Facts:

Jose V. Bagtas borrowed from the Bureau of Animal Industry three bulls for breeding purposes subject
to a breeding fee of 10% of the book value of the bulls. The borrower asked for its renewal upon the expiration
of the contract. However, Secretary of Agriculture and Natural Resources approved the renewal of only one bull
and requested for the return of the other two.

Jose V. Bagtas wrote to the Director of Animal Industry that he would pay the value of the three bulls.
The Secretary of Agriculture and Natural Resources advised him that his request for the deduction of the book
value of the bulls cannot be granted. Bagtas can either pay the bull in accordance with their book value or return
then. However, Bagtas failed to neither pay the bulls nor return them.

Thus, the republic of the Philippines commenced asking Bagtas to return the bulls or pay for their book
value and the breeding fee.

Bagtas replied that due to the bad peace and order situation in Cagayan Valley, he could not return the
animals nor pray for their value. When Jose Bagtas died, he was succeeded by his surviving spounse, Felicidad.
She filed a motion saying that the two bulls were already returned and the third one died due a gunshot wound
during a Huk raid.

Bagtas contends that the unreturned bull was accidentally killed during a raid by the Huk in and as such
the death was due to force majeure. Thus, she is relieved from the duty of returning the bull or paying its value
to the appellee. Bagtas contends that the contract was commodatum and that, for that reason, as the appellee
retained ownership or title to the bull it should suffer its loss due to force majeure.

Issue:

1) Whether or not the contract entered into by Republic and Bagtas is commodatum. NO.
2) Whether or not Bagtas is liable for the loss of the bull. Yes.

Ruling:

1)
A contract of commodatum is essentially gratuitous. The loan entered into by the parties was subject to
the payment by the borrower of breeding fee of 10% of the book value of the bulls. If the breeding fee be
considered compensation, then the contract would be a lease of the bull. The contract cannot be considered as a
commodatum since that contract is essentially gratuitous.

2)
Under article 1671 of the Civil Code the lessee would be subject to the responsibilities of a possessor in
bad faith, because she had continued possession of the bull after the expiry of the contract. And even if the
contract be commodatum, still the appellant is liable, because article 1942 of the Civil Code provides that a
bailee in a contract of commodatum
. . . is liable for loss of the things, even if it should be through a fortuitous event:
(2) If he keeps it longer than the period stipulated . . .
(3) If the thing loaned has been delivered with appraisal of its value, unless there is a stipulation
exempting the bailee from responsibility in case of a fortuitous event;

From the fact of the case, Bagtas only has the right to have the bull in his possession until May 8, 1950.
However, Bagtas kept and used the bull until November of 1953 when the bull was killed during a Huk raid.
Thus, Bagtas is not relieved from liability even if the bull was killed due to a fortuitous event. It was also 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.