PRODUCERS BANK OF THE PHILIPPINES v.

CA
G.R. No. 115324 19 February 2003 CALLEJO, SR., J.
Commodatum Created By: Kath
Petitioners Respondents
PRODUCERS BANK OF THE PHILIPPINES (now HON. COURT OF APPEALS AND FRANKLIN VIVES
FIRST INTERNATIONAL BANK)
Recit Ready Summary

Vives was asked by Sanchez to help Doronilla in incorporating his business, Sterela Marketing and Services, by
making a deposit in the bank account of Sterela. She assured private respondent that he could withdraw his
money from said account within a month. Vives then issued a check in the amount of ₱200,000 in favor of
Sterela. Private respondent instructed his wife to accompany Doronilla and Sanchez in opening a savings
account in the name of Sterela in the Producers Bank of the Philippines (PBP). Subsequently, Vives learned that
Sterela was no longer holding office in the address previously given to him. Alarmed, he and his wife went to
PBP to verify if their money was still intact. They were informed that part of the money had been withdrawn by
Doronilla, and that only ₱90,000.00 remained. They were also informed that Mrs. Vives could not withdraw said
remaining amount because it had to answer for some postdated checks issued by Doronilla. Vives instituted an
action for recovery of sum of money in the RTC in Pasig against Doronilla, Sanchez, Dumagpi and PBP. RTC
ruled in favor of Vives and ordered Doronilla and PBP to pay jointly and severally for the ₱200,000. PBP
appealed to the CA but the CA affirmed the RTC decision. Hence, this case before the SC.

The issue is whether the transaction between Vives and Doronilla is that of a mutuum or a
commodatum. The court held that the transaction was a commodatum. Article 1933 1 seems to imply that if the
subject of the contract is a consumable thing, such as money, the contract would be a mutuum. However, there
are some instances where a commodatum may have for its object a consumable thing. Article 1936 of the Civil
Code provides that “[c]onsumable goods may be the subject of commodatum if the purpose of the
contract is not the consumption of the object, as when it is merely for exhibition.” Thus, if consumable
goods are loaned only for purposes of exhibition or when the intention of the parties is to lend consumable
goods and to have the very same goods returned at the end of the period agreed upon, the loan is a
commodatum and not a mutuum.

Petition DENIED.
Facts of the Case
 Franklin Vives (private respondent) was asked by his neighbor and friend, Angeles Sanchez, to help her
friend and townmate, Col. Arturo Doronilla, in incorporating his business, the Sterela Marketing and
Services. Specifically, Sanchez asked private respondent to deposit in a bank a certain amount of
money in the bank account of Sterela for purposes of its incorporation. She assured private respondent
that he could withdraw his money from said account within a month’s time.
 Vives issued a check in the amount of ₱200,000 in favor of Sterela. Private respondent instructed his
wife, Mrs. Inocencia Vives, to accompany Doronilla and Sanchez in opening a savings account in the
name of Sterela in the Buendia, Makati branch of Producers Bank of the Philippines. In opening the
account, the authorized signatories were Inocencia Vives and/or Angeles Sanchez. A passbook for a
savings account was issued to Mrs. Vives.
 Subsequently, Vives found out that Sterela was no longer in its old office address. Alarmed, he and his
wife went to the bank to check if their money was still intact. The bank informed them that part of the
money in the savings account had been withdrawn by Doronilla, and only ₱90,000 remained therein. He
likewise told them that Mrs. Vives could not withdraw said remaining amount because it had to answer
for some postdated checks issued by Doronilla.
 Vives tried to get in touch with Doronilla through Sanchez. Doronilla then issued a postdated check for
₱212,000.00 in favor of private respondent. However, upon presentment by Vives to the drawee bank,
the check was dishonored. Doronilla requested private respondent to present the same check on a later
time but was again dishonored.
 Vives instituted an action for recovery of sum of money in the RTC in Pasig against Doronilla, Sanchez,
and PBP. RTC ruled in favor of Vives and ordered Doronilla and PBP to pay jointly and severally for the
₱200,000. PBP appealed to the CA but the CA affirmed the RTC decision. PBP the elevated the case to
the SC.

