Credit Transaction Cases

PEOPLE vs. CONCEPCION, 44 Phil. 126

FACTS: Venancio Concepcion, President of the Philippine National Bank and a member of the

Board thereof, authorized an extension of credit in favor of "Puno y Concepcion, S en C! to the manaer of the #parri branch of the Philippine National Bank "Puno y Concepcion, S en C" $as a co%partnership $here Concepcion is a partner Subse&uently, Concepcion $as chared and found uilty in the Court of 'irst (nstance of Caayan $ith violation of section )* of #ct No +- +- Sect Sectio ion n )* of #ct #ct No +- +- prov provid ides es that that the the Nati Nationa onall Bank Bank shal shalll not, not, dire direct ctly ly or indirectly, rant loans to any of the members of the board of directors of the bank nor to aents of the branch banks Counsel for the defense arue that the documents of record do not prove that authority authority to make a loan $as iven, but only sho$ the concession concession of a credit .hey averred that the rantin of a credit to the co%partnership "Puno y Concepcion, S en C" by Venancio Concepcion, President of the Philippine National Bank, is not a "loan" $ithin the meanin of section )* of #ct No +-

ISSU ISSUE: E: /hether or not the rantin of a credit of P)00,000 to the co%partnership "Puno y

Concepcion, S en C" by Venancio Concepcion, President of the Philippine National Bank, a "loan" $ithin the meanin of section )* of #ct No +-

HELD: .he Supreme Court ruled in the affirmative .he "credit" of an individual means his

ability to borro$ money by virtue of the confidence or trust reposed by a lender that he $ill pay $hat he may promise # "loan" means the delivery by one party and the receipt by the other  party of a iven sum of money, upon an areement, express or implied, to repay the sum loaned, $ith or $ithout interest .he concession of a "credit" necessarily involves the rantin of "loans" up to the limit of the amount fixed in the "credit,"

REPUBLIC v. BAGTAS, 116 SCRA 262

FACTS: 1n 2ay 3, 45-3, 6ose Batas borro$ed from the Bureau of #nimal (ndustry three bulls

for one year for breedin purposes upon payment of a breedin fee of 407 of the book value of the bulls #fter one year, the contract contract $as rene$ed but only for one bull Batas offered offered to buy the bulls at book value less depreciation, but the Bureau told him that he should either return the  bulls or pay for their book value Batas failed to pay the book value, so the 8epublic filed an action $ith the C'( 2anila to order the return of the bulls or the payment of the book value 'elicidad 'elicidad Batas, the survivin survivin spouse and administr administratrix atrix of the decedent9s estate, said that the t$o bulls have already been returned in 45*+, and that the remainin one died of unshot durin a :uk raid (t $as established that the t$o bulls $ere returned, thus, there is no more obliation on the part of Batas /ith reards the bull not returned, 'elicidad maintained that the obliation is extinuished since the contract is that of a commodatum and that the loss throuh fortuitous event should be borne by the o$ner

ISSUE: ISSUE: /hether or not the contract entered into bet$een Batas and the 8epublic is that of

commodatum makin Batas not liable for the death of the bull

HELD: # contract of commodatum is essentially ratuitous (f the breedin fee be considered

compensation, then the contract $ould be a lease of the bull ;nder article 4ven if the contract  be commodatum, still Batas is liable because article 45-+ of the Civil Code provides that a  bailee in a contract of commodatum is liable for loss of the thins even if it should be throuh a fortuitous event if he keeps it loner than the period stipulated or if the thin loaned has been delivered $ith appraisal of its value, unless there is a stipulation exemptin the bailee from responsibility in case of a fortuitous event .he loan of one bull $as rene$ed for another period of one year but Batas kept and used the bull more than one year $here durin a :uk raid it $as killed by stray bullets 'urthermore, $hen lent and delivered to the deceased husband of Batas, the bulls had each an appraised book value (t $as not stipulated that in case of loss of the bull due to fortuitous event the late husband of the appellant $ould be exempt e xempt from liability

