
31

n this case, the deposit in Franco's accounts consists of money which, albeit characterized as a movable, is generic and fungible.
32
The quality
of being fungible depends upon the possibility of the property, because of its nature or the will of the parties, being substituted by others of the
same kind, not having a distinct individuality.
33

Significantly, while Article 559 permits an owner who has lost or has been unlawfully deprived of a movable to recover the exact same thing
from the current possessor, BP-FB simply claims ownership of the equivalent amount of money, i.e., the value thereof, which it had mistakenly
debited from FMC's account and credited to Tevesteco's, and subsequently traced to Franco's account. n fact, this is what BP-FB did in filing
the Makati Case against Franco, et al. t staked its claim on the money itself which passed from one account to another, commencing with the
forged Authority to Debit.
t bears emphasizing that money bears no earmarks of peculiar ownership,
34
and this characteristic is all the more manifest in the instant case
which involves money in a banking transaction gone awry. ts primary function is to pass from hand to hand as a medium of exchange, without
other evidence of its title.
35
Money, which had passed through various transactions in the general course of banking business, even if of
traceable origin, is no exception.
Thus, inasmuch as what is involved is not a specific or determinate personal property, BP-FB's illustrative example, ostensibly based on Article
559, is inapplicable to the instant case.
There is no doubt that BP-FB owns the deposited monies in the accounts of Franco, but not as a legal consequence of its unauthorized
transfer of FMC's deposits to Tevesteco's account. BP-FB conveniently forgets that the deposit of money in banks is governed by the Civil
Code provisions on simple loan or mutuum.
36
As there is a debtor-creditor relationship between a bank and its depositor, BP-FB ultimately
acquired ownership of Franco's deposits, but such ownership is coupled with a corresponding obligation to pay him an equal amount on
demand.
37
Although BP-FB owns the deposits in Franco's accounts, it cannot prevent him from demanding payment of BP-FB's obligation by
drawing checks against his current account, or asking for the release of the funds in his savings account. Thus, when Franco issued checks
drawn against his current account, he had every right as creditor to expect that those checks would be honored by BP-FB as debtor.
More importantly, BP-FB does not have a unilateral right to freeze the accounts of Franco based on its mere suspicion that the funds therein
were proceeds of the multi-million peso scam Franco was allegedly involved in. To grant BP-FB, or any bank for that matter, the right to take
whatever action it pleases on deposits which it supposes are derived from shady transactions, would open the floodgates of public distrust in
the banking industry.
Our pronouncement in Simex nternational (Manila), nc. v. Court of Appeals
38
continues to resonate, thus:
The banking system is an indispensable institution in the modern world and plays a vital role in the economic life of every civilized nation.
Whether as mere passive entities for the safekeeping and saving of money or as active instruments of business and commerce, banks have
become an ubiquitous presence among the people, who have come to regard them with respect and even gratitude and, most of all,
confidence. Thus, even the humble wage-earner has not hesitated to entrust his life's savings to the bank of his choice, knowing that they will
be safe in its custody and will even earn some interest for him. The ordinary person, with equal faith, usually maintains a modest checking
account for security and convenience in the settling of his monthly bills and the payment of ordinary expenses. x x x.
n every case, the depositor expects the bank to treat his account with the utmost fidelity, whether such account consists only of a few hundred
pesos or of millions. The bank must record every single transaction accurately, down to the last centavo, and as promptly as possible. This has
to be done if the account is to reflect at any given time the amount of money the depositor can dispose of as he sees fit, confident that the bank
will deliver it as and to whomever directs. A blunder on the part of the bank, such as the dishonor of the check without good reason, can cause
the depositor not a little embarrassment if not also financial loss and perhaps even civil and criminal litigation.
The point is that as a business affected with public interest and because of the nature of its functions, the bank is under obligation to treat the
accounts of its depositors with meticulous care, always having in mind the fiduciary nature of their relationship. x x x.
neluctably, BP-FB, as the trustee in the fiduciary relationship, is duty bound to know the signatures of its customers. Having failed to detect the
forgery in the Authority to Debit and in the process inadvertently facilitate the FMC-Tevesteco transfer, BP-FB cannot now shift liability thereon
to Franco and the other payees of checks issued by Tevesteco, or prevent withdrawals from their respective accounts without the appropriate
court writ or a favorable final judgment.
Further, it boggles the mind why BP-FB, even without delving into the authenticity of the signature in the Authority to Debit, effected the
transfer of P80,000,000.00 from FMC's to Tevesteco's account, when FMC's account was a time deposit and it had already paid advance
interest to FMC. Considering that there is as yet no indubitable evidence establishing Franco's participation in the forgery, he remains an
innocent party. As between him and BP-FB, the latter, which made possible the present predicament, must bear the resulting loss or
inconvenience.
Second. With respect to its liability for interest on Franco's current account, BP-FB argues that its non-compliance with the Makati RTC's Order
Lifting the Order of Attachment and the legal consequences thereof, is a matter that ought to be taken up in that court.
The argument is tenuous. We agree with the succinct holding of the appellate court in this respect. The Manila RTC's order to pay interests on
Franco's current account arose from BP-FB's unjustified refusal to comply with its obligation to pay Franco pursuant to their contract of
mutuum. n other words, from the time BP-FB refused Franco's demand for the release of the deposits in his current account, specifically, from
May 17, 1990, interest at the rate of 12% began to accrue thereon.
39

Undeniably, the Makati RTC is vested with the authority to determine the legal consequences of BP-FB's non-compliance with the Order Lifting
the Order of Attachment. However, such authority does not preclude the Manila RTC from ruling on BP-FB's liability to Franco for payment of
interest based on its continued and unjustified refusal to perform a contractual obligation upon demand. After all, this was the core issue raised
by Franco in his complaint before the Manila RTC.
Third. As to the award to Franco of the deposits in Quiaoit's account, we find no reason to depart from the factual findings of both the Manila
RTC and the CA.
Noteworthy is the fact that Quiaoit himself testified that the deposits in his account are actually owned by Franco who simply accommodated
Jaime Sebastian's request to temporarily transfer P400,000.00 from Franco's savings account to Quiaoit's account.
40
His testimony cannot be
characterized as hearsay as the records reveal that he had personal knowledge of the arrangement made between Franco, Sebastian and
himself.
41

