Case : F10 - PNB vs. BERNARDO BAGAMASPAD and BIENVENIDO M.

FERRER, 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 of foodstuff. President Roxas in order to foment and encourage food production, instructed the plaintiff Philippine National Bank to extend special facilities to farmers in the form of crop loans in order to enable them to rehabilitate their farms. In pursuance of said instructions and to cooperate with the dministration, the plaintiff Bank passed the corresponding resolution authori!ing the granting of ten"month special crop loans to bona fide food producers, land"owners or their tenants, under certain conditions. #elfin Buencamino, one of the $ice"President of the Bank and head of the Branches and gencies #epartment of said institution, was entrusted with the super%ision of the granting of these loans. &uan 'ueres, one of the ssistant (anagers of said #epartment drafted the corresponding rules and regulations regarding the granting of said specials crops loans. fter appro%al by Buencamino, these rules and regulations were embodied in a circular letter, a copy of which was personally deli%ered to defendant )errer. 'hese rules and regulations were later amplified by another circular letter. Besides circulari!ing its branches and agencies with these rules and regulations, on &une *+, *,+-, the Bank held in (anila a conference in of all its manager and gents. #efendant )errer, ssistant gent of the .otabato gency attended the conference in representation of said gency. /e arri%ed late but 'ueres explained to him what had been discussed during the conference, emphasi!ing to him the necessity of exercising diligence and care in the granting of the crop loans to see to it that they are granted only to bona fide planters, land"owners or tenants, as well as repeating to him the ad%ice of $icente .armona, President of the bank, that the (anagers and gents of the Bank should not allow themsel%es to be fooled. 'he .otabato gency under the management of the two defendants began granting these special crop loans in &uly, *,+-, and by (arch of the following year, *,+0, said gency had granted to o%er 1,222 borrowers, loans in the total amount of a little o%er eight and half million pesos. In their brief the appellant contend that the trial court erred in finding and holding that extending new special crop loans after No%ember 3-, *,+-, amounting to P03-,-42, as they as gent and ssistant gent, respecti%ely, of the of the .otabato gency, did so at their own risk and in %iolation of the instructions recei%ed from the (anila office5 also that the court erred in holding that they 6appellants7 acted with extreme laxity, negligence and carelessness in granting said new special crops loans. 8n the first assigned error appellants maintain that outside of the telegram, which they claim to ha%e recei%ed only on #ecember 0, *,+-, there was no instruction by the central office stopping the granting of new special crop loans. ppellants not only granted new special crop loans after they were gi%en to understand by the central office that they should no longer grant said loans and before appellants recei%ed instructions as to what they should do in that regard, but they also %iolated the express instructions of the Bank to the effect that funds recei%ed from the 9amboanga gency should be utili!ed only to pay second installments on special crop loans. 'he e%idence shows that in %iolation of these instructions and regulations, the defendants released large loans aggregating P:+4,0-4.33 to about *2: borrowers who were neither landowners or tenants but only public land sales applicants that is to say, persons who ha%e merely filed applications to buy public lands. ppellants in their o%er"enthusiasm and seemingly inordinate desire 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.

Issue s!: Whether or not the two defendants Bagamaspad and )errer acting as gent and ssistant gent of the .otabato gency, in granting new crop loans after No%ember *:, *,+-, %iolated the instructions of the Bank, and that furthermore, in granting said crop loans, they acted negligently and did not exercise the care and precaution re;uired of them in order to pre%ent the release of crop loans to persons who were neither ;ualified borrowers nor entitled to the assistance being rendered by the <o%ernment and the Bank, all contrary to the rules and regulations issued by the Bank. Ru"#n$ : 'he trial court based the ci%il liability of the appellants herein on the pro%isions of rts. *0*4 and *0*, of the .i%il .ode, defining and enumerating the duties and obligations of an agent and his liability for failure to comply with such duties, and rt. 31, of the .ode of .ommerce which pro%ides that an agent must obser%e the pro%isions of law and regulations with respect to business transactions entrusted to him otherwise he shall be responsible for the conse;uences resulting from their breach or omissions5 and also rt. *,23 of the .i%il .ode which pro%ides for the liability of one for his tortious act, that is to say, any act or omission which causes damage to another by his fault or negligence. ppellants while agreeing with the meaning and scope of the legal pro%isions cited, ne%ertheless insist that those pro%isions are not applicable to them inasmuch as they are not guilty of any %iolation of instructions or regulations of the plaintiff Bank5 and that neither are they guilty of negligence of carelessness as found by the trial court. careful study and consideration of the record, howe%er, con%inces us and we agree with the trial court that the defendants"appellants ha%e not only %iolated instructions of the plaintiff Bank, including things which said Bank wanted done or not done, all of which were fully understood by them, but they 6appellants7 also %iolated standing regulations regarding the granting of loans5 and, what is more, thru their carelessness, laxity and negligence, they allowed loans to be granted to persons who were not entitled to recei%e loans. s pointed out by .ounsel for appellee, ordinarily, a principal who collects either =udicially or extra=udicially a loan made by an agent without authority, thereby ratifies the said act of the agent. In the present case, howe%er, in filing suits against some of the borrowers to collect at least part of the unauthori!ed loans, there was no intention on the part of the plaintiff Bank to ratify the acts of appellants. Neither did the plaintiff recei%e any substantial benefit by its act of filing these suits if we consider the fact that the collections so far made, form a small or insignificant portion of the entire principal and interest. nd, we fail to see any ini;uity in this act of the plaintiff in suing some of the borrowers to collect what it could at the same time holding the appellants liable for the balance, because the plaintiff 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 automatically decrease the financial liability of appellants. .onsidering the large amount for which appellants are found liable, it is a matter of serious doubt if they are in a position to pay it. (oreo%er, whate%er amount is collected by the plaintiff Bank from borrowers, ser%es to diminish the financial liability of the appellants, in the same way that the original claim of P02+,,2:.*4, at the %ery instance of plaintiff was reduced to P-,,,42:.10. In other words, the act of the plaintiff Bank in the matter, far from being ini;uitous, is really beneficial to the appellants.