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 They were informed that part of the money had been withdrawn by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
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.

 ₱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.
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.