BP-FB makes capital of Franco's belated allegation relative to this particular arrangement. t insists that the transaction with Quiaoit was not
specifically alleged in Franco's complaint before the Manila RTC. However, it appears that BP-FB had impliedly consented to the trial of this
issue given its extensive cross-examination of Quiaoit.
Section 5, Rule 10 of the Rules of Court provides:
Section 5. Amendment to conform to or authorize presentation of evidence. When issues not raised by the pleadings are tried with the
express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Such amendment of
the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party
at any time, even after judgment; but failure to amend does not affect the result of the trial of these issues. f evidence is objected to at the trial
on the ground that it is now within the issues made by the pleadings, the court may allow the pleadings to be amended and shall do so with
liberality if the presentation of the merits of the action and the ends of substantial justice will be subserved thereby. The court may grant a
continuance to enable the amendment to be made. (Emphasis supplied)
n all, BP-FB's argument that this case is not the right forum for Franco to recover the P400,000.00 begs the issue. To reiterate, Quiaoit,
testifying during the trial, unequivocally disclaimed ownership of the funds in his account, and pointed to Franco as the actual owner thereof.
Clearly, Franco's action for the recovery of his deposits appropriately covers the deposits in Quiaoit's account.
Fourth. Notwithstanding all the foregoing, BP-FB continues to insist that the dishonor of Franco's checks respectively dated September 11 and
18, 1989 was legally in order in view of the Makati RTC's supplemental writ of attachment issued on September 14, 1989. t posits that as the
party that applied for the writ of attachment before the Makati RTC, it need not be served with the Notice of Garnishment before it could place
Franco's accounts under garnishment.
The argument is specious. n this argument, we perceive BP-FB's clever but transparent ploy to circumvent Section 4,
42
Rule 13 of the Rules of
Court. t should be noted that the strict requirement on service of court papers upon the parties affected is designed to comply with the
elementary requisites of due process. Franco was entitled, as a matter of right, to notice, if the requirements of due process are to be observed.
Yet, he received a copy of the Notice of Garnishment only on September 27, 1989, several days after the two checks he issued were
dishonored by BP-FB on September 20 and 21, 1989. Verily, it was premature for BP-FB to freeze Franco's accounts without even awaiting
service of the Makati RTC's Notice of Garnishment on Franco.
Additionally, it should be remembered that the enforcement of a writ of attachment cannot be made without including in the main suit the owner
of the property attached by virtue thereof. Section 5, Rule 13 of the Rules of Court specifically provides that "no levy or attachment pursuant to
the writ issued x x x shall be enforced unless it is preceded, or contemporaneously accompanied, by service of summons, together with a copy
of the complaint, the application for attachment, on the defendant within the Philippines."
Franco was impleaded as party-defendant only on May 15, 1990. The Makati RTC had yet to acquire jurisdiction over the person of Franco
when BP-FB garnished his accounts.
43
Effectively, therefore, the Makati RTC had no authority yet to bind the deposits of Franco through the
writ of attachment, and consequently, there was no legal basis for BP-FB to dishonor the checks issued by Franco.
Fifth. Anent the CA's finding that BP-FB was in bad faith and as such liable for the advance interest it deducted from Franco's time deposit
account, and for moral as well as exemplary damages, we find it proper to reinstate the ruling of the trial court, and allow only the recovery of
nominal damages in the amount of P10,000.00. However, we retain the CA's award of P75,000.00 as attorney's fees.
n granting Franco's prayer for interest on his time deposit account and for moral and exemplary damages, the CA attributed bad faith to BP-
FB because it (1) completely disregarded its obligation to Franco; (2) misleadingly claimed that Franco's deposits were under garnishment; (3)
misrepresented that Franco's current account was not on file; and (4) refused to return the P400,000.00 despite the fact that the ostensible
owner, Quiaoit, wanted the amount returned to Franco.
n this regard, we are guided by Article 2201 of the Civil Code which provides:
Article 2201. n contracts and quasi-contracts, the damages for which the obligor who acted in good faith is liable shall be those that are the
natural and probable consequences of the breach of the obligation, and which the parties have foreseen or could have reasonable foreseen at
the time the obligation was constituted.
n case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which may be reasonably attributed to the
non-performance of the obligation. (Emphasis supplied.)
We find, as the trial court did, that BP-FB acted out of the impetus of self-protection and not out of malevolence or ill will. BP-FB was not in the
corrupt state of mind contemplated in Article 2201 and should not be held liable for all damages now being imputed to it for its breach of
obligation. For the same reason, it is not liable for the unearned interest on the time deposit.
Bad faith does not simply connote bad judgment or negligence; it imports a dishonest purpose or some moral obliquity and conscious doing of
wrong; it partakes of the nature of fraud.
44
We have held that it is a breach of a known duty through some motive of interest or ill will.
45
n the
instant case, we cannot attribute to BP-FB fraud or even a motive of self-enrichment. As the trial court found, there was no denial whatsoever
by BP-FB of the existence of the accounts. The computer-generated document which indicated that the current account was "not on file"
resulted from the prior debit by BP-FB of the deposits. The remedy of freezing the account, or the garnishment, or even the outright refusal to
honor any transaction thereon was resorted to solely for the purpose of holding on to the funds as a security for its intended court action,
46
and
with no other goal but to ensure the integrity of the accounts.
We have had occasion to hold that in the absence of fraud or bad faith,
47
moral damages cannot be awarded; and that the adverse result of an
action does not per se make the action wrongful, or the party liable for it. One may err, but error alone is not a ground for granting such
damages.
48

An award of moral damages contemplates the existence of the following requisites: (1) there must be an injury clearly sustained by the
claimant, whether physical, mental or psychological; (2) there must be a culpable act or omission factually established; (3) the wrongful act or
omission of the defendant is the proximate cause of the injury sustained by the claimant; and (4) the award for damages is predicated on any of
the cases stated in Article 2219 of the Civil Code.
49

Franco could not point to, or identify any particular circumstance in Article 2219 of the Civil Code,
50
upon which to base his claim for moral
damages.
Thus, not having acted in bad faith, BP-FB cannot be held liable for moral damages under Article 2220 of the Civil Code for breach of
contract.
51

