4. 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 tenants withholding of the property would then be unlawful.

5. Spouses Palada v. Solidbank Corp.

GR No. 172227 June 29, 2011
Facts: Spouses Palada applied for a 3M loan with the respondent Solidbank. Petitioners received
the amount of 1M and secured the same with a deed of real estate mortgage of several properties
in favor of the respondent. Due to failure of the petitioners to pay their obligation, Solidbank
foreclosed said properties covered by the mortgage and sold the same. Petitioners filed for
declaration of nullity of the mortgage upon the ground, among others, that the loan contract was
not perfected because the bank delivered only 1M instead of the whole loan amount of 3M.

Issue: Was the contract of loan perfected?

Held: Yes, the loan contract was perfected. Under Article 1934 of the Civil Code, a loan contract
is perfected only upon the delivery of the object of the contract. In this case, although petitioners
applied for a P3 million loan, only the amount of P1 million was approved by the bank because
petitioners became collaterally deficient when they failed to purchase TCT No. T-227331 which
had an appraised value of P1,944,000.00. Hence, on March 17, 1997, only the amount of P1
million was released by the bank to petitioners.

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.
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

Garcia vs Thio Credit Digest

Carolyn M. Garcia
-vsRica Marie S. Thio
GR No. 154878, 16 March 2007
FACTS
Respondent Thio received from petitioner Garcia two crossed checks which amount to
US$100,000 and US$500,000, respectively, payable to the order of Marilou Santiago. According
to petitioner, respondent failed to pay the principal amounts of the loans when they fell due and
so she filed a complaint for sum of money and damages with the RTC. Respondent denied that
she contracted the two loans and countered that it was Marilou Satiago to whom petitioner lent
the money. She claimed she was merely asked y petitioner to give the checks to Santiago. She
issued the checks for P76,000 and P20,000 not as payment of interest but to accommodate
petitioners request that respondent use her own checks instead of Santiagos.
RTC ruled in favor of petitioner. CA reversed RTC and ruled that there was no contract of
loan between the parties.
ISSUE
(1) Whether or not there was a contract of loan between petitioner and respondent.
(2) Who borrowed money from petitioner, the respondent or Marilou Santiago?
HELD

(1)
The Court held in the affirmative. A loan is a real contract, not consensual, and
as such I perfected only upon the delivery of the object of the contract. Upon delivery of the
contract of loan (in this case the money received by the debtor when the checks were encashed)
the debtor acquires ownership of such money or loan proceeds and is bound to pay the creditor
an equal amount. It is undisputed that the checks were delivered to respondent.
(2)
However, the checks were crossed and payable not to the order of the
respondent but to the order of a certain Marilou Santiago. Delivery is the act by which the res or
substance is thereof placed within the actual or constructive possession or control of another.
Although respondent did not physically receive the proceeds of the checks, these instruments
were placed in her control and possession under an arrangement whereby she actually re-lent the
amount to Santiago.
Petition granted; judgment and resolution reversed and set aside.