commodatum case digests

8/19/2019 COMMODATUM Case Digests

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COMMODATUM CASES:

REPUBLIC VS BAGTAS [G.R. No. L-17474 October !" 1#$% PADILLA" &.

'ACTS:

• Jose Bagtas borrowed from the Bureau of Animal Industry three bullsfor a period of one year for breeding purposes subject to a

government charge of breeding fee of 10% of the boo value of theboos!

• "pon the e#piration of the contract$ Bagtas ased for a renewal for

another one year$ however$ the ecretary of Agriculture and &atural'esources approved only the renewal for one bull and other two bullsbe returned!

• Bagtas then wrote a letter to the (irector of Animal Industry that he

would pay the value of the three bulls with a deduction of yearlydepreciation! )he (irector advised him that the value cannot bedepreciated and ased Bagtas to either return the bulls or pay their

boo value!

• Bagtas neither paid nor returned the bulls! )he 'epublic then

commenced an action against Bagtas ordering him to return the bullsor pay their boo value!

• After hearing$ the trial *ourt ruled in favor of the 'epublic$ as such$

the 'epublic moved e# parte for a writ of e#ecution which the courtgranted!

• +elicidad Bagtas$ the surviving spouse and administrator of Bagtas,

estate$ returned the two bulls and -led a motion to .uash the writ of

e#ecution since one bull cannot be returned for it was illed bygunshot during a /u raid! )he *ourt denied her motion hence$ thisappeal certi-ed by the *ourt of Appeals because only .uestions of law are raised!

ISSUE: & the contract was commodatum2thus$ Bagtas be held liable forits loss due to force majeure!

RULING:

• A contract of commodatum is essentially gratuitous! upreme *ourt

held that Bagtas was liable for the loss of the bull even though it wascaused by a fortuitous event!

• If the contract was one of lease$ then the 10% breeding charge is

compensation 3rent4 for the use of the bull and Bagtas$ as lessee$ issubject to the responsibilities of a possessor! /e is also in bad faithbecause he continued to possess the bull even though the term of the contract has already e#pired!

• If the contract was one of commodatum$ he is still liable because: 314

he ept the bull longer than the period stipulated2 and 354 the thingloaned has been delivered with appraisal of its value 310%4! &o

stipulation that in case of loss of the bull due to fortuitous event thelate husband of the appellant would be e#empt from liability!

• )he original period of the loan was from 6 7ay 1896 to 7ay 1898!

)he loan of one bull was renewed for another period of one year toend on 6 7ay 18;0! But the appellant ept and used the bull until&ovember 18;< when during a /u raid it was illed by stray bullets!

• +urthermore$ when lent and delivered to the deceased husband of the

appellant the bulls had each an appraised boo value$ to with: theindhi$ at =1$1>!9>$ the Bhagnari at =1$<50!;> and the ahiniwal at=99!9>! It was not stipulated that in case of loss of the bull due to

fortuitous event the late husband of the appellant would be e#emptfrom liability!

CAT(OLIC VICAR O' MT PROVINCE VS CA )Se*t +1" 1#,,

'ACTS:

? 18>5: *atholic @icar Apostolic of the 7ountain =rovince 3@icar4$petitioner$ -led with the court an application for the registration of title over lots 1$ 5$ < and 9 situated in =oblacion *entral$ Benguet$said lots being used as sites of the *atholic *hurch$ building$convents$ high school building$ school gymnasium$ dormitories$ socialhall and stonewalls!

• ? 18><: /eirs of Juan @alde and /eirs of gmidio ctaviano claimed

that they have ownership over lots 1$ 5 and <! 35 separate civil cases4

• ? 18>;: )he land registration court con-rmed the registrable title of

@icar to lots 1 $ 5$ < and 9! "pon appeal by the private respondents3heirs4$ the decision of the lower court was reversed! )itle for lots 5and < were cancelled!

• ? @I*A' -led with the upreme *ourt a petition for review on

certiorari of the decision of the *ourt of Appeals dismissing his application for registration of Cots 5 and <!