We also deny the claim for exemplary damages. Franco should show that he is entitled to moral, temperate, or compensatory damages before
the court may even consider the question of whether exemplary damages should be awarded to him.
52
As there is no basis for the award of
moral damages, neither can exemplary damages be granted.
While it is a sound policy not to set a premium on the right to litigate,
53
we, however, find that Franco is entitled to reasonable attorney's fees for
having been compelled to go to court in order to assert his right. Thus, we affirm the CA's grant of P75,000.00 as attorney's fees.
Attorney's fees may be awarded when a party is compelled to litigate or incur expenses to protect his interest,
54
or when the court deems it just
and equitable.
55
n the case at bench, BP-FB refused to unfreeze the deposits of Franco despite the Makati RTC's Order Lifting the Order of
Attachment and Quiaoit's unwavering assertion that the P400,000.00 was part of Franco's savings account. This refusal constrained Franco to
incur expenses and litigate for almost two (2) decades in order to protect his interests and recover his deposits. Therefore, this Court deems it
just and equitable to grant Franco P75,000.00 as attorney's fees. The award is reasonable in view of the complexity of the issues and the time it
has taken for this case to be resolved.
56

Sixth. As for the dismissal of BP-FB's counter-claim, we uphold the Manila RTC's ruling, as affirmed by the CA, that BP-FB is not entitled to
recover P3,800,000.00 as actual damages. BP-FB's alleged loss of profit as a result of Franco's suit is, as already pointed out, of its own
making. Accordingly, the denial of its counter-claim is in order.
WHEREFORE, the petition is PARTALLY GRANTED. The Court of Appeals Decision dated November 29, 1995 is AFFRMED with the
MODFCATON that the award of unearned interest on the time deposit and of moral and exemplary damages is DELETED.
No pronouncement as to costs.
SO ORDERED.



In BPI Family Bank v. Franco, we cautioned against the unilateral Ireezing oI bank accounts by banks, noting
that:
More importantly, |BPI Family Bank| does not have a unilateral right to Ireeze the accounts oI Franco based on
its mere suspicion that the Iunds therein were proceeds oI the multi-million peso scam Franco was allegedly
involved in. To grant |BPI Family Bank|, or any bank Ior that matter, the right to take whatever action it pleases
on deposits which it supposes are derived Irom shady transactions, would open the Iloodgates oI public distrust
in the banking industry.



9. TELFTH DIVISION

[CA-G.R. CV NO. 63958, August 18, 2006]

POLO S. PANTALEON, PLAINTIFF-APPELLANT, VS. AMERICAN EXPRESS
INTERNATIONAL, INC., DEFENDANT-APPELLANT.

D E C I S I O N

TAYAG, J.:

On appeal to Us is the Decision
[1]
of the Regional Trial Court, Branch 145 of Makati City in Civil Case No.
92-1665 for damages. The dispositive portion is as follows:
"WHEREFORE, judgment is hereby rendered in favor of plaintiff, POLO PANTALEON. Consequently,
defendant AMERICAN EXPRESS INTERNATIONAL, INC. is hereby ordered to pay plaintiff P500,000.00 as
moral damages, P300,000.00 as exemplary damages, P100,000.00 as attorney's fees, and P85,223.01 as
expenses of litigation. The counter-claim of defendant is DISMISSED.

Costs against defendant.

SO ORDERED.
The essential facts, as presented by the parties, are quoted from the appealed decision, to wit:
Defendant American Express International, Inc. is a resident foreign corporation engaged in the business
of providing credit services through its operation of a charge card system in the Philippines valid for use
locally or internationally. As advertised by defendant, holders of its American Express Basic Card
["AmexCard] charge purchases on their card and are encouraged as to its use. "Don't leave home without
it, the AmexCard "being as good as cash.

Plaintiff Polo S. Pantaleon is a Senior Partner of Castillo Laman Pantaleon and San Jose Law Offices, an
institutional law firm in the country. [TSN, February 24, 1993, pp. 12-13]. In 1990, he was issued
AmexCard No. 3729-817921-2003. [Exhibits "A-2 and "A-3]. In 1991, Supplementary cards were
likewise issued to plaintiff's wife Julialinda and his daughter Anna Regina.

Plaintiff's AmexCard and the supplementary cards issued to his wife and daughter had no pre-set spending
limits. [Exhibits "12 and "12-A]. The use of the cards, which plaintiff, his wife and daughter, cannot
charge their purchases.

As a gift to his daughter, Anna Regina, who graduated valedictorian from the U.P. College of Law, Class of
1991, plaintiff, his wife, his daughter and a son joined a first-class escorted tour of Western Europe,
known as the "Trafalgar Tour. The tour group, composed mostly of Caucasians, began its tour on October
4, 1991 and ended it on October 26, 1991. The tourists visited the countries of England, France, Spain,
Monaco, Italy, Austria, Germany, Belgium and Holland (Exhibits "B to "B-2, "E to "E-3, "F). In the
course of their tour, plaintiff, together with his family, forged friendships with the other members of the
tour group and eventually earned the latter's respect (TSN, November 20, 1992, pp. 55-56).

The last leg of the tour was Amsterdam, which the group scheduled to visit on the last two days of the
tour. The first day in Amsterdam was unproductive, since the group arrived there already late in the
afternoon. As no sightseeing was done for that day, the tour group agreed to start early the next day to
see the entire city before ending the tour. (TSN, November 20, 1992, pp. 28-30).

The following day, the tour group went to their first scheduled stop at Coster Diamond House, which they
reached before 9:00 a.m., local time. The store was still closed. It was agreed that the tour group would
have only 30 minutes at the store (TSN, November 20, 1992, pp. 31-32).

The tour group was ushered in shortly before 9:00 a.m. And, after brief lecture on diamonds lasting not
more than 10 minutes, the group was brought to to store's showroom to select items for purchase.
Plaintiff's and his wife immediately made their selection since plaintiff's wife already knew beforehand
what she wanted to buy. (TSN, 20 November 1992, pp. 34-36).