1
By the contract of loan, one of the parties delivers to another, either something not consumable so that the latter may use the same for a
certain time and return it, in which case the contract is called a commodatum; or money or other consumable thing, upon the condition that
the same amount of the same kind and quality shall be paid, in which case the contract is simply called a loan or mutuum.

Commodatum is essentially gratuitous.

Simple loan may be gratuitous or with a stipulation to pay interest.

PBP’s contention:
 The transaction between Vives and Doronilla is a mutuum since all the elements of a mutuum are
present: first, what was delivered by private respondent to Doronilla was money, a consumable thing;
and second, the transaction was onerous as Doronilla was obliged to pay interest, as evidenced by the
check issued by Doronilla in the amount of ₱212,000.00, or ₱12,000 more than what private respondent
deposited in Sterela’s bank account.
Private respondent’s arguments:
 The transaction between him and Doronilla is not a mutuum but a commodatum, since he did not
actually part with the ownership of his ₱200,000.00 and in fact asked his wife to deposit said amount in
the account of Sterela. He argues that he retained some degree of control over his money through his
wife who was made a signatory to the savings account and in whose possession the savings account
passbook was given.
Issues Ruling
1. Whether the transaction between Vives and Doronilla is that of a mutuum or a Commodatum
commodatum
Rationale/Analysis/Legal Basis
1. The transaction was a commodatum. Article 1933 of the Civil Code seems to imply that if the subject of the
contract is a consumable thing, such as money, the contract would be a mutuum. However, there are some
instances where a commodatum may have for its object a consumable thing. Article 1936 of the Civil Code
provides:
Consumable goods may be the subject of commodatum if the purpose of the contract is not the consumption
of the object, as when it is merely for exhibition.

Thus, if consumable goods are loaned only for purposes of exhibition, or when the intention of the parties is
to lend consumable goods and to have the very same goods returned at the end of the period agreed upon,
the loan is a commodatum and not a mutuum.

The evidence shows that Vives agreed to deposit his money in the savings account of Sterela specifically for
the purpose of making it appear that said firm had sufficient capitalization for incorporation, with the promise
that the amount shall be returned within thirty days. Vives merely accommodated Doronilla by lending his
money without consideration, as a favor to his good friend Sanchez. It was clear to the parties that the
money would not be removed from Sterela’s savings account and would be returned to Vives after thirty
days.

The additional ₱12,000, allegedly representing interest on the mutuum, did not convert the transaction from a
commodatum into a mutuum because such was not the intent of the parties and because the additional
₱12,000 corresponds to the fruits of the lending of the ₱200,000. Article 1935 states that the bailee in
commodatum acquires the use of the thing loaned but not its fruits. Hence, it was only proper for Doronilla to
remit to private respondent the interest accruing to the latter’s money deposited with petitioner.
Disposition
WHEREFORE, the petition is hereby DENIED. The assailed Decision and Resolution of the Court of Appeals
are AFFIRMED.
Bonnevie v. CA
GR No. L-49101 October 24, 1983

Facts: Spouses Lozano mortgaged their property to secure the payment of a loan amounting to
75K with private respondent Philippine Bank of Communication (PBCom). The deed of mortgage
was executed on 12-6-66, but the loan proceeeds were received only on 12-12-66. Two days after
the execution of the deed of mortgage, the spouses sold the property to the petitioner Bonnevie
for and in consideration of 100k—25K of which payable to the spouses and 75K as payment to
PBCom. Afterwhich, Bonnevie defaulted payments to PBCom prompting the latter to auction the
property after Bonnivie failed to settle despite subsequent demands, in order to recover the
amount loaned. The latter now assails the validity of the mortgage between Lozano and Pbcom
arguing that on the day the deed was executed there was yet no principal obligation to secure as
the loan of P75,000.00 was not received by the Lozano spouses, so that in the absence of a
principal obligation, there is want of consideration in the accessory contract, which consequently
impairs its validity and fatally affects its very existence.

