Saura Import & Export Co., Inc.

-vsDBP
GR No. L-24968, 27 April 972
44 SCRA 445
FACTS
Saura applied to the Rehabilitation Finance Corporation (RFC), before its conversion into DBP,
for an industrial loan to be used for construction of factory building, for payment of the balance
of the purchase price of the jute machinery and equipment and as additional working capital. In
Resolution No.145, the loan application was approved to be secured first by mortgage on the
factory buildings, the land site, and machinery and equipment to be installed.
The mortgage was registered and documents for the promissory note were executed. The
cancellation of the mortgage was requested to make way for the registration of a mortgage
contract over the same property in favor of Prudential Bank and Trust Co., the latter having
issued Saura letter of credit for the release of the jute machinery. As security, Saura execute a
trust receipt in favor of the Prudential. For failure of Saura to pay said obligation, Prudential sued
Saura.
After 9 years after the mortgage was cancelled, Saura sued RFc alleging failure to comply with
tits obligations to release the loan proceeds, thereby prevented it from paying the obligation to
Prudential Bank.
The trial court ruled in favor of Saura, ruling that there was a perfected contract between the
parties ad that the RFC was guilty of breach thereof.
ISSUE
Whether or not there was a perfected contract between the parties.
HELD
The Court held in the affirmative. Article 1934 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 delivery of the object of the
contract.
There was undoubtedly offer and acceptance in the case. When an application for a loan of
money was approved by resolution of the respondent corporation and the responding mortgage
was executed and registered, there arises a perfected consensual contract.

Saura Import &Export Co., Inc v. DBP

G.R. No. L-24968 April 27, 1972
Facts: Saura Inc. applied to the Rehabilitation Finance Corp (before its conversion to DBP) for a
loan of 500k secured by a first mortgage of the factory building to finance for the construction of
a jute mill factory and purchase of factory implements. RFC accepted and approved the loan
application subject to some conditions which Saura admitted it could not comply with. Without
having received the amount being loaned, and sensing that it could not at anyway obtain the full
amount of loan, Saura Inc. then asked for cancellation of the mortgage which RFC also
approved. Nine years after the cancellation of the mortgage, Saura sued RFC for damages for its
non-fulfillment of obligations arguing that there was indeed a perfected consensual contract
between them.
Issue: Was there a perfected consensual contract? Was there a real contract of loan which would
warrant recovery of damages arising out of breach of such contract?
Held: On the first issue, yes, there was indeed a perfected consensual contract, as recognized in
Article 1934 of the Civil Code. There was undoubtedly offer and acceptance in this case: the
application of Saura, Inc. for a loan of P500,000.00 was approved by resolution of the defendant,
and the corresponding mortgage was executed and registered. But this fact alone falls short of
resolving the second issue and the basic claim that the defendant failed to fulfill its obligation
and the plaintiff is therefore entitled to recover damages. The action thus taken by both parties
Saura's request for cancellation and RFC's subsequent approval of such cancellationwas in the
nature of mutual desistance what Manresa terms "mutuo disenso" which is a mode of
extinguishing obligations. It is a concept derived from the principle that since mutual agreement
can create a contract, mutual disagreement by the parties can cause its extinguishment. In view
of such extinguishment, said perfected consensual contract to deliver did not constitute a real
contract of loan.

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 100k25K 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.

Credit Transactions Case Digest: Bonnevie V. CA (1983)

G.R. No. L-49101 October 24, 1983
Lessons Applicable: Simple Loan
Laws Applicable:
Facts:
December 6, 1966: Spouses Jose M. Lozano and Josefa P. Lozano secured their loan of
P75K from Philippine Bank of Commerce (PBC) by mortgaging their property

December 8, 1966: Executed Deed of Sale with Mortgage to Honesto Bonnevie where
P75K is payable to PBC and P25K is payable to Spouses Lanzano.

April 28, 1967 to July 12, 1968: Honesto Bonnevie paid a total of P18,944.22 to PBC

May 4, 1968: Honesto Bonnevie assigned all his rights under the Deed of Sale with
Assumption of Mortgage to his brother, intervenor Raoul Bonnevie

June 10, 1968: PBC applied for the foreclosure of the mortgage, and notice of sale was
published

January 26, 1971: Honesto Bonnevie filed in the CFI of Rizal against Philippine Bank of
Commerce for the annulment of the Deed of Mortgage dated December 6, 1966 as well as
the extrajudicial foreclosure made on September 4, 1968.

CFI: Dismissed the complaint with costs against the Bonnevies

CA: Affirmed
ISSUE: W/N the forclosure on the mortgage is validly executed.