After selecting some items for purchase (Exhibit "I), at about 9:15 a.m., plaintiff presented his AmexCard
together with his passport to the Coster sales clerk, who took the imprint at the AmexCard and asked
plaintiff to sign the charge slip for a total amount of US$13,826.00 (Exhibits "H and "H-1; TSN,
November 20, 1992, pp. 35-40; February 24, 1993, pp. 51-52). The charge purchase was then referred
electronically to defendant's Amsterdam office at 9:20 a.m.

Ten minutes later, plaintiff was told by the store clerk that his AmexCard had not yet been approved (TSN,
November 20, 1992, pp. 41-42; February 24, 1993, pp. 52-53). This information was relayed to plaintiff
within hearing distance of his wife, daughter, and two Caucasian ladies of the tour group, who were then
inside the store. (TSN, November 30, 1992, pp. 41-43; February 24, 1993, pp. 53-54).

Plaintiff began to feel anxious about the delay in the approval of his charge purchase. His son, who had
already left the store, returned from the tour bus where the tour group was waiting and, in the presence
of his wife, daughter and the sales attendant, informed plaintiff that the entire tour group were waiting for
them. (TSN, November 20, 1992, pp. 44-45; February 23, 1993, p. 54). Plaintiff, embarrassed and
worried about the further inconvenience he would cause the tour group because it was already 9:40 a.m. -
- way past the time alloted by the tour guide for the store visit - asked the store clerk to cancel the sale.
The store manager, however, asked plaintiff to wait for a few more minutes and the latter complied. After
15 minutes, plaintiff was informed by the store clerk that bank references were being required by
defendant. Plaintiff felt insulted by this demand, but he complied, with great reluctance. (TSN, February
24, 1993, pp. 51-58; November 20, 1992, p. 45; March 1, 1993, pp. 71-72). After giving the name of his
depository banks, plaintiff instructed his daughter Anna Regina to hurry back to the tour group inside the
bus and apologize for the delay they were causing. His daughter did as she was told. (TSN, November 20,
1992, pp. 46-47, November 27, 1992, pp. 5-6, 7-8).

Almost one hour after plaintiff made his charge purchase, or at about 10:00 a.m., the store manager
finally decided to release the items to plaintiff at the store's own risk, even without defendant's approval.
(TSN, February 24, 1993, pp. 59-63; March 1, 1993, pp. 43-47).

Plaintiff and his wife hurried to the bus where they were met with stares and stony silence.

Plaintiff noticed that some members of the tour group were visibly irritated by the incident. Plaintiff had to
take a tranquilizer to contain his embarrassment, his humiliation, and his anger (TSN, March 1, 1993, pp.
86-88).

Worse, the tour guide announced that the city tour of Amsterdam was to be canceled for lack of time. This
caused plaintiff further humiliation, guilt and insult. (TSN, November 20, 1992, pp. 49-51). Plaintiff's
family was likewise embarrassed; his daughter Anne Regina testified that her mother wept. (TSN,
November 20, 1992, p. 49).

After the European tour, plaintiff and his family proceeded to the United States of America, while there,
plaintiff was able to use his AmexCard a number of times, and the approvals for them were obtained
quickly, except again on two occasions. (TSN, November 20, 1992, pp. 52-53).

(1) On October 30, 1991, plaintiff, his son, and a friend went to the Richard Metz Golf Studio in New York
to purchase some golf equipment worth US$1, 475.00.

After waiting for defendant's approval of the charge purchase for almost 20 minutes, plaintiff was forced
to cancel the sale.

Because of what happened, plaintiff told the store owner that he would return to pay for the items in cash,
which he did on November 3, 1991 after borrowing some money from a friend in New York.

(2) Plaintiff encountered another delay of 20 minutes in the approval of a charge purchase of US$87.00
worth of children's shoes at the Kid's Unlimited Store at the Quiency Market in Boston on November 3,
1991. (TSN, November 20, 1992, pp. 56-58; Exhibit "U).

Because of the delays and the consequent inconvenience, humiliation and hurt which he encountered,
plaintiff, upon his return to the Philippines, sent a letter thru his counsel to defendant on March 4, 1992,
demanding an apology for the "inconvenience, humiliation and embarrassment he and his family thereby
suffered from defendant's failure and/or refusal to provide credit authorization to (his) aforesaid
purchases. (Exhibit "BB-1). Defendant replied also through counsel, in a letter dated March 24, 1992
(Exhibit "DD) stating, among others, that defendant's delay in giving the needed authorization for the
purchase in Coster Diamond House in Amsterdam was because the charge purchase of US$13,826.00
"was out of the usual charge purchase pattern established, and denied plaintiff's demand. The plaintiff
then filed this action.

Defendant, for its part, claims at trial that its authority to reject or disallow charge referrals by plaintiff
was covered by the Cardmembership Agreement (Exhibits "A and "A-1) entered into with plaintiff in
November 1990. According to defendant, it had every right to do the acts complained of by plaintiff since
the agreement states that:
9. Problems with Goo/s an/ Services.
xxx xxx xxx

However, unless required by law, we are not responsible for any problem you have with any goods or
services you charge on the Card, and if you have a dispute with firm honoring the Card, you must pay us
anyway and settle the dispute directly with the firm. We will not be responsible in any other problems you
may have with such firm.

16. The Car/ Remains our Property

The Card remains our property and we can revoke your right to use it at anytime. We can do this with or
without cause and without giving you notice. You and any Additional Cardmember[s] agree not to dispute
our actions in terminating your Card privileges since the Card is is our property. If we have revoked the
Card without cause, we will refund you a proportion of your yearly fee. We may list revoked cards in our
Cancellation Bulletin or otherwise inform firms honoring the Card that the Card[s] issued to you has/have
been revoked or canceled. We shall not be liable in respect of any statement made arising out of such
revocation including the listing or revoked cards in our Cancellation Bulletin.

If we revoke the Card or it expires, you must return it to us, if we request. Also, if a firm that accepts the
Card asks you to surrender an expired or revoked card, you must do so. You may not use the Card after it
has expired or after it has been revoked. [Exhs. "A and "A-1]
In its appealed decision, the trial court concluded that the prolonged processing of the charge purchases
made by plaintiff Pantaleon constituted delay which evidently was a cause of action against defendant
American Express International, Inc. (AEII). We quote from the decision:
xxx xxx xxx

The delay in the processing is apparent to the undue as shown from the frantic successive queries of
Amexco Amsterdam which reads: "US$13,826.00 Cardmember buying jewels. ID seen. Advise how long
will this take? They were sent at 01:33, 01:37, 01:40, 01:45, 01:52 and 02:08, all times Phoenix. Manila
Amexco could be unaware of the need for speed in resolving the charge purchase referred to it, yet it sat
on its hands, unconcerned.

