People vs Concepcion [44 Phil 126]

The "credit" of an individual means his ability to borrow money by virtue of the confidence or trust
reposed by a lender that he will pay what he may promise.

Facts: Venancio Concepcion, President of the Philippine National Bank and a member of the Board
thereof, authorized an extension of credit in favor of "Puno y Concepcion, S. en C.” to themanager of the
Aparri branch of the Philippine National Bank. "Puno y Concepcion, S. en C." was a co-partnership where
Concepcion is a partner. Subsequently, Concepcion was charged and found guilty in the Court of First
Instance of Cagayan with violation of section 35 of Act No. 2747. Section 35 of Act No. 2747 provides
that the National Bank shall not, directly or indirectly, grant loans to any of the members of the board of
directors of the bank nor to agents of the branch banks. Counsel for the defense argue that the
documents of record do not prove that authority to make a loan was given, but only show the
concession of a credit. They averred that the granting of a credit to the co-partnership "Puno y
Concepcion, S. en C." by Venancio Concepcion, President of the Philippine National Bank, is not a "loan"
within the meaning of section 35 of Act No. 2747.

Issue: Whether or not the granting of a credit of P300,000 to the co-partnership "Puno y Concepcion, S.
en C." by Venancio Concepcion, President of the Philippine National Bank, a "loan" within the meaning
of section 35 of Act No. 2747.

Held: YES. The "credit" of an individual means his ability to borrow money by virtue of the confidence or
trust reposed by a lender that he will pay what he may promise. (Donnell vs. Jones [1848], 13 Ala., 490;
Bouvier's Law Dictionary.) A "loan" means the delivery by one party and the receipt by the other party of
a given sum of money, upon an agreement, express or implied, to repay the sum loaned, with or without
interest. (Payne vs. Gardiner [1864], 29 N. Y., 146, 167.) The concession of a "credit" necessarily involves
the granting of "loans" up to the limit of the amount fixed in the "credit,"

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

G.R. No. L-49101 October 24, 1983

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.

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 100k—25K 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.

ART. 1954. 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 perferted until the
delivery of the object of the 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: We hold that there was indeed a perfected consensual contract, as recognized in Article 1934 of
the Civil Code, which provides:

ART. 1954. 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 perferted until the delivery of
the object of the contract.
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 basic claim that the defendant
failed to fulfill its obligation and the plaintiff is therefore entitled to recover damages. 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.

… The action thus taken by both parties was in the nature cf mutual desistance — what Manresa
terms "mutuo disenso"1 — which is a mode of extinguishing obligations. It is a concept that derives
from the principle that since mutual agreement can create a contract, mutual disagreement by the
parties can cause its extinguishment.2

Salonga vs. Farrales

It is elementary that consent is an essential element for the existence of a contract, and where it is
wanting, the contract is non-existent.

Facts:

Farrales was the titled owner of a parcel of residential land that was leased. Prior to the acquisition by
Farrales of the aforesaid land, Salonga was already a lessee of some portion of the land. She had built a
house and paid rentals thereon. Sometime prior to November 1968, Farrales filed an ejectment case
(one of the old forms of action for recovery of the possession of real property) for non-payment of
rentals against Salonga. The lower court rendered a decision in favor of Farrales and ordered Salonga
and the other lessees (Pascual et al.) to vacate the portion occupied by them and to pay rentals in
arrears, attorney’s fees and costs. Even before the rendition of the decision of the lower court, Farrales
sold to Pascual et al. (the other lessees of Farrales) the areas occupied by them.

Salonga offered to purchase from Farrales the portion of land that Salonga was leasing. Farrales
persistently refused the offer and insisted to execute the judgment rendered in the ejectment case.
Hence if Salonga’s offer to purchase was persistently refused by Farrales, it is obvious that no meeting of
the minds took place and no contract was ever perfected between them. It was revealed that Farrales
wanted the payment of the portion of land under consideration to be in cash but Salonga did not have
any money for that purpose that is why Farrales persistently refused to sell the portion of the leased
land to the lessee.

Issue: WON the lower court erred in dismissing the complaint of Salonga on the ground that no legal

contract exists between Farrales and Salonga.

