[THE LOAN CONTRACT]
05 PRODUCERS BANK V. CA and VIVES
Feb 19, 2003 | Callejo, Sr., J. |
Petitioner/s: PRODUCERS BANK OF THE PHILIPPINES (now FIRST INTERNATIONAL BANK)
Respondent/s: HON. COURT OF APPEALS AND FRANKLIN VIVES
Doctrine: There are instances where a commodatum may have for its object a consumable thing
such as in 1936 , when the purpose of the contract is not the consumption of the object, as when it
is merely for exhibition.
Facts:
● In 1979, Franklin Vives was asked by his friend Angeles Sanchez to help her and
Doronilla, in incorporating the Sterela Marketing and Services.
○ Sanchez asked Vives to deposit money in the bank account of Sterela, with
an assurance that Vives could withdraw his money from said account within
a months time. Private respondent asked Sanchez to bring Doronilla to their
house so that they could discuss Sanchezs request.
● May 9, 1979: Vives, Sanchez, Doronilla and Estrella Dumagpi, Doronillas’ private
secretary, met and discussed the matter.
○ Vives issued a check for P200,000 in favor of Sterela.
○ He instructed his wife Inocencia to accompany Doronilla and Sanchez in
opening a savings account in the name of Sterela In opening the account,
the authorized signatories were Inocencia Vives and/or Angeles Sanchez. A
passbook for Savings Account No. 10-1567 was thereafter issued to Mrs.
Vives.
● Subsequently, Vives learned that Sterela was no longer holding office in the address
previously given to him.
○ The sps. Vives went to the bank to check and found out from the manager
that Doronilla withdrew most of the money and only P90,000 remained. The
remaining balance could also not be withdrawn as it was meant for postdated
checks issued by Doronilla.
● Alarmed, he and his wife went to the Bank to verify if their money was still intact. The
bank manager referred them to Mr. Rufo Atienza, the assistant manager, who informed
them that part of the money in Savings Account No. 10-1567 had been withdrawn by
Doronilla, and that only P90,000.00 remained therein. He likewise told them that Mrs.
Vives could not withdraw said remaining amount because it had to answer for some
postdated checks issued by Doronilla.
● Vives tried to get in touch with Doronilla through Sanchez. On June 29, 1979, He
received a letter from Doronilla, assuring him that his money was intact and would be
returned to him.
● August 13, 1979: Doronilla issued a postdated check for P212,000 to pay Vives. The
check was dishonored. Doronilla requested private respondent to present the same
check on September 15, 1979 but when the latter presented the check, it was again
dishonored.
1 1933: By the contract of loan, one of the parties delivers to another, either something not
consumable so that the latter may use the same for a certain time and return it, in which case the
contract is called a commodatum; or money or other consumable thing, upon the condition that the
same amount of the same kind and quality shall be paid, in which case the contract is simply
called a loan or mutuum.
Commodatum is essentially gratuitous.
● Vives made a written demand upon Doronilla for the return of his client’s money.
Doronilla issued another check for P212,000 in private respondents favor but the check
was again dishonored for insufficiency of funds.
● Vives instituted an action for recovery of sum of money in the RTC. He also filed criminal
actions.
● RTC sentenced the defendants to pay Vives P200,000 for the deposit, P50,000 moral
damage and exemplary, P40,000 atty fees, and costs
● CA affirmed.
Petitioner’s contention:
● The transaction between Vives and Doronilla is a simple loan (mutuum) since all the
elements of a mutuum are present:
○ first, what was delivered by private respondent to Doronilla was money, a
consumable thing; and
○ second, the transaction was onerous as Doronilla was obliged to pay
interest, as evidenced by the check issued by Doronilla in the amount of
P212,000.00, or P12,000 more than what private respondent deposited in
Sterelas bank account.
● The fact that Vives sued his friend Sanchez for his failure to recover his money from
Doronilla shows that the transaction was not merely gratuitous but had a business angle
to it. Hence, petitioner argues that it cannot be held liable for the return of the money
because it is not privy to the transaction between the latter and Doronilla.
● Asst. Manager Atienzacould not be faulted for allowing Doronilla to withdraw from the
savings account of Sterela since the latter was the sole proprietor of said company.
Vives argument:
 The transactio is not a mutuum but an accommodation.
o He did not actually part with the ownership of his P200,000 and asked his
wife to deposit said amount in the account of Sterela so that a certification
can be issued to the effect that Sterela had sufficient funds for purposes of
its incorporation.
o He retained some degree of control over his money through his wife who
was made a signatory to the savings account and in whose possession the
savings account passbook was given.
Ruling:
W/N the transaction was a commodatum and not a mutuum - COMMODATUM.
● 19331 distinguishes between the two kinds of loans although it may imply that if the
subject is a consumable thing like money, the contract would be a mutuum.
● There are instances where a commodatum may have for its object a consumable thing
such as in 19362, when the purpose of the contract is not the consumption of the object,
as when it is merely for exhibition.
● Evidence shows that Vives agreed to deposit his money in the savings account of Sterela
specifically for the purpose of making it appear that said firm had sufficient capitalization
for incorporation, with the promise that the amount shall be returned within thirty (30)
days.
○ He merely accommodated Doronilla by lending his money without
consideration, as a favor to his good friend Sanchez. It was however clear to
Simple loan may be gratuitous or with a stipulation to pay interest.
In commodatum, the bailor retains the ownership of the thing loaned, while in simple loan,
ownership passes to the borrower.
2 1936: Consumable goods may be the subject of commodatum if the purpose of the contract is
not the consumption of the object, as when it is merely for exhibition.
 the parties to the transaction that the money would not be removed from
Sterelas savings account and would be returned.
● Doronilla’s attempts to return the amount of P200,000 together with an additional
P12,000.00, allegedly representing interest on the mutuum, did not convert the
transaction from a commodatum into a mutuum because such was not the intent of the
parties
○ The additional P12,000 corresponds to the fruits of the lending of the
P200,000.
○ 1935 states that [t]he bailee in commodatum acquires the use of the thing
loaned but not its fruits. Hence, it was only proper for Doronilla to remit to
private respondent the interest accruing to the latters money deposited with
petitioner.

W/N the petitioner is liable. – YES, petitioner, through the manager, was partly responsible
for the loss.
 The bank’s rules state that Deposits and withdrawals must be made by the depositor
personally or upon his written authority duly authenticated, and neither a deposit nor a
withdrawal will be permitted except upon the production of the depositor savings bank
book.
 Said rule notwithstanding, Doronilla was permitted by petitioner, through Atienza to
withdraw therefrom even without presenting the passbook (which Atienza very well knew
was in the possession of Mrs. Vives), not just once, but several times.
 Under 2180, employers shall be held primarily and solidarily liable for damages caused
by their employees acting within the scope of their assigned tasks.
o It was established that the transfer of funds from Sterelas savings account
to its current account could not have been accomplished by Doronilla without
the invaluable assistance of Atienza, and that it was their connivance which
was the cause of private respondents loss.
o Petitioner failed to prove that it exercised due diligence.

Dispositive
WHEREFORE, the petition is hereby DENIED. The assailed Decision and Resolution of the Court
of Appeals are AFFIRMED.

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