The other two purchases subject of this complaint were likewise not approved "in a matter of seconds.
The purchase at the Richard Metz Golf store had to be canceled by the plaintiff as the referral was still not
acted upon after almost 20 minutes of waiting. [TSN, 24 February 1993, pp. 83-84, Exhibit "S]. Approval
of the charge purchase at Kid's Unlimited Store took 20 minutes. [TSN, 20 November 1992, pp. 56-58,
Exhibit "U] Apparently, the delay was due to the continuing instruction of Manila Amexco for the
merchant and the local Amexco to require positive identification of the Cardmember and his bank
references before any charge purchase may be granted.

Since defendant's processing of the charge purchase were done electronically and the cardholder's charge
account and history were stored in its computer, defendant could have rejected or approved the charge
purchase in a matter of seconds. That time is of the essence in the processing of the charge purchase
should have been known to defendant, who received the request for approval of a charge purchase using
an AmexCard issued in the Philippines from an accredited establishment in Amsterdam and, later on, in
the United States. It is quite obvious under the circumstances the cardholder traveled from the Philippines
to Amsterdam and the US and was using his card to charge purchases in tourist commercial
establishments accredited with Amexco.

xxx xxx xxx

From the foregoing, it is evident that plaintiff has cause of action against defendant since the Civil Code
provides:
"Article 1170. Those who in the performance of their obligation are guilty of fraud, negligence or delay,
and those who, in any manner contravene the terms thereof, are liable for damages.
The circumstances attendant in the case at bar likewise reveal that the delays committed by defendant
are tainted with recklessness and bad faith. Such bad faith is indicated in no small measure by the fact
that while it used the "out of usual charge pattern reason to justify the delay in approving the charge
purchase at Coster, there were nevertheless similar delays with the Ridhard Metz and Kid's Unlimited
purchases, which were for much smaller amounts.

The defendant's own evidence reveals that the reason for the delays was the daily-dailying of the credit
authorizer, Edgardo Jaurique, in giving or denying the needed authorization on those three occasions.

xxx xxx xxx
The trial court thus ordered the defendant American Express International, Inc. to pay moral damages,
exemplary damages, attorney's fees and expenses of litigation. In awarding these damages, the trial court
had this to say:
The evidence at hand shows that plaintiff is entitled to an award of moral damages for the moral shock,
mental anguish, serious anxiety, wounded feelings, and social humiliation he suffered due to the
unreasonable delay in getting the requested charge approval. The deliberate delay by defendant in
granting the needed authorization on the three occasions complained of by plaintiff spoiled his and his
family's trip to Europe and the United States, which was a graduation gift of plaintiff to his daughter. The
Court understands the humiliating circumstances plaintiff was placed after presenting his AmexCard to pay
for the jewelry chosen by his wife, in a foreign city and with foreign tourists painfully aware of his
unattended cancellation of the group's continuing its tour program. What they knew then was that this
plaintiff Filipino and his family tried to buy some jewelry knowingly with a questionable credit card. The
Trafalgar tourists, who all paid for the city tour of Amsterdam that they missed, naturally resented
plaintiff's and his family's overstaying at the Coster Diamond Store, not knowing that it was not the fault
of plaintiff but of defendant which was taking all of one hour to decide whether the Amexco Cardholder is
entitled to charge his purchase against the card.
[2]


The experience humiliated plaintiff, not only before his own family but also his friends and acquaintances.
Because of the Coster incident, the personal friendships he and his family had cultivated with the other
members of the tour group and the efforts made by plaintiff and his family to build a good image for
himself and his countrymen in a foreign country were irretrievably lost. They were the only Filipinos in the
tour group. [TSN, 20 November 1992, pp. 51-52; 24 February 1993, pp. 73-77; 01 March 1993, pp. 53-
55, 56] And plaintiff is painfully aware that the incident would long be the impression of the tour group of
every Filipino.
[3]


xxx xxx xxx

Plaintiff should likewise be awarded P300,000.00 in exemplary damages, so that defendant, engaged in a
worldwide business, may be deterred from repeating its lack of prudence, consideration and care in
performing its contractual services to its clients as shown from the acts complained of in this case. The
bad faith and recklessness of defendant sanctions the award of exemplary damages [Civil Code, Arts.
2229, 2231 and 2232]

It should be remembered that at the onset, plaintiff merely sought a formal apology and some gesture of
concern from defendant for what it had done. In view of defendant's gross and evident bad faith in
refusing to satisfy plaintiff's valid claim, thereby compelling him to litigate and incur legal expenses,
plaintiff is entitled to P100,000.00 as reasonable attorney's fees and the reimbursement of P85,235.00 in
litigation expenses which he has duly proven.
[4]

From the decision, both the plaintiff and defendant appealed.

A. Appeal by the Plaintiff

Plaintiff appealed from the decision stating that "THE LOWER COURT ERRED IN LIMITING PLAINTIFF-
APPELLANTS' AWARD FOR MORAL AND EXEMPLARY DAMAGES TO ONLY P500,000.00 AND P300,000.00,
RESPECTIVELY, AND NOT P2,000,000.00 AND P500,000.00 AS ORIGINALLY PRAYED FOR, DESPITE THE
RISE IN INFLATION AND ITS FINDING THAT DEFENDANT-APPELLANT WAS GUILTY OF ACTING IN
WANTON, RECKLESS AND OPPRESSIVE MANNER.
[5]
The plaintiff argues that the amount of moral
damages awarded by the lower court is not sufficient to compensate the anxiety and embarrassment he
and his family suffered. Likewise, the amount of exemplary damages awarded is not sufficient to deter
similar wrongful acts by the defendant AEII.

B. Appeal by the Defen/ant

For its part, defendant-appellant AEII in its appeal makes the following assignment of errors, to wit:
I.

THE HONORABLE COURT A QUO ERRED IN FINDING THAT PLAINTIFF-APPELLANT SUFFERED
MORAL SHOCK, SERIOUS ANXIETY, OUNDED FEELINGS AND SOCIAL HUMILIATION.
II.

