Republic vs.

Bagtas, 6 SCRA 262

Topic: Liability of a bailee in his obligations in commodatum.

Facts:

Borrowed money for breeding

• On 8 May 1948, Jose borrowed from the Republic, through the Bureau of Animal Industry, three bulls for a period of
one year. This was for breeding purposes subject to a government charge, which was the breeding fee of 10% of the
book value of the bulls.

The three bulls and their book values are as follows:

(a) Red Sindhi – PhP 1,176.46;

(b) Bhagnari – PhP 1,320.56; and
(c) Sahiniwal – PhP 744.46

[TN: Book value is an accounting term used for both a measure of a business's equity and the value of an asset as it appears
on a balance sheet.]

1-year renewal granted; only for one bull

• Upon the expiration of the contract on 7 May 1949, Jose asked Republic for a renewal of the same for another year. The
Republic, through the Secretary of Agriculture and Natural Resources, however, only approved the renewal of only one
bull for another year. It also requested the return of the other two bulls.

Desired to buy but value never changed; Failed to return

• On 25 March 1950, Jose wrote to the Director of Animal Industry that he would pay the value of the three bulls.
Moreover, he expressed his desire to buy them at lower value. On 19 October 1950, the Director advised him that the
books value of the bulls cannot be reduced and that they either be returned or their book value paid not later than 31
October 1950. Subsequently, Jose failed to either return or pay them.

Action to return
• On 20 December 1950, the Republic commenced an action against Jose in the CFI of Manila ordering the return of the
bulls and the payment of their book value.
• 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.

Cannot return the bulls due to bad peace and order

• 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.
• On 5 July 1951, however, Jose replied that he could neither return the bulls nor pay their book value due to the bad
peace and order situation in Cagayan Valley. Later on, it was found out that the Sahiniwal died from a gunshot wound
inflicted during a Huk raid sometime in November 1953.

Issue:

Whether the contract was commodatum. — NO.

(2) Whether Bagtas is liable for the death of the Sahiniwal. — YES.

Ruling:

(1) A contract of commodatum is essentially gratuitous.

The 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 as 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.

(2) Yes, Jose is liable for the death of the Sahiniwal. This liability is based on Article 1942 of the New Civil Code (NCC)
regarding the obligations of the bailee in commodatum.

The bailee in commodatum is liable for the loss of the things, even if it should be through a fortuitous event if:

(a) he keeps it longer than the period stipulated (Article 1942(2), NCC); and
(b) 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.

In the case at bar:

• The original period of 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. Nevertheless, Jose kept and used the bull until November 1953 when it
was killed by stray bullets during a Huk raid.

Furthermore, when Jose borrowed the three bulls, each of them had an appraised value, to wit:

(a) Red Sindhi – PhP 1,176.46;

(b) Bhagnari – PhP 1,320.56; and
(c) Sahiniwal – PhP 744.46.

Likewise, the contract between the Republic and Jose did not stipulate that he would be exempt from liability in case of loss
of the bull due to fortuitous event.