PRODUCERS BANK OF THE PHILIPPINES vs. COURT OF APPEALS, GR N. 11!"24

FACTS: Sometime in 455, private respondent 'ranklin Vives, upon re&uest of his friend

#neles Sanchez and relyin on the assurance that he could $ithdra$ his money $ithin a month9s time, issued a check in the amount of .$o :undred .housand Pesos in favor of Sterela 2arketin and Services o$ned by one Col #rturo ?oronilla Subse&uently, private respondent and his $ife found out that Sterela can9t be found on the address previously iven to then, so they $ent to petitioner Producer9s Bank of the Philippines to verify if their money $as still intact .hey $ere informed that part of the amount had been $ithdra$n by ?oronilla and that the latter instructed the bank to debit from the savins account the amount and deposit it in his current account Private respondent filed an action for recovery of sum of money aainst ?oronilla, Sanchez, ?umapi and petitioner .he trial court ruled in favour of herein private respondents 1n appeal of the case, the appellate court affirmed the decision of the 8.C Petitioner contends that the transaction bet$een private respondent and ?oronilla is a simple loan @mutuumA since all the elements of a mutuum are present first, $hat $as delivered by  private respondent to ?oronilla $as money, a consumable thin and second, the transaction $as onerous as ?oronilla $as oblied to pay interest :ence, petitioner arues that it cannot be held liable because it is not privy to the transaction bet$een the latter and ?oronilla Private respondent, on the other hand, arues that the transaction bet$een him and ?oronilla is not a mutuum but an accommodation, since he did not actually part $ith the o$nership of his P+00,00000 but retained some deree of control over his money throuh his $ife $ho $as made a sinatory to the savins account and in $hose possession the savins account passbook $as iven

ISSUE: /hether or not the contract bet$een Sanchez and ?oronilla and Vives is a contract of

commodatum, thus makin petitioner Bank liable

HELD: Supreme Court held that the contract is commodatum #lthouh in vie$ of #rticle 45))

of the Civil Code, the ob=ect in commodatum is non%consumable, but #rticle 45)< of the Civil Code provides DConsumable oods may be the sub=ect of commodatum if the purpose of the contract is not the consumption of the ob=ect, as $hen it is merely for exhibition! .hus, if consumable oods are loaned only for purposes of exhibition or $hen the intention of the parties is to lend consumable oods and to have the very same oods returned at the end of the period areed upon, the loan is commodatum and not a mutuum .he evidence sho$s that private respondent merely "accommodated" ?oronilla by lendin his money $ithout consideration, as a favor to his ood friend Sanchez (t $as ho$ever clear to the parties to the transaction that the money $ould not be removed from Sterela9s savins account and $ould be returned to private respondent after thirty @)0A days

CAROL#N $. GARCIA vs. RICA $ARIE S. THIO, GR. N. 1!4%&%, $'()h 16, 2**&

FACTS: Sometime in 'ebruary 455*, respondent 8ica 2arie S .hio received from petitioner

Carolyn 2 Earccia a crossed check in the amount of F400,00000 payable to the order of 2arilou Santiao .hereafter, Carolyn received from 8ica payments of the sum due (n 6une 455*, 8ica received another check in the amount of P*00,00000 from Carolyn and payable to the order of 2arilou Payments $ere made by 8ica representin interests .here $as failure to  pay the principal amount hence a complaint for sum of money $ith damaes $as filed by Carolyn 8ica contended that she had no obliation to petitioner as it $as 2arilou $ho $as indebted as she $as merely asked to deliver the checks to the latter and that the check payments she issued $ere merely intended to accommodate 2arilou .he 8.C ruled in favor of Carolyn  but the C# reversed on the round that there $as no contract bet$een 8ica and Carolyn as t here is nothin in the record that sho$s that respondent received money from petitioner and that the checks received by respondent, bein crossed, may not be encashed but only deposited in the  bank by the payee thereof, that is, by 2arilou Santiao herself

