You are on page 1of 37

G.R. No.

118375 October 3, 2003 To secure the loan, Queaño executed a Deed of Real Estate
Mortgage dated 11 August 1980 in favor of Naguiat, and
CELESTINA T. NAGUIAT, petitioner, vs. COURT OF APPEALS and surrendered to the latter the owner’s duplicates of the titles
AURORA QUEAÑO, respondents. covering the mortgaged properties.4 On the same day, the
Before us is a Petition for Review on Certiorari under Rule 45, mortgage deed was notarized, and Queaño issued to Naguiat a
assailing the decision of the Sixteenth Division of the respondent promissory note for the amount of TWO HUNDRED THOUSAND
Court of Appeals promulgated on 21 December 19941 , which PESOS (₱200,000.00), with interest at 12% per annum, payable on
affirmed in toto the decision handed down by the Regional Trial 11 September 1980.5 Queaño also issued a Security Bank and Trust
Court (RTC) of Pasay City. Company check, postdated 11 September 1980, for the amount of
TWO HUNDRED THOUSAND PESOS (₱200,000.00) and payable to
The case arose when on 11 August 1981, private respondent Aurora the order of Naguiat.
Queaño (Queaño) filed a complaint before the Pasay City RTC for
cancellation of a Real Estate Mortgage she had entered into with Upon presentment on its maturity date, the Security Bank check
petitioner Celestina Naguiat (Naguiat). The RTC rendered a decision, was dishonored for insufficiency of funds. On the following day, 12
declaring the questioned Real Estate Mortgage void, which Naguiat September 1980, Queaño requested Security Bank to stop payment
appealed to the Court of Appeals. After the Court of Appeals upheld of her postdated check, but the bank rejected the request pursuant
the RTC decision, Naguiat instituted the present petition. to its policy not to honor such requests if the check is drawn against
insufficient funds.
The operative facts follow:
On 16 October 1980, Queaño received a letter from Naguiat’s
Queaño applied with Naguiat for a loan in the amount of Two lawyer, demanding settlement of the loan. Shortly thereafter,
Hundred Thousand Pesos (₱200,000.00), which Naguiat granted. On Queaño and one Ruby Ruebenfeldt (Ruebenfeldt) met with Naguiat.
11 August 1980, Naguiat indorsed to Queaño Associated Bank Check At the meeting, Queaño told Naguiat that she did not receive the
No. 090990 (dated 11 August 1980) for the amount of Ninety Five proceeds of the loan, adding that the checks were retained by
Thousand Pesos (₱95,000.00), which was earlier issued to Naguiat Ruebenfeldt, who purportedly was Naguiat’s agent.
by the Corporate Resources Financing Corporation. She also issued
her own Filmanbank Check No. 065314, to the order of Queaño, Naguiat applied for the extrajudicial foreclosure of the mortgage
also dated 11 August 1980 and for the amount of Ninety Five with the Sheriff of Rizal Province, who then scheduled the
Thousand Pesos (₱95,000.00). The proceeds of these checks were to foreclosure sale on 14 August 1981. Three days before the
constitute the loan granted by Naguiat to Queaño. scheduled sale, Queaño filed the case before the Pasay City RTC,8
seeking the annulment of the mortgage deed. The trial court law in a given case when the doubt or difference arises as to what
eventually stopped the auction sale. the law is on a certain state of facts; there is a question of fact when
the doubt or difference arises as to the truth or the falsehood of
On 8 March 1991, the RTC rendered judgment, declaring the Deed
alleged facts.
of Real Estate Mortgage null and void, and ordering Naguiat to
return to Queaño the owner’s duplicates of her titles to the Surely, there are established exceptions to the rule on the
mortgaged lots.10 Naguiat appealed the decision before the Court conclusiveness of the findings of facts of the lower courts.17 But
of Appeals, making no less than eleven assignments of error. The Naguiat’s case does not fall under any of the exceptions. In any
Court of Appeals promulgated the decision now assailed before us event, both the decisions of the appellate and trial courts are
that affirmed in toto the RTC decision. Hence, the present petition. supported by the evidence on record and the applicable laws.