Issue: Was there a perfected contract of loan?

Held: Yes. From the recitals of the mortgage deed itself, it is clearly seen that the mortgage deed
was executed for and on condition of the loan granted to the Lozano spouses. The fact that the
latter did not collect from the respondent Bank the consideration of the mortgage on the date it
was executed is immaterial. A contract of loan being a consensual contract, the herein contract of
loan was perfected at the same time the contract of mortgage was executed. The promissory note
executed on December 12, 1966 is only an evidence of indebtedness and does not indicate lack of
consideration of the mortgage at the time of its execution.
 
BPI vs CA Credit Digest
BPI Investment Corporation
 -vs- 
CA
 
GR No. 133632, 15 February 2002
 
377 SCRA 117
 
FACTS
 Frank Roa obtained a loan from Ayala Investment and DevelopmentCorporation (AIDC), for the
construction of his house. Said house and lotwere mortgaged to AIDC to secure the loan. Roa sold
the properties to ALSand Litonjua, the latter paid in cash and assumed the
balance of Roa’s
indebtedness wit AIDC. AIDC was not willing to extend the old interest toprivate respondents and
proposed a grant of new loan of P500,000 with
higher interest to be applied to Roa’s debt, secured by the same property.
Private respondents executed a mortgage deed containing the stipulation.The loan contract was
signed on 31 March 1981 and was perfected on 13September 1982, when the full loan was
released to private respondents.
BPIIC, AIDC’s predecessor, released to private respondents
P7,146.87,
purporting to be what was left of their loan after full payment of Roa’s loan.
BPIIC filed for foreclosure proceedings on the ground that privaterespondents failed to pay the
mortgage indebtedness. Private respondentsmaintained that they should not be made to pay
amortization before theactual release of the P500,000 loan. The suit was dismissed and affirmed
bythe CA.
ISSUE
 Whether or not a contract of loan is a consensual contract.
HELD
 The Court held in the negative. A loan contract is not a consensual contractbut a real contract. It
is perfected only upon delivery of the object of thecontract. A contract o loan involves a reciprocal
obligation, wherein theobligation or promise of each party is the consideration for that of the
other;it is a basic principle in reciprocal obligations that neither party incurs indelay, if the other
does not comply or is not ready to comply is a propermanner with what is incumbent upon him
Emilia Manzano vs Miguel Perez Sr., et. Al.
GR 112485, 9 August 2001

FACTS:
 Emilia Manzano alleged that she is the owner of a residential house and lot, together with
all its improvements, in question.
 Nieves Manzano, Emilia’s sister, allegedly borrowed the said property as collateral for a
projected loan.
 Emilia accepted Nieve’s request considering her promise to return the same immediately
upon payment of the said loan.
 Emilia executed 2 deeds of conveyance for the sale of properties in favor of Nieves for a
consideration of P1.00 plus other valuables.
 Nieves and her husband Macario obtained the loan from Rural Bank of Infanta, Inc.
amounting to P30,000. Real Estate Mortgage (REM) has been executed over the subject
property in favor of the bank.
 When Nieves died, her heirs refused to return the property to Emilia after the payment of
the loan for they averred that the property is the only memory left by Nieves.
 Due to failure of settlement, Emilia sought the annulment of the deeds of sale eand
execution of a deed of transfer or reconveyance in her favor.
 Nieves’ heirs countered that they are the owners of the property being the legal heir of
Nieves.
 CA ruled in favor of Nieves’ heirs, Perez et. al. for it was not explained why physical
possession and occupation of the property had to be with Nieves’ heirs who even built a
pigen on the lot. As to consideration, CA held that inadequacy of the moneraty
consideration doe not render a conveyance null and void.

