Diaz, Jayson Paolo DM.

Credit Transactions Case Digest

2nd Year - Wesleyan Law School

REPUBLIC V. BAGTAS

FACTS:

Bagtas borrowed three bulls from the Bureau of Animal Industry for a period of one year
from 8 May 1948 to 7 May 1949 for breeding purposes subject to a government charge
of breeding fee of 10% of the book value of the bulls.

Upon expiration, Bagtas asked for renewal. The renewal was granted only to one
bull. the Secretary of Agriculture and Natural Resources approved a renewal thereof of
only one bull for another year from 8 May 1949 to 7 May 1950 and requested the return
of the other two.

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.

Jose V. Bagtas failed to pay the book value of the three bulls or to return them. Court of
First Instance of Manila the Republic of the Philippines commenced an action against
him praying that he be ordered to return the three bulls loaned to him or to pay their
book value.

CFI rendered a decision in favor of the Republic of the Philippines

Bagtas proved that he already returned two of the bulls, and the other bull died during a
Huk raid in November 1953. hence, obligation already extinguished. He claims that the
contract is a commodatum hence, loss through fortuitous event should be borne by the
owner.

ISSUE:

Whether or not Bagtas is liable for the death of the bull.

RULING:

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.

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.

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

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 Diaz, Jayson Paolo DM.
Credit Transactions Case Digest
2nd Year - Wesleyan Law School

delivered with appraisal of value and there was no contrary stipulation regarding his
liability in case there is a fortuitous event.

Article 1942 of the Civil Code provides that a bailee in a contract of commodatum

x x x is liable for loss of the things, even if it should be through a fortuitous

event: If he keeps it longer than the period stipulated

x x x 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;

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