REPUBLIC VS.

PNB  The same is true with the term "deposits" in banks where the relationship created
G.R. NO. L-16106, DECEMBER 30, 1961 between the depositor and the bank is that of creditor and debtor
 a demand draft is a bill of exchange payable on demand
Escheat – forfeiture
 Considered as a bill of exchange, a draft is said to be, like the former, an open letter
FACTS: of request from, and an order by, one person on another to pay a sum of money therein
mentioned to a third person, on demand or at a future time therein specified
 Republic of the Philippines filed  a bill of exchange within the meaning of our Negotiable Instruments Law (Act No.
 a complaint for escheat of certain unclaimed bank deposits balances under the 2031) does not operate as an assignment of funds in the hands of the drawee who is
provisions of Act No. 3936 against several banks, among them the First National City not liable on the instrument until he accepts it.
Bank of New York  Since it is admitted that the demand drafts herein involved have not been presented
 all the credits and deposits held by them in favor of persons known to be dead or who either for acceptance or for payment, the inevitable consequence is that the appellee
have not made further deposits or withdrawals during the period of 10 years or more. bank never had any chance of accepting or rejecting them.
 the First National City Bank of New York claims that  appellee bank never became a debtor of the payee concerned and as such the aforesaid
 P100,000.00, which remained dormant for 10 years or more, are subject to escheat drafts cannot be considered as credits subject to escheat within the meaning of the
law.
however, it has inadvertently included in said report certain items amounting to
 But a demand draft is very different from a cashier's or manager's cheek, contrary to
P18,589.89 which, properly speaking, are not credits or deposits within the
appellant's pretense, for it has been held that the latter is a primary obligation of the
contemplation of Act No. 3936.
bank which issues it and constitutes its written promise to pay upon demand.
 the court a quo rendered judgment holding that cashier's is or manager's checks and
 A cashier's check issued by a bank, however, is not an ordinary draft. The latter
demand drafts as those which defendant wants excluded from the complaint come
is a bill of exchange payable demand. It is an order upon a third party purporting
within the purview of Act No. 3936, but not the telegraphic transfer payment which
to drawn upon a deposit of funds
orders are of different category.
 A cashier's check issued on request of a depositor is the substantial equivalent of
 after a motion to reconsider was filed by defendant, the court a quo changed its view
a certified check
and held that even said demand drafts do not come within the purview of said Act and
 A demand draft is not therefore of the same category as a cashier's check which should
so amended its decision accordingly. Plaintiff has appealed
come within the purview of the law
ISSUE:  The case, however, is different with regard to telegraphic payment order. It is
said that as the transaction is for the establishment of a telegraphic or cable
 The questions that now arise are: Do demand draft and telegraphic orders come within transfer the agreement to remit creates a contractual obligation a has been
the meaning of the term "credits" or "deposits" employed in the law? termed a purchase and sale transaction
 Can their import be considered as a sum credited on the books of the bank to a person  The purchaser of a telegraphic transfer upon making payment completes the
who appears to be entitled to it? transaction insofar as he is concerned, though insofar as the remitting bank is
 Do they create a creditor-debtor relationship between drawee and the payee? concerned the contract is executory until the credit is established
 WHEREFORE, the decision of the trial court is hereby modified in the sense that the
items specifically referred to and listed under paragraph 3 of appellee bank's answer
HELD: representing telegraphic transfer payment orders should be escheated in favor of the
Republic of the Philippines.
 Section 1, Act No. 3936, provides:
 Section 1. "Unclaimed balances" within the meaning of this Act shall include credits
or deposits of money, bullion, security or other evidence of indebtedness of any kind,
and interest thereon with banks, as hereinafter defined, in favor of any person unheard
from for a period of ten years or more.
 It would appear that the term "unclaimed balances" that are subject to escheat include
credits or deposits money, or other evidence of indebtedness of any kind with banks,
in favor of any person unheard from for a period of 10 years or more.
 THE PEOPLE OF THE PHILIPPINE ISLANDS vs. VENANCIO CONCEPCION YES. In the interpretation and construction of statutes, the primary rule is to ascertain and give
G.R. No. L-19190 November 29, 1922 effect to the intention of the Legislature. In this instance, the purpose of the Legislature is plainly
to erect a wall of safety against temptation for a director of the bank. The prohibition against
FACTS: indirect loans is a recognition of the familiar maxim that no man may serve two masters — that
where personal interest clashes with fidelity to duty the latter almost always suffers. If, therefore,
it is shown that the husband is financially interested in the success or failure of his wife's
Venancio Concepcion, President of the Philippine National Bank, sent telegrams and a business venture, a loan to partnership of which the wife of a director is a member, falls within
confirmation letter to the manager of the Aparri branch of PNB, authorizing an extension of the prohibition.
credit in favour of Puno y Concepcion, S. en C. in the amount of P300,000.00. This special
authorization limited the discretional power of the local manager of the Aparri branch to grant
loans and discount negotiable documents to P5,000, which in certain cases, could be increased Various provisions of the Civil serve to establish the familiar relationship called a conjugal
to P10,000. Pursuant to this authorization, credit aggregating P300,000 was granted to Puno y partnership. (Articles 1315, 1393, 1401, 1407, 1408, and 1412 can be specially noted.) A loan,
Concepcion, S. en C., the only security required consisting of six demand notes. This Puno y therefore, to a partnership of which the wife of a director of a bank is a member, is an
Concepcion, S. en C., in reality is a copartnership capitalized at P100,000 wherein, Venancio indirect loan to such director.
Concepcion’s wife owns half of the copartnership. Venancio Concepcion was found guilty by
the CFI for violation of Section 354 of Act 2747 which provides that: : "The National Bank shall That it was the intention of the Legislature to prohibit exactly such an occurrence is shown by
not, directly or indirectly, grant loans to any of the members of the board of directors of the the acknowledged fact that in this instance the defendant was tempted to mingle his personal
bank nor to agents of the branch banks." and family affairs with his official duties, and to permit the loan P300,000 to a partnership of
no established reputation and without asking for collateral security.
ISSUES:

1. Whether or not the granting of a credit of P300,000 to the copartnership was a “loan”
within the meaning of Section 35 of Act No. 2747.

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

2. Whether or not the granting of a credit of P300,000 to the copartnership was a “loan”
or a “discount”.

LOAN. Discounts are favored by bankers because of their liquid nature, growing, as they do,
out of an actual, live, transaction. But in its last analysis, to discount a paper is only a mode of
loaning money, with, however, these distinctions: (1) In a discount, interest is deducted in
advance, while in a loan, interest is taken at the expiration of a credit; (2) a discount is always
on double-name paper; a loan is generally on single-name paper.

Conceding, without deciding, the law covers loans and not discounts, yet the conclusion is
inevitable that the demand notes signed by the firm "Puno y Concepcion, S. en C." were not
discount paper but were mere evidences of indebtedness, because (1) interest was not deducted
from the face of the notes, but was paid when the notes fell due; and (2) they were single-name
and not double-name paper.

3. Whether or not the granting of a credit of P300,000 to the copartnershop was an

“indirect loan” within the meaning of Section 35 of Act 2747.
 SAURA IMPORT and EXPERT CO., INC., vs DBP
[G.R. No. L-24968, April 27, 1972] MAKALINTAL, J.

FACTS:

 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.
 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.

