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CRED TRANS Digest Pool | Atty. Sarona SY 2015-2016 1

PART I: CONCEPT OF CREDIT the agreement is not for a price certain.

TRANSACTIONS
ISSUE: Whether or not the contractual
PART II: LOAN (Articles 1933 – 1961) relationship between Pajuyo and Guevarra
was that of a commodatum.
I. Concept
II. Commodatum HELD: No. In a contract of commodatum, one
of the parties delivers to another something not
PAJUYO VS. CA consumable so that the latter may use the
same for a certain time and return it.
FACTS: In June 1979, petitioner Pajuyo paid
P400 to a certain Perez for the rights over a Essential features of commodatum:
250-square meter lot in Quezon City. Pajuyo  it is gratuitous.
then constructed a house on the lot and he and  the use of the thing belonging to
his family lived in the house from 1979 to 1985. another is for a certain period
On 8 December 1985, Pajuyo and private Thus, the bailor cannot demand the return of
respondent Guevarra executed a Kasunduan the thing loaned until after expiration of the
or agreement. Pajuyo, as owner of the house, period stipulated, or after accomplishment of
allowed Guevarra to live in the house for free the use for which the commodatum is
provided Guevarra would maintain the constituted.
cleanliness and orderliness of the house.
Guevarra promised that he would voluntarily If the bailor should have urgent need of the
vacate the premises on Pajuyos demand. thing, he may demand its return for temporary
use. If the use of the thing is merely tolerated
In September 1994, Pajuyo informed Guevarra by the bailor, he can demand the return of the
of his need of the house and demanded that thing at will, in which case the contractual
Guevarra vacate the house. Guevarra refused. relation is called a precarium, which is a kind of
Pajuyo filed an ejectment case against commodatum.
Guevarra with the MTC.
The Kasunduan reveals that the
Guevarra claimed that Pajuyo had no valid title accommodation accorded by Pajuyo to
or right of possession over the lot because the Guevarra was not essentially gratuitous.
lot is within the 150 hectares set aside by While the Kasunduan did not require Guevarra
Proclamation No. 137 for socialized housing. to pay rent, it obligated him to maintain the
Guevarra pointed out that from December property in good condition. The imposition of
1985 to September 1994, Pajuyo did not show this obligation makes the Kasunduan a
up or communicate with him. Guevarra insisted contract different from a commodatum.
that neither he nor Pajuyo has valid title to the
lot (both were squatters). The effects of the Kasunduan are also different
from that of a commodatum. Case law on
MTC rendered its decision in favor of Pajuyo. ejectment has treated relationship based on
Pajuyo allowed Guevarra to use the house tolerance as one that is akin to a landlord-
only by tolerance. Thus, Guevarras refusal to tenant relationship where the withdrawal of
vacate the house on Pajuyos demand made permission would result in the termination of
Guevarras continued possession of the house the lease. The tenants withholding of the
illegal. RTC affirmed the MTC decision in toto. property would then be unlawful.
CA reversed the MTC and RTC rulings and Even assuming that the relationship
declared that Pajuyo and Guevarra illegally between Pajuyo and Guevarra is one of
occupied the contested lot which the commodatum, Guevarra as bailee would
government owned. CA also declared that still have the duty to turn over possession
Pajuyo and Guevarra are in pari delicto or in of the property to Pajuyo, the bailor. The
equal fault. Moreover, the Kasunduan is not a obligation to deliver or to return the thing
lease contract but a commodatum because received attaches to contracts for safekeeping,

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or contracts of commission, administration and Doronilla issued 3 postdated checks, all of

commodatum. which were dishonored.