ISSUE: /hether or not there $as a contract of loan bet$een petitioner and respondent

HELD: .here Court ruled in the affirmative # loan is a real contract, not consensual, and as

such is perfected only upon the delivery of the ob=ect of the contract #rt 45)- of the Civil Code  provides that Dan accepted promise to deliver somethin by $ay of commodatum or simple loan is bindin upon the parties, but the commodatum or simple loan itself shall not be perfected until the delivery of the ob=ect of the contract! ;pon delivery of the ob=ect of the contract of loan @in this case the money received by the debtor $hen the checks $ere encashed the debtor ac&uires o$nership of such money or loan proceeds and is bound to pay the creditor an e&ual amount (t is undisputed that the checks $ere delivered to respondent :o$ever, these checks $ere crossed and payable not to the order of respondent but to the order of a certain 2arilou Santiao .he Supreme Court arees $ith petitioner that delivery is the act by $hich the res or substance thereof is placed $ithin the actual or constructive possession or control of another #lthouh respondent did not physically receive the proceeds of the checks, these instruments $ere placed in her control and possession under an arranement $hereby she actually re%lent the amounts to Santiao :ence, 8ica is the debtor and not 2arilou

COLITO T. PA+U#O vs. COURT OF APPEALS, GR. N. 146"64, +- ", 2**4

FACTS: (n 6une 455, petitioner Colito . Pa=uyo purchased the rihts over a property from

Pedro Perez .hereafter, he constructed a house therein and he and his family lived there Gater, Pa=uyo areed to let private respondent >ddie Euevarra to live in the house for free provided that the latter maintain the cleanliness and orderliness of the house .hey also areed that Euevarra should leave the premises upon demand Subse&uently, $hen Pa=uyo told Euevarra that he needed the house, Euevarra refused, hence an e=ectment case $as filed Euevarra claimed that Pa=uyo had no valid title or riht of possession over the lot $here the house stands because the lot is $ithin the 4*0 hectares set aside for socialized housin .he 2.C ruled that the sub=ect of the areement bet$een Pa=uyo and Euevarra is the house and not the lot Pa=uyo is the o$ner of the house, and he allo$ed Euevarra to use the house only by tolerance .hus, Euevarra9s refusal to vacate the house on Pa=uyo9s demand made Euevarra9s continued possession of the house illeal #rieved, Euevarra appealed to the 8eional .rial Court $hich only affirmed the 2.C decision #t the C#, the latter reversed the 8.C decision .he Court of #ppeals ruled that the Hasunduan is not a lease contract but a commodatum because the areement is not for a price certain Since Pa=uyo admitted that he resurfaced only in 455- to claim the property, the appellate court held that Euevarra has a better riht over the property under Proclamation No 4) #t that time, Euevarra $as in physical possession of the property

ISSUE: /hether or not the contract bet$een petitioner and private respondent is one of

commodatum

HELD: .he Supreme Court held that the contract is not a commodatum D(n a contract of

commodatum, one of the parties delivers to another somethin not consumable so that the latter may use the same for a certain time and return it #n essential feature of commodatum is that it is ratuitous #nother feature is that the use of the thin belonin to another is for a certain period .hus, the bailor cannot demand the return of the thin loaned until after the expiration of the  period stipulated, or after accomplishment of the use for $hich the commodatum is constituted (f the bailor should have urent need of the thin, he may demand its return for temporary use (f the use of the thin is merely tolerated by the bailor, he can demand the return of the thin at $ill, in $hich case the contractual relation is called a precarium .he Hasunduan reveals that the accommodation accorded by Pa=uyo to Euevarra $as not essentially ratuitous /hile the Hasunduan did not re&uire Euevarra to pay rent, it obliated him to maintain the property in ood condition .he imposition of this obliation makes the Hasunduan a contract different from a commodatum .he effects of the Hasunduan are also different from that of a commodatum