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 RFC’s 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.
 BPI INVESTMENT CORP V. CA (2002)  contract of loan involves a reciprocal obligation, wherein the obligation or promise of each
G.R. No. 133632 February 15, 2002 party is the consideration for that of the other. It is a basic principle in reciprocal
obligations that neither party incurs in delay, if the other does not comply or is not ready
to comply in a proper manner with what is incumbent upon him. Consequently, petitioner
Lessons Applicable: Simple Loan could only demand for the payment of the monthly amortization after September 13, 1982
for it was only then when it complied with its obligation under the loan contract.
FACTS:  BPIIC was negligent in relying merely on the entries found in the deed of mortgage,
without checking and correspondingly adjusting its records on the amount actually released
 Frank Roa obtained a loan with interest rate of 16 1/4%/annum from Ayala Investment and and the date when it was released. Such negligence resulted in damage for which an award
Development Corporation (AIDC), the predecessor of BPI Investment Corp. (BPIIC), for of nominal damages should be given
the construction of a house on his lot in New Alabang Village, Muntinlupa.  SSS where we awarded attorney’s fees because private respondents were compelled to
 He mortgaged the house and lot to AIDC as security for the loan. litigate, we sustain the award of P50,000 in favor of private respondents as attorney’s fees
 1980: Roa sold the house and lot to ALS Management & Development Corp. and Antonio
Litonjua for P850K who paid P350K in cash and assumed the P500K indebtness of ROA
with AIDC.
 AIDC proposed to grant ALS and Litonjua a new loan for P500K with interested rate of
20%/annum and service fee of 1%/annum on the outstanding balance payable within 10
years through equal monthly amortization of P9,996.58 and penalty interest of
21%/annum/day from the date the amortization becomes due and payable.
 March 1981: ALS and Litonjua executed a mortgage deed containing the new stipulation
with the provision that the monthly amortization will commence on May 1, 1981
 August 13, 1982: ALS and Litonjua paid BPIIC P190,601.35 reducing the P500K principal
loan to P457,204.90.
 September 13, 1982: BPIIC released to ALS and Litonjua P7,146.87, purporting to be what
was left of their loan after full payment of Roa’s loan
 June 1984: BPIIC instituted foreclosure proceedings against ALS and Litonjua on the
ground that they failed to pay the mortgage indebtedness which from May 1, 1981 to June
30, 1984 amounting to P475,585.31
 August 13, 1984: Notice of sheriff's sale was published
 February 28, 1985: ALS and Litonjua filed Civil Case No. 52093 against BPIIC alleging
that they are not in arrears and instead they made an overpayment as of June 30, 1984 since
the P500K loan was only released September 13, 1982 which marked the start of the
amortization and since only P464,351.77 was released applying legal compensation the
balance of P35,648.23 should be applied to the monthly amortizations
 RTC: in favor of ALS and Litonjua and against BPIIC that the loan granted by BPI to ALS
and Litonjua was only in the principal sum of P464,351.77 and awarding moral damages,
exemplary damages and attorneys fees for the publication
 CA: Affirmed reasoning that a simple loan is perfected upon delivery of the object of the
contract which is on September 13, 1982

ISSUE: W/N the contract of loan was perfected only on September 13, 1982 or the second
release of the loan?

HELD: YES. AFFIRMED WITH MODIFICATION as to the award of damages. The award
of moral and exemplary damages in favor of private respondents is DELETED, but the award
to them of attorney’s fees in the amount of P50,000 is UPHELD. Additionally, petitioner is
ORDERED to pay private respondents P25,000 as nominal damages. Costs against petitioner.

 obligation to pay commenced only on October 13, 1982, a month after the perfection of CAROLYN M. GARCIA -VS- RICA MARIE S. THIO
the contract GR No. 154878, 16 March 2007
 FACTS
Respondent Thio received from petitioner Garcia two crossed checks which amount to
US$100,000 and US$500,000, respectively, payable to the order of Marilou Santiago.
According to petitioner, respondent failed to pay the principal amounts of the loans when they
fell due and so she filed a complaint for sum of money and damages with the RTC. Respondent
denied that she contracted the two loans and countered that it was Marilou Satiago to whom
petitioner lent the money. She claimed she was merely asked y petitioner to give the checks to
Santiago. She issued the checks for P76,000 and P20,000 not as payment of interest but to
accommodate petitioner’s request that respondent use her own checks instead of Santiago’s.

RTC ruled in favor of petitioner. CA reversed RTC and ruled that there was no contract
of loan between the parties.

ISSUE
(1) Whether or not there was a contract of loan between petitioner and respondent.
(2) Who borrowed money from petitioner, the respondent or Marilou Santiago?

HELD
(1) The Court held in the affirmative. A loan is a real contract, not consensual,
and as such I perfected only upon the delivery of the object of the contract. Upon delivery of
the contract of loan (in this case the money received by the debtor when the checks were
encashed) the debtor acquires ownership of such money or loan proceeds and is bound to pay
the creditor an equal amount. It is undisputed that the checks were delivered to respondent.

(2) However, the checks were crossed and payable not to the order of the
respondent but to the order of a certain Marilou Santiago. Delivery is the act by which the res or
substance is thereof placed within the actual or constructive possession or control of another.
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 amount to Santiago.

Petition granted; judgment and resolution reversed and set aside.