Guevarra freely entered into the Vives received a letter from Doronilla assuring
Kasunduan. Guevarra cannot now impugn him that his money was intact and would be
the Kasunduan after he had benefited from returned to him. Doronilla issued a postdated
it. The Kasunduan binds Guevarra. check for P212k in favor of Vives. However,
upon presentment to the drawee bank, the
The Kasunduan is not void for purposes of check was dishonored. Doronilla requested
determining who between Pajuyo and Vives to present the same check on a later
Guevarra has a right to physical date but it was again dishonored.
possession of the contested property. The
Kasunduan is the undeniable evidence of Vives referred the matter to a lawyer, who
Guevarras recognition of Pajuyos better right made a written demand upon Doronilla for the
of physical possession. Guevarra is clearly a return of his clients money. Doronilla issued
possessor in bad faith. The absence of a another check but was again dishonored for
contract would not yield a different result, as insufficiency of funds.
there would still be an implied promise to
vacate. Vives instituted an action for recovery of sum
of money in the RTC against Doronilla,
PRODUCERS BANK VS. CA Sanchez, Dumagpi and Producers Bank. He
also filed criminal actions against Doronilla,
FACTS: Sometime in 1979, private respondent Sanchez and Dumagpi in the RTC.
Vives was asked by his neighbor and friend
Sanchez to help her friend, Col. Doronilla, in RTC rendered a decision in favor of Vives. CA
incorporating his business (Sterela). Sanchez affirmed the decision of the RTC in Toto.
asked Vives to deposit in a bank a certain
amount of money in the bank account of Petitioner contends that the transaction
Sterela for purposes of its incorporation. She between private respondent and Doronilla is a
assured Vives that he could withdraw his simple loan (mutuum) since all the elements of
money from said account within a months time. a mutuum are present: first, what was
delivered by private respondent to Doronilla
Vives, Sanchez, Doronilla and a certain was money, a consumable thing; and second,
Dumagpi, Doronillas private secretary, met and the transaction was onerous as Doronilla was
discussed the matter. Relying on the obliged to pay interest, as evidenced by the
assurances and representations of Sanchez check issued by Doronilla in the amount of
and Doronilla, Vives issued a check in the P212k, or P12k more than what Vives
amount of P200k in favor of Sterela which was deposited in Sterelas bank account.
subsequently deposited under Sterela's
account. ISSUE: Whether or not the transaction
between Doronilla and Vives was one of
Subsequently, Vives learned that Sterela was simple loan or mutuum.
no longer holding office in the address
previously given to him. He went to the Bank to HELD: No, it was a commodatum.
verify if their money was still intact. Atienza, Article 1933 of the Civil Code distinguishes
the assistant manager, informed them that part between the two kinds of loans in this wise:
of the money had been withdrawn by Doronilla,
and that only P90k remained therein. He By the contract of loan, one of the parties
likewise told them that they could not withdraw delivers to another, either something not
the remaining amount because it had to consumable so that the latter may use the
answer for some postdated checks issued by same for a certain time and return it, in which
Doronilla. case the contract is called a commodatum; or
money or other consumable thing, upon the
Sterela, through Doronilla, obtained a loan of condition that the same amount of the same
P175k from the Bank. To cover payment, kind and quality shall be paid, in which case

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the contract is simply called a loan or mutuum. that the bailee in commodatum acquires the
use of the thing loaned but not its fruits. Hence,
Commodatum is essentially gratuitous. Simple it was only proper for Doronilla to remit the
loan may be gratuitous or with a stipulation to interest.
pay interest. In commodatum, the bailor retains
the ownership of the thing loaned, while in Neither does the Court agree with petitioners
simple loan, ownership passes to the borrower. contention that it is not solidarily liable for the
return of private respondents money because it
The foregoing provision seems to imply that if was not privy to the transaction between
the subject of the contract is a consumable Doronilla and Vives.
thing, such as money, the contract would be a
mutuum. However, there are some instances Under Article 2180 of the Civil Code,
where a commodatum may have for its employers shall be held primarily and solidarily
object a consumable thing. liable for damages caused by their employees
acting within the scope of their assigned tasks.
