PRODUCERS BANK vs CA

FACTS:
Vives (will be the creditor in this case) was asked by his friend Sanchez to help
the latters friend, Doronilla (will be the debtor in this case) in incorporating Doronillas
business Strela. This help basically involved Vives depositing a certain amount of
money in Strelas bank account for purposes of incorporation (rationale: Doronilla had to
show that he had sufficient funds for incorporation). This amount shall later be returned
to Vives.
Relying on the assurances and representations of Sanchez and Doronilla, Vives
issued a check of P200,00 in favor of Strela and deposited the same into Strelas newly-
opened bank account (the passbook was given to the wife of Vives and the passbook
had an instruction that no withdrawals/deposits will be allowed unless the passbook is
presented). Later on, Vives learned that Strela was no longer holding office in the
address previously given to him. He later found out that the funds had already been
withdrawn leaving only a balance of P90,000. The Vives spouses tried to withdraw the
amount, but it was unable to since the balance had to answer for certain postdated
checks issued by Doronilla. Doronilla made various tenders of check in favor of Vives in
order to pay his debt. All of which were dishonored.
Vives filed an action for recovery of sum against Doronilla, Sanchez, Dumagpi and
Producers Bank. TC & CA: ruled in favor of Vives.

ISSUES:
(1) W/N the transaction is a commodatum or a mutuum. COMMODATUM.
(2) W/N the fact that there is an additional P 12,000 (allegedly representing interest)
in the amount to be returned to Vives converts the transaction from commodatum
to mutuum. NO.
(3) W/N Producers Bank is solidarily liable to Vives, considering that it was not privy
to the transaction between Vives and Doronilla. YES.

HELD:
1. The transaction is a commodatum. CC 1933 (the provision distinguishing between
the two kinds of loans) seem to imply that if the subject of the contract is a
consummable thing, such as money, the contract would be a mutuum. However,
there are instances when a commodatum may have for its object a consummable
thing. Such can be found in CC 1936 which states that consummable 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. In this case, the intention of the
parties was merely for exhibition. Vives agreed to deposit his money in Strelas
account specifically for purpose of making it appear that Streal had sufficient
capitalization for incorporation, with the promise that the amount should be returned
withing 30 days.
2. CC 1935 states that the bailee in commodatum acquires the use of the thing loaned
but not its fruits. In this case, the additional P 12,000 corresponds to the fruits of the
lending of the P 200,000.
3. Atienza, the Branch Manager of Producers Bank, allowed the withdrawals on the
account of Strela despite the rule written in the passbook that neither a deposit, nor
a withdrawal will be permitted except upon the production of the passbook (recall in
this case that the passbook was in the possession of the wife of Vives all along).
Hence, this only proves to show that Atienza allowed the withdrawals because he
was party to Doronillas scheme of defrauding Vives. By virtue of CC 2180, PNB, as
employer, is held primarily and solidarily liable for damages caused by their
employees acting within the scope of their assigned tasks. Atienzas acts, in helpong
Doronilla, a customer of the bank, were obviously done in furtherance of the
business of the bank, even though in the process, Atienza violated some rules.