THE HONORABLE COURT A QUO ERRED IN FINDING THAT DEFENDANT-APPELLANT VIOLATED
ITS CONTRACT ITH PLAINTIFF-APPELLANT.
III.

THE HONORABLE COURT A QUO ERRED IN FINDING THAT DEFENDANT-APPELLANT'S ACTIONS
ERE TAINTED ITH RECKLESSNESS, MALICE AND BAD FAITH.
IV.

ASSUMING ARGUENDO THAT PLAINTIFF-APPELLANT IS ENTITLED TO DAMAGES, THE AMOUNTS
AARDED BY THE HONORABLE COURT A QUO ARE PATENTLY EXCESSIVE.
V.

THE HONORABLE COURT A QUO ERRED IN DISMISSING DEFENDANT-APPELLANT'S
COUNTERCLAIM.
[6]

The questions the Court is now tasked to answer are: (1) Did the trial court err in finding that defendant-
appellant's actions were tainted with recklessness, malice and bad faith? (2) Was the award of damages
and attorney's fees to plaintiff-appellant proper?

On the first issue, plaintiff-appellant claims that AEII's action in unreasonably delaying the approval of the
plaintiff-appellant's charge purchases was a clear breach of its contractual representations and obligations.
He further claims that AEII acted in bad faith, and in wanton and oppressive manner.

Defendant-appellant AEII dispute the plaintiff-appellant's contentions. It says that there was no
contractual obligation on its part to instantaneously approve plaintiff-appellant's charge purchases. It
further claims that even assuming there was breach of contract, there is no evidence that AEII acted with
malice, or bad faith.
R U L I N G

We considered that plaintiff-appellant was able to show that defendant-appellant AEII had indeed caused
delay in the processing of the charge purchases made by plaintiff-appellant. We disagree, however, with
the Regional Trial Court that defendant-appellant AEII had breached its contract with plaintiff-appellant by
such delay in approving the charge purchases.

In order that there may be delay on the part of AEII, the creditor, the following requisites must concur:
(1) an offer of performance by the debtor who has the required capacity; (2) the offer must be to comply
with prestation as it should be performed; and (3) the creditor refuses the performance without just
cause.
[7]


In the instant case, the third requisite appears to be absent. It is not enough that there be delay to hold
the AEII liable for damages; such delay must either be attended by bad faith, malice, or gross negligence
to be actionable. While in this case, there is probably delay, yet, the said delay cannot be considered
without just cause.

It appears to Us that defendant-appellant AEII had exercised diligent efforts to effect the approval of
plaintiff-appellant's purchases, especially the one made from the Coster Diamond House which was not
automatically approved as the charge purchase of US$13,826 was not in accordance with the charge
pattern plaintiff-appellant had established for himself.
Q21: With reference to the transaction at the Coster Diamond House covered Exhibit R [sic], also Exhibit 4
for the defendant, the request was relayed at the defendant, the approval came at 2:19 a.m. After the
request was relayed at 1:33 a.m., can you explain why the approval does came after about 46 minutes,
more or less.

A21: Because we have to make certain considerations and evaluations of plaintiff's past spending pattern
with AEII at that time before approving plaintiff was at that time making his very first single charge
purchase of US$13,826 [This is below the US$16,112.58 actually billed and paid for by plaintiff because
the difference was already automatically approved by AEII office in Netherland] and the record of
plaintiff's past spending with AEII at the time does not not favorably support his ability to pay for such
purchase. In fact, if the foregoing internal policy of AEII ha/ been strictly followe/, the
transaction woul/ not have been approve at all consi/ering that the past spen/ing pattern of
the plaintiff with AEII at that time /oes not support his ability to pay such purchase.

(Affidavit/Direct Testimony of r. Edgardo Jaurique, Exhibit 12, p. 5, emphasis supplied)
xxx xxx xxx

Q: And then finally as Manila is several line above Exhibit 9-D which appears on column evidence before
02-19; and it also appeared 206; what does it mean?

A: It could mean that the authorizer in Manila may have checked the status of the account.

Q: And then Marion kept on following up?

A: Yes, sir.

Q: And as you said in your affidavit, the reason was, it took sometime to go through the process in
evaluating this particular referral?

A: Yes, sir.

Q: Why did it take that long?

A: It took time to review the account on credit, so if there is any delinquencies of the cardmember. There
are factors on deciding the charge itself which are standard measures in approving the authorization. Now
in the case of Mr. Pantaleon although his account as single charge purchase of US$13,826 this is below
the US$16,000 plus actually billed...we would have already declined the charge outright and ask his bank
account to support his charge. But /ue to the length of his membership as a car/hol/er, we ha/ to
make a /ecision off han/.
xxx xxx xxx

Q: It took you about 45 minutes from the time it was first referred?

A: Yes, sir.

Q: To evaluate?

A: Yes, sir.

Q: I would ask you to evaluate since you said you were the one who evaluated his credit standing at that
time; and you said that the particular criteria you looked at spending and payment pattern?

A: That, it was much lower, the amount that he was paying and he was getting bill which as significant
lower he was requesting, this was qualified out of pattern criteria of referral.

(Id., at pp. 89-92; emphasis supplied)

Q: You mentioned that among the standard you use in approval high single charge referral you would
analyze the accumulated billing over past 12 months, is that correct?

A: That is one of the factors.

Q: In the case of Atty. Pantaleon since you approved the charge then you did not find any factor which
would deviate from such standard?

A: I did not find billing balance exactly supportive of the amount charged. It was fair in the sense that
there were no delinquencies but in consideration of the tenure of his membership, so the charge was
approved.

(Id., at pp. 98-99; emphasis supplied)
Defendant-appellant AEII's review of plaintiff-appellant's past spending and payment patterns was
obviously to ensure the protection of the plaintiff-appellant as a cardholder, and prevent the card from
being fraudulently or improperly used by a third party, cannot be held guilty of bad faith; the procedure
adopted of seeking verification as precautionary measure was one taken in the usual course of business
and was not in itself unreasonable or arbitrary. While the defendant-appellant AEII who had approved the
charge purchase at Coster Diamond House some forty-six (46) minutes might be negligent, there was no
evidence either of deliberate malice or of gross negligence. We do not believe, again, that the last two (2)
charge purchases made at Richard Mertz Golf Studio in New York and at the Kid's Unlimited Store in
Boston were motivated by personal malice or bad faith, or that there was patently negligence so gross as
to amount to bad faith. Bad faith under the law is not presumed; it must be established by clear and
convincing evidence
[8]
. Plaintiff-appellant has not adduced that kind of evidence in the instant case.