/UINTOS vs. BECK, 60 Phil 1*%

FACTS: Beck is a tenant of defendant 2ararita Iuintos #s such, Beck occupied Iuintos9

house Iuintos ranted Beck the use of the furniture found on the leased house, amon these $ere three as heaters and - electric lamps, sub=ect to the condition that the defendant $ould return them to the plaintiff upon the latterJs demand Iuintos sold the pieces of furniture to 2aria Gopez and 8osario Gopez and thereafter notified Beck of the conveyance Beck informed Iuintos that the latter can et the furniture at the round floor of the house, ho$ever, at a later date, Beck told Iuintos that he $ill return only the other furniture but not the as heaters and the electric lamps as he is to return them only after the expiration of the lease contract /hen the lease contract expires, Beck deposited the furniture to the sheriff9s $arehouse Iuintos refused to et the furniture in vie$ of the fact that the defendant had declined to make delivery of all of them Conse&uently, Iuintos brouht an action to compel Beck to return her certain furniture $hich she lent him for his use .he trial court ruled in favour of Beck holdin that Iuintos failed to comply $ith her obliation to et the furniture $hen they $ere offered to her 1n appeal of the case, the Court of 'irst (nstance of 2anila affirmed the lo$er court9s decision :ence, this  petition

ISSUE: /hether or not the trial court erred in rulin that Iuintos failed to comply $ith her

obliation to et the furniture $hen they $ere offered to her

HELD: .he contract entered into bet$een the parties is one of commadatum ;nder it the

 plaintiff ratuitously ranted the use of the furniture to the defendant, reservin for herself the o$nership thereof By this contract the defendant bound himself to return the furniture to the  plaintiff, upon the latter9s demand .he obliation voluntarily assumed by the defendant to return the furniture upon the plaintiffJs demand, means that he should return all of them to the plaintiff at the latterJs residence or house .he defendant did not comply $ith this obliation $hen he merely placed them at the disposal of the plaintiff, retainin for his benefit the three as heaters and the four electric lamps .he trial court, therefore, erred $hen it came to the leal conclusion that the plaintiff failed to comply $ith her obliation to et the furniture $hen they $ere offered to her

FRIAS vs. SAN DIEGOSISON, GR. N. 1!!22", A(il 4, 2**&

FACT: Petitioner Bobie 8ose V 'rias o$ned a house and lot $hich she ac&uired from (sland

2asters 8ealty and ?evelopment Corporation @(28?CA by virtue of a ?eed of Sale She entered into a 21# $ith respondent 'lora San ?ieo%Sison (n the 21#, they had areed amon others that in the event that on the C, and eventually placed under rehabilitation receivership Conse&uently, .8B dismissed complaint as to PB2 Chin then alleed that the ?eed of Suretyship executed in 45 could not ans$er for obliations not yet in existence at the time of its execution (t could not ans$er for debts contracted by petitioner PB2 in 4530 and 4534 No accessory contract of suretyship could arise $ithout an existin principal contract of loan

Iss:  /hether or not Chin is liable for credit obliations contracted by Philippine Bloomin

2ills (nc aainst .raders 8oyal Bank before and after the execution of the ?eed of Suretyship

Hl: Chin is liable for credit obliations contracted by Philippine Bloomin 2ills (nc aainst

.raders 8oyal Bank before and after the execution of the ?eed of Suretyship .his is evident from the tenor of the deed itself, referrin to amounts to PB2 may no$ be indebted or may hereafter become indebted to .raders 8oyal Bank .he la$ expressly allo$s a suretyship for future debts #rticle +0*) provides that a uaranty may also be iven as security for future debts, the amount of $hich is not yet kno$n, there can be no claim aainst the uarantor until the debt is li&uidated

