People v.

Concepcion
G. R. No. L-19190, 29 November 1922
44 Phil. 126

Topic: Loans; Article 1933; Distinction Between Credit and Loan

Facts:
Philippine National Bank President Venancio Concepcion authorized an extension of
credit in favor of “Puno y Concepcion, S. en C.” in the amount of P300,000.00, in
view of his memorandum order limiting the discretional power of the Aparri,
Cagayan local manager to grant loans and discount negotiable documents to
P5,000.00, which could be increased to P10,000.00. The said credit was granted to the
said firm, in which six demand notes were taken up and paid.

Concepcion, as the bank president and as member of the board of directors of PNB,
was charged with violation of Section 35 of Act No. 2747, in which he was found
guilty.

Issue:
Whether or not the granting of the credit by Concepcion is a “loan” within the
meaning of Section 35 of Act No. 2747.

Held:
Yes.
Counsel argue that the documents of record do not prove that authority to make a
loan was given,

Development Bank of the Philippines v. Guariña Agricultural and Realty

Development Corporation
G. R. No. 160758, 15 January 2014
713 SCRA 292

Topic: Loans; Article 1933

Facts:
Guariña Corporation applied for a loan from DBP to finance the development of its
resort complex in Iloilo in the amount of P3,387,000.00, which was approved later on.
Prior to the release of the loan, DBP required Guariña to put up a cash equity of
P1,470,951.00 for the construction of the buildings and other improvements on the
resort complex. Guariña used the loan to defray the additional improvements in the
resort complex, in which the amount released totalled P3,003,617.49, from which
DBP withheld P148,102.98 as interest.

Guariña demanded the release of the loan balance but DBP refused, instead it paid
some suppliers of Guariña over the latter’s objection. DBP demanded Guariña to
expedite the completion of the project, when it found out upon inspection that
Guariña had not completed the constructive works. It wanted the latter that it would
initiate foreclosure proceedings should Guariña not do so, which they later did.

Guariña sued DBP in the RTC to demand specific performance of the latter’s
obligations under the loan agreement, and to stop the foreclosure of the mortgages,
which was later amended, adding the nullification of the foreclosure proceedings
and the cancellation of the certificate of sale.

The RTC ruled in favour of Guariña, which was later affirmed by the CA with
modification.

Issue:
Whether or not the contract entered between Guariña and DBP is a loan.

Held:
Yes.

De Los Santos v. Jarra

G. R. No. L-4150, 10 February 1910
15 Phil. 147

Topic: Loans; Article 1933

Facts:
A certain Magdaleno Jimenea borrowed from Felix de los Santos 10 first-class
carabaos, to be used at the animal mill of his hacienda from 1901-02 without
recompense or remuneration whatever for the use thereof, under the sale condition
that he will return them after the completion of the work at the mill, but Jimenea did
not return the carabaos. He died in 1904 and the trial court appointed Agustina Jarra
as the administratrix of his estate. De los Santos claimed to the estate requesting for
the return of his carabaos, but it was rejected. Jarra was summoned by the trial court
and denied the allegation of de los Santos, that the late Jimenea only obtained 3
second-class animals, and in case of the carabaos, 4 died of rinderpest, in which only
six surviving carabaos were in issue. The trial court ruled in favour of de los Santos
and ordered Jarra to return the 6 carabaos and 3 second-class animals or its value.

Issue:
Whether or not the contract is a loan, in this case a commodatum.

Held:
Yes.

Saura Import and Export Co., Inc. v. Development Bank of the Philippines
G. R. No. L-24968, 27 April 1972
44 SCRA 445
Topic: Loans; Article 1934

Facts:
Saura applied to the Rehabilitation Finance Corporation (RFC), which was later
converted into DBP an industrial loan of P500,000.00 for the construction of a factory
building for the manufacture of jutesacks, payment of the balance of the purchase
price of the jute mill machinery and equipment, and additional working capital. The
jute mill machinery had been purchased already by Saura from a letter of credit
extended by Prudential Bank. The loan was later approved by the RFC by way of a
resolution. After being notified of the resolution, Saura requested RFC to modify the
terms, namely: having China Engineers, Ltd. Sign as co-maker on the promissory
notes, Saura putting up a bond for subscription, and that Maria Roca substituting for
Inocencia Arellano as one of the other co-makers. However, Saura decided to reduce
the loan from P500,000.00 to P300,000.00 due to the refusal of China Engineers, Ltd.
Later on, Saura requested RFC that the P500,000.00 loan be granted, but it was
denied at first because it will consider the reduced loan as cancelled, but later on
approved, through another resolution.