Naguiat questions the findings of facts made by the Court of Against the common finding of the courts below, Naguiat vigorously
Appeals, especially on the issue of whether Queaño had actually insists that Queaño received the loan proceeds. Capitalizing on the
received the loan proceeds which were supposed to be covered by status of the mortgage deed as a public document, she cites the rule
the two checks Naguiat had issued or indorsed. Naguiat claims that that a public document enjoys the presumption of validity and
being a notarial instrument or public document, the mortgage deed truthfulness of its contents. The Court of Appeals, however, is
enjoys the presumption that the recitals therein are true. Naguiat correct in ruling that the presumption of truthfulness of the recitals
also questions the admissibility of various representations and in a public document was defeated by the clear and convincing
pronouncements of Ruebenfeldt, invoking the rule on the non- evidence in this case that pointed to the absence of
binding effect of the admissions of third persons. consideration.18 This Court has held that the presumption of
truthfulness engendered by notarized documents is rebuttable,
The resolution of the issues presented before this Court by Naguiat
yielding as it does to clear and convincing evidence to the contrary,
involves the determination of facts, a function which this Court does as in this case.
not exercise in an appeal by certiorari. Under Rule 45 which governs
appeal by certiorari, only questions of law may be raised12 as the On the other hand, absolutely no evidence was submitted by
Supreme Court is not a trier of facts.13 The resolution of factual Naguiat that the checks she issued or endorsed were actually
issues is the function of lower courts, whose findings on these encashed or deposited. The mere issuance of the checks did not
matters are received with respect and are in fact generally binding result in the perfection of the contract of loan. For the Civil Code
on the Supreme Court.14 A question of law which the Court may provides that the delivery of bills of exchange and mercantile
pass upon must not involve an examination of the probative value documents such as checks shall produce the effect of payment only
of the evidence presented by the litigants.15 There is a question of when they have been cashed.20 It is only after the checks have
produced the effect of payment that the contract of loan may be Ruebenfeldt to withhold from Queaño the checks she issued or
deemed perfected. Art. 1934 of the Civil Code provides: indorsed to Queaño, pending delivery by the latter of additional
collateral. Ruebenfeldt served as agent of Naguiat on the loan
"An accepted promise to deliver something by way of commodatum application of Queaño’s friend, Marilou Farralese, and it was in
or simple loan is binding upon the parties, but the commodatum or connection with that transaction that Queaño came to know
simple loan itself shall not be perfected until the delivery of the Naguiat.23 It was also Ruebenfeldt who accompanied Queaño in
object of the contract." her meeting with Naguiat and on that occasion, on her own and
A loan contract is a real contract, not consensual, and, as such, is without Queaño asking for it, Reubenfeldt actually drew a check for
perfected only upon the delivery of the object of the contract.21 In the sum of ₱220,000.00 payable to Naguiat, to cover for Queaño’s
this case, the objects of the contract are the loan proceeds which alleged liability to Naguiat under the loan agreement.24
Queaño would enjoy only upon the encashment of the checks The Court of Appeals recognized the existence of an "agency by
signed or indorsed by Naguiat. If indeed the checks were encashed estoppel25 citing Article 1873 of the Civil Code.26 Apparently, it
or deposited, Naguiat would have certainly presented the considered that at the very least, as a consequence of the
corresponding documentary evidence, such as the returned checks interaction between Naguiat and Ruebenfeldt, Queaño got the
and the pertinent bank records. Since Naguiat presented no such impression that Ruebenfeldt was the agent of Naguiat, but Naguiat
proof, it follows that the checks were not encashed or credited to
did nothing to correct Queaño’s impression. In that situation, the
Queaño’s account. rule is clear. One who clothes another with apparent authority as
Naguiat questions the admissibility of the various written his agent, and holds him out to the public as such, cannot be
representations made by Ruebenfeldt on the ground that they permitted to deny the authority of such person to act as his agent,
could not bind her following the res inter alia acta alteri nocere non to the prejudice of innocent third parties dealing with such person
debet rule. The Court of Appeals rejected the argument, holding in good faith, and in the honest belief that he is what he appears to
that since Ruebenfeldt was an authorized representative or agent of be.27 The Court of Appeals is correct in invoking the said rule on
Naguiat the situation falls under a recognized exception to the agency by estoppel.
rule.22 Still, Naguiat insists that Ruebenfeldt was not her agent. More fundamentally, whatever was the true relationship between
Suffice to say, however, the existence of an agency relationship Naguiat and Ruebenfeldt is irrelevant in the face of the fact that the
between Naguiat and Ruebenfeldt is supported by ample evidence. checks issued or indorsed to Queaño were never encashed or
As correctly pointed out by the Court of Appeals, Ruebenfeldt was deposited to her account of Naguiat.
