BPI INVESTMENT v CA

G.R. No. 133632 February 15, 2002

Lessons Applicable: Simple Loan
Facts:

Frank Roa obtained a loan with interest rate of 16 1/4%/annum from Ayala Investment and
Development Corporation (AIDC), the predecessor of BPI Investment Corp. (BPIIC), for the
construction of a house on his lot in New Alabang Village, Muntinlupa.

He mortgaged the house and lot to AIDC as security for the loan.

1980: Roa sold the house and lot to ALS Management & Development Corp. and Antonio
Litonjua for P850K who paid P350K in cash and assumed the P500K indebtness of ROA with
AIDC.

AIDC proposed to grant ALS and Litonjua a new loan for P500K with interested rate of
20%/annum and service fee of 1%/annum on the outstanding balance payable within 10 years
through equal monthly amortization of P9,996.58 and penalty interest of 21%/annum/day from
the date the amortization becomes due and payable.

March 1981: ALS and Litonjua executed a mortgage deed containing the new stipulation with the
provision that the monthly amortization will commence on May 1, 1981

August 13, 1982: ALS and Litonjua paid BPIIC P190,601.35 reducing the P500K principal loan
to P457,204.90.

September 13, 1982: BPIIC released to ALS and Litonjua P7,146.87, purporting to be what was
left of their loan after full payment of Roas loan

June 1984: BPIIC instituted foreclosure proceedings against

ALS and Litonjua on the

ground that they failed to pay the mortgage indebtedness which from May 1, 1981 to June 30,
1984 amounting to P475,585.31

August 13, 1984: Notice of sheriff's sale was published

February 28, 1985: ALS and Litonjua filed Civil Case No. 52093 against BPIIC alleging that they
are not in arrears and instead they made an overpayment as of June 30, 1984 since the P500K
loan was only released September 13, 1982 which marked the start of the amortization and
since only P464,351.77 was released applying legal compensation the balance of P35,648.23
should be applied to the monthly amortizations

RTC: in favor of ALS and Litonjua and against BPIIC that the loan granted by BPI to ALS and
Litonjua was only in the principal sum of P464,351.77 and awarding moral damages, exemplary
damages and attorneys fees for the publication

CA: Affirmed reasoning that a simple loan is perfected upon delivery of the object of the contract
which is on September 13, 1982

ISSUE: W/N the contract of loan was perfected only on September 13, 1982 or the second release
of the loan?
HELD: YES. AFFIRMED WITH MODIFICATION as to the award of damages. The award of moral
and exemplary damages in favor of private respondents is DELETED, but the award to them of
attorneys fees in the amount of P50,000 is UPHELD. Additionally, petitioner is ORDERED to pay
private respondents P25,000 as nominal damages. Costs against petitioner.

obligation to pay commenced only on October 13, 1982, a month after the perfection of the
contract

contract of loan involves a reciprocal obligation, wherein the obligation 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 in delay, if the other does not comply or is not ready to comply in a proper
manner with what is incumbent upon him. Consequently, petitioner could only demand for the
payment of the monthly amortization after September 13, 1982 for it was only then when it
complied with its obligation under the loan contract.

BPIIC was negligent in relying merely on the entries found in the deed of mortgage, without
checking and correspondingly adjusting its records on the amount actually released and the date
when it was released. Such negligence resulted in damage for which an award of nominal
damages should be given

SSS where we awarded attorneys fees because private respondents were compelled to litigate,
we sustain the award of P50,000 in favor of private respondents as attorneys fees

Naguiat vs CA and Queao

GR No. 118375, 03 October 2003
412 SCRA 591
FACTS
Queao applied with Naguiat a loan for P200,000, which the latter granted. Naguiat indorsed to
Queao Associated bank Check No. 090990 for the amount of P95,000 and issued also her own
Filmanbank Check to the order of Queao for the amount of P95,000. The proceeds of these checks
were to constitute the loan granted by Naguiat to Queao. To secure the loan, Queao executed a
Deed of Real Estate Mortgage in favor of Naguiat, and surrendered the owners duplicates of titles of
the mortgaged properties. The deed was notarized and Queao issued to Naguiat a promissory note
for the amount of P200,000. Queao also issued a post-dated check amounting to P200,000
payable to the order of Naguait. The check was dishonoured for insufficiency of funds. Demand was
sent to Queao. Shortly, Queao, and one Ruby Reubenfeldt met with Naguiat. Queao told Naguiat
that she did not receive the loan proceeds, adding that the checks were retained by Reubenfeldt,
who purportedly was Naguiats agent.