Article 1936 of the Civil Code provides:
Atienzas acts of helping Doronilla, a customer
Consumable goods may be the subject of of the petitioner, were obviously done in
commodatum if the purpose of the contract is furtherance of petitioners interests. It was
not the consumption of the object, as when it is established that the transfer of funds from
merely for exhibition. Sterelas savings account to its current account
could not have been accomplished by Doronilla
Thus, if consumable goods are loaned only for without the invaluable assistance of Atienza,
purposes of exhibition, or when the intention of and that it was their connivance which was the
the parties is to lend consumable goods and cause of private respondents loss.
to have the very same goods returned at
the end of the period agreed upon, the loan Under Article 2180 of the Civil Code, petitioner
is a commodatum and not a mutuum. is liable for private respondents loss and is
solidarily liable with Doronilla and Dumagpi for
The rule is that the intention of the parties the return of the P200k since it is clear that
thereto shall be accorded primordial petitioner failed to prove that it exercised due
consideration in determining the actual diligence to prevent the unauthorized
character of a contract. The evidence shows withdrawals from Sterela's savings account.
that Vives agreed to deposit his money in the
savings account of Sterela for the purpose of
making it appear that said firm had sufficient MINA VS. PASCUAL
capitalization for incorporation, with the
promise that the amount shall be returned FACTS: Francisco Fontanilla and Andres
within 30 days. Fontanilla were brothers. Francisco acquired a
lot in Laoag, the property having been awarded
Vives merely accommodated Doronilla by to him through its purchase at a public auction.
lending his money without consideration, as a Andres, with the consent of his brother
favor to Sanchez. It was however clear to the Francisco, erected a warehouse on a part of
parties to the transaction that the money would the said lot.
not be removed from Sterelas savings account
and would be returned to Vives after 30 days. Francisco, the former owner of the lot, being
dead, the plaintiffs, Alejandro Mina, et al., were
Doronillas attempts to return the amount recognized as his heirs. Andres, the former
did not convert the transaction from a owner of the warehouse, also having died, the
commodatum into a mutuum because such children of Ruperta Pascual were recognized
was not the intent of the parties and (though it is not said how) and consequently
because the additional P12k corresponds are entitled to the said building.
to the fruits of the lending of the P200k.
The plaintiffs and the defendants are the
Article 1935 of the Civil Code expressly states owners of the warehouse, while the plaintiffs

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are undoubtedly, the owners of the part of the Supreme Court which found for them by
lot occupied by that building, as well as of the holding that they are the owners of the lot in
remainder thereof. question, although there existed and still exists
a commodatum by virtue of which the
This was the state of affairs when on May 6, guardianship (meaning the defendants) had
1909, Ruperta Pascual, as the guardian of her and has the use, and the plaintiffs the
minor children (defendants), petitioned the CFI ownership, of the property, with no finding
for authorization to sell "the 6/7 of the one-half concerning the decree of the lower court that
of the warehouse, of 14 by 11 meters, together ordered the sale.
with its lot."
ISSUE: Whether or not there is a contract of
The plaintiffs opposed the petition of Ruperta commodatum.
Pascual for the reason that the latter had
included the lot occupied by the warehouse, HELD: No. Although both litigating parties
which they claimed was their exclusive may have agreed in their idea of the
property. commodatum, it is not, a question of fact
but of law. The denomination given by them to
The plaintiffs requested the court to decide the the use of the lot granted by Francisco
question of the ownership of the lot before it Fontanilla to his brother, Andres Fontanilla, is
pass upon the petition for the sale of the not acceptable.
warehouse. But the court before determining
the matter of the ownership of the lot occupied Contracts are not to be interpreted in
by the warehouse, ordered the sale of the conformity with the name that the parties
building. thereto agree to give them, but must be
construed, duly considering their constitutive
The warehouse, together with the lot, was sold elements, as they are defined and
to Cu Joco (P2890) at a public auction. denominated by law.