Held:

It is elementary that consent is an essential element for the existence of a contract, and where it is
wanting, the contract is non-existent. The essence of consent is the conformity of the parties on the
terms of the contract, the acceptance by one of the offer made by the other. The contract to sell is a
bilateral contract. Where there is merely an offer by one party, without the acceptance of the other,
there is no consent. 25

It appears in this case that the offeree, the defendant-appellee Julita B. Farrales not only did not
accept, but rejected the offer of plaintiffs-appellants, spouses Salonga to buy the land in question.
There being no consent there is. therefore, no contract to sell to speak of.

Leabres v. CA

Contract of Sale namely 1) consent or meeting of the minds of the parties; 2) determinate subject
matter; 3) price certain in money or its equivalent.

G.R. No. L-41847; 12 December 1986

Paras, J.

CONTRACT OF SALE, CONCEPTS | Essential Requisites of a Contract of Sale

FACTS:

Clara Tambunting de Legarda died testate on 22 April 1950. Among the properties left behind by the
deceased is the “Legarda Tambunting Subdivision.” Shortly after her death, plaintiff Catalino Leabres
bought on a partial payment of P1,000.00 a portion of said Subdivision from surviving husband Vicente
Legarda, who acted as special administrator. The sale was evidenced by a receipt. In the meantime,
Philippine Trust Company took over as administrator and advertised the sale of the subdivision which
includes the lot contested. Manotoc Realty emerged as the successful bidder at the price of
P840,000.00. It must be noted that no adverse claim or interest over the subdivision or any other
portion was ever presented before. Subsequently, a complaint was filed by Leabres which sought,
among others, for quieting of title and continued possession of said lot. He anchored his claim on the
receipt which he contends as evidence of the sale.

ISSUE:

Can the receipt be a basis of a valid sale?

HELD:

NO. Petitioner anchors his main arguments on the receipt (Exh. 1) dated May 2, 1950, as a basis of a
valid sale. An examination of the receipt reveals that the same can neither be regarded as a contract of
sale or a promise to sell. There was merely an acknowledgment of the sum of One Thousand Pesos
(P1,000.00). There was no agreement as to the total purchase price of the land nor to the monthly
installment to be paid by the petitioner. The requisites of a valid Contract of Sale namely 1) consent or
meeting of the minds of the parties; 2) determinate subject matter; 3) price certain in money or its
equivalent-are lacking in said receipt and therefore the "sale" is not valid nor enforceable.

Topic: Contract to sell – Art. 1478

A non-existent obligation cannot be subject of rescission. Article 1191 speaks of obligations already
existing, which may be rescinded in case one of the obligors fails to comply with what is incumbent upon
him.

Case: Sacobia Hills Dev”t Corp. v. Ty, 470 SCRA 395, September 20, 2005
Facts: Petitioner Sacobia Hills Development Corporation (Sacobia) is the developer of True North Golf
and Country Club which boasts of amenities that include a golf course, clubhouse, sports complex and
several vacation villas. Respondent Allan U. Ty wrote to Sacobia a letter expressing his intention to
acquire one Class A share of True North and accordingly paid the reservation fee of P180,000.00 as
evidenced by PCI Bank Check No. 0038053. Sacobia assured its prospective shareholders that the
development of True North was proceeding on schedule; that the golf course would be playable by
October 1999; that the Environmental Clearance Certificate (ECC) by the Department of Environment
and Natural Resources (DENR) as well as the Permit to Sell from the Securities and Exchange
Commission (SEC) should have been released by October 1997; and that their registration deposits
remained intact in an escrow account. Sacobia then approved the purchase application and membership
of Ty for P600,000.00, subject to certain terms and conditions. The notice of approval provided the
following:

Terms and Conditions

1. Approval of an application to purchase golf/country club shares is subjected to the full payment of the
total purchase price. Should the buyer opt for the deferred payment scheme, approval is subject to our
receipt of a down payment of at least 30% and the balance payable in installments over a maximum of
eleven (11) months from the date of application, and covered by postdated cheques.

2. Your reserved share shall be considered withdrawn and may be deemed cancelled should you fail to
settle your obligation within fifteen (15) days from due date, or failure to cover the value of the
postdated cheques upon their maturity, or your failure to issue the required postdated cheques. In
which case, we shall reserve the right to offer the said shares to other interested parties. This also
means forfeiture of 50% of the total amount you have already paid.

3. We will undertake to execute the corresponding sales documents/ Deed of Absolute Sale covering the
reserved shares upon full payment of the total purchase price. The Certificate of Membership shall be
issued thereafter.

