People v. Concepcion distinctions that (1) In a discount, interest is value paid not later than 31 October 1950.

deducted in advance, while in a loan, interest Venancio Concepcion, President of PNB, through Bagtas failed to pay and/or return the bulls SO is taken at the expiration of a credit; (2) a special authorization authorized an extension of republic commenced an action against him praying discount is always on double-name paper; a credit in favor of "Puno y Concepcion, S. en C." in that he be ordered to return the three bulls loaned loan is generally on single-name paper. the amount of P300,000, security of which to him or to pay their book value in the total sum 2. The law covers loans and not discounts but consisted of 6 demand notes. of P3,241.45 and the unpaid breeding fee in the the conclusion is inevitable that the demand sum of P199.62, both with interests, and costs; and The notes, together with the interest, were taken notes signed by the firm "Puno y Concepcion, that other just and equitable relief be granted. up and paid a month after the grant of the notes. S. en C." were not discount paper but were Jose V. Bagtas asked that the complaint be 50% of the said firm was owned by Venancio's wife. mere evidences of indebtedness, because (1) dismissed because he could not pay/return the Venancio Concepcion, as President of the interest was not deducted from the face of bulls. Philippine National Bank and as member of the the notes, but was paid when the notes fell TC sentencing the latter (defendant) to pay the board of directors of this bank, was charged in the due; and (2) they were single-name and not value of the bulls + breeding costs. Court of First Instance of Cagayan with a violation double-name paper. of section 35 of Act No. 2747. Found guilty by Republic moved for a writ of execution Granted 3. Yes. CFI. by the court. 1. In the interpretation and construction of Section 35: "The National Bank shall not, Felicidad Bagtas, SS, filed a motion alleging that 2 statutes, the primary rule is to ascertain and directly or indirectly, grant loans to any of the bulls were already returned and that the 3rd bull give effect to the intention of the Legislature. members of the board of directors of the bank was shot and died from the wound thereof during a 2. In this instance, the purpose of the nor to agents of the branch banks." Any act Huk raid. She prayed that the execution be Legislature is plainly to erect a wall of safety of such would be punishable. quashed. > DENIED BY COURT. against temptation for a director of the bank. Issue: Note that later on, the 2 sections (provisions) The prohibition against indirect loans is a embodying this offense was subsequently repealed. WON contract is commodatum or a lease? recognition of the familiar maxim that no man (These two sections were in effect in 1919 when WON the death of the bull by virtue of a F.E., may serve two masters that where personal the alleged unlawful acts took place, but were Bagtas' widow is relieved from the duty of interest clashes with fidelity to duty the repealed by Act No. 2938, approved on January 30, returning the bull or paying its value? latter almost always suffers. If, therefore, it 1921. ) Held: No. is shown that the husband is financially Issue: Ratio: interested in the success or failure of his 1. WON the granting of credit to the copartnership Lease. wife's business venture, a loan to partnership was a loan within the meaning of Act. No. 2747? A contract of commodatum is essentially of which the wife of a director is a member, 2. WON it was a discount rather than a loan? gratuitous.1 If the breeding fee be considered falls within the prohibition. 3. WON the grant of a credit constituted an indirect a compensation, then the contract would be a loan? lease of the bull. Under article 1671 of the Republic v. Bagtas Held: Civil Code the lessee would be subject to the Jose Bagtas borrowed from the Bureau of Animal 1. No. responsibilities of a possessor in bad faith, Industry, 3 bulls , for a period of one year from 8 1. Argument: Acts only show concession of a because she had continued possession of the May 1948 to 7 May 1949 for breeding purposes credit/ bull after the expiry of the contract. subject to a government charge of breeding fee of 2. The "credit" of an individual means his ability No. 10% of the book value of the bulls. to borrow money by virtue of the confidence Nevertheless, even if the contract is Upon the expiration, Bagtas asked for a renewal of or trust reposed by a lender that he will pay commodatum. 1 more year. But the Secretary only approved the what he may promise. SS is still liable because Art. 1942 renewal with respect to only 1 bull for another 3. A "loan" means the delivery by one party and provides that: bailee in commondatum is year. He also requested the return of the two the receipt by the other party of a given sum liable for loss of the things even if loss bulls. of money, upon an agreement, express or is due to f.e. If: Jose V. Bagtas wrote to the Director of Animal implied, to repay the sum loaned, with or If he keeps it longer than the period Industry that he would pay the value of the three without interest. stipulated . . . bulls. He reiterated this request later on to buy 4. The concession of a "credit" necessarily them with a deduction of yearly depreciation. If the thing loaned has been involves the granting of "loans" up to the limit delivered with appraisal of its Director of Animal Industry advised him that the of the amount fixed in the "credit," value, unless there is a stipulation book value of the three bulls could not be reduced 2. Loan. exempting the bailee from and that they either be returned or their book 1. Discount is a mode of loaning money with the

responsibility in case of a fortuitous event; 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. Also the bulls had an appraised value and 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.