The plaintiffs insisted upon a decision of the By the contract of loan, one of the parties
question of the ownership of the lot, and the delivers to the other, either anything not
court decided it by holding that the land perishable, in order that the latter may use
belonged to the owner of the warehouse which it during the certain period and return it to
had been built thereon thirty years before. the former, in which case it is called
commodatum . . . (art. 1740, Civil Code).
The plaintiffs appealed and this court reversed
the judgment of the lower court and held that It is, therefore, an essential feature of the
the appellants were the owners of the lot in commodatum that the use of the thing
question. When the judgment became final belonging to another shall for a certain
and executory, a writ of execution was issued period.
and the plaintiffs were given possession of the
lot; but soon thereafter the trial court annulled Francisco Fontanilla did not fix any definite
this possession for the reason that it affected period or time during which Andres Fontanilla
Cu Joco, who had not been a party to the suit could have the use of the lot whereon the latter
in which that writ was served. was to erect a stone warehouse of
considerable value, and so it is that for the past
It was then that the plaintiffs commenced the 30 years of the lot has been used by both
present action for the purpose of having the Andres and his successors in interest.
sale of the said lot declared null and void and
of no force and effect. The present contention of the plaintiffs that Cu
Joco, now in possession of the lot, should pay
An agreement was had add to the facts, the rent for it at the rate of P5 a month, would
ninth paragraph of which is as follows: destroy the theory of the commodatum
sustained by them, since, according to the
9. That the herein plaintiffs excepted to the second paragraph of the aforecited article
judgment and appealed therefrom to 1740, "commodatum is essentially
the
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gratuitous," of witnesses that Santos, sent in charge of

various persons, the 10 carabaos requested by
With that expectation in view, it appears more Jimenea (it was revealed that Jimenea is the
likely that Francisco intended to allow his father in law of de los Santos). Also, de los
brother Andres a surface right; but this right Santos produced 2 letters proving that
supposes the payment of an annual rent, and Jimenea received them in the presence of said
Andres had the gratuitous use of the lot. persons (brother of Jimenea) who saw the
animals arrive at the hacienda. FOUR of the
carabaos died of rinderpest and thus the
FELIX DE LOS SANTOS VS AGUSTINA judgment appealed from only deals with 6
JARRA (1910 CASE) carabaos.
FACTS: Felix de los Santos brought suit THE ALLEGED PURCHASE of 3 carabaos by
against Agusitina Jarra (the administratrix of Jimenea from his son-in-law Santos is not
the estate of Magdaleno Jimenea, he alleges evidenced by any trustworthy evidence.
that Jimenea borrowed and obtained from the Therefore, it is not true.
plaintiff 10 first class carabos, to be used at the
animal power mill of Jimenea’s hacienda, From the foregoing, it may be logically inferred
without recompense or remuneration for the that the carabaos loaned or given on
use of it and under the sole condition that they commodatum to the deceased Jimenea were
should be returned to the owner as soon as the ten in number, that 6 survived and that these
work at the mill was terminated. Jimenea carabaos have not been returned to the owner
however, did not return the carabaos even delos Santos, and lastly, that the 6 carabaos
though de los Santos claimed their return after were not the property of the deceased nor any
the work at the mill was finished. of his descendants, it is the duty of the
Jimenea died in 1904 (before the suit) and administratrix to return them or indemnify the
Jarra was appointed by the CFI as owner for the value.
administratrix of his estate.