not a stranger or an unauthorized person. Naguiat instructed
All told, we find no compelling reason to disturb the finding of the 26 and July 26, all in 1995) the amount of US$3,0006 and ₱76,5007
courts a quo that the lender did not remit and the borrower did not on July 26,8 August 26, September 26 and October 26, 1995.
receive the proceeds of the loan. That being the case, it follows that
the mortgage which is supposed to secure the loan is null and void. In June 1995, respondent received from petitioner another crossed
The consideration of the mortgage contract is the same as that of check9 dated June 29, 1995 in the amount of ₱500,000, also
the principal contract from which it receives life, and without which payable to the order of Marilou Santiago.10 Consequently,
it cannot exist as an independent contract.28 A mortgage contract petitioner received from respondent the amount of ₱20,000 every
being a mere accessory contract, its validity would depend on the month on August 5, September 5, October 5 and November 5, 1995.
validity of the loan secured by it. According to petitioner, respondent failed to pay the principal
WHEREFORE, the petition is denied and the assailed decision is amounts of the loans (US$100,000 and ₱500,000) when they fell
affirmed. Costs against petitioner. due. Thus, on February 22, 1996, petitioner filed a complaint for
sum of money and damages in the RTC of Makati City, Branch 58
SO ORDERED. against respondent, seeking to collect the sums of US$100,000, with
interest thereon at 3% a month from October 26, 1995 and
G.R. No. 154878 March 16, 2007 ₱500,000, with interest thereon at 4% a month from November 5,
CAROLYN M. GARCIA, Petitioner, vs. RICA MARIE S. THIO, 1995, plus attorney’s fees and actual damages.12
Respondent. Petitioner alleged that on February 24, 1995, respondent borrowed
Assailed in this petition for review on certiorari1 are the June 19, from her the amount of US$100,000 with interest thereon at the
2002 decision2 and August 20, 2002 resolution3 of the Court of rate of 3% per month, which loan would mature on October 26,
Appeals (CA) in CA-G.R. CV No. 56577 which set aside the February 1995.13 The amount of this loan was covered by the first check. On
28, 1997 decision of the Regional Trial Court (RTC) of Makati City, June 29, 1995, respondent again borrowed the amount of ₱500,000
Branch 58. at an agreed monthly interest of 4%, the maturity date of which was
on November 5, 1995.14 The amount of this loan was covered by
Sometime in February 1995, respondent Rica Marie S. Thio received the second check. For both loans, no promissory note was executed
from petitioner Carolyn M. Garcia a crossed check4 dated February since petitioner and respondent were close friends at the time.15
24, 1995 in the amount of US$100,000 payable to the order of a Respondent paid the stipulated monthly interest for both loans but
certain Marilou Santiago.5 Thereafter, petitioner received from on their maturity dates, she failed to pay the principal amounts
respondent every month (specifically, on March 24, April 26, June despite repeated demands.
Respondent denied that she contracted the two loans with On appeal, the CA reversed the decision of the RTC and ruled that
petitioner and countered that it was Marilou Santiago to whom there was no contract of loan between the parties:
petitioner lent the money. She claimed she was merely asked by
petitioner to give the crossed checks to Santiago.17 She issued the A perusal of the record of the case shows that [petitioner] failed to
checks for ₱76,000 and ₱20,000 not as payment of interest but to substantiate her claim that [respondent] indeed borrowed money
accommodate petitioner’s request that respondent use her own from her. There is nothing in the record that shows that
checks instead of Santiago’s. [respondent] received money from [petitioner]. What is evident is
the fact that [respondent] received a MetroBank [crossed] check
In a decision dated February 28, 1997, the RTC ruled in favor of dated February 24, 1995 in the sum of US$100,000.00, payable to
petitioner.19 It found that respondent borrowed from petitioner the order of Marilou Santiago and a CityTrust [crossed] check dated
the amounts of US$100,000 with monthly interest of 3% and June 29, 1995 in the amount of ₱500,000.00, again payable to the
₱500,000 at a monthly interest of 4%: order of Marilou Santiago, both of which were issued by
[petitioner]. The checks received by [respondent], being crossed,
WHEREFORE, finding preponderance of evidence to sustain the may not be encashed but only deposited in the bank by the payee
instant complaint, judgment is hereby rendered in favor of
thereof, that is, by Marilou Santiago herself.