ESCANO '- SILOS vs. ORTIGAS, +(., GR. N. 1!10!", +- 20, 2**&

FACTS: Private ?evelopment Corporation of the Philippines @P?CPA entered into a loan

areement $ith 'alcon 2inerals, (nc $hereby P?CP areed to make available and lend to 'alcon a sum certain 8espondent 8afael 1rtias, 6r, et al, stockholder officers of 'alcon, executed an #ssumption of Solidary Giability $hereby they areed to assume in their individual capacity, solidary liability $ith 'alcon for the due and punctual payment of the loan contracted  by 'alcon $ith P?CP .$o separate uaranties $ere executed to uarantee the payment of the same loan by other stockholders and officers of 'alcon, actin in their personal and individual capacities 1ne Euaranty $as executed by petitioner Salvador >scaMo, $hile the other by  petitioners 2ario 2 Silos, 8icardo C Silverio, et al .$o years later, an areement developed to cede control of 'alcon to >scaMo, Silos and 6oseph 2 2atti .hus, contracts $ere executed $hereby 1rtias, Eeore # Scholey, (nductivo and the heirs of then already deceased Eeore . Scholey assined their shares of stock in 'alcon to >scaMo, Silos and 2atti Part of the consideration that induced the sale of stock $as a desire by 1rtias, et al, to relieve themselves of all liability arisin from their previous =oint and several undertakins $ith 'alcon, includin those related to the loan $ith P?CP .hus, an ;ndertakin $as executed by the concerned  parties $ith >scaMo, Silos and 2atti identified in the document as Dsureties,! on one hand, and 1rtias, (nductivo and the Scholeys as Dobliors,! on the other :o$ever, 'alcon subse&uently defaulted in its payments #fter P?CP foreclosed on the chattel mortae, there remained a subsistin deficiency of P*,000,000, $hich 'alcon did not satisfy despite demand (n order to recover the indebtedness, P?CP filed a complaint for sum of money aainst 'alcon, 1rtias, >scaMo, Silos, Silverio and (nductivo 1rtias filed toether $ith his ans$er a cross%claim aainst his co%defendants 'alcon, >scaMo and Silos, and also manifested his intent to file a third%  party complaint aainst the Scholeys and 2atti .he cross%claim loded aainst >scaMo and Silos $as predicated on the 453+ ;ndertakin, $herein they areed to assume the liabilities of 1rtias $ith respect to the P?CP loan >scaMo, 1rtias and Silos each souht to seek a settlement $ith P?CP .he first to come to terms $ith P?CP $as >scaMo, $ho entered into a compromise areement (n exchane, P?CP $aived or assined in favor of >scaMo 4K) of its entire claim in the complaint aainst all of the other defendants in the case .hen 1rtias entered into his o$n compromise areement $ith P?CP, alleedly $ithout the kno$lede of >scaMo, 2atti and Silos .hereby, 1rtias areed to pay P?CP P4)2 as full satisfaction of the P?CP9s claim aainst 1rtias Silos and P?CP entered into a Partial Compromise #reement $hereby he areed to  pay P*00k in exchane for P?CP9s $aiver of its claims aainst him (n the meantime, after havin settled $ith P?CP, 1rtias pursued his claims aainst >scaMo, Silos and 2atti, on the  basis of the 453+ ;ndertakin :e initiated a third%party complaint aainst 2atti and Silos, $hile he maintained his cross%claim aainst >scaMo 8.C issued the Summary 6udment, orderin >scaMo, Silos and 2atti to pay 1rtias, =ointly and severally, the amount of P4)2, as $ell as

P+0H in attorney9s fees .he trial court ratiocinated that none of the third%party defendants disputed the 453+ ;ndertakin

ISSUE: /hether or not petitioners are solidarily liable to respondent 1rtias

Hl: Petitioners are not solidarily liable to respondent 1rtias (n case there is a concurrence of