ISSUE: W/N the contracts is one of a
De los Santos presented his claim to the commodatum.
commissioners of the estate of Jimenea for
return of the carabaos. (for the carabaos to be HELD: YES. The carabaos were given on
exluded from the estate of Jimenea). The commodatum as these were delivered to be
commissioners rejected his claim, and thus a used by defendant. Upon failure of defendant
lawsuit ensued. to return the cattle upon demand, he is under
the obligation to indemnify the plaintiff by
Jarra answered and said that it was true that paying him their value. Since the 6 carabaos
the late Jimenea asked the plaintiff to loan him were not the property of the deceased or of
ten carabaos, but that he only obtained THREE any of his descendants, it is the duty of the
(3) second-class carabaos, which were administratrix of the estate to either return
afterwards sold by the Delos Santos to them or indemnify the owner thereof of their
Jimenea. (Basically Jarra denied all the value.
allegations in the complaint)
It was not part of Jimenea’s estate. Therefore
The case came up for trial and the court Agustina Jarra should exclude it or indemnify
rendered judgment against Jarra and ordering De los Santos… “for the reasons above set
her to return to de los Santos 6 second-class forth, by which the errors assigned to the
and third class carabaos. The value of which judgment appealed from have been refuted,
was 120 each so 720 pesos. Jarra moved for a and considering that the same is in accordance
new trial on the ground that the findings of fact with the law and the merits of the case, it is our
were openly and manifestly contrary to the opinion that it should be affirmed and we do
weight of the evidence. hereby affirm it with the costs against
appellant.
The record however, discloses that it has been
fully proven from the testimonies of a number RATIO: The ratio differentiates a loan from a

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commodatum. Art 1740. (Old civil code) By the the thing should have been lost or injured…
contract of loan, one of the parties delivers
to the other, either anything not perishable
(in the new civil code it’s consumable), in REPUBLIC OF THE PHILIPPINES VS. JOSE
order that the latter may use it during a BAGTAS, FELICIDAD BAGTAS,
certain period and return it to the former, in ADMINISTRATRIX OF THE INTESTATE
which case it is called commodatum, or ESTATE LEFT BY JOSE BAGTAS
money or any other perishable thing, under the
condition to return an equal amount of the FACTS: On May 8, 1948, Jose Bagtas
same kind and quality, in which case it is borrowed from the Bureau of Animal Industry 3
merely called a loan. bulls for 1 year for breeding purposes, subject
to breeding fee for 10% of the book value of
Commodatum is essentially gratuitous. the bulls. Upon the expiration of the contract,
Bagtas asked for a renewal for another year.
A simple loan may be gratuitous, or made The renewal granted was only for 1 bull.
under a stipulation to pay interest. Bagtas offered to buy the bulls at book value
less depreciation, but the Bureau told him that
Art 1741. The bailor retains ownership of the he should either return the bulls or pay for their
thing loaned the bailee acquires the use book value. Bagtas failed to pay the book
thereof, but not its fruits; if any compensation value, and so the Republic commenced an
is involved, to be paid by the person requiring action with the CFI Manila to order the return of
the use, the agreement ceases to be a the bulls of the payment of book value.
commodatum. Felicidad Bagtas, the surviving spouse and
administratrix of the decedent’s estate, stated
Art 1742. The obligations and rights which that the 2 bulls have already been returned in
arise from the commodatum pass to the heirs 1952, and that the remaining one died of
of both contracting parties, unless the loan has gunshot during a Huk raid. As regards the two
been made in consideration for the person of bulls, is was proven that they were returned
the bailee, in which case his heirs shall not and thus, there is no more obligation on the
have the right to continue using the thing part of the appellant. As to the bull not
loaned. returned, Felicidad contends that the obligation
is extinguished since the contract is that of a
The carabaos delivered to be used were not commodatum and that the loss through
returned by Jiminea upon demand. There is no fortuitous event should be borne by the owner.
