Republic v Bagtas (Credit Transactions)

REPUBLIC VS BAGTAS G.R. No. L-17474 October 25, 1962

FACTS:

Jose Bagtas borrowed from the Bureau of Animal Industry three bulls for a period of one year
for breeding purposes subject to a government charge of breeding fee of 10% of the book value
of the books. Upon the expiration of the contract, Bagtas asked for a renewal for another one
year, however, the Secretary of Agriculture and Natural Resources approved only the renewal
for one bull and other two bulls be returned. Bagtas then wrote a letter to the Director of
Animal Industry that he would pay the value of the three bulls with a deduction of yearly
depreciation. The Director advised him that the value cannot be depreciated and asked Bagtas
to either return the bulls or pay their book value. Bagtas neither paid nor returned the bulls.
The Republic then commenced an action against Bagtas ordering him to return the bulls or pay
their book value.

DECISION OF LOWER COURTS: * Trial court: After hearing, the trial Court ruled in favor of the
Republic, as such, the Republic moved ex parte for a writ of execution which the court granted.

INTERVENING FACT: Felicidad Bagtas, the surviving spouse and administrator of Bagtas' estate,
returned the two bulls and filed a motion to quash the writ of execution since one bull cannot
be returned for it was killed by gunshot during a Huk raid. The Court denied her motion hence,
this appeal certified by the Court of Appeals because only questions of law are raised.

ISSUES & RULING: 1. WON the contract was commodatum; WON Bagtas should be held liable
for its loss due to force majeure.

NO, the contract is not commodatum. YES, he is liable for the loss.

A contract of commodatum is essentially gratuitous. 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%). No stipulation that in case of loss of the bull due to fortuitous event the late
husband of the appellant would be exempt from liability.

The original period of the loan was from 8 May 1948 to 7 May 1949. The loan of one bull was
renewed for another period of one year to end on 8 May 1950. But the appellant kept and used
the bull until November 1953 when during a Huk raid it was killed by stray bullets. Furthermore,
when lent and delivered to the deceased husband of the appellant the bulls had each an
appraised book value, to with: the Sindhi, at P1,176.46, the Bhagnari at P1,320.56 and the
Sahiniwal at P744.46. It was 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.