After the mortgage was cancelled 9 years later, Saura filed an action for damages,
alleging the failure of RFC to comply with its obligation to release the proceeds of
the loan applied for and approved, thereby preventing Saura 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, which was appealed by the DBP to the
Supreme Court.

Issue:
Whether or not there was a perfected contract of loan.

Held:
Yes.

Naguiat v. Court of Appeals

G. R. No. 118375, 3 October 2003
412 SCRA 591

Topic: Loans; Article 1934

Facts:
Aurora Queaño applied for a loan worth P200,000.00 in which Celestina Naguiat
granted, and later on indorsed a check amounting P95,000.00 to Queaño. After the
issuance of several checks and execution of mortgages and promissory notes, the
check issued by Security Bank was dishonoured for insufficiency of funds. Queaño
requested Security Bank to stop the payment of her check, but the bank rejected the
request pursuant to its policy not to honor such requests if the check is drawn
against insufficient funds. Queaño was asked by Naguiat’s lawyer to settle the loan,
and later on she talked to Naguiat informing her that she did not receive the
proceeds of the loan, adding that the checks were retained by Ruby Ruebenfeldt,
who was Naguiat’s agent. After Naguiat applied for the foreclosure of the mortgage
which was later on scheduled, Queaño filed an action seeking the annulment of the
mortgage deed.

The trial court ruled in favor of Queaño, which was affirmed by the Court of
Appeals.

Issue:
Whether or not the contract of loan was perfected.

Held:
No.

Garcia v. Thio
G. R. No. 154878, 16 March 2007
518 SCRA 433

Topic: Loans; Article 1934

Facts:
Rica Marie Thio received from Carolyn Garcia two crossed checks: first is worth US$
100,000.00 and another worth P500,000.00, both payable to the order of a certain
Marilou Santiago, and some sum of money every month for 8 months, but Thio
failed to pay the principal amounts of the loans when they fell due. Garcia filed a
complaint for sum of money and damages against Thio.

The trial court ruled in favor of Garcia, which was reversed by the Court of Appeals
which ruled that there was no contract of loan between the parties.

Issue:
Whether or not the contract of loan has been perfected.

Held:
Yes.

Pantaleon v. American Express International, Inc.

G. R. No. 174269, 25 August 2010
629 SCRA 276

Topic: Loans; Article 1934; Credit Cards

Facts:
Polo Pantaleon, while having a tour in Europe with his family, presented his
American Express (AmEx) credit card, together with his passport to pay for his
purchases. The sales clerk took the card’s imprint, and asked him to sign the charge
slip, and later referred to Amsterdam office of AmEx, but later informed Pantaleon
that his card had not yet been approved, but because of time constraint for the tour,
he cancelled the sale, however, he was asked to wait for a few minutes, which
informed him that AmEx had demanded bank references, in which he complied. He
returned back to the tour, apologizing for the delay. After the Europe tour, the
Pantaleon family proceeded to the US before returning to Manila. While in the US,
he continued to use his credit card for some purchases. When he purchased a golf
equipment, he cancelled his credit card purchase and borrowed money from a friend
instead.

After returning to Manila, Pantaleon filed a case after sending a letter to AmEx
demanding an apology for the incident happened during the Europe tour, which the
bank refused to apologize. The trial court ruled in favor of Pantaleon, which was
reversed by the Court of Appeals, in which the Supreme Court reversed the CA
decision, holding that AmEx was guilty of mora solvendi or debtor’s default. AmEx
filed its motion for reconsideration to reverse the prior ruling.