On the matter of damages, we have held that moral damages may be recovered in cases where one
willfully causes injury to property, or in cases of breach of contract where the other party acts fraudulently
or in bad faith. There is no hard and fast rule in the determination of what would be a fair amount of
moral damages, since each case must be governed by its own peculiar circumstances. Exemplary
damages, on the other hand, are imposed by way of example or correction for the public good, when the
party to a contract acts in wanton, fraudulent, oppressive or malevolent manner. Attorney's fees are
allowed when exemplary damages are awarded and when the party to a suit is compelled to incur
expenses to protect his interest.
[9]
There being no breach of contract nor proof that AEII acted in wanton,
fraudulent or malevolent manner, there is no basis for the award of any form of damages.

However, we find that the Regional Trial Court correctly dismissed AEII's counterclaim for attorney's fees
and litigation expenses. The action was filed by plaintiff-appellant in utmost good faith and not manifestly
frivolous. A person's right to litigate should not be penalized by holding him liable for damages. This is
especially true when the filing of the case is to enforce what he believes to be his rightful claim against
another although found to be erroneous.
[10]


HEREFORE, in view of the above, the judgment of the trial court is SET ASIDE, in that the award of
FIVE HUNDRED THOUSAND PESOS (P500,000.00) as moral damages, THREE HUNDRED THOUSAND
PESOS (P300,000.00) as exemplary damages, ONE HUNDRED THOUSAND PESOS (P100,000.00) as
attorney's fees and EIGHTY FIVE THOUSAND TWO HUNDRED THIRTY THREE PESOS AND ONE CENTAVO
(P85,233.01) as litigation expenses is hereby DELETED. However, the dismissal of the counterclaim by
defendant-appellant for attorney's fees and litigation expenses is SUSTAINED. No pronouncement as to
costs.

SO ORDERED.

Asuncion, (Chairman) and endoza, JJ., concur.


[O]ne hour appears to be an awfully long, patently unreasonable length of time to approve or disapprove a credit
card purchase Supreme Court (Polo S. Pantaleon vs. American Express nternational, nc, G.R. No. 174269, May
8, 2009)

n a nutshell, such was the reasoning behind the Supreme Court's reinstatement of the Regional Trial Court's
decision awarding American Express credit cardholder Atty. Panteleon P500,000.00 as moral damages,
P300,000.00 as exemplary damages, P100,000.00 as attorney's fees, and P85,233.01 as expenses of litigation.
Sweet.

Well, maybe not so, at the time of the incident complained about by said Amex card owner.

The facts are best lifted verbatim from the decision. Don't worry, the paragraphs may be long but they are an easy
read -

The petitioner, lawyer Polo Pantaleon, his wife Julialinda, daughter Anna Regina and son Adrian Roberto, joined an
escorted tour of Western Europe organized by Trafalgar Tours of Europe, Ltd., in October of 1991.

xxx

[On] the last day of the tour, the group arrived at the Coster Diamond House in Amsterdam around 10 minutes
before 9:00 a.m. The group had agreed that the visit to Coster should end by 9:30 a.m. to allow enough time to take
in a guided city tour of Amsterdam. The group was ushered into Coster shortly before 9:00 a.m., and listened to a
lecture on the art of diamond polishing that lasted for around ten minutes. Afterwards, the group was led to the
store's showroom to allow them to select items for purchase. Mrs. Pantaleon had already planned to purchase even
before the tour began a 2.5 karat diamond brilliant cut, and she found a diamond close enough in approximation that
she decided to buy. Mrs. Pantaleon also selected for purchase a pendant and a chain, all of which totaled U.S.
$13,826.00.

To pay for these purchases, Pantaleon presented his American Express credit card together with his passport to the
Coster sales clerk. This occurred at around 9:15 a.m., or 15 minutes before the tour group was slated to depart from
the store. The sales clerk took the card's imprint, and asked Pantaleon to sign the charge slip. The charge purchase
was then referred electronically to respondent's Amsterdam office at 9:20 a.m.

Ten minutes later, the store clerk informed Pantaleon that his AmexCard had not yet been approved. His son, who
had already boarded the tour bus, soon returned to Coster and informed the other members of the Pantaleon family
that the entire tour group was waiting for them. As it was already 9:40 a.m., and he was already worried about
further inconveniencing the tour group, Pantaleon asked the store clerk to cancel the sale. The store manager
though asked plaintiff to wait a few more minutes. After 15 minutes, the store manager informed Pantaleon that
respondent had demanded bank references. Pantaleon supplied the names of his depositary banks, then instructed
his daughter to return to the bus and apologize to the tour group for the delay.

At around 10:00 a.m, or around 45 minutes after Pantaleon had presented his AmexCard, and 30 minutes after the
tour group was supposed to have left the store, Coster decided to release the items even without respondent's
approval of the purchase. The spouses Pantaleon returned to the bus. t is alleged that their offers of apology were
met by their tourmates with stony silence. The tour group's visible irritation was aggravated when the tour guide
announced that the city tour of Amsterdam was to be canceled due to lack of remaining time, as they had to catch a
3:00 p.m. ferry at Calais, Belgium to London. Mrs. Pantaleon ended up weeping, while her husband had to take a
tranquilizer to calm his nerves.

t later emerged that Pantaleon's purchase was first transmitted for approval to respondent's Amsterdam office at
9:20 a.m., Amsterdam time, then referred to respondent's Manila office at 9:33 a.m, then finally approved at 10:19
a.m., Amsterdam time. The Approval Code was transmitted to respondent's Amsterdam office at 10:38 a.m., several
minutes after petitioner had already left Coster, and 78 minutes from the time the purchases were electronically
transmitted by the jewelry store to respondent's Amsterdam office.