t$o or more creditors or of t$o or more debtors in one and the same obliation, #rticle 4+0 of the Civil Code states that amon them, there is a solidary liability only $hen the obliation expressly so states, or $hen the la$ or the nature of the obliation re&uires solidarity! #rticle 4+40 supplies further that the indivisibility of an obliation does not necessarily ive rise to solidarity Nor does solidarity of itself imply indivisibility .hus, the presumption is that the obliation is only =oint (t thus becomes incumbent upon the party allein that the obliation is indeed solidary in character to prove such fact $ith a preponderance of evidence .he ;ndertakin does not contain any express stipulation that the petitioners areed Dto bind themselves =ointly and severally! in their obliations to the 1rtias roup, or any such terms to that effect :ence, such obliation established in the ;ndertakin is presumed only to be =oint 1rtias, as the party allein that the obliation is in fact solidary, bears the burden to overcome the presumption of =ointness of obliations :e has failed to dischare such burden .he term Dsurety! has a specific meanin under our Civil Code #s provided in #rticle +0- in a surety areement the surety undertakes to be bound solidarily $ith the principal debtor .hus, a surety areement is an ancillary contract as it presupposes the existence of a principal contract (t appears that 1rtias9 arument rests solely on the solidary nature of the obliation of the surety under #rticle+0- (n tandem $ith the nomenclature Dsureties! accorded to petitioners and 2atti in the ;ndertakin, ho$ever, this arument can only be viable if the obliations established in the ;ndertakin do partake of the nature of a suretyship as defined under #rticle +0- in the first  place .hat clearly is not the case here, not$ithstandin the use of the nomenclature Dsureties! in the ;ndertakin

TUPA9 I '- TUPA9 v. CA '- BPI, GR. N. 14!!&%, Nv. 1%, 2**!

FACTS: Petitioners 6ose .upaz (V and Petronila .upaz $ere Vice%President for 1perations and

Vice%PresidentK.reasurer, respectively, of >l 1ro >nraver Corporation >l 1ro Corporation had a contract $ith the Philippine #rmy to supply the latter $ith survival bolos Petitioners, on  behalf of >l 1ro Corporation, applied $ith respondent Bank of the Philippine (sland for t$o commercial letters of credit to finance the purchase of the ra$ materials for the survival bolos .he letters of credit $ere in favor of >l 1ro Corporation9s suppliers, .anchaoco 2anufacturin (ncorporated and 2aresco 8ubber and 8etreadin Corporation 8espondent bank ranted  petitioners9 application and issued t$o letters of credit Simultaneously, petitioners sined trust receipts in favor of respondent bank 1n September )0, 4534, petitioner 6ose .upaz sined, in his personal capacity, a trust receipt correspondin to one letter of credit $hile on 1ctober 5, 4534, both petitioners sined, in their capacities as officers of >l 1ro Corporation, a trust receipt correspondin to the other #fter .anchaoco (ncorporated and 2aresco Corporation delivered the ra$ materials to >l 1ro Corporation, respondent bank paid the former /hen petitioners did not comply $ith their undertakin under the trust receipts after respondent bank9s several demands, the latter chared petitioners $ith estafa under the .rust 8eceipts Ga$ .he trial court ac&uitted petitioners of estafa on reasonable doubt ho$ever it found petitioners solidarily liable $ith >l 1ro Corporation for the balance of >l 1ro Corporation9s principal debt under the trust receipts Petitioners appealed to the Court of #ppeals contendin that their ac&uittal operates to extinuish their civil liability and so they are not personally liable for >l 1ro Corporation9s debts .he Court of #ppeals affirmed the trial court9s rulin :ence, this petition

ISSUE: /hether or not petitioners are solidarily liable $ith >l 1ro Corporation

HELD:  (n the trust receipt dated 5 1ctober 4534, petitioners sined as officers of >l 1ro

Corporation By so sinin that trust receipt, petitioners did not bind themselves personally liable for >l 1ro Corporation9s obliation :ence, for the trust receipt dated 5 1ctober 4534,  petitioners are not personally liable for >l 1ro Corporation9s obliation 'or the trust receipt dated )0 September 4534, petitioner 6ose .upaz sined alone in his personal capacity, he did not indicate that he $as sinin as >l 1ro Corporation9s Vice%President for 1perations :ence,  petitioner 6ose .upaz bound himself personally liable for >l 1ro Corporation9s debts Not bein a party to the trust receipt dated )0 September 4534, petitioner Petronila .upaz is not liable under such trust receipt