1. People v.

Concepcion

Facts:
By telegrams and a letter of confirmation to the manager of the Aparri branch of the Philippine
National Bank, Venancio Conception, President of the Philippine National Bank, authorized an
extension of credit in favor of "Puno y Conception, S. en C." in the amount of P300,000. This
special authorization was essential in view of the memorandum order of President Conception
dated May 17, 1918, limiting the discretional power of the local manager at Aparri, Cagayan, to
grant loans and discount negotiable documents to P5,000, which, in certain cases, could be
increased to P10,000. Pursuant to this authorization, credit aggregating P300,000, was granted
the firm of "Puno y Conception, S. en C.," the only security required consisting of six demand
notes. The notes, together with the interest, were taken up and then paid.

"Puno y Concepcion, S. en C." was a copartnership. Venancio Concepcion, as President of the

Philippine National Bank and as member of the board of directors of this bank, was charged in
the Court of First Instance of Cagayan with a violation of section 35 of Act No. 2747. He was
found guilty by the Honorable Enrique V Filamor, Judge of First Instance. Section 35 of Act No.
2747 reads as follows: "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." Section 49
of the same Act provides: "Any person who shall violate any of the provisions of this Act shall
be punished by a fine not to exceed ten thousand pesos, or by imprisonment not to exceed five
years, or by both such fine and imprisonment." These two sections were in effect in 1919 when
the alleged unlawful acts took place, but were repealed by Act No. 2938.

Issue:
1. WON the granting of a credit of P300,000 to the copartnership "Puno y Concepcion, S.
en C." by Venacio Concepcion, President of the Philippine National Bank, a "loan"
within the meaning of section 35 of Act No. 2747?
2. WON the granting of a credit of P300,000 to the copartnership "Puno y Conception, S.
en C.," by Venancio Conception, President of the Philippine National Bank, a "loan" or a
"discount."
Held:
1. 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. (Donnell
vs. Jones [1848], 13 Ala., 490; Bouvier's Law Dictionary.) 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 of money, upon an agreement, express or
implied, to repay the sum loaned, with or without interest. (Payne vs. Gardiner [1864], 29
N.Y., 146, 167.) The concession of a "credit" necessarily involves the granting of "loans"
up to the limit of the amount fixed in the "credit."
2. In a letter dated August 7, 1916, H. Parker Willis, then President of the National Bank,
inquired of the Insular Auditor whether section 37 of Act No. 2612 was intended to apply
to discounts as well as to loans. The ruling of the Acting Insular Auditor, dated August
11, 1916, was to placed no restriction upon discount transactions.

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, that, as ruled by the Insular Auditor, 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.

The facts of the instant case having relation to this phase of the argument are not
essentially different from the facts in the Binalbagan Estate case. Just as there it was
declared that the operations constituted a loan and not a discount, so the court on in this
case laid down the same ruling.
 2. Pajuyo v. CA, GR No. 146364 June 3, 2004

Facts: Pajuyo entrusted a house to Guevara for the latter's use provided he should return the same
upon demand and with the condition that Guevara should be responsible of the maintenance of
the property. Upon demand Guevara refused to return the property to Pajuyo. The petitioner then
filed an ejectment case against Guevara with the MTC who ruled in favor of the petitioner. On
appeal with the CA, the appellate court reversed the judgment of the lower court on the ground
that both parties are illegal settlers on the property thus have no legal right so that the Court
should leave the present situation with respect to possession of the property as it is, and ruling
further that the contractual relationship of Pajuyo and Guevara was that of a commodatum.

Issue: Is the contractual relationship of Pajuyo and Guevara that of a commodatum?

Held: No. The Court of Appeals’ theory that the Kasunduan is one of commodatum is devoid of
merit. In a contract of commodatum, one of the parties delivers to another something not
consumable so that the latter may use the same for a certain time and return it. An essential
feature of commodatum is that it is gratuitous. Another feature of commodatum is that the use of
the thing belonging to another is for a certain period. Thus, the bailor cannot demand the return
of the thing loaned until after expiration of the period stipulated, or after accomplishment of the
use for which the commodatum is constituted. If the bailor should have urgent need of the thing,
he may demand its return for temporary use. If the use of the thing is merely tolerated by the
bailor, he can demand the return of the thing at will, in which case the contractual relation is
called a precarium. Under the Civil Code, precarium is a kind of commodatum. The Kasunduan
reveals that the accommodation accorded by Pajuyo to Guevarra was not essentially gratuitous.
While the Kasunduan did not require Guevarra to pay rent, it obligated him to maintain the
property in good condition. The imposition of this obligation makes the Kasunduan a contract
different from a commodatum. The effects of the Kasunduan are also different from that of a
commodatum. Case law on ejectment has treated relationship based on tolerance as one that is
akin to a landlord-tenant relationship where the withdrawal of permission would result in the
termination of the lease. The tenant’s withholding of the property would then be unlawful.
WHEREFORE, we GRANT the petition. The Decision dated 21 June 2000 and Resolution dated
14 December 2000 of the Court of Appeals in CA-G.R. SP No. 43129 are SET ASIDE. The
Decision dated 11 November 1996 of the Regional Trial Court of Quezon City, Branch 81 in
Civil Case No. Q-96-26943, affirming the Decision dated 15 December 1995 of the Metropolitan
Trial Court of Quezon City, Branch 31 in Civil Case No. 12432, is REINSTATED with
MODIFICATION. The award of attorney's fees is deleted. No costs. SO ORDERED.
 3. BPI Family Bank v. Franco, G. R. NO. 123498, 23 NOVEMBER 2007

TOPIC/DOCTRINE
The quality of being fungible depends upon the possibility of the property, because of its nature
or the will of the parties, being substituted by others of the same kind, not having a distinct
individuality.