• ? (uring trial$ the /eirs of ctaviano presented one 314 witness$ who

testi-ed on the alleged ownership of the land in .uestion 3Cot <4 bytheir predecessor?in?interest$ gmidio ctaviano2 his written demand

to @icar for the return of the land to them2 and the reasonable rentalsfor the use of the land at =10$000 per month! n the other hand$



@icar presented the 'egister of (eeds for the =rovince of Benguet$Atty! ison$ who testi-ed that the land in .uestion is not covered byany title in the name of gmidio ctaviano or any of the heirs! @icardispensed with the testimony of 7ons! Brasseur when the heirsadmitted that the witness if called to the witness stand$ would testifythat @icar has been in possession of Cot <$ for ; years continuouslyand peacefully and has constructed permanent structures thereon!

ISSUE: & @icar had been in possession of lots 5 and < merely as

bailee borrower in commodatum$ a gratuitous loan for use!

(ELD: D!

• =rivate respondents were able to prove that their predecessorsEhouse was borrowed by petitioner @icar after the church and theconvent were destroyed! )hey never ased for the return of thehouse$ but when they allowed its free use$ they became bailors incommodatum and the petitioner the bailee!

• )he baileesE failure to return the subject matter of commodatum tothe bailor did not mean adverse possession on the part of theborrower! )he bailee held in trust the property subject matter of

commodatum! )he adverse claim of petitioner came only in 18;1when it declared the lots for ta#ation purposes! )he action of petitioner @icar by such adverse claim could not ripen into title byway of ordinary ac.uisitive prescription because of the absence of just title!

• )he *ourt of Appeals found that petitioner @icar did not meet there.uirement of <0 years possession for ac.uisitive prescription overCots 5 and <! &either did it satisfy the re.uirement of 10 yearspossession for ordinary ac.uisitive prescription because of theabsence of just title! )he appellate court did not believe the -ndingsof the trial court that Cot 5 was ac.uired from Juan @alde bypurchase and Cot < was ac.uired also by purchase from gmidio

ctaviano by petitioner @icar because there was absolutely nodocumentary evidence to support the same and the allegedpurchases were never mentioned in the application for registration!

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SPV )SPECIAL PURPOSE VE(ICLE INSOLVENC LA/

It may be recalled that the pecial =urpose @ehicle 3=@4 Act of 5005 was

enacted into law on (ecember 5<$ 5005 and became eGective on April 8$

500<! It is intended to help bans dispose of their &=As 3non?performing

assets4 by waiving some of the ta#es and reducing fees usually collected in

the sale or transfer of assets! )he =@ Caw waived the documentary stampta#$ capital gains ta# and @A) and reduced the applicable registration and

transfer fees by ;0%! )he * 3*erti-cate of ligibility4 is the document

issued by the B= 3Bango *entral ng =ilipinas4 to .ualify the sale or transfer

of &=As to the ta# e#emptions and reduced fees!

+iscal bene-ts include e#emption from payments of documentary stamp ta#$

capital gains ta#$ creditable withholding ta# and value added ta# or gross

receipts ta#! )ransactions .uali-ed under the =@ law are also entitled to

various fee reductions such as mortgage and land registration$ -ling fees$

transfer fees! n top of these$ bans are allowed to deduct a portion of theirlosses from the =@ transactions from their ta#able gross income for up to 10

years!

)he =@ Act stated that only loansHassets which are nonperforming are

.uali-ed! )he B= re.uired all bans to report each loan that was non

performing or under litigation! )he B= combined them together with the

masterlist of all .uali-ed &=As in the -nancial system! All related

transactions by bans or =@s that are covered by the Act would have to be

reconciled with the B= masterlist for the issuance of *erti-cate of ligibility!

)he *s are then used by the seller or buyer of assets to avail of the ta#

e#emptions and fees reduction when approaching concerned government

agencies$ e#ample BI'!

Bans:

• It has to be a true sale

• Asset completely removed from the ban,s or debtor,s control

• /as no e.uity share e#cedding ;% in the buying =@ and no direct or

indirect management

• )he originating ban cannot e#tend credit facility$ guaranty or any

other similar -nancial transactions$ whether directly or indirectly to

the transferee =@!

• 'e.uired to notify the borrowers about the impending transfer of

their loans and to give them a 80?day period for renegotiation andrestructuring$ if they are interested!

)he =@ is organied as a stoc corporation under =hilipp ine Caws with

the primary purpose of investing in or ac.uiring &=As of -nancial

institutions$ and disposing of them through various strategies! If the =@

will ac.uire land$ foreign investors face a ma#imum of 90% share of its

capital stoc$ with the rest being owned by =hilippine &ationals! )he =@s

can issue e.uity or participation certi-cates or other forms of Investment

"nit Instruments for the purpose of ac.uiring$ managing$ improving and

disposing of the &=As! Bans are not allowed to purchase I"Is issued by

the =@ that ac.uired its &=As!