However, on January 12, 1998, Ty notified Sacobia that he is rescinding the contract and sought refund
of the payments already made due to the latter’s failure to complete the project on time as promised
(supposedly October 1997). Sacobia wrote him a letter, stating that the DENR had issued the required
ECC only on March 5, 1998, and that the golf course would be ready for use by end of 1998( in fact
ahead of promised date which is October 1999). Sacobia again wrote the respondent advising him that
the 18-hole golf course would be fully operational by summer of 1999. Sacobia also sought to collect
from respondent the latter’s outstanding balance of P190,909.08 which was covered by five (5)
postdated checks. However, Ty notified Sacobia that he had stopped payment on the five (5) postdated
checks and reiterated his demand for the refund of his payments which amounted to P409,090.92.
Sacobia denied his request thus Ty filed a complaint for rescission and damages.

Issue: Whether or not respondent Ty can rescind the contract and demand for damages from Sacobia
Hills for breach of contract

Held:

As shown, Ty did not pay the full purchase price which is his obligation under the contract to sell,
therefore, it cannot be said that Sacobia breached its obligation. No obligations arose on its part
because respondents non-fulfillment of the suspensive condition rendered the contract to sell
ineffective and unperfected. Indeed, there can be no rescission under Article 1191[17] of the Civil Code
because until the happening of the condition, i.e. full payment of the contract price, Sacobias obligation
to deliver the title and object of the sale is not yet extant. A non-existent obligation cannot be subject of
rescission. Article 1191 speaks of obligations already existing, which may be rescinded in case one of the
obligors fails to comply with what is incumbent upon him.

FilOil Marketing vs. IAC

Pabalan sold a parcel of land to Villa Rey Transit. On the day of the sale, the TCT was delivered by Pabalan to Villarama,
president of Villa Rey, who caused the issuance of the new title in his own name. The transfer appeared to be a deed of sale.

On the same day Villarama mortgaged the lot in behalf of Villa Rey to FilOil as security for a loan. Having defaulted the
payment, the lot was extrajudicially foreclosed in which FilOil won the bidding. However before FilOil could consolidate the
ownership, Pabalan filed a complaint against Villarama, Villa Rey and FilOil.

The complaint alleged that the sale was conditional and did not transfer the title to the buyer until full payment of the price.
RTC and CA both rendered a judgment in favor of complainant.

Issue: is the transaction a contract to sell?

It is obvious that the above instrument is not a contract to sell as contended by the private respondent.
We read it as a deed of sale in which title to the subject land was transferred to the vendee as of the
date of the transaction notwithstanding that the purchase price had not yet been fully paid at that time.

In the first place, the dispositive part of the deed states that "for and in consideration of the sum of ONE
HUNDRED FORTY THOUSAND (Pl40,000.00) PESOS, payable under the terms and conditions stated in the
foregoing premises, the VENDOR sells, transfers and conveys unto the VENDEE ... the property in
question as of December 22, 1971, the date of the said document.

Laforteza vs. Machuca

Facts: Roberto Laforteza and Gonzalo Laforteza, Jr., in their capacities as attorneys-in-fact of Dennis
Laforteza, entrered into a MOA (Contract to Sell) with Alonzo Machuca over a house and lot registered
in the name of the late Francisco Laforteza. Machuca was able to pay the earnest money but however
failed to pay the balance on time. Upon a request of an extension of time, Machuca informed petitioner
heirs that the balance was already covered, but petitioners refused to accept the balance and told
Machuca that the subject property is no longer for sale. The petitioners contend that the Memorandum
of Agreement is merely a lease agreement with “option to purchase”; hence, it only gave the
respondent a right to purchase the subject property within a limited period without imposing upon
them any obligation to purchase it. And since the respondent’s tender of payment was made after the
lapse of the option agreement, his tender did not give rise to the perfection of a contract of sale.

Issue: (1) WON the tender of payment after the lapse of the option agreement gave rise to the
perfection of a contract of sale.

Held:

A perusal of the Memorandum Agreement shows that the transaction between the petitioners
and the respondent was one of sale and lease…

(1) A contract of sale is a consensual contract and is perfected at the moment there is a meeting
of the minds upon the thing which is the object of the contract and upon the price.[10] From that
moment the parties may reciprocally demand performance subject to the provisions of the law
governing the form of contracts.[11] The elements of a valid contract of sale under Article 1458 of
the Civil Code are (1) consent or meeting of the minds; (2) determinate subject matter and (3)
price certain in money or its equivalent.[12]

In the case at bench, there was a perfected agreement between the petitioners and the
respondent whereby the petitioners obligated themselves to transfer the ownership of and
deliver the house and lot located at 7757 Sherwood St., Marcelo Green Village, Paraaque and
the respondent to pay the price amounting to six hundred thousand pesos (P600,000.00).