FACTS: Franco opened three accounts, namely, a current,4 savings,5 and time deposit,6 with
BPI-FB. The current and savings accounts were respectively funded with an initial deposit of
P500,000.00 each, while the time deposit account had P1,000,000.00 with a maturity date of
August 31, 1990. The total amount of P2,000,000.00 used to open these accounts is traceable to a
check issued by Te-vesteco allegedly in consideration of Franco’s introduction of Eladio Teves,
who was looking for a conduit bank to facilitate Tevesteco’s business transactions, to Jaime
Sebastian, who was then BPI-FB SFDM’s Branch Manager. In turn, the funding for the
P2,000,000.00 check was part of the P80,000,000.00 debited by BPI-FB from FMIC’s time
deposit account and credited to Tevesteco’s current account pursuant to an Authority to Debit
purportedly signed by FMIC’s officers. It appears that the signatures of FMIC’s officers on the
Authority to Debit were forged. Unfortunately, Tevesteco had already effected several
withdrawals from its current account (to which had been credited the P80,000,000.00 covered by
the forged Authority to Debit) amounting to P37,455,410.54, including the P2,000,000.00 paid to
Franco.
On September 8, 1989, impelled by the need to protect its interests in light of FMIC’s forgery
claim, BPI-FB instructed Jesus Arangorin to debit Franco’s savings and current accounts for the
amounts remaining therein. In the meantime, two checks drawn by Franco against his BPI-FB
current account were dishonored upon presentment for payment, and stamped with a notation
“account under garnishment.” BPI-FB urges the court that the legal consequence of FMIC’s
forgery claim is that the money transferred by BPI-FB to Tevesteco is its own, and considering
that it was able to recover possession of the same when the money was redeposited by Franco, it
had the right to set up its ownership thereon and freeze Franco’s accounts. To bolster its position,
BPI-FB cites Article 559 of the Civil Code.

ISSUE: Whether Franco had a better right to the deposits in the subject accounts which are part
of the proceeds of a forged Authority to Debit.

RULING: The court held in the affirmative and that BPI’s position is unsound.

The court held that the movable property mentioned in Article 559 of the Civil Code pertains to a
specific or determinate thing. A determinate or specific thing is one that is individualized and can
be identified or distinguished from others of the same kind.
Here, the court held that the deposit in Franco’s accounts consists of money which, albeit
characterized as a movable, is generic and fungible. The quality of being fungible depends upon
the possibility of the property, because of its nature or the will of the parties, being substituted by
others of the same kind, not having a distinct individuality. Moreover, BPI-FB conveniently
forgets that the deposit of money in banks is governed by the Civil Code provisions on simple
loan or mutuum. As there is a debtor-creditor relationship between a bank and its depositor, BPI-
FB ultimately acquired ownership of Franco’s deposits, but such ownership is coupled with a
corresponding obligation to pay him an equal amount on demand. Although BPI-FB owns the
deposits in Franco’s accounts, it cannot prevent him from demanding payment of BPI-FB’s
obligation by drawing checks against his current account, or asking for the release of the funds in
his savings account. Thus, when Franco issued checks drawn against his current account, he had
every right as creditor to expect that those checks would be honored by BPI-FB as debtor.
 4. Eastern Shipping Lines v. CA, GR No. 97412 July 12, 1994

Facts: Petitioner-defendant was consigned to deliver a cargo. Upon embarkment, the cargo was
found to be damaged while on transit. Private respondent-plaintiff, Mercantile Insurance, paid
the consignee the amount of damage based on a marine insurance policy. Mercantile consquently
sued the petitioner for recovery of damages it paid to the consignee. The court a quo decided in
favor of the plaintiff and further stressing the amount paid by the insurance company to the
consignee be paid and with the present legal interest of 12% per annum commencing on the date
of filing of the complaint, until fully paid. The petitioner now constests the ruling particularly on
the issue of interest.

Issue:
1. Whether the payment of legal interest on an award for loss or damage is to be computed
from the time the complaint is filed or from the date the decision appealed from is
rendered.
2. Whether the applicable rate of interest, referred to above, is twelve percent (12%) or six
percent (6%). 6%
Held:
1. The Court laid down the following rules of thumb for guidance in cases like that of the
above:

I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or
quasi-delicts is breached, the contravenor can be held liable for damages. The provisions under
Title XVIII on "Damages" of the Civil Code govern in determining the measure of recoverable
damages.
II. With regard particularly to an award of interest in the concept of actual and compensatory
damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:
1. 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.
2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest
on the amount of damages awarded may be imposed at the discretion of the court at the rate of
6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages
except when or until the demand can be established with reasonable certainty. Accordingly,
where the demand is established with reasonable certainty, the interest shall begin to run from
the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such
certainty cannot be so reasonably established at the time the demand is made, the interest shall
begin to run only from the date the judgment of the court is made (at which time the
quantification of damages may be deemed to have been reasonably ascertained). The actual base
for the computation of legal interest shall, in any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes final and executory, the
rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be
12% per annum from such finality until its satisfaction, this interim period being deemed to be
by then an equivalent to a forbearance of credit.

2.
The Court held that the legal interest is 6% computed from the decision of the court a quo. When
an obligation, not constituting a loan or forbearance of money, is breached, an interest on the
amount of damaes awarded may be imposed at the discretion of the court at the rate of 6% per
annum. No interest shall be adjudged on unliquidated claims or damages except when or until the
demand can be established with reasonable certainty.

When the judgment of the court awarding a sum of money becomes final and executor, the rate
of legal interest shall be 12% per annum from such finality until satisfaction, this interim period
being deemed to be by then an equivalent to a forbearance of money.