Ratio:

Quintos, Ansaldo v. Beck DEF was a tenant of the plaintiff and as such occupied the latter's house. In a novation of their contract of lease, PET gratuitously granted to the latter the use of the furniture (heaters & electric lamps). The plaintiff later on sold the property to another party; PET and this party 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. Communication by DEF: She may get some of the furniture on the ground floor of the house but he would not give up the gas heaters/electric lamps because he would use them until the expiration of the lease. PET refused to get the furniture in view of the fact that the defendant had declined to make delivery of all of them. At the expiration of the lease, DEF deposited with Saura Import v. DBP the Sheriff all the furniture belonging to the PET applied to the RFC for an industrial loan of plaintiff. P500,000.00 (250K for construction of building; PET brought an action to compel the defendant to 240,000 to pay balance of the jute mill machinery return her certain furniture which she lent him for & equipment; 9,100 as additional working capital) his use. COURT RULED THAT PLAINTIFF SHOULD RFC passed Resolution No. 145 approving the loan REDEEM THE FURNITURE AT THE SHERIFF AT HER application for P500,000.00, to be secured by a OWN EXPENSE. first mortgage on the factory building to be Issue: WON defendant complied with his obligation to return constructed, the land site thereof, and the the furniture upon the plaintiff's demand; whether the latter machinery and equipment to be installed. Extra is bound to bear the deposit fees thereof, and whether she is terms: entitled to the costs of litigation? That the proceeds of the loan shall be utilized Held: No.

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. 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. 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. 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. In 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.

exclusively for the following purposes named in the application. That certain parties (including China Engineers) shall sign the promissory notes jointly with the borrower-corporation; After learning about the resolution, Saura, Inc. wrote a letter to RFC, requesting a modification of the terms laid down by it, namely: that in lieu of having China Engineers, Ltd. sign as co-maker on the corresponding promissory notes, Saura, Inc. would put up a bond for P123,500.00, an amount equivalent to such subscription; and that another person would substitute as a co-maker. RFC made another resolution (736) for the reexamination of all the aspects of the approved loan. Later on, Saura wrote that China Engineers would again be able to sign as a co-maker for the loan. Later on, the loan documents were executed: the promissory note, with F.R. Halling, representing China Engineers, Ltd., as one of the co-signers; and the corresponding deed of mortgage, which was duly registered on the following April 17. It appears, however, that despite the formal execution of the loan agreement the reexamination contemplated in Resolution No. 736 proceeded. In a meeting of the RFC Board of Governors on June 10, 1954, at which Ramon Saura, President of Saura, Inc., was present, it was decided to reduce the loan from P500,000.00 to P300,000.00. The REP for China Engineer informed RFC that his company no longer to of the loan and therefore considered the same as cancelled as far as it was concerned. Saura, Inc. had written RFC requesting that the loan of P500,000.00 be granted. The request was denied by RFC, which added in its letter-reply that it was "constrained to consider as cancelled the loan of P300,000.00 ... in view of a notification ... from the China Engineers Ltd., expressing their desire to consider the loan insofar as they are concerned." Saura took exception to the cancellation and informed RFC that China Engineers, Ltd. "will at any time reinstate their signature as co-signer of the note if RFC releases to us the P500,000.00 originally approved by you.". Another resolution restoring the loan (500K) but with the proviso that That the raw materials