Naguiat applied for extrajudicial foreclosure of the mortgage. RTC declared the Deed as null and
void and ordered Naguiat to return to Queao the owners duplicates of titles of the mortgaged lots.
ISSUE
Whether or not the issuance of check resulted in the perfection of the loan contract.
HELD
The Court held in the negative. No evidence was submitted by Naguiat that the checks she issued or
endorsed were actually encashed or deposited. The mere issuance of the checks did not result in
the perfection of the contract of loan. 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 been produced the effect of payment that the contract
of loan may have been perfected.
Article 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 itsel
shall not be perfected until the delivery of the object of the contract. A loan contract is a real contract,
not consensual, and as such, is perfected only upon the delivery of the objects of the contract.
Catholic Vicar vs. CA
Wednesday, April 30, 2014
Date: September 31, 1988
Facts:
- 1962: Catholic Vicar Apostolic of the Mountain Province (Vicar), petitioner, filed with the court an
application for the registration of title over lots 1, 2, 3 and 4 situated in Poblacion Central, Benguet,
said lots being used as sites of the Catholic Church, building, convents, high school building, school
gymnasium, dormitories, social hall and stonewalls.
- 1963: Heirs of Juan Valdez and Heirs of Egmidio Octaviano claimed that they have ownership over
lots 1, 2 and 3. (2 separate civil cases)
- 1965: The land registration court confirmed the registrable title of Vicar to lots 1 , 2, 3 and 4. Upon
appeal by the private respondents (heirs), the decision of the lower court was reversed. Title for lots
2 and 3 were cancelled.
- VICAR filed with the Supreme Court a petition for review on certiorari of the decision of the Court of
Appeals dismissing his application for registration of Lots 2 and 3.
- During trial, the Heirs of Octaviano presented one (1) witness, who testified on the alleged
ownership of the land in question (Lot 3) by their predecessor-in-interest, Egmidio Octaviano; his
written demand to Vicar for the return of the land to them; and the reasonable rentals for the use of
the land at P10,000 per month. On the other hand, Vicar presented the Register of Deeds for the

Province of Benguet, Atty. Sison, who testified that the land in question is not covered by any title in
the name of Egmidio Octaviano or any of the heirs. Vicar dispensed with the testimony of Mons.
Brasseur when the heirs admitted that the witness if called to the witness stand, would testify that
Vicar has been in possession of Lot 3, for 75 years continuously and peacefully and has constructed
permanent structures thereon.
Issue: WON Vicar had been in possession of lots 2 and 3 merely as bailee borrower in
commodatum, a gratuitous loan for use.
Held: YES.
Private respondents were able to prove that their predecessors' house was borrowed by petitioner
Vicar after the church and the convent were destroyed. They never asked for the return of the
house, but when they allowed its free use, they became bailors in commodatum and the petitioner
the bailee.
The bailees' failure to return the subject matter of commodatum to the bailor did not mean adverse
possession on the part of the borrower. The bailee held in trust the property subject matter of
commodatum. The adverse claim of petitioner came only in 1951 when it declared the lots for
taxation purposes. The action of petitioner Vicar by such adverse claim could not ripen into title by
way of ordinary acquisitive prescription because of the absence of just title.
The Court of Appeals found that petitioner Vicar did not meet the requirement of 30 years
possession for acquisitive prescription over Lots 2 and 3. Neither did it satisfy the requirement of 10
years possession for ordinary acquisitive prescription because of the absence of just title. The
appellate court did not believe the findings of the trial court that Lot 2 was acquired from Juan Valdez
by purchase and Lot 3 was acquired also by purchase from Egmidio Octaviano by petitioner Vicar
because there was absolutely no documentary evidence to support the same and the alleged
purchases were never mentioned in the application for registration.
Pajuyo v. CA, G.R. No. 146364, June 3, 2004
Pajuyo purchased the rights over a property from Pedro Perez. Thereafter, he constructed a house
and he and his family lived there. Later, Pajuyo agreed to let Guevarra live in the house for free
provided that Guevarra maintain cleanliness and orderliness of the house. They also agreed that
Guevarra should leave upon demand. But when Pajuyo later told Guevarra that he needed the
house, Guevarra refused, hence an ejectment case was filed.