doubt that Jarra is under the obligation to
indemnify delos Santos. ISSUE: Whether, depending on the nature of
the contract, the respondent is liable for the
Article 101. Those who in fulfilling their death of the bull
obligations are guilty of fraud, negligence or
delay…. HELD: A contract of commodatum is
essentially gratuitous. If the breeding fee be
The obligation of the bailee or of his considered a compensation, then the contract
successors to return either the thing loaned or would be a lease of the bull. Under article 1671
its value is sustained by the tribunal of Spain, of the Civil Code the lessee would be subject
which said in its decision - (Mentioned to the responsibilities of a possessor in bad
jurisprudence): legal doctrine touching faith, because she had continued possession
commodatum as follows: of the bull after the expiry of the contract. And
Although it is true that in a contract of even if the contract be commodatum, still the
commodatum the bailor retains the appellant is liable, because article 1942 of the
ownership of thing loaned at the expiration Civil Code provides that a bailee in a contract
of the period, or after the use for which it of commodatum -
was loaned has been accomplished, it is . . . is liable for loss of the things, even if it
the imperative duty of the bailee to return should be through a fortuitous event:
the thing itself to its owner, or to pay him (2) If he keeps it longer than the period
damages if through the fault of the stipulated . . .
bailee
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(3) If the thing loaned has been delivered with registration of Lots 2 and 3.
appraisal of its value, unless there is
a stipulation exempting the bailee During trial, the Heirs of Octaviano presented
from responsibility in case of a one (1) witness, who testified on the alleged
fortuitous event. ownership of the land in question (Lot 3) by
their predecessor-in-interest, Egmidio
The loan of one bull was renewed for another Octaviano; his written demand to Vicar for the
period of one year to end on 8 May 1950. But return of the land to them; and the reasonable
the appellant kept and used the bull until rentals for the use of the land at P10,000 per
November 1953 when during a Huk raid it was month.
killed by stray bullets. Furthermore, when lent
and delivered to the deceased husband of the On the other hand, Vicar presented the
appellant the bulls had each an appraised Register of Deeds for the Province of Benguet,
book value. It was not stipulated that in case of Atty. Sison, who testified that the land in
loss of the bull due to fortuitous event the late question is not covered by any title in the name
husband of the appellant would be exempt of Egmidio Octaviano or any of the heirs. Vicar
from liability. dispensed with the testimony of Mons.
Brasseur when the heirs admitted that the
Special proceedings for the administration and witness if called to the witness stand, would
settlement of the estate of the deceased Jose testify that Vicar has been in possession of Lot
V. Bagtas having been instituted in the Court of 3, for 75 years continuously and peacefully and
First Instance of Rizal (Q-200), the money has constructed permanent structures thereon.
judgment rendered in favor of the appellee
cannot be enforced by means of a writ of ISSUE: WON Vicar had been in possession of
execution but must be presented to the lots 2 and 3 merely as bailee borrower in
probate court for payment by the appellant, the commodatum, a gratuitous loan for use.
administratrix appointed by the court.
HELD: YES. Private respondents were able to
prove that their predecessors' house was
CATHOLIC VICAR VS. CA borrowed by petitioner Vicar after the church
and the convent were destroyed. They never
FACTS: 1962: Catholic Vicar Apostolic of the asked for the return of the house, but when
Mountain Province (Vicar), petitioner, filed with they allowed its free use, they became bailors
the court an application for the registration of in commodatum and the petitioner the bailee.
title over lots 1, 2, 3 and 4 situated in
Poblacion Central, Benguet, said lots being The bailees' failure to return the subject matter
used as sites of the Catholic Church, building, of commodatum to the bailor did not mean
convents, high school building, school adverse possession on the part of the
gymnasium, dormitories, social hall and borrower. The bailee held in trust the property
stonewalls. subject matter of commodatum. The adverse
claim of petitioner came only in 1951 when it
1963: Heirs of Juan Valdez and Heirs of declared the lots for taxation purposes. The
Egmidio Octaviano claimed that they have action of petitioner Vicar by such adverse claim
ownership over lots 1, 2 and 3. (2 separate civil could not ripen into title by way of ordinary
cases) acquisitive prescription because of the
absence of just title.