needed by the borrower-corporation to carry out 145 and embodied in the mortgage contract, its operation are available in the immediate implying as it did a diversion of part of the vicinity; and That there is prospect of increased proceeds of the loan to purposes other than production thereof to provide adequately for the those agreed upon. requirements of the factory." When RFC turned down the request in its letter of Could not be done because circumstances then January 25, 1955 the negotiations which had been were not conducive to the proviso stated. going on for the implementation of the agreement reached an impasse. Saura, Inc. obviously was in Negotiations came to a halt and Saura, Inc. did not no position to comply with RFC's conditions. So pursue the matter further. Instead, it requested instead of doing so and insisting that the loan be RFC to cancel the mortgage, and so, on June 17, released as agreed upon, Saura, Inc. asked that 1955 RFC executed the corresponding deed of the mortgage be cancelled, which was done on cancellation and delivered it to Ramon F. Saura June 15, 1955. The action thus taken by both himself as president of Saura, Inc. parties was in the nature cf mutual desistance It appears that the cancellation was requested to make way for the registration of a mortgage what Manresa terms "mutuo disenso" 1 which is a contract, executed on August 6, 1954, over the mode of extinguishing obligations. It is a concept same property in favor of the Prudential Bank and that derives from the principle that since mutual Trust Co., under which contract Saura, Inc. had up agreement can create a contract, mutual to December 31 of the same year within which to disagreement by the parties can cause its pay its obligation on the trust receipt heretofore extinguishment. 2 mentioned. It appears further that for failure to The subsequent conduct of Saura, Inc. confirms pay the said obligation the Prudential Bank and this desistance. It did not protest against any Trust Co. sued Saura, Inc. alleged breach of contract by RFC, or even point 9 years after, Saura commenced suit against RESP out that the latter's stand was legally unjustified. for the latter;s failure to comply with its obligation Its request for cancellation of the mortgage carried to release the proceeds of the loan applied for and no reservation of whatever rights it believed it approved, thereby preventing the plaintiff from might have against RFC for the latter's noncompleting or paying contractual commitments it compliance. had entered into, in connection with its jute mill project. TC ruled: PERFECTED CONTRACT hence Ligutan v. CA BREACH. PET obtained a loan from Security Bank (120K). Issue: WON there was a perfected contract between the PETs executed a promissory note binding parties? themselves to pay the sum borrowed with: Held: Yes. an interest of 15.189% Ratio: a penalty of 5% every month on the ART. 1954. An accepted promise to deliver outstanding principal and interest in case of something, by way of commodatum or simple loan default. is binding upon the parties, but the commodatum or simple loan itself shall not be perferted until 10% of the total amount due by way of the delivery of the object of the contract. attorneys fees There was undoubtedly offer and acceptance in PET failed to pay despite several demands of the this case: the application of Saura, Inc. for a loan Bank SO bank instituted a suit for recovery of the of P500,000.00 was approved by resolution of the due amount. TC decision, pay the principal with defendant, and the corresponding mortgage was the corresponding interest, penalty charge, service executed and registered. But this fact alone falls charge and attorney's fees. short of resolving the basic claim that the CA: Deleted the 2% service charge. defendant failed to fulfill its obligation and the MR to CA: PET for reduction of the penalty charge; plaintiff is therefore entitled to recover damages. Bank for the interest to be computed from the Based on Saura's letter, there was a deviation time of default CA (interest from the date of from the terms laid down in Resolution No. default; penalty from 5% to 3% per month)

Issue: WON the penalty/interest/rate of atty's fees may be reduced? Held: Reasonable. Will not be lowered. Ratio: Penalty Given the circumstances, not to mention the repeated acts of breach by petitioners of their contractual obligation, the Court sees no cogent ground to modify the ruling of the appellate court.. Interest In any event, the interest stipulation, on its face, does not appear as being that excessive. The essence or rationale for the payment of interest, quite often referred to as cost of money, is not exactly the same as that of a surcharge or a penalty. A penalty stipulation is not necessarily preclusive of interest, if there is an agreement to that effect, the two being distinct concepts which may separately be demanded. Atty's Fees Bearing in mind that the rate of attorneys fees has been agreed to by the parties and intended to answer not only for litigation expenses but also for collection efforts as well, the Court, like the appellate court, deems the award of 10% attorneys fees to be reasonable. Dispositive: Petition is DENIED. Eastern Shipping Lines Producer's Bank of the Philippines v. CA Garcia v. Thio Thio received from petitioner Carolyn M. Garcia 2 crossed check4 dated February 24, 1995 in the amount of US$100,000 payable to the order of a certain Marilou Santiago and some cash amounts. RESP denied that she contracted the 2 loans claiming that it was the Marilou Santiago named therein to whom the PET lent the money. RTC In favor of PET; Ordered RESP to pay. CA: Reversed RTC; No contract of loan between the parties. Issue: Who borrowed the money-- Santiago or RESP? What interest is due? Held: RESP. Ratio:

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. Article 1956 of the Civil Code provides that "[n]o interest shall be due unless it has been expressly stipulated in writing." 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 verbal agreement that the loans would earn 3% and 4% interest per month. 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. In 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.

Hence, respondent is liable for the payment of legal interest per annum to be computed from November 21, 1995, the date when she received petitioners 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.