Supreme Court held that the contract is not a commodatum. 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.

Teofisto Guingona, Jr., Antonio Martin, and Teresita Santos vs. The City Fiscal of Manila,
Hon. Jose Flaminiano, Asst. City Fiscal Felizardo Lota
Facts:
From March 1979 to March 1981, Clement David made several investments with the National
Savings and Loan Association. On March 21, 1981, the bank was placed under receivership by the
Bangko Sentral. Upon Davids request, petitioners Guingona and Martin issued a joint promissory
note, absorbing the obligations of the bank. On July 17, 1981, they divided the indebtedness. David
filed a complaint for estafa and violation of Central Bank Circular No. 364 and related regulations
regarding foreign exchange transactions before the Office of the City Fiscal of Manila. Petitioners
filed the herein petition for prohibition and injunction with a prayer for immediate issuance of
restraining order and/or writ of preliminary injunction to enjoin the public respondents to proceed with
the preliminary investigation on the ground that the petitioners obligation is civil in nature.
Issue:
(1) Whether the contract between NSLA and David is a contract of depositor a contract of loan,
which answer determines whether the City Fiscal has the jurisdiction to file a case for estafa
(2) Whether there was a violation of Central Bank Circular No. 364
Held:
(1) When private respondent David invested his money on nine. and savings deposits with the
aforesaid bank, the contract that was perfected was a contract of simple loan or mutuum and not a
contract of deposit. Hence, the relationship between the private respondent and the Nation Savings
and Loan Association is that of creditor and debtor; consequently, the ownership of the amount

deposited was transmitted to the Bank upon the perfection of the contract and it can make use of the
amount deposited for its banking operations, such as to pay interests on deposits and to pay
withdrawals. While the Bank has the obligation to return the amount deposited, it has, however, no
obligation to return or deliver the same money that was deposited. And, the failure of the Bank to
return the amount deposited will not constitute estafa through misappropriation punishable under
Article 315, par. l(b) of the Revised Penal Code, but it will only give rise to civil liability over which the
public respondents have no jurisdiction.
But even granting that the failure of the bank to pay the time and savings deposits of private
respondent David would constitute a violation of paragraph 1(b) of Article 315 of the Revised Penal
Code, nevertheless any incipient criminal liability was deemed avoided, because when the aforesaid
bank was placed under receivership by the Central Bank, petitioners Guingona and Martin assumed
the obligation of the bank to private respondent David, thereby resulting in the novation of the
original contractual obligation arising from deposit into a contract of loan and converting the original
trust relation between the bank and private respondent David into an ordinary debtor-creditor relation
between the petitioners and private respondent. Consequently, the failure of the bank or petitioners
Guingona and Martin to pay the deposits of private respondent would not constitute a breach of trust
but would merely be a failure to pay the obligation as a debtor. Moreover, while it is true that
novation does not extinguish criminal liability, it may however, prevent the rise of criminal liability as
long as it occurs prior to the filing of the criminal information in court. In the case at bar, there is no
dispute that petitioners Guingona and Martin executed a promissory note on June 17, 1981
assuming the obligation of the bank to private respondent David; while the criminal complaint for
estafa was filed on December 23, 1981 with the Office of the City Fiscal. Hence, it is clear that
novation occurred long before the filing of the criminal complaint with the Office of the City Fiscal.
Consequently, as aforestated, any incipient criminal liability would be avoided but there will still be a
civil liability on the part of petitioners Guingona and Martin to pay the assumed obligation.
(2) Petitioner Guingona merely accommodated the request of the Nation Savings and loan
Association in order to clear the bank draft through his dollar account because the bank did not have
a dollar account. Immediately after the bank draft was cleared, petitioner Guingona authorized
Nation Savings and Loan Association to withdraw the same in order to be utilized by the bank for its
operations. It is safe to assume that the U.S. dollars were converted first into Philippine pesos before
they were accepted and deposited in Nation Savings and Loan Association, because the bank is
presumed to have followed the ordinary course of the business which is to accept deposits in
Philippine currency only, and that the transaction was regular and fair, in the absence of a clear and
convincing evidence to the contrary.
In conclusion, considering that the liability of the petitioners is purely civil in nature and that there is
no clear showing that they engaged in foreign exchange transactions, We hold that the public