1965: The land registration court confirmed the
registrable title of Vicar to lots 1, 2, 3 and 4. The Court of Appeals found that petitioner
Upon appeal by the private respondents Vicar did not meet the requirement of 30 years
(heirs), the decision of the lower court was possession for acquisitive prescription over
reversed. Title for lots 2 and 3 were cancelled. Lots 2 and 3. Neither did it satisfy the
requirement of 10 years possession for
VICAR filed with the Supreme Court a petition ordinary acquisitive prescription because of the
for review on certiorari of the decision of the absence of just title. The appellate court did not
Court of Appeals dismissing his application for believe the findings of the trial court that

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Lot 2 was acquired from Juan Valdez by under it Quintos gratuitously granted the use of
purchase and Lot 3 was acquired also by the furniture to BECK, reserving for herself the
purchase from Egmidio Octaviano by petitioner ownership thereof; by this contract he bound
Vicar because there was absolutely no himself to return the furniture to Quintos, upon
documentary evidence to support the same the latter’s demand (clause 7 of the contract,
and the alleged purchases were never Exhibit A; articles 1740, paragraph 1, and 1741
mentioned in the application for registration. of the Civil Code). The obligation voluntarily
assumed by BECK to return the furniture upon
demand, means that he should return all of
MARGARITA QUINTOS and ANGEL A. them to Quintos at the latter's residence or
ANSALDO vs. BECK house. BECK did not comply with this
obligation when he merely placed them at the
FACTS: BECK was a tenant of the Quintos
disposal of the Quintos, retaining for his benefit
and as such occupied the latter's house on M. the three gas heaters and the four eletric
H. del Pilar street, No. 1175. On January 14,
lamps. The provisions of article 1169 of the
Civil Code cited by counsel for the parties are
1936, upon the novation of the contract of
not squarely applicable. The trial court,
lease between them, the former gratuitously
therefore, erred when it came to the legal
granted to the latter the use of the furniture
conclusion that the Quintos failed to comply
subject to the condition that the BECK would
with her obligation to get the furniture when
return them to the Quintos upon the latter's
they were offered to her.
demand. Quintos sold the property to Maria
Lopez and Rosario Lopez and on September ISSUE 2: WON Quintos is bound to bear the
14, 1936, these three notified BECK of the deposit fees. NO.
conveyance, giving him sixty days to vacate
the premises under one of the clauses of the HELD 2: As BECK had voluntarily undertaken
contract of lease. There after Quintos required to return all the furniture to the Quintos, upon
BECK to return all the furniture transferred to the latter's demand, the Court could not legally
him for them in the house where they were compel her to bear the expenses occasioned
found. by the deposit of the furniture at the BECK's
behest. The latter, as bailee, was not entitled
On November 5, 1936, BECK, through another to place the furniture on deposit; nor was
person, wrote to Quintos reiterating that she Quintos under a duty to accept the offer to
may call for the furniture in the ground floor of return the furniture, because he wanted to
the house. On the 7th of the same month, he retain the three gas heaters and the four
wrote another letter to Quintos informing her electric lamps.
that he could not give up the three gas heaters
and the four electric lamps because he would As to the value of the furniture, we do not
use them until the 15th of the same month believe that Quintos is entitled to the payment
when the lease in due to expire. Quintos thereof by BECK in case of his inability to
refused to get the furniture in view of the fact return some of the furniture because under
that BECK had declined to make delivery of all paragraph 6 of the stipulation of facts, BECK
of them. On November 15th, before vacating has neither agreed to nor admitted the
the house, the BECK deposited with the Sheriff correctness of the said value. Should he fail to
all the furniture belonging to Quintos and they deliver some of the furniture, the value thereof
are now on deposit in the warehouse situated should be later determined by the trial Court
at No. 1521, Rizal Avenue, in the custody of through evidence which the parties may desire
the said sheriff. to present.
ISSUE 1: WON BECK complied with his ISSUE 3: WON Quintos is entitled to the costs
obligation to return the furniture upon the of litigation. YES.
Quintos’ demand. NO.