Issue:
Whether or not the use of credit card is a mere offer to enter into loan agreements.

Held:
Yes.

Gironella v. Philippine National Bank

G. R. No. 194515, 16 September 2015

Topic: Loans; Article 1934

Facts:
Spouses Oscar and Gina Gironella obtained 2 loans from PNB in the amounts of
P7,500,000.00 and P2,000,000.00 for the construction of the Dagupan Village Hotel
and Sports Complex. They applied for another loan amounting P5,800,000.00 for the
construction of a restaurant bar and the purchase of a generator set. The spouses
began to default in paying their prior 2 loans. They used their income from the hotel
to construct the restaurant bar while waiting for the P5,800,000.00 loan application.
They paid P4,219,000.00 on the first 2 loans, followed by P1,000,000.00 and
P1,650,000.00 for purpose of restructuring their loans with PNB. While the spouses
were restructuring their loan, PNB attempted to foreclose their properties. Later on,
PNB offered the restructuring plan to the Gironellas, in which the latter made a
counter offer, in which PNB denied.
After PNB filed for foreclosure, Gironella filed a complaint against PNB. The trial
court issued a TRO and preliminary injuction. PNB appealed to the CA, which was
granted, reversing the trial court ruling.

Issue:
Whether or not PNB is liable to the Gironellas.

Held:
No.

BPI Investment Corporation v. Court of Appeals

G. R. No. 133632, 15 February 2002
377 SCRA 117

Topic: Loans; Article 1934

Facts:
Frank Roa obtained a loan with interest from Ayala Investment and Development
Corporation (AIDC) (predecessor of BPI Investment Corporation) for the
construction of a house on his lot in New Alabang Village, Muntinlupa. He sold the
house and lot to ALS Management and Antonio Litonjua for P850,000.00. They paid
P350,000.00 and assumed Roa’s indebtedness with AIDC. However, AIDC was not
willing to extend the old interest rate to ALS and proposed to grant them a
P500,000.00 loan to be applied to Roa’s debt and secured by the same property. ALS
paid BPI Investment P190,601.35 to reduce Roa’s loan but it was liquidated by the
bank. BPI released P7,146.87, which was the amount left of their loan after full
payment of Roa’s loan.

After the foreclosure of the properties, ALS filed a case against BPI. The trial court
ruled in favour of ALS, which was affirmed by the CA.

Issue:
Whether or not there is a perfection of the contract of loan.

Held:
Yes.

Pentacapital Investment Corporation v. Mahinay

G. R. No. 171736, 5 July 2010

Topic: Loans; Article 1934

Facts:
Makilito Mahinay obtained two separate loans from Pentacapital amounting
P1,520,000.00 and P416,800.00. Despite repeated demands, Mahinay failed to pay the
loans. According to Mahinay, Pentacapital offered to buy parcels of land in Molino,
Bacoor, Cavite, which were sold at P400.00 per square meter. Pentacapital paid only
P12,000,000.00. Ciudad Real instructed Pentacapital to pay the former creditors
including Mahinay in which the former paid P1,715,156.90.

Then they agreed that Mahinay had a charging lien equivalent to 20% of the total
consideration of the sale in the amount of P10,277,040.00. Later on, Mahinay
returned the P1,715,156.90 to Pentacapital.

Mahinay filed an action against Pentacapital, which was dismissed by the RTC. The
CA also dismissed the appeal by Pentacapital.

Issue:
Whether or not there was a perfection of the contract of loan.

Held:

Sierra v. Court of Appeals

G. R. No. 90270, 24 July 1992

Topic: Loans; Article 1934

Facts:
Armando Sierra lent the Ebarles P85,000.00, which they said they needed “to pay
some cattle for fattening to be inspected by the Land Bank inspector that day” in
connection with their application for a loan of P400,000.00 from the Land Bank to
finance their logging and cattle business, which was denied. Sierra demanded for
payment but he was ignored. He filed an action against the Ebarles. The trial court
held that the Ebarles are only liable to Sierra for only P20,000.00 and the P85,000.00
promissory note is invalid, which was affirmed by the CA.