Art. 1479… .

An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon
the promissor if the promise is supported by a consideration distinct from the price.

In the present case, the six-month period merely delayed the demandability of the contract of sale and
did not determine its perfection for after the expiration of the six-month period, there was an absolute
obligation on the part of the petitioners and the respondent to comply with the terms of the sale.

G.R. No. 142618 July 12, 2007 PCI LEASING AND FINANCE, INC., Petitioner, vs. GIRAFFE-X CREATIVE
IMAGING, INC., Respondent.

Facts: On December 4, 1996, petitioner PCI LEASING and respondent GIRAFFE entered into a Lease
Agreement, whereby the former leased out to the latter two equipment with accessories. Forming parts
of the basic lease agreement were separate documents described that GIRAFFE as the "borrower" who
acknowledged that it must pay monthly for thirty-six (36) months. The agreement embodied a standard
acceleration clause if GIRAFFE fails to pay.

GIRAFFE defaulted in its monthly rental-payment obligations. Following a three-month default, PCI
LEASING addressed a pay-or-surrender-equipment demand letter to GIRAFFE. The demand went
unheeded. Hence, PCI LEASING instituted the instant case against GIRAFFE praying for the issuance of a
writ of replevin for the recovery of the leased property. After trial, judgment be rendered in favor of PCI
LEASING. The trial court issued a writ of replevin, paving the way for PCI LEASING to secure the seizure
and delivery of the equipment.

GIRAFFE filed a Motion to Dismiss arguing that the seizure of the two leased equipment stripped PCI
LEASING of its cause of action. GIRAFFE argues that, pursuant to Article 1484 of the Civil Code on
installment sales of personal property, PCI LEASING is barred from further pursuing any claim arising
from the lease agreement, adding that the agreement between the parties is in reality a lease of
movables with option to buy. The given situation, GIRAFFE continues, squarely brings into applicable
play Articles 1484 and 1485 of the Civil Code, commonly referred to as the Recto Law.

In its opposition, PCI LEASING maintains that its contract with GIRAFFE is a straight lease without an
option to buy. PCI LEASING rejects the applicability of Article 1484 in relation to Article 1485 of the Civil
Code, claiming that, under the terms and conditions of the basic agreement, the relationship between
the parties is one between an ordinary lessor and an ordinary lessee.

In a decision, the trial court granted GIRAFFE’s motion to dismiss mainly on the interplay of the following
premises: 1) the lease agreement package, as memorialized in the contract documents, is akin to the
contract contemplated in Article 1485 of the Civil Code, and 2) GIRAFFE’s loss of possession of the leased
equipment consequent to the enforcement of the writ of replevin is "akin to foreclosure, … the
condition precedent for application of Articles 1484 and 1485.

Issue: Whether or not the Lease Agreement between the parties are covered by Articles 1484 and 1485
of the New Civil Code.

Held: As we articulated in Elisco Tool Manufacturing Corp. v. Court of Appeals,[23] the remedies
provided for in Article 1484 of the Civil Code are alternative, not cumulative. The exercise of one bars
the exercise of the others. This limitation applies to contracts purporting to be leases of personal
property with option to buy by virtue of the same Article 1485. The condition that the lessor has
deprived the lessee of possession or enjoyment of the thing for the purpose of applying Article 1485 was
fulfilled in this case by the filing by petitioner of the complaint for a sum of money with prayer for
replevin to recover possession of the office equipment.[24] By virtue of the writ of seizure issued by the
trial court, the petitioner has effectively deprived respondent of their use, a situation which, by force of
the Recto Law, in turn precludes the former from maintaining an action for recovery of accrued rentals
or the recovery of the balance of the purchase price plus interest.

Teofisto Guingona, Jr., Antonio Martin, and Teresita Santos vs. The City Fiscal of Manila, Hon. Jose
Flaminiano, Asst. City Fiscal Felizardo Lota and
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 David’s 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

Held:

(1) It must be pointed out that 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. Thus, Article 1980 of the New Civil Code provides
that:
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Article 1980. Fixed, savings, and current deposits of-money in banks and similar institutions shall be
governed by the provisions concerning simple loan.