After the star-crossed tour had ended, the Pantaleon family proceeded to the United States before returning to
Manila on 12 November 1992. While in the United States, Pantaleon continued to use his AmEx card, several times
without hassle or delay, but with two other incidents similar to the Amsterdam brouhaha. On 30 October 1991,
Pantaleon purchased golf equipment amounting to US $1,475.00 using his AmEx card, but he cancelled his credit
card purchase and borrowed money instead from a friend, after more than 30 minutes had transpired without the
purchase having been approved. On 3 November 1991, Pantaleon used the card to purchase children's shoes
worth $87.00 at a store in Boston, and it took 20 minutes before this transaction was approved by respondent.

[A]fter coming back to Manila, Pantaleon sent a letter through counsel to the respondent, demanding an apology for
the inconvenience, humiliation and embarrassment he and his family thereby suffered for respondent's refusal to
provide credit authorization for the aforementioned purchases. n response, respondent sent a letter dated 24 March
1992, stating among others that the delay in authorizing the purchase from Coster was attributable to the
circumstance that the charged purchase of US $13,826.00 was out of the usual charge purchase pattern
established. Since respondent refused to accede to Pantaleon's demand for an apology, the aggrieved cardholder
instituted an action for damages with the [RTC]. Pantaleon prayed that he be awarded P2,000,000.00, as moral
damages; P500,000.00, as exemplary damages; P100,000.00, as attorney's fees; and P50,000.00 as litigation
expenses.

So, was the approximately 1 hour delay by Amex in approving or disapproving its cardholder's purchase a breach of
its obligation to the latter?

We already know what the RTC held. On appeal by Amex to the CA, the latter found no breach on Amex's part and
decided against Atty. Pantaleon.

The CA's decision was based on the traditional role of creditor-debtor between credit card companies and credit
cardholders, respectively. Citing the principle of mora accipiendi (which is delay on the part of the creditor to accept
the performance of the obligation), the CA held that Amex, as creditor, may be held liable if it refuses performance
of its obligation without just cause.

The CA found that Amex's delay was not attended by bad faith, malice, or gross negligence" and that Amex had
exercised diligent efforts to effect the approval of the purchase because the purchases were not in accordance
with the charge pattern of Atty. Pantaleon since at the Coster Diamond House, he was making his very first single
charge purchase of US$13,826, and the record of [his] past spending with [Amex] at the time [did] not favorably
support his ability to pay for such purchase.

The SC, however, held that Atty. Pantaleon was instead correct in citing the principle of mora sol;endi (delay on the
part of the debtor to fulfill his obligation), not mora accipiendi. The traditional role of a credit card company as
creditor applies when the cardholder has already incurred a debt. n this case, the debt had not yet been created;
the purchase was still pending approval or disapproval by Amex. Thus, under mora sol;endi, Amex is not creditor
but debtor insofar as it has the obligation to the customer . to act promptly on its purchases on credit.

So, was Amex guilty of delay?

The SC found culpable delay on the part of Amex citing the findings of the RTC where both parties admitted that
normal approval time for purchases was a matter of seconds.

The SC admits:

there really is no strict, legally determinative point of demarcation on how long must it take for a credit card
company to approve or disapprove a customer's purchase, much less one specifically contracted upon by the
parties. Yet this is one of those instances when you'd know it when you'd see it, and one hour appears to be an
awfully long, patently unreasonable length of time to approve or disapprove a credit card purchase. t is long enough
time for the customer to walk. to a bank a kilometer away, withdraw money over the counter, and return to the store.

Ok, now that delay was established, are the P500,000 moral damages awarded correct? The original prayer was for
P5,000,000.

The SC further admits that

defendant has the right, if not the obligation, to verify whether the credit it is extending upon on a particular
purchase was indeed contracted by the cardholder, and that the cardholder is within his means to make such
transaction. The culpable failure of respondent herein is not the failure to timely approve petitioner's purchase, but
the more elemental failure to timely act on the same, whether favorably or unfavorably. Even assuming that
respondent's credit authorizers did not have sufficient basis on hand to make a judgment, we see no reason why
respondent could not have promptly informed petitioner the reason for the delay, and duly advised him that resolving
the same could take some time. n that way, petitioner would have had informed basis on whether or not to pursue
the transaction at Coster, given the attending circumstances. nstead, petitioner was left uncomfortably dangling in
the chilly autumn winds in a foreign land and soon forced to confront the wrath of foreign folk.

The SC found the RTC's findings below sufficient in establishing that Amex acted fraudulently or in bad faith
justifying the award for moral damages

While it is true that the Cardmembership Agreement, which [Amex] prepared, is silent as to the amount of time it
should take defendant to grant authorization for a charge purchase, defendant acknowledged that the normal time
for approval should only be three to four seconds. Specially so with cards used abroad which requires special
handling, meaning with priority. Otherwise, the object of credit or charge cards would be lost; it would be so
inconvenient to use that buyers and consumers would be better off carrying bundles of currency or traveller's checks,
which can be delivered and accepted quickly. Such right was not accorded to plaintiff in the instances complained
off for reasons known only to defendant at that time. This, to the Court's mind, amounts to a wanton and deliberate
refusal to comply with its contractual obligations, or at least abuse of its rights, under the contract.

x x x

The delay committed by defendant was clearly attended by unjustified neglect and bad faith, since it alleges to have
consumed more than one hour to simply go over plaintiff's past credit history with defendant, his payment record
and his credit and bank references, when all such data are already stored and readily available from its computer.
This Court also takes note of the fact that there is nothing in plaintiff's billing history that would warrant the
imprudent suspension of action by defendant in processing the purchase.

xxx

[Amex Manila's credit authorizer] further testified that there were no delinquencies in plaintiff's account.

Thus, the SC found that culpable delay existed pursuant to Art. 1170 of the Civil Code which reads:

Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any
manner contravene the tenor thereof, are liable for damages.

And that such delay caused Atty. Pantaleon injuries enumerated in Art. 2217 of the Civil Code, namely, moral
shock, mental anguish, serious anxiety, wounded feelings and social humiliation which gave rise to Amex's liability
for moral damages.

What's the moral of the story? Credit card companies, don't let lawyers your customers wait for an unreasonably
long time to approve or disapprove their credit card purchases. And saying sorry, as originally demanded, could
avoid expensive litigation.