T0e '232c3 Re03bt3to2 325 I26oe2c8 Act )'RIA

)he +inancial 'ehabilitation and Insolvency Act 3+'IA4 was passed into law bythe =hilippine *ongress in early 5010! As well as providing for the li.uidationof banrupt companies$ the legislation also allows possible rehabilitation fordebtors who are able to get more than a ;0 percent approval rate from theircreditors! an act providing for the rehabilitation or li.uidation of -nancially

distressed enterprises and individuals!

'92cto2

• "nder the +inancial 'ehabilitation and Insolvency Act$ shareholders

will be able to recover value from collapsed listed companies much

more speedily$ thus improving lender con-dence in the country!

+urthermore$ both businesses and individuals on the verge of

banruptcy can as for a suspension of payments to their creditors! If

their assets amount to less than their liabilities$ they may also

petition for a discharge from their debts!

)he +ria replaces and repeals the Insolvency Caw 3Act &o! 18;>4$ which was

enacted in 1808 and was almost universally acnowledged as outdated and

obsolete! )he +ria also impliedly amends the Interim 'ules on *orporate

'ehabilitation -rst issued by the upreme *ourt in 5000 3and amended in

50064$ given several inconsistencies between those rules and the new +ria! It

is e#pected that the upreme *ourt will issue new rules on procedure to

govern corporate rehabilitation in conformity with the +ria!

"nder the +ria$ a debtor is considered insolvent if it is generally unable to

pay its or his liabilities as they fall due in the ordinary course of business or

has liabilities that are greater than its or his assets! )he +ria provides for thefollowing modes of rehabilitating an insolvent corporate debtor:

• *ourt?supervised rehabilitation proceedings ? )hese may be

commenced by either the debtor 3or a group of aliated debtors4 orby creditors representing a speci-ed minimum amount of claims! )hecourt conducts the rehabilitation proceedings$ appoints a receiverand determines which claims against the debtor are valid$ with thegoal of putting a rehabilitation plan in place! A plan must be approvedby the debtor and creditors representing more than ;0% of the

claims of each class of creditors! )he rehabilitation plan must beagreed upon$ and the court must approve such plan$ within one year

from the date of commencement of the proceedings! If the plan is not-nalied or the court does not approve the plan within such period$the matter will proceed to li.uidation of the debtor! All claims againstthe debtor are suspended while rehabilitation proceedings arepending in court!

• =re?negotiated rehabilitation ? In these proceedings$ a debtor -les apetition with the court for the approval of a rehabilitation plan whichhas been previously agreed upon by the debtor and its creditorsrepresenting at least 5H< of the debtorEs total liabilities 3and at least>% and ;% of the debtorEs secured and unsecured obligations$respectively4! )he court is re.uired to approve the plan within 150days from the date the petition if -led$ failing which$ the plan shall bedeemed approved! )he court may also order that the matter proceedto the li.uidation of the debtor if it -nds that the plan is notmeritorious or the parties acted in bad faith! All claims against thedebtor are suspended while rehabilitation proceedings are pending incourt!

• ut?of?court or informal restructuring agreements or rehabilitationplans ? In this scenario$ the debtor and creditors representing at least6;% of the debtorEs total liabilities 3and at least >% and ;% of thedebtorEs secured and unsecured obligations$ respectively4 agree on arestructuring or rehabilitation plan! As long as these thresholds aremet$ the plan is binding on the parties 3and on the debtorEs othercreditors4 even without court approval! A standstill period may beenforced during the negotiations$ provided that such standstill isapproved by creditors representing more than ;0% of the debtorEstotal liabilities! )he standstill period may not$ however$ e#ceed 150days!

Another notable change is that while court?supervised proceedings are

pending$ all ta#es and fees due from the debtor to the national and local

governments shall be considered waived! imilarly$ the amount by which any

indebtedness or obligation of the debtor is reduced or forgiven shall not be

subject to any ta#!

Bans$ insurance companies and pre?need companies are not covered by the

+ria! )he rehabilitation of such entities is governed by other laws!

commodatum case digests

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