[petitioner], sentencing [respondent] to pay the former the amount
of: It must be noted that crossing a check has the following effects: (a)
the check may not be encashed but only deposited in the bank; (b)
1. [US$100,000.00] or its peso equivalent with interest thereon at
the check may be negotiated only once—to one who has an account
3% per month from October 26, 1995 until fully paid; with the bank; (c) and the act of crossing the check serves as
2. ₱500,000.00 with interest thereon at 4% per month from warning to the holder that the check has been issued for a definite
November 5, 1995 until fully paid. purpose so that he must inquire if he has received the check
pursuant to that purpose, otherwise, he is not a holder in due
3. ₱100,000.00 as and for attorney’s fees; and course.

4. ₱50,000.00 as and for actual damages. Consequently, the receipt of the [crossed] check by [respondent] is
not the issuance and delivery to the payee in contemplation of law
For lack of merit, [respondent’s] counterclaim is perforce dismissed.
since the latter is not the person who could take the checks as a
With costs against [respondent]. holder, i.e., as a payee or indorsee thereof, with intent to transfer
title thereto. Neither could she be deemed as an agent of Marilou
IT IS SO ORDERED.
Santiago with respect to the checks because she was merely It is undisputed that the checks were delivered to respondent.
facilitating the transactions between the former and [petitioner]. However, these checks were crossed and payable not to the order
of respondent but to the order of a certain Marilou Santiago. Thus
With the foregoing circumstances, it may be fairly inferred that the main question to be answered is: who borrowed money from
there were really no contracts of loan that existed between the
petitioner — respondent or Santiago?
parties. x x x (emphasis supplied)22
Petitioner insists that it was upon respondent’s instruction that
Hence this petition. both checks were made payable to Santiago.27 She maintains that it
As a rule, only questions of law may be raised in a petition for was also upon respondent’s instruction that both checks were
review on certiorari under Rule 45 of the Rules of Court. However, delivered to her (respondent) so that she could, in turn, deliver the
this case falls under one of the exceptions, i.e., when the factual same to Santiago.28 Furthermore, she argues that once respondent
findings of the CA (which held that there were no contracts of loan received the checks, the latter had possession and control of them
between petitioner and respondent) and the RTC (which held that such that she had the choice to either forward them to Santiago
there were contracts of loan) are contradictory. (who was already her debtor), to retain them or to return them to
petitioner.
The petition is impressed with merit.
We agree with petitioner. Delivery is the act by which the res or
A loan is a real contract, not consensual, and as such is perfected substance thereof is placed within the actual or constructive
only upon the delivery of the object of the contract.25 This is possession or control of another.30 Although respondent did not
evident in Art. 1934 of the Civil Code which provides: physically receive the proceeds of the checks, these instruments
were placed in her control and possession under an arrangement
An accepted promise to deliver something by way of commodatum
whereby she actually re-lent the amounts to Santiago.
or simple loan is binding upon the parties, but the commodatum or
simple loan itself shall not be perfected until the delivery of the Several factors support this conclusion.
object of the contract. (Emphasis supplied)
First, respondent admitted that petitioner did not personally know
Upon delivery of the object of the contract of loan (in this case the Santiago. It was highly improbable that petitioner would grant two
money received by the debtor when the checks were encashed) the loans to a complete stranger without requiring as much as
debtor acquires ownership of such money or loan proceeds and is promissory notes or any written acknowledgment of the debt
bound to pay the creditor an equal amount. considering that the amounts involved were quite big. Respondent,
on the other hand, already had transactions with Santiago at that human testimony except its conformity to our knowledge,
time. observation, and experience. Whatever is repugnant to these
belongs to the miraculous, and is outside of juridical cognizance.
Second, Leticia Ruiz, a friend of both petitioner and respondent (and
whose name appeared in both parties’ list of witnesses) testified Fourth, in the petition for insolvency sworn to and filed by Santiago,
that respondent’s plan was for petitioner to lend her money at a it was respondent, not petitioner, who was listed as one of her
monthly interest rate of 3%, after which respondent would lend the (Santiago’s) ceditors.
same amount to Santiago at a higher rate of 5% and realize a profit
of 2%.33 This explained why respondent instructed petitioner to Last, respondent inexplicably never presented Santiago as a witness
make the checks payable to Santiago. Respondent has not shown to corroborate her story.39 The presumption is that "evidence
willfully suppressed would be adverse if produced."40 Respondent
any reason why Ruiz’ testimony should not be believed.
was not able to overturn this presumption.
