Case : F10 - PNB vs.

BERNARDO BAGAMASPAD and Appellants in their over-enthusiasm and seemingly inordinate desire
BIENVENIDO M. FERRER, to grant as many loans as possible and in amounts disproportionate
to the needs of the borrowers, admitted and passed upon more loan
applications than they could properly handle.
Facts : Because of the Pacific War and by reason of the destruction
and loss of animals of labor, farm implements, and damage to or
abandonment of farm lands, after liberation there was acute shortage Issue(s): Whether or not the two defendants Bagamaspad and Ferrer
of foodstuff. President Roxas in order to foment and encourage food acting as Agent and Assistant Agent of the Cotabato Agency, in
production, instructed the plaintiff Philippine National Bank to extend granting new crop loans after November 13, 1946, violated the
special facilities to farmers in the form of crop loans in order to enable instructions of the Bank, and that furthermore, in granting said crop
them to rehabilitate their farms. In pursuance of said instructions and loans, they acted negligently and did not exercise the care and
to cooperate with the Administration, the plaintiff Bank passed the precaution required of them in order to prevent the release of crop
corresponding resolution authorizing the granting of ten-month loans to persons who were neither qualified borrowers nor entitled to
special crop loans to bona fide food producers, land-owners or their the assistance being rendered by the Government and the Bank, all
tenants, under certain conditions. Delfin Buencamino, one of the Vice- contrary to the rules and regulations issued by the Bank.
President of the Bank and head of the Branches and Agencies
Department of said institution, was entrusted with the supervision of
Ruling : The trial court based the civil liability of the appellants
the granting of these loans. Juan Tueres, one of the Assistant
herein on the provisions of Arts. 1718 and 1719 of the Civil Code,
Managers of said Department drafted the corresponding rules and
defining and enumerating the duties and obligations of an agent and
regulations regarding the granting of said specials crops loans. After
his liability for failure to comply with such duties, and Art. 259 of the
approval by Buencamino, these rules and regulations were embodied
Code of Commerce which provides that an agent must observe the
in a circular letter, a copy of which was personally delivered to
provisions of law and regulations with respect to business
defendant Ferrer. These rules and regulations were later amplified by
transactions entrusted to him otherwise he shall be responsible for
another circular letter. Besides circularizing its branches and agencies
the consequences resulting from their breach or omissions; and also
with these rules and regulations, on June 14, 1946, the Bank held in
Art. 1902 of the Civil Code which provides for the liability of one for
Manila a conference in of all its manager and Agents. Defendant
his tortious act, that is to say, any act or omission which causes
Ferrer, Assistant Agent of the Cotabato Agency attended the
damage to another by his fault or negligence. Appellants while
conference in representation of said Agency. He arrived late but
agreeing with the meaning and scope of the legal provisions cited,
Tueres explained to him what had been discussed during the
nevertheless insist that those provisions are not applicable to them
conference, emphasizing to him the necessity of exercising diligence
inasmuch as they are not guilty of any violation of instructions or
and care in the granting of the crop loans to see to it that they are
regulations of the plaintiff Bank; and that neither are they guilty of
granted only to bona fide planters, land-owners or tenants, as well as
negligence of carelessness as found by the trial court. A careful study
repeating to him the advice of Vicente Carmona, President of the
and consideration of the record, however, convinces us and we agree
bank, that the Managers and Agents of the Bank should not allow
with the trial court that the defendants-appellants have not only
themselves to be fooled.
violated instructions of the plaintiff Bank, including things which said
Bank wanted done or not done, all of which were fully understood by
The Cotabato Agency under the management of the two defendants them, but they (appellants) also violated standing regulations
began granting these special crop loans in July, 1946, and by March of regarding the granting of loans; and, what is more, thru their
the following year, 1947, said Agency had granted to over 5,000 carelessness, laxity and negligence, they allowed loans to be granted
borrowers, loans in the total amount of a little over eight and half to persons who were not entitled to receive loans.
million pesos.
As pointed out by Counsel for appellee, ordinarily, a principal who
collects either judicially or extrajudicially a loan made by an agent
In their brief the appellant contend that the trial court erred in finding
without authority, thereby ratifies the said act of the agent. In the
and holding that extending new special crop loans after November 26,
present case, however, in filing suits against some of the borrowers to
1946, amounting to P726,680, as they as Agent and Assistant Agent,
collect at least part of the unauthorized loans, there was no intention
respectively, of the of the Cotabato Agency, did so at their own risk
on the part of the plaintiff Bank to ratify the acts of appellants.
and in violation of the instructions received from the Manila office;
Neither did the plaintiff receive any substantial benefit by its act of
also that the court erred in holding that they (appellants) acted with
filing these suits if we consider the fact that the collections so far
extreme laxity, negligence and carelessness in granting said new
made, form a small or insignificant portion of the entire principal and
special crops loans. On the first assigned error appellants maintain
interest. And, we fail to see any iniquity in this act of the plaintiff in
that outside of the telegram, which they claim to have received only
suing some of the borrowers to collect what it could at the same time
on December 7, 1946, there was no instruction by the central office
holding the appellants liable for the balance, because the plaintiff
stopping the granting of new special crop loans.
Bank is not trying to enrich itself at the expense of the defendants but
is merely trying to diminish as much as possible the loss to itself and
Appellants not only granted new special crop loans after they were automatically decrease the financial liability of appellants.
given to understand by the central office that they should no longer Considering the large amount for which appellants are found liable, it
grant said loans and before appellants received instructions as to is a matter of serious doubt if they are in a position to pay it.
what they should do in that regard, but they also violated the express Moreover, whatever amount is collected by the plaintiff Bank from
instructions of the Bank to the effect that funds received from the borrowers, serves to diminish the financial liability of the appellants,
Zamboanga Agency should be utilized only to pay second installments in the same way that the original claim of P704,903.18, at the very
on special crop loans. instance of plaintiff was reduced to P699,803.57. In other words, the
act of the plaintiff Bank in the matter, far from being iniquitous, is
really beneficial to the appellants.
The evidence shows that in violation of these instructions and
regulations, the defendants released large loans aggregating
P348,768.22 to about 103 borrowers who were neither landowners or
tenants but only public land sales applicants that is to say, persons
who have merely filed applications to buy public lands.