respondents acted without jurisdiction when they investigated the charges against the petitioners.
Consequently, public respondents should be restrained from further proceeding with the criminal
case for to allow the case to continue, even if the petitioners could have appealed to the Ministry of
Justice, would work great injustice to petitioners and would render meaningless the proper
administration of justice.
COMMODATUM
NATURE, PURPOSE AND CHARACTERISTICS
Simple Loan (Mutuum) Defined
Art. 1933: By a contract of loan, one of the parties delivers to another xxx 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.

Tolentino vs. Gonzalez Sy Chiam 50 Phil 558

Tolentino purchased land from Luzon Rice Mills for Php25,000 payable in three installments.
Tolentino defaulted on the balance so the owner sent a letter of demand to him. To pay, Tolentino
applied for loan from Gonzalez on condition that he would execute a pacto de retro sale on the
property in favor of Gonzalez. Upon maturation of loan, Tolentino defaulted so Gonzalez is
demanding recovery of the land. Tolentino contends that the pacto de retro sale is a mortgage and
not an absolute sale.
The Supreme Court held that upon its terms, the deed of pacto de retro sale is an absolute sale with
right of repurchase and not a mortgage. Thus, Gonzalez is the owner of the land and Tolentino is
only holding it as a tenant by virtue of a contract of lease.
**LOAN: A contract of loan signifies the giving of a sum of money, goods or credits to another, with a
promise to repay, but not a promise to return the same thing. It has been defined as an
advancement of money, goods, or credits upon a contract or stipulation to repay, not to return, the
thing loaned at some future day in accordance with the terms of the contract. The moment the
contract is completed, the money, goods or chattels given cease to be the property of the former
owner and become the property of the obligor to be used according to his own will, unless the
contract itself expressly provides for a special or specific use of the same. At all events, the money,
goods or chattels, the moment the contract is executed, cease to be the property of the former
owner and become the sole property of the obligor.

Commodatum Defined
Art. 1933: By the contract of loan, 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, in which case the contract is
called a commodatum. xxx
- the bailee acquires the use of the thing loaned but not its fruits (Art. 1935), EXCEPT if the parties
stipulate use of fruits (Art. 1940)

Distinctions
RENT v. LOAN (Tolentino v. Gonzalez Sy Chiam, supra): A contract of lease of property is not a
loan. A loan signifies the giving of a sum of money, goods or credit to another, with a promise to
repay, but not a promise to return the same thing. In a contract of rent, the owner of the property
does not lose his ownership. He simply loses his control over the property rented during the period
of the contract. In a contract of rent the relation between the contractors is that of landlord and
tenant. In a contract of loan of money, goods, chattels, or credits, the relation between the parties is
that of obligor and obligee.
COMMODATUM v. MUTUUM
As to parties commodatum: bailor and bailee; mutuum: obligor and obligee
As to object commodatum: non-consumable or non-fungible thing; mutuum: money or any
consumable or fungible thing
As to consideration commodatum: use of the thing and return it; mutuum: use and own the thing
and pay the same amount of the same kind and quality
commodatum: gratuitous; mutuum: may be gratuitous or onerous
commodatum: ownership of the thing is retained by the bailor; mutuum: ownership is transferred to
the obligee
commodatum: real or personal property; mutuum: personal property
As to purpose commodatum: use or temporary possession of the thing; mutuum: consumption of
the thing
commodatum: bailor may demand the return of the thing before expiration of term in case of urgent
need or precarium; mutuum: no demand before lapse of the term
commodatum: bailor suffers the loss of the thing; mutuum: obligee suffers the loss of the thing

