1. BPI Investment v. CA, GR No.

133632, February 15, 2002

FACTS:
Frank Roa received a loan from Ayala Investment and Development Corporation (AIDC)
for a house. He sold the property to ALS and Antonio Litonjua for ₱850,000, who paid ₱350,000
in cash and assumed the ₱500,000 indebtedness. AIDC refused to extend the old interest rate and
proposed a new loan of ₱500,000.
Consequently, in March 1981, private respondents executed a mortgage deed containing
the above stipulations with the provision that payment of the monthly amortization shall
commence on May 1, 1981.

On August 13, 1982, ALS and Litonjua updated Roa’s arrearages by paying BPIIC which
reduced Roa’s principal balance to ₱457,204.90 which, in turn, was liquidated when BPIIC
applied thereto the proceeds of private respondents’ loan of ₱500,000. On September 13, 1982,
BPIIC released to private respondents ₱7,146.87, purporting to be what was left of their loan
after full payment of Roa’s loan.

In June 1984, BPIIC instituted foreclosure proceedings against private respondents on the
ground that they failed to pay the mortgage indebtedness which from May 1, 1981 to June 30,
1984.

ALS and Litonjua filed Civil Case against BPIIC. The RTC decided in favor of ALS and
Litonjua and on appeal, the Court of Appeals affirmed the decision in toto.

ISSUE:
WHETHER OR NOT A CONTRACT OF LOAN IS A CONSENSUAL CONTRACT.
RULING:
No. A loan contract is not a consensual contract but a real contract. It is perfected only
upon the delivery of the object of the contract.
In the present case, the loan contract between BPI, on the one hand, and ALS and
Litonjua, on the other, was perfected only on September 13, 1982, the date of the second release
of the loan. Following the intentions of the parties on the commencement of the monthly
amortization, as found by the Court of Appeals, private respondents’ obligation to pay
commenced only on October 13, 1982, a month after the perfection of the contract.7

2. Naguiat v. CA, 3 October 2003

FACTS:

Queaño applied for a loan from Naguiat, which was granted. Naguiat indorsed to Queaño
two checks.The proceeds of these checks were to constitute the loan granted by Naguiat to
Queaño.

Queaño issued two Security Bank checks to secure the loan, a Deed of Real Estate
Mortgage, and a promissory note. However, the Security Bank check was dishonored due to
insufficient funds. Queaño received a letter from Naguiat’s lawyer, demanding settlement of the
loan. Shortly thereafter, Queaño and one Ruby Ruebenfeldt (Ruebenfeldt) met with Naguiat. At
the meeting, Queaño told Naguiat that she did not receive the proceeds of the loan, adding that
the checks were retained by Ruebenfeldt, who purportedly was Naguiat’s agent.

Queaño demanded settlement from Naguiat's lawyer, but was denied. Naguiat filed for
extrajudicial foreclosure, and Queaño filed a case before the Pasay City RTC, seeking the
annulment of the mortgage deed. The RTC declared the mortgage null and void, ordering
Naguiat to return her titles to the mortgaged lots. Naguiat appealed the decision, leading to the
present petition.

ISSUE:

Whether or not Queaño had actually received the loan proceeds which were supposed to
be covered by the two checks Naguiat had issued or indorsed,

RULING:

No. The mere issuance of the checks did not result in the perfection of the contract of
loan. For the Civil Code provides that the delivery of bills of exchange and mercantile
documents such as checks shall produce the effect of payment only when they have been cashed.
It is only after the checks have produced the effect of payment that the contract of loan may be
deemed perfected. Art. 1934 of the Civil Code provides:

"An accepted promise to deliver something by way of commodatum or simple loan is

binding upon the parties, but the commodatum or simple loan itself shall not be perfected until
the delivery of the object of the contract."

In this case, the objects of the contract are the loan proceeds which Queaño would enjoy
only upon the encashment of the checks signed or indorsed by Naguiat. If indeed the checks
were encashed or deposited, Naguiat would have certainly presented the corresponding
documentary evidence, such as the returned checks and the pertinent bank records. Since Naguiat
presented no such proof, it follows that the checks were not encashed or credited to Queaño’s
account.

3. DBP v. COA, G.R. No. 144516. February 11, 2004

FACTS:
 In 1983, DBP established a Special Loan Program availed thru the facilities of the DBP
Provident Fund and funded by placements from the Gratuity Plan Fund. Under the Special Loan
Program, a prospective retiree is allowed the option to utilize in the form of a loan a portion of
his "outstanding equity" in the gratuity fund and to invest it in a profitable investment or
undertaking. The earnings of the investment shall then be applied to pay for the interest due on
the gratuity loan which was initially set at 9% per annum subject to the minimum investment rate
resulting from the updated actuarial study. The excess or balance of the interest earnings shall
then be distributed to the investor-members.