ISSUE: Whether the agreement between the parties was a commodatum.

HELD:

No. The agreement between the parties was not of a commodatum. The said agreement is of a
sale, not a commodatum.

Under Art. 1933 of the New Civil Code, In commodatum , bailor retains the ownership of the thing
used and the Bailee has an obligation to return the very same thing.

In the case, SC held that Emilia has presented no convincing proof of her continued ownership of
the subject property. On the other hand, Perez, Nieves’ heirs, presented 3 Deeds of Sale
executed in favor of Nieves. Such Deeds of Sale can be considered as transfer of ownership in
favor of Perez et. al. Thus, SC denied the petition.
 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.
REPUBLIC VS BAGTAS 
[G.R. No. L-17474  October 25, 1962] 
PADILLA, J.

FACTS:
 Jose Bagtas borrowed from the Bureau of Animal Industry three bulls for a period of one year for
breeding purposes subject to a government charge of breeding fee of 10% of the book value of the
books.
 Upon the expiration of the contract, Bagtas asked for a renewal for another one year, however, the
Secretary of Agriculture and Natural Resources approved only the renewal for one bull and other
two bulls be returned.
 Bagtas then wrote a letter to the Director of  Animal Industry that he would pay the value of the
three bulls with a deduction of yearly depreciation. The Director advised him that the value cannot
be depreciated and asked Bagtas to either return the bulls or pay their book value.
 Bagtas neither paid nor returned the bulls. The Republic then commenced an action against Bagtas
ordering him to return the bulls or pay their book value.
 After hearing, the trial Court ruled in favor of the Republic, as such, the Republic moved ex parte for
a writ of execution which the court granted.
 Felicidad Bagtas, the surviving spouse and administrator of Bagtas’ estate, returned the two bulls
and filed a motion to quash the writ of execution since one bull cannot be returned for it was killed
by gunshot during a Huk raid. The Court denied her motion hence, this appeal certified by the Court
of Appeals because only questions of law are raised.
ISSUE: WON the contract was commodatum;thus, Bagtas be held liable for its loss due to force majeure. 
RULING:
 A contract of commodatum is essentially gratuitous. Supreme Court held that Bagtas was liable for
the loss of the bull even though it was caused by a fortuitous event.
 If the contract was one of lease, then the 10% breeding charge is compensation (rent) for the use of
the bull and Bagtas, as lessee, is subject to the responsibilities of a possessor. He is also in bad faith
because he continued to possess the bull even though the term of the contract has already expired.
 If the contract was one of commodatum, he is still liable because: (1) he kept the bull longer than
the period stipulated; and (2) the thing loaned has been delivered with appraisal of its value (10%).
No stipulation that in case of loss of the bull due to fortuitous event the late husband of the
appellant would be exempt from liability.
 The original period of the loan was from 8 May 1948 to 7 May 1949. The loan of one bull was
renewed for another period of one year to end on 8 May 1950. But the appellant kept and used the
bull until November 1953 when during a Huk raid it was killed by stray bullets. 
 Furthermore, when lent and delivered to the deceased husband of the appellant the bulls had each
an appraised book value, to with: the Sindhi, at P1,176.46, the Bhagnari at P1,320.56 and the
Sahiniwal at P744.46. It was not stipulated that in case of loss of the bull due to fortuitous event the
late husband of the appellant would be exempt from liability.
QUINTOS VS BECK 69 PHIL 108
Facts: Quintos and Beck entered into a contract of lease, whereby the latter occupied the former’s
house. On Jan 14, 1936, the contract of lease was novated, wherein the QUintosgratuitously
granted to Beck the use of the furniture, subjectto the condition that Beck should return the
furnitures toQuintos upon demand. Thereafter, Quintos sold the propertyto Maria and Rosario
Lopez. Beck was notified of theconveyance and given him 60 days to vacate the premises.
INaddition, Quintos required Beck to return all the furniture.Beck refused to return 3 gas heaters
and 4 electric lampssince he would use them until the lease was due to expire.Quintos refused to
get the furniture since Beck had declinedto return all of them. Beck deposited all the
furniturebelonging to QUintos to the sheriff.
ISSUE: WON Beck complied with his obligation of returningthe furnitures to Quintos when it
deposited the furnitures tothe sheriff.