Purpose
- to transfer either the use or possession of the thing loaned; for safekeeping of the thing delivered
and returning it
Characteristics of Commodatum
perfected upon delivery of the thing loaned (real contract)
Q: Is there a perfected contract of commodatum before delivery?
A: No. A contract of commodatum is a real contract and therefore requires delivery for its perfection.
There can be no perfected contract of commodatum but there can be a binding accepted promise to
deliver by the bailor. In which case, commodatum is a unilateral contract in that only one party, the
bailor, has the obligation to deliver the object.
accepted promise to deliver by commodatum or mutuum is binding (unilateral contract)
purely personal in character: a) death of bailor or bailee extinguishes contract; b) bailee cannot lend
or lease the object loaned to third parties EXCEPT if members of his household, UNLESS there is a
stipulation against or the use is prohibited by nature of the thing (art. 1949)
Q: If there are two or more borrowers, would the commodatum be extinguished upon the death of
one?
A: The contract is not extinguished in the absence of a contrary stipulation. The borrowers are
considered solidary debtors (art. 1945) and for this reason, the bailor or creditor has the right to
demand from either one of them the thing loaned. This is an exception the general rule that the
concurrence of two or more debtors gives rise only to a joint obligation. The reason is that in a
commodatum, it is presumed that the bailor took into account the character of each of the bailees in
lending the thing and that therefore he would not have constituted the contract if there were only one
bailee.
Q: Even if death of the parties extinguishes a contract of commodatum, is it possible for the heirs to
acquire rights to the obligation?
A: Ordinarily in a contract of commodatum, the death of the parties extinguishes the contract. That is
because commodatum, being essentially gratuitous, takes into account the character, credit and
conduct of the bailee. However, there can be a valid stipulation stating that the contract be
transmitted to the heirs of the parties.
bailor has the right to demand the thing at will if:
he has urgent need, demand the return or its temporary use (art. 1946)
(art. 1947) PRECARIUM: (1) if neither the duration or the use of thing has been stipulated; (2) if the
use of the thing is by mere tolerance of the owner
essentially gratuitous (art. 1933)

PARTIES AND REQUIREMENTS FOR VALIDITY AND PERFECTION

Parties
- bailor and bailee
Requirements for Validity and Perfection
CONSENT
Art. 1315: Contracts are perfected by mere consent, and from that moment the parties are bound not
only to the fulfillment of what has been expressly stipulated but also to all the consequences which,
according to their nature, may be in keeping with good faith, usage and law.
OBJECT
Art. 1937: Movable or immovable property may be the object of commodatum.
- MOVABLE: non-consumable or non-fungible EXCEPT that consumable thing may be the object if
the purpose is only for exhibition
Mina v. Pascual, 25 Phil 540
Francisco is the owner of land and he allowed his brother, Andres, to erect a warehouse in that lot.
Both Francisco and Andres died and their children became their respective heirs: Mina for Francisco
and Pascual for Andres. Pascual sold his share of the warehouse and lot. Mina opposed because
the lot is hers because her predecessor (Francisco) never parted with its ownership when he let
Andres construct a warehouse, hence, it was a contract of commodatum. What is the nature of the
contract between Francisco and Andres?
The Supreme Court held that it was not a commodatum. It is an essential feature of commodatum
that the use of the thing belonging to another shall be for a certain period. The parties never fixed a
definite period during which Andres could use the lot and afterwards return it.
NOTA BENE: It would seem that the Supreme Court failed to consider the possibility of a contract of
precardium between Francisco and Andres. Precardium is a kind of commodatum wherein the bailor
may demand the object at will if the contract does not stipulate a period or use to which the thing is
devoted.
Producers Bank of the Philippines v. CA, 397 SCRA 651

Doronilla is in the process of incorporating his business and to comply with one of the requirements
of incorporation, he caused Vives to issue a check which was then deposited in Doronillas savings
account. It was agreed that Vives can withdraw his money in a months time. However, what
Doronilla did was to open a current account and instructed the bank to debit from the savings
account and deposit it in his current account. So when Vives checked the savings account, the
money was gone. Is the contract a mutuum or commodatum?
Supreme Court held that the contract is a commodatum. Although in a commodatum, the object is a
non-consumable thing, there are instances where a consumable thing may be the object of a
commodatum, such as when the purpose is not for consumption of the object but merely for
exhibition (Art. 1936). 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.