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.

5) ALEJANDRA MINA ET AL VS. RUPERTA PASCUAL ART. 1947 (SARENAS)

Facts: Francisco and Andres Fontanilla were brothers. Francisco acquired a lot in Laoag, Ilocos Norte on
1874.
Andres erected a warehouse on a part of the lot with the consent of his brother.
They both died later on. Plaintiffs are heirs of Francisco, defendants are heirs of Andres. Plaintiffs and
defendants are co-owners of the building (50/50) and plaintiffs are owners of the whole lot, including
the lot that the building is on.
1904: Pascual, in behalf of her minor children, asked the trial court if she could sell 6/7 of ½
(representing her kids‘ share) of the building together with its lot. This was opposed by Mina. But the
court still gave it a go signal and later on it was sold to a Cu Joco.
Issue: W/N the sale is valid
Held: NO.The defendants do not hold lawful possession of the lot in question.1awphil.net
But, although both litigating parties may have agreed in their idea of the commodatum, on account of
its not being, as indeed it is not, a question of fact but of law, yet that denomination given by them to
the use of the lot granted by Francisco Fontanilla to his brother, Andres Fontanilla, is not acceptable.
Contracts are not to be interpreted in conformity with the name that the parties thereto agree to give
them, but must be construed, duly considering their constitutive elements, as they are defined and
denominated by law.
By the contract of loan, one of the parties delivers to the other, either anything not perishable, in order
that the latter may use it during the certain period and return it to the former, in which case it is
called commodatum . . . (art. 1740, Civil Code).
… For the foregoing reasons, it is only necessary to annul the sale of the said lot which was made by
Ruperta Pascual, in representation of her minor children, to Cu Joco, and to maintain the latter in the
use of the lot until the plaintiffs shall choose one or the other of the two rights granted them by article
361 of the Civil Code.1awphil.net

Delos Santos v. Jarra

G.R. No. L-4150 February 10, 1910

Facts: The Plaintiff Felix delos Santos filed this suit against Agustina Jarra. Jarra was the administratix of
the estate of Jimenea. Plaintiff alleged that he owned 10 1st class carabaos which he lent to his father-
in-law Jimenea to be used in the animal-power mill without compensation. This was done on the
condition of their return after the work at the latter’s mill is terminated. When delos Santos demanded
the return of the animals Jimenea refused, hence this suit.

Issue: W/N the contracts is one of a commodatum

Ruling: YES. Commodatum is essentially gratuitous.

A simple loan may be gratuitous, or made under a stipulation to pay interest.

ART. 1741. The bailee acquires retains the ownership of the thing loaned. The bailee acquires the use
thereof, but not its fruits; if any compensation is involved, to be paid by the person requiring the use,
the agreement ceases to be a commodatum.

ART. 1742. The obligations and rights which arise from the commodatum pass to the heirs of both
contracting parties, unless the loan has been in consideration for the person of the bailee, in which case
his heirs shall not have the right to continue using the thing loaned.
The carabaos delivered to be used not being returned by the defendant upon demand, there is no doubt
that she is under obligation to indemnify the owner thereof by paying him their value.

[ G.R. No. 46240, November 03, 1939 ]

MARGARITA QUINTOS AND ANGEL A. ANSALDO, PLAINTIFFS AND

APPELLANTS, VS. BECK, DEFENDANT AND APPELLEE.
The furniture story

69 Phil. 108

IMPERIAL, J.:

The plaintiff brought this action to compel the defendant to return to her certain furniture which she
lent him for his use. She appealed from the judgment of the Court of First Instance of Manila which
ordered that the defendant return to her the three gas heaters and the four electric lamps found in the
possession of the Sheriff of said city, that she call for the other furniture from the said Sheriff of Manila
at her own expense, and that the fees which the Sheriff may charge for the deposit of the furniture be
paid pro rata by both parties, without pronouncement as to the costs.

