Article 1170

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. (1101)

Ang mga nagsasagawa ng kanilang obligasyon na may kasalanan ng fraud, nagligence, o delay o balam at sa mga nagsasagawa ng kanilang obligasyon na hindi ayon sa napagkasunduan ay mananagot sa mga danyos.

 Discussion

Fraud – A false representation of a matter of fact—whether by words or by conduct, by false or misleading allegations, or by concealment of what should have been disclosed—that deceives and is intended to deceive another so that the individual will act upon it to her or his legal injury.

Negligence – Conduct that falls below the standards of behavior established by law for the protection of others against unreasonable risk of harm. A person has acted negligently if he or she has departed from the conduct expected of a reasonably prudent person acting under similar circumstances.        .

 Case Illustration: International Corporate Bank vs. Sps. Gueco

Verdejo vs. CA

G.R. No. 77735 January 29, 1988

WILFREDO VERDEJO, petitioner,
vs.
THE HON. COURT OF APPEALS, HON. SOFRONIO G. SAYO, Presiding Judge, RTC, Br. III, Pasay City, and HERMINIA PATINIO, ET AL., respondents.

PADILLA, J.:

Facts: 

On 20 December 1984, the herein petitioner filed a complaint against the private respondent Herminia Patinio and one John Doe before the Regional Trial Court of Pasay City, for collection of a sum of money amounting to P60,500.00, which said Herminia Patinio had allegedly borrowed from him but failed to pay when it became due, notwithstanding demands.

In her answer, Herminia Patinio admitted having obtained loans from the petitioner but claimed that the amount borrowed by her was very much less than the amount demanded in the complaint, which amount she had already paid or settled, and that the petitioner had exacted or charged interest on the loan ranging from 10% to 12% per month, which is exorbitant and in gross violation of the Usury Law. Wherefore she prayed that she be reimbursed the usurious interests charged and paid. She also asked for damages, attorneys fee and costs of suit.

After trial court on 3 September 1986, the trial court rendered Judgment, as follows:WHEREFORE, judgment is hereby rendered dismissing plaintiff’s complaint for lack of merit.

The petitioner filed a petition for certiorari before the Court of Appeals, to annul RTC Order of 8 October 1986.The appellate court, however, as aforestated, dismissed the petition in a Decision dated 28 November 1986. The petitioner filed a motion for reconsideration of the decision, but his motion was denied in a Resolution dated 5 March 1987.

Issues:

Whether or not defendant defense claim for being charged usuriously is correct?

Held: 

Article 1413. Interest in excess of the interest allowed by the usury laws may be recovered by the debtor, with interest thereon from the date of the payments.

This Court has ruled in one case, that with the promulgation of Central Bank Circular No. 905, series of 1982, usury has become “legally inexistent” as the lender and the borrower can agree on any interest that may be charged on the loan. This Circular was also given retroactive effect. But, whether or not this Circular should also be given retroactive effect and applied in this case is yet to be determined by the appellate court at the proper time.

The trial court merely added the amounts paid by the private respondent to the petitioner and, thereafter, deducted therefrom the amounts given as loan to the private respondent and considered the excess amount usurious, without apparently considering the lawful interest that may be collected on said loans.

Only usurious interests may be reimbursed.

Abrenica vs. Gonda

G.R. No. L-10100            August 15, 1916

GALO ABRENICA, plaintiff-appellee,
vs.
MANUEL GONDA and MARCELO DE GARCIA, defendants-appellees.

Marcelo Caringal for appellants.
Ramon Diokno for appellee.

ARAULLO, J.

Facts:

This case was brought by the plaintiff to compel the defendants to return the two parcels of land described in the complaint which he claimed were sold to the defendants under the right of repurchase for seven years and for the sum of 75Php. Further, the plaintiff alleged that the defendant refused to deliver the same when, upon the expiration of the period, mentioned, he is entitled to redeem the subject parcels of land upon the payment of the amount agreed upon.

However, the plaintiff stated that the agreement for the sale with right of repurchase was done verbally between him and Gonda (one of the defendants). When he was placed on the stand as a witness, he testified at length and answered all the questions asked by his lawyer regarding the said agreement/contract, including its details, the persons who witnessed it, the place it was made, and the various other circumstances connected with its execution. The defendant’s counsel failed to raise an objection to the examination. The defendant’s lawyer also challenged one of the questions as leading and claimed another question was irrelevant. Moreover, he only moved to strike out all of the testimony and statements given by the plaintiff when the examination was already terminated on the ground that the period for the fulfillment of the contract exceeded one year and that it could not be proven except by means of a written instrument. The lawyer also did a cross examination and asked several questions relative to the plaintiff’s ownership of the parcels of land.

Issue:

Whether the two parcels of land were sold under the right of repurchase by the plaintiff to the defendant .

Held:

Yes. The two parcels of land were sold under the right of repurchase by the plaintiff to the defendant with the seven year term for 75 php. This agreement, though verbally made is ratified by the failure of the defendant’s party to object to the presentation of oral evidence to prove the same as expressed on Article 1405 of the New Civil Code.

Moreover, the fact that the defendants’ counsel asked various cross-questions, both of the plaintiff and of the other witness, in connection with the answers given by them in their direct examination, with respect to particulars concerning the contract, implies a waiver on his part to have the evidence stricken out.

No timely objection or protest was made to the admission of the testimony of the plaintiff with respect to the contract; and as the motion to strike out said evidence came to late; and, furthermore, as the defendants themselves, by the cross- questions put by their counsel for the witnesses in respect to said contract, tacitly waived their right to have it stricken out, that evidence, therefore, cannot be considered either inadmissible or illegal.

The plaintiff made use of his right to recover the property within the period stipulated by the contract and which did not exceed ten years, and as he deposited with the clerk of the court the sum of P75, the price of the purchase, in due time, the defendant is not entitled to oppose the recovery, and the said parcels of land must be delivered to the plaintiff, even though they be in the possession of the other defendant, Marcelino de Garcia, to whom they were sold by his codefendant Gonda, for the latter could not sell them to De Gracia except under the condition that they could be repurchased by the plaintiff within the said period of seven years.