CONSIDERATION
Art. 1933: xxx Commodatum is essentially gratuitous.
Art. 1935: xxx if any compensation is to be paid by him who acquires the use, the contract ceases to
be a commodatum.
DELIVERY
- perfects the contract
Central Bank of the Philippines v. CA, 139 SCRA 46 (1985)
Tolentino made a loan from Island Savings Bank secured by a mortgage. The Bank did not release
the whole amount but only a portion thereof. Later, the Bank experienced liquidity problems and the
Monetary Board of Central Bank prohibited it from making new loans and much later, from doing
business in the Philippines. Thereafter, the Acting Superintendent of Central Bank took charge of its
assets. Upon expiration of the loan term, the Bank filed extrajudicial foreclosure of the mortgage.
Was there a perfected contract of loan when only a portion of the amount was delivered?
The Supreme Court held that there was only partial delivery. As such, the contract is deemed perfect
only in so far as what has been delivered. The mortgage cannot be entirely foreclosed, except for up
to the amount of the actual amount released, but the Bank can recover the interest of the partial
loan. Tolentino cannot anymore demand the remaining amount of the loan from the Bank because
he defaulted on his payment. His liability offsets the liability of the Bank to him.

RIGHTS AND OBLIGATIONS OF THE PARTIES

Obligations of the Bailee
- to return the object
pay for the ordinary expenses for the use and preservation of the thing loaned
- no reimbursement for ordinary expenses
liable for loss of the thing even if fortuitous if:
he devotes the thing for a different purpose
he keeps it longer than the period stipulated or after the accomplishment of the use for which the
commodatum has been constituted
thing loaned has been delivered with appraisal of its value, unless there is a stipulation exempting
bailee from fortuitous event
lends or leases the thing to a third person not a member of the household
being able to save either the thing borrowed or his own thing, he chose to save his
not answer for the deterioration of the thing loaned due to use thereof and without fault
bailee cannot retain on ground that the bailor owes him something, even if expenses
- but if bailor knew of defect and did not advise the bailee about it, then bailee has the right of
retention but only to recover damages
bailee is not entitled to the fruits of the thing loaned, EXCEPT if there is a stipulation to the contrary
bailee must take care good care of the thing with the diligence of a good father of the family (art.
1163)
Q: If the parties in a commodatum can stipulate that the bailee may make use of the fruits, wouldnt
that make the contract one of usufruct?
A: A usufruct is a contract by which the usufructuary is allowed by the owner to enjoy the fruits. By
that, it means that the main cause of the usufruct is to enjoy the fruits. In a contract of commodatum,
the consideration is the use of the thing and if there is a stipulation for the enjoyment of the fruits, it
must only be incidental to the use of the thing itself.
Republic v. Bagtas, 6 SCRA 262 (1962)
Bagtas borrowed three bulls from the Bureau of Animal Industry for a period of one year with
breeding charge at 10% of book value. After one year, the contract was renewed only for one bull
but Bagtas did not return the two, one of which died because of gunshot wound during the Huk raid.
Is Bagtas liable for the loss of the bull?

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%).

Obligations of the Bailor

respect the duration of the loan, EXCEPT if there is urgent need or precarium
demand immediate return if the bailee commits acts of ingratitude
- Art. 765: a) bailee commits offenses against the person, honor or property of the bailor or that of
his wife and children under his parental authority; b) bailee imputes any criminal offense or any act
involving moral turpitude on the bailor, even if he should prove it, EXCEPT if the act was committed
against the bailee or his family; and c) bailee unduly refuses to give support to the bailor when he
was morally bound to do so
refund extraordinary expenses
- provided that the bailee informs the bailor about it before incurring them, EXCEPT if the need is
urgent; HOWEVER, if extraordinary expenses arise on the occasion of actual use of the thing,
whether bailee is at fault or not, they shall be borne by both bailor and bailee EXCEPT if there is a
contrary stipulation (art. 1949)
no right of abandonment for expenses and damages
- because the expenses and damages may exceed the value of the thing loaned
liable for damages if he knew of the flaws of the thing loaned and did not inform the bailee, who
incurs damages by reason thereof
- REQUISITES:
there is a flaw or defect in the thing loaned
the flaw or defect is hidden
the bailor is aware thereof
he does not advise the bailee of the same
the bailee suffers damages by reason of such flaw or defect
- liability is by reason of bailors bad faith so if bailor is not aware of the defect, he is not liable