HELD 3: The costs in both instances should be
HELD 1: The contract entered into between borne by BECK because the plaintiff is the
the parties is one of commadatum, because prevailing party (section 487 of the Code of

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 lOMoARcPSD|16136577

Civil Procedure). He was the one who proceeds of ALS’s loan of P500,000.
breached the contract of commodatum, and
without any reason he refused to return and On September 13, 1982, BPIIC released to
deliver all the furniture upon demand. In these ALS P7,146.87, purporting to be what was left
circumstances, it is just and equitable that he of their loan after full payment of Roa’s loan.
pay the legal expenses and other judicial costs
which the plaintiff would not have otherwise In June 1984, BPIIC instituted foreclosure
defrayed. proceedings against ALS on the ground that
they failed to pay the mortgage indebtedness
POLICY: Commodatum is a contract where which from May 1, 1981 to June 30, 1984,
the bailor delivers to the bailee a non- amounted to P475,585.31.
consumable thing so that the latter may use it
for a certain time and return the identical thing.
ALS and Litonjua filed a civil case against
BPIIC. They alleged, among others, that they
were not in arrears in their payment, but in fact
III. Mutuum
made an overpayment as of June 30, 1984.
They maintained that they should not be made
BPI INVESTMENT CORPORATION vs. HON.
to pay amortization before the actual release of
COURT OF APPEALS and ALS
the P500,000 loan in August and September
MANAGEMENT & DEVELOPMENT
1982. Further, out of the P500,000 loan, only
CORPORATION
the total amount of P464,351.77 was released
to ALS.
FACTS: Frank Roa obtained a loan at an
interest rate of 16.25% per annum from Ayala RTC favored ALS and Litonjua. CA affirmed in
Investment and Development Corporation
toto.
(AIDC), the predecessor of petitioner BPIIC,
for the construction of a house on his lot in CA reasoned that a simple loan is perfected
New Alabang Village, Muntinlupa. Said house only upon the delivery of the object of the
and lot were mortgaged to AIDC to secure the contract. The contract of loan between BPIIC
loan. Sometime in 1980, Roa sold the house and ALS & Litonjua was perfected only on
and lot to private respondents ALS and September 13, 1982, the date when BPIIC
Antonio Litonjua for P850,000. They paid released the purported balance of the
P350,000 in cash and assumed the P500,000 P500,000 loan after deducting therefrom the
balance of Roa’s indebtedness with AIDC. value of Roa’s indebtedness. Thus, payment of
the monthly amortization should commence
AIDC, however, was not willing to extend the only a month after the said date, as can be
old interest rate to ALS and proposed to grant inferred from the stipulations in the contract.
them a new loan of P500,000 to be applied to This, despite the express agreement of the
Roa’s debt and secured by the same property, parties that payment shall commence on May
at an interest rate of 20% per annum and 1, 1981. From October 1982 to June 1984, the
service fee of 1% per annum on the total amortization due was only P194,960.43.
outstanding principal balance payable within Evidence showed that ALS had an
ten years in equal monthly amortization. overpayment. Therefore, there was no basis
for BPIIC to extrajudicially foreclose the
Consequently, on March 1981, ALS executed mortgage.
a mortgage deed containing the above
stipulations with the provision that payment of BPIIC contends among others that CA erred in
the monthly amortization shall commence on ruling that because a simple loan is perfected
May 1, 1981. upon the delivery of the object of the contract,
the loan contract in this case was perfected
On August 1982, ALS and Litonjua updated only on September 13, 1982. BPIIC claims that
Roa’s arrearages by paying BPIIC the sum of a contract of loan is a consensual contract, and
P190,601.35. This reduced Roa’s principal a loan contract is perfected at the time the
balance to P457,204.90 which, in turn, was contract of mortgage is executed conformably
liquidated when BPIIC applied thereto the with SC’s ruling in Bonnevie v. CA, 125 SCRA

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