RULING: The contract entered into between the parties is oneof commadatum , because under it
the plaintiff gratuitouslygranted the use of the furniture to the defendant, reservingfor herself the
ownership thereof; by this contract thedefendant bound himself to return the furniture to
theplaintiff, upon the latters demand (clause 7 of the contract,Exhibit A; articles 1740, paragraph 1,
and 1741 of the CivilCode). The obligation voluntarily assumed by the defendantto return the
furniture upon the plaintiff's demand, meansthat he should return all of them to the plaintiff at the
latter'sresidence or house. The defendant did not comply with thisobligation when he merely
placed them at the disposal of theplaintiff, retaining for his benefit the three gas heaters andthe
four eletric lamps.As the defendant had voluntarily undertaken to return all thefurniture to the
plaintiff, upon the latter's demand, the Courtcould not legally compel her to bear the expenses
occasionedby the deposit of the furniture at the defendant's behest. Thelatter, as bailee, was nt
entitled to place the furniture ondeposit; nor was the plaintiff under a duty to accept the offerto
return the furniture, because the defendant wanted to retain the three gas heaters and the four
electric lamps"

Margarita Quintos and Angel Ansaldo v

Beck
GR No. L-46240, November 3, 1939
Facts: Beck was a tenant of the plaintiffs.
In January 14, 1936, upon a novation of the
contract of lease, plaintiff
gratuitously granted to Beck the use of the
furniture subject to the condition that he
would return them upon demand.
In September 14, 1936, plaintiff sold
property to the Lopezs. Beck was notified
and was given 60 days to vacate the
premises. Plaintiff required Beck to return
all furniture. Beck wrote that he could not
give up the 3 gas heaters and 4
electric lamps because he would use them
until the 15
th
of November when the lease was about to
expire. Plaintiff refused
to get the furniture because Beck declined
to deliver ALL of them.
November 15, Beck deposited with the
Sheriff all furniture.
Plaintiff brought action to compel Beck to
return furniture.
CFI ordered Beck to return her heaters and
gas lamps. As for the other furniture, at
plaintiff’s own expense na. Di mo
kinuha eh. (Art. 1169)
Plaintiffs appealed, CFI incorrectly applied
the law. Bakit kami magbabayad??? Beck
dapat!
Issues: WoN Beck complied with his
obligation t return the furniture upon
plaintiff’s demand – NO
WoN plaintiff bound to bear the deposit
fees and to the costs of litigation – NO
Held: The contract entered into between
the parties is one of commadatum. Plaintiff
gratuitously granted the use of the
furniture to Beck, reserving for herself the
ownership thereof; by this contract Beck
bound himself to return the furniture to
the plaintiff, upon the latter’s demand. The
obligation voluntarily assumed by Beck to
return the furniture upon the
plaintiff's demand, means that he should
return all of them to the plaintiff at the
latter's residence or house. The defendant
did not comply with this obligation when
he merely placed them at the disposal of
the plaintiff, retaining for his benefit the
three gas heaters and the four electric
lamps.
CFI erred in applying Art. 1169 in
concluding plaintiff failed to comply with
her obligation to get furniture when they
were
offered to her.
Costs to be borne by Beck because he was
the one who breached the contract of
commodatum and without reason
refused to return and deliver ALL furniture
upon demand.
Judgment modified. Beck to return and
deliver to plaintiff all furniture at his own
expense