The defendant was a tenant of the plaintiff and as such occupied the latter's house on M. H. del Pilar
street, No. 1175. On January 14, 1936, upon the novation of the contract of lease between the plaintiff
and the defendant, the former gratuitously granted to the latter the use of the furniture described in the
third paragraph of the stipulation of facts, subject to the condition that the defendant would return
them to the plaintiff upon the latter's demand. The plaintiff sold the property to Maria Lopez and
Rosario Lopez and on September 14, 1936, these three notified the defendant of the conveyance, giving
him sixty days to vacate the premises under one of the clauses of the contract of lease. There after the
plaintiff required the defendant to return all the furniture transferred to him for his use. The defendant
answered that she may call for them in the house where they are found. On November 5, 1936, the
defendant, through another person, wrote to the plaintiff reiterating that she may call for the furniture
in the ground floor of the house. On the 7th of the same month, the defendant wrote another letter to
the plaintiff informing her that he could not give up the three gas heaters and the four electric lamps
because he would use them until the 15th of the same month when the lease is due to expire. The
plaintiff refused to get the furniture in view of the fact that the defendant had declined to make delivery
of all of them. On November 15th, before vacating the house, the defendant deposited with the Sheriff
all the furniture belonging to the plaintiff and they are now on deposit in the warehouse situated at No.
1521, Rizal Avenue in the custody of the said sheriff.

In their seven assigned errors the plaintiffs contend that the trial court incorrectly applied the law: in
holding that they violated the contract by not calling for all the furniture on November 5, 1936, when
the defendant placed them at their disposal; in not ordering the defendant to pay them the value of the
furniture in case they are not delivered; in holding that they should get all the furniture from the Sheriff
at their expenses; in ordering them to pay one-half of the expenses claimed by the Sheriff for the
deposit of the furniture; in ruling that both parties should pay their respective legal expenses or the
costs; and in denying the motions for reconsideration and new trial. To dispose of the case, it is only
necessary to decide whether the defendant complied with his obligation to return the furniture upon
the plaintiff's demand; whether the latter is bound to bear the deposit fees thereof, and whether she is
entitled to the costs of litigation.

The contract entered into between the parties is one of commodatum, because under it the plaintiff
gratuitously granted the use of the furniture to the defendant, reserving for herself the ownership
thereof; by this contract the defendant bound himself to return the furniture to the plaintiff, upon the
latter's demand (clause 7 of the contract, Exhibit A; articles 1740, paragraph 1, and 1741 of the Civil
Code). The obligation voluntarily assumed by the defendant to return the furniture upon the plaintiff's
demand, means that he should return all of them to the plaintiff at the latter's residence or house. The
defendant did not comply with this obligation when he merely placed them at the disposal of the
plaintiff, retaining for his benefit the three gas heaters and the four electric lamps. The provisions of
article 1169 of the Civil Code cited by counsel for the parties are not squarely applicable. The trial court,
therefore, erred when it came to the legal conclusion that the plaintiff failed to comply with her
obligation to get the furniture when they were offered to her.

As the defendant had voluntarily undertaken to return all the furniture to the plaintiff, upon the latter's
demand, the Court could not legally compel her to bear the expenses occasioned by the deposit of the
furniture at the defendant's behest. The latter, as bailee, was not entitled to place the furniture on
deposit; nor was the plaintiff under a duty to accept the offer to return the furniture, because the
defendant wanted to retain the three gas heaters and the four electric lamps.

As to the value of the furniture, we do not believe that the plaintiff is entitled to the payment thereof by
the defendant in case of his inability to return some of the furniture, because under paragraph 6 of the
stipulation of facts, the defendant has neither agreed to nor admitted the correctness of the said value.
Should the defendant fail to deliver some of the furniture, the value thereof should be later determined
by the trial Court through evidence which the parties may desire to present.

The costs in both instances should be borne by the defendant because the plaintiff is the prevailing
party (section 487 of the Code of Civil Procedure). The defendant was the one who breached the
contract of commodatum, and without any reason he refused to return and deliver all the furniture
upon the plaintiff's demand. In these circumstances, it is just and equitable that he pay the legal
expenses and other judicial costs which the plaintiff would not have otherwise defrayed.

The appealed judgment is modified and the defendant is ordered to return and deliver to the plaintiff, in
the residence or house of the latter, all the furniture described in paragraph 3 of the stipulation of facts
Exhibit A. The expenses which may be occasioned by the delivery to and deposit of the furniture with
the Sheriff shall be for the account of the defendant. The defendant shall pay the costs in both
instances. So ordered.

Avanceña, C. J., Villa-Real, Diaz, Laurel, Concepcion, and Moran, JJ., concur.