Pursuant to the investment scheme, DBP-TSD paid to the investor-members a total of

₱11,626,414.25 representing the net earnings of the investments for the years 1991 and 1992.
The payments were disallowed by the Auditor under Audit Observation Memorandum No. 93-2
dated March 1, 1993, on the ground that the distribution of income of the Gratuity Plan Fund
(GPF) to future retirees of DBP is irregular and constituted the use of public funds for private
purposes which is specifically proscribed under Section 4 of P.D. 1445.

ISSUE:
Whether or not the Special Loan Program of DBP is merely a normal loan transaction.
RULING:
No. In a loan transaction or mutuum, the borrower or debtor acquires ownership of the
amount borrowed. As the owner, the debtor is then free to dispose of or to utilize the sum he
loaned, subject to the condition that he should later return the amount with the stipulated interest
to the creditor. In contrast, the amount borrowed by a qualified employee under the SLP was not
even released to him.

In the present case, the Fund allowed the debtor-employee to "borrow" a portion of his
gratuity fund credit solely for the purpose of investing it in certain instruments specified by DBP.
The debtor-employee could not dispose of or utilize the loan in any other way. These instruments
were, incidentally, some of the same securities where the Fund placed its investments. At the
same time the Fund obligated the debtor-employee to assign immediately his loan to DBP-TSD
so that the amount could be commingled with the loans of other employees..

Simply put, the amount ostensibly loaned from the Fund stayed in the Fund, and
remained under the control and custody of the DBP-TSD. The debtor-employee never had any
control or custody over the amount he supposedly borrowed. However, DBP-TSD listed new or
existing investments of the Fund corresponding to the "loan" in the name of the debtor-
employee, so that the latter could collect the interest earned from the investments.

4. Pajuyo vs. CA – G.R. No. 146364 (June 3, 2004)

FACTS:
In 1979, Colito T. Pajuyo paid ₱400 to Pedro Perez for rights over a 250-square meter lot
in Barrio Payatas, Quezon City. He built a house and lived there from 1979 to 1985. In 1985,
Pajuyo and Eddie Guevarra signed a Kasunduan agreement, allowing Guevarra to live in the
house for free. In 1994, Pajuyo demanded Guevarra vacate the house, but Guevarra refused.
Pajuyo filed an ejectment case against Guevarra.
MTC rendered its decision in favor of Pajuyo.
Aggrieved, Guevarra appealed to the Regional Trial Court, the RTC affirmed the MTC
decision. Guevarra filed his petition for review with the Supreme Court but the case was referred
to the Court of Appeals.
The Court of Appeals reversed the MTC and RTC rulings, It held that
the Kasunduan between Pajuyo and Guevarra created a legal tie akin to that of a landlord and
tenant relationship. The Court of Appeals ruled that the Kasunduan is not a lease contract but
a commodatum because the agreement is not for a price certain.
ISSUE:
Whether or not the Kasunduan between Pajuyo and Guevarra is a contract of
commodatum.
RULING:
No. 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.

5. Producers Bank vs. CA – G.R. No. 115324 (February 19, 2003)

FACTS:
In 1979, Franklin Vives was asked by his friend Angeles Sanchez to help Col. Arturo
Doronilla incorporate his business, Sterela Marketing and Services. Sanchez assured Vives that
he could withdraw his money within a month. Vives, along with Sanchez, Doronilla, and Estrella
Dumagpi, deposited money and opened a savings account in the name of Sterela in the Buendia,
Makati branch of Producers Bank of the Philippines.
 Vives and his wife discovered Sterela's office was closed, and they went to the bank to
check their money. The assistant manager informed them that Doronilla had withdrawn part of
their savings account, leaving only ₱90,000.00. Private respondent tried to contact Doronilla
through Sanchez, but received a letter confirming his money was intact. Doronilla issued a
postdated check for Two Hundred Twelve Thousand Pesos (₱212,000.00), but it was dishonored.

Private respondent instituted an action for recovery of sum of money in the Regional
Trial Court. RTC decided in favor of the respondent. The Court of Appeals affirmed in toto.

ISSUE:
Whether or not the CA erred in upholding that the transaction between the Doronilla and
Vives was one of simple loan and not accommodation.

RULING:

No. The transaction was a commodatum and not a mutuum.

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
(30) days."Vives merely "accommodated" Doronilla by lending his money without
consideration, as a favor to his good friend Sanchez. It was however clear to the parties to the
transaction that the money would not be removed from Sterela’s savings account and would be
returned to private respondent after thirty (30) days.
Doronilla’s attempts to return to Vives the amount of ₱200,000.00 which the latter
deposited in Sterela’s account together with an additional ₱12,000.00, 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 ₱12,000.00 corresponds
to the fruits of the lending of the ₱200,000.00.