Third, for the US$100,000 loan, respondent admitted issuing her
own checks in the amount of ₱76,000 each (peso equivalent of We hold that the CA committed reversible error when it ruled that
US$3,000) for eight months to cover the monthly interest. For the respondent did not borrow the amounts of US$100,000 and
₱500,000 from petitioner. We instead agree with the ruling of the
₱500,000 loan, she also issued her own checks in the amount of
₱20,000 each for four months.34 According to respondent, she RTC making respondent liable for the principal amounts of the
merely accommodated petitioner’s request for her to issue her own loans.
checks to cover the interest payments since petitioner was not We do not, however, agree that respondent is liable for the 3% and
personally acquainted with Santiago.35 She claimed, however, that 4% monthly interest for the US$100,000 and ₱500,000 loans
Santiago would replace the checks with cash.36 Her explanation is respectively. There was no written proof of the interest payable
simply incredible. It is difficult to believe that respondent would put except for the verbal agreement that the loans would earn 3% and
herself in a position where she would be compelled to pay interest, 4% interest per month. Article 1956 of the Civil Code provides that
from her own funds, for loans she allegedly did not contract. We "[n]o interest shall be due unless it has been expressly stipulated in
declared in one case that: writing."
In the assessment of the testimonies of witnesses, this Court is Be that as it may, while there can be no stipulated interest, there
guided by the rule that for evidence to be believed, it must not only can be legal interest pursuant to Article 2209 of the Civil Code. It is
proceed from the mouth of a credible witness, but must be credible well-settled that:
in itself such as the common experience of mankind can approve as
probable under the circumstances. We have no test of the truth of
When the obligation is breached, and it consists in the payment of a SO ORDERED.
sum of money, i.e., a loan or forbearance of money, the interest due
should be that which may have been stipulated in writing. G.R. No. L-8321 October 14, 1913
Furthermore, the interest due shall itself earn legal interest from ALEJANDRA MINA, ET AL., plaintiffs-appellants, vs. RUPERTA
the time it is judicially demanded. In the absence of stipulation, the PASCUAL, ET AL., defendants-appellees.
rate of interest shall be 12% per annum to be computed from
default, i.e., from judicial or extrajudicial demand under and subject Francisco Fontanilla and Andres Fontanilla were brothers. Francisco
to the provisions of Article 1169 of the Civil Code. Fontanilla acquired during his lifetime, on March 12, 1874, a lot in
the center of the town of Laoag, the capital of the Province of Ilocos
Hence, respondent is liable for the payment of legal interest per Norte, the property having been awarded to him through its
annum to be computed from November 21, 1995, the date when purchase at a public auction held by the alcalde mayor of that
she received petitioner’s demand letter. From the finality of the province. The lot has a frontage of 120 meters and a depth of 15.
decision until it is fully paid, the amount due shall earn interest at
12% per annum, the interim period being deemed equivalent to a Andres Fontanilla, with the consent of his brother Francisco,
forbearance of credit. erected a warehouse on a part of the said lot, embracing 14 meters
of its frontage by 11 meters of its depth.
The award of actual damages in the amount of ₱50,000 and
₱100,000 attorney’s fees is deleted since the RTC decision did not Francisco Fontanilla, the former owner of the lot, being dead, the
explain the factual bases for these damages. herein plaintiffs, Alejandro Mina, et al., were recognized without
discussion as his heirs.
WHEREFORE, the petition is hereby GRANTED and the June 19, 2002
decision and August 20, 2002 resolution of the Court of Appeals in Andres Fontanilla, the former owner of the warehouse, also having
CA-G.R. CV No. 56577 are REVERSED and SET ASIDE. The February died, the children of Ruperta Pascual were recognized likes without
28, 1997 decision of the Regional Trial Court in Civil Case No. 96-266 discussion, though it is not said how, and consequently are entitled
is AFFIRMED with the MODIFICATION that respondent is directed to to the said building, or rather, as Ruperta Pascual herself stated, to
pay petitioner the amounts of US$100,000 and ₱500,000 at 12% per only six-sevenths of one-half of it, the other half belonging, as it
annum interest from November 21, 1995 until the finality of the appears, to the plaintiffs themselves, and the remaining one-
decision. The total amount due as of the date of finality will earn seventh of the first one-half to the children of one of the plaintiffs,
interest of 12% per annum until fully paid. The award of actual Elena de Villanueva. The fact is that the plaintiffs and the
damages and attorney’s fees is deleted. defendants are virtually, to all appearance, the owners of the
warehouse; while the plaintiffs are undoubtedly, the owners of the
part of the lot occupied by that building, as well as of the remainder The plaintiffs insisted upon a decision of the question of the
thereof. ownership of the lot, and the court decided it by holding that