PEOPLE vs. CONCEPCION, 44 Phil.

126

necessarily involves the granting of "loans" up to the limit of the amount fixed in the "credit,"

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 manager of the Aparri branch of the Philippine National Bank. "Puno y Concepcion, S. en C." was a co-partnership where Concepcion is a partner. Subsequently, Concepcion was charged and found guilty in the Court of First Instance of Cagayan with violation of section 35 of Act No. 2747. Section 35 of Act No. 2747 provides that the National Bank shall not, directly or indirectly, grant loans to any of the members of the board of directors of the bank nor to agents of the branch banks. Counsel for the defense argue that the documents of record do not prove that authority to make a loan was given, but only show the concession of a credit. They averred that the granting 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" within the meaning of section 35 of Act No. 2747. After almost 9 years, Saura Inc, commenced an action against RFC, alleging failure on the latter to comply with its obligations to release the loan applied for and approved, thereby preventing the plaintiff from completing or paying contractual commitments it had entered into, in connection with its jute mill project. The trial court ruled in favor of Saura, ruling that there was a perfected contract between the parties and that the RFC was guilty of breach thereof. ISSUE: Whether or not there was a perfected contract between the parties. YES. There was indeed a perfected consensual contract. In July 1952, Saura, Inc., applied to Rehabilitation Finance Corp., now DBP, for an industrial loan of P500,000 to be used for the construction of a factory building, to pay the balance of the jute mill machinery and equipment and as additional working capital. In Resolution No.145, the loan application was approved to be secured first by mortgage on the factory buildings, the land site, and machinery and equipment to be installed. The mortgage was registered and documents for the promissory note were executed. But then, later on, was cancelled to make way for the registration of a mortgage contract over the same property in favor of Prudential Bank and Trust Co., the latter having issued Saura letter of credit for the release of the jute machinery. As security, Saura execute a trust receipt in favor of the Prudential. For failure of Saura to pay said obligation, Prudential sued Saura. SAURA IMPORT and EXPERT CO., INC., vs DBP [G.R. No. L-24968, April 27, 1972] MAKALINTAL, J. FACTS:

ISSUE: Whether or not the granting of a credit of P300,000 to the co-partnership "Puno y Concepcion, S. en C." by Venancio Concepcion, President of the Philippine National Bank, a "loan" within the meaning of section 35 of Act No. 2747.

HELD: The Supreme Court ruled in the affirmative. The "credit" of an individual means his ability to borrow money by virtue of the confidence or trust reposed by a lender that he will pay what he may promise. A "loan" means the delivery by one party and the receipt by the other party of a given sum of money, upon an agreement, express or implied, to repay the sum loaned, with or without interest. The concession of a "credit" HELD: Article 1934 provides: An accepted promise to deliver something by way of commodatum or simple loan is

binding upon the parties, but the commodatum or simple loan itself shall not be perfected until delivery of the object of the contract. There was undoubtedly offer and acceptance in the case. The application of Saura, Inc. for a loan of P500,000.00 was approved by resolution of the defendant, and the corresponding mortgage was executed and registered. The defendant failed to fulfill its obligation and the plaintiff is therefore entitled to recover damages. When an application for a loan of money was approved by resolution of the respondent corporation and the responding mortgage was executed and registered, there arises a perfected consensual contract. However, it should be noted that RFC imposed two conditions (availability of raw materials and increased production) when it restored the loan to the original amount of P500,000.00. Saura, Inc. obviously was in no position to comply with RFCs conditions. So instead of doing so and insisting that the loan be released as agreed upon, Saura, Inc. asked that the mortgage be cancelled. The action thus taken by both parties was in the nature of mutual desistance which is a mode of extinguishing obligations. It is a concept that derives from the principle that since mutual agreement can create a contract, mutual disagreement by the parties can cause its extinguishment. WHEREFORE, the judgment appealed from is reversed and the complaint dismissed.

bulls or pay for their book value. Bagtas failed to pay the book value, so the Republic filed an action with the CFI Manila to order the return of the bulls or the payment of the book value. Felicidad Bagtas, the surviving spouse and administratrix of the decedents estate, said that the two bulls have already been returned in 1952, and that the remaining one died of gunshot during a Huk raid. It was established that the two bulls were returned, thus, there is no more obligation on the part of Bagtas. With regards the bull not returned, Felicidad maintained that the obligation is extinguished since the contract is that of a commodatum and that the loss through fortuitous event should be borne by the owner.

ISSUE: Whether or not the contract entered into between Bagtas and the Republic is that of

commodatum making Bagtas not liable for the death of the bull.

HELD:

contract If the

of commodatum is breeding fee be

essentially considered

gratuitous.

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. Even if the contract be commodatum, still Bagtas is liable because article 1942 of the Civil Code provides that a bailee in a

REPUBLIC v. BAGTAS, 116 SCRA 262

contract of commodatum is liable for loss of the things even if it should be through a fortuitous event if he

FACTS: On May 8, 1948, Jose Bagtas borrowed from the Bureau of Animal Industry three bulls for one year for breeding purposes upon payment of a breeding fee of 10% of the book value of the bulls. After one year, the contract was renewed but only for one bull. Bagtas offered to buy the bulls at book value less depreciation, but the Bureau told him that he should either return the

keeps it longer than the period stipulated or if 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. The loan of one bull was renewed for another period of one year but Bagtas kept and used the bull more than one year where during a Huk raid it was killed by stray bullets.

Furthermore, when lent and delivered to the deceased husband of Bagtas, the bulls had each an appraised book value. It 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. HELD: The contract entered into between the parties is one of commadatum. 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 QUINTOS vs. BECK, 69 Phil 108 furniture to the plaintiff, upon the latters demand. The obligation voluntarily assumed by the defendant to FACTS: Beck is a tenant of defendant Margarita Quintos. As such, Beck occupied Quintos house. Quintos granted Beck the use of the furniture found on the leased house, among these were three gas heaters and 4 electric lamps, subject to the condition that the defendant would return them to the plaintiff upon the latter's demand. Quintos sold the pieces of furniture to Maria Lopez and Rosario Lopez and thereafter notified Beck of the conveyance. Beck informed Quintos that the latter can get the furniture at the ground floor of the house, however, at a later date, Beck told Quintos that he will return only the other furniture but not the gas heaters and the electric lamps as he is to return them only after the expiration of the lease contract. When the lease contract expires, Beck deposited the furniture to the sheriffs warehouse. Quintos refused to get the furniture in view of the fact that the defendant had declined to make delivery of all of them. Consequently, Quintos brought an action to compel Beck to return her certain furniture which she lent him for his use. The trial court ruled in favour of Beck holding that Quintos failed to comply with her obligation to get the furniture when they were offered to her. On appeal of the case, the Court of First Instance of Manila affirmed the lower courts decision. Hence, this petition. 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 electric lamps. 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.

ISSUE: Whether or not the trial court erred in ruling that Quintos failed to comply with her obligation to get the furniture when they were offered to her.