HELD: YES. CA affirmed

A contract of loan being a consensual contract is 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.
Respondent Bank had every right to rely on the certificate of title. It was not bound to go
behind the same to look for flaws in the mortgagor's title, the doctrine of innocent purchaser
for value being applicable to an innocent mortgagee for value.
Thru certificate of sale in favor of appellee was registered on September 2, 1968 and the
one year redemption period expired on September 3, 1969. It was not until September 29,
1969 that Honesto Bonnevie first wrote respondent and offered to redeem the property.

loan matured on December 26, 1967 so when respondent Bank applied for foreclosure,
the loan was already six months overdue. Payment of interest on July 12, 1968 does not
make the earlier act of PBC inequitous nor does it ipso facto result in the renewal of the loan.
In order that a renewal of a loan may be effected, not only the payment of the accrued
interest is necessary but also the payment of interest for the proposed period of renewal as
well. Besides, whether or not a loan may be renewed does not solely depend on the debtor
but more so on the discretion of the bank.

Republic v. Bagtas
Facts: Bagtas borrowed three bulls from the Bureau of Animal Industry for one year for breeding
purposes subject to payment of breeding fee of 10% of book value of the bull. Upon expiration,
Bagtas asked for renewal. The renewal was granted only to one bull. Bagtas offered to buy the
bulls at its book value less depreciation but the Bureau refused. The Bureau said that Bagtas
should either return or buy it at book value. Bagtas proved that he already returned two of the
bulls, and the other bull died during a Huk raid, hence, obligation already extinguished. He
claims that the contract is a commodatum hence, loss through fortuitous event should be borne
by
the
owner.

Issue: WON Bagtas is liable for the death of the bull.

Held: Yes. Commodatum is essentially gratuitous. However, in this case, there is a 10% charge.
If this is considered compensation, then the case at bar is a lease. Lessee is liable as possessor in
bad faith because the period already lapsed.
Even if this is a commodatum, Bagtas is still liable because the fortuitous event happened when
he held the bull and the period stipulated already expired and he is liable because the thing
loaned was delivered with appraisal of value and there was no contrary stipulation regarding his
liability in case there is a fortuitous event.

Credit Transactions Case Digest: Republic V. Bagtas (1962)

G.R. No. L-17474 October 25, 1962
Laws Applicable: Commodatum
Lessons Applicable:
FACTS:

May 8, 1948: Jose V. Bagtas borrowed from the Republic of the Philippines through the
Bureau of Animal Industry three bulls: a Red Sindhi with a book value of P1,176.46, a
Bhagnari, of P1,320.56 and a Sahiniwal, of P744.46, for a period of 1 year for breeding
purposes subject to a breeding fee of 10% of the book value of the bulls
May 7, 1949: Jose requested for a renewal for another year for the three bulls but only
one bull was approved while the others are to be returned
March 25, 1950: He wrote to the Director of Animal Industry that he would pay the value
of the 3 bulls
October 17, 1950: he reiterated his desire to buy them at a value with a deduction of
yearly depreciation to be approved by the Auditor General.
October 19, 1950: Director of Animal Industry advised him that either the 3 bulls are to
be returned or their book value without deductions should be paid not later than October 31,
1950 which he was not able to do
December 20, 1950: An action at the CFI was commenced against Jose praying that he be
ordered to return the 3 bulls or to pay their book value of P3,241.45 and the unpaid breeding
fee of P199.62, both with interests, and costs
July 5, 1951: Jose V. Bagtas, through counsel Navarro, Rosete and Manalo, answered that
because of the bad peace and order situation in Cagayan Valley, particularly in the barrio of
Baggao, and of the pending appeal he had taken to the Secretary of Agriculture and Natural
Resources and the President of the Philippines, he could not return the animals nor pay their
value and prayed for the dismissal of the complaint.
RTC: granted the action
December 1958: granted an ex-parte motion for the appointment of a special sheriff to
serve the writ outside Manila
December 6, 1958: Felicidad M. Bagtas, the surviving spouse of Jose who died on
October 23, 1951 and administratrix of his estate, was notified
January 7, 1959: she file a motion that the 2 bulls where returned by his son on June 26,
1952 evidenced by recipt and the 3rd bull died from gunshot wound inflicted during a Huk

raid and prayed that the writ of execution be quashed and that a writ of preliminary
injunction be issued.
ISSUE: W/N the contract is commodatum and NOT a lease and the estate should be liable for the
loss due to force majeure due to delay.
HELD: YES. writ of execution appealed from is set aside, without pronouncement as to costs

If contract was commodatum then Bureau of Animal Industry retained ownership or title
to the bull it should suffer its loss due to force majeure. A contract of commodatum is
essentially gratuitous. If the breeding fee be considered a compensation, then the contract
would be a lease of the bull. 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 if he keeps it longer than the period stipulated

the estate of the late defendant is only liable for the sum of P859.63, the value of the bull
which has not been returned because it was killed while in the custody of the administratrix
of his estate

Special proceedings for the administration and settlement of the estate of the deceased
Jose V. Bagtas having been instituted in the CFI, the money judgment rendered in favor of
the appellee cannot be enforced by means of a writ of execution but must be presented to the
probate court for payment by the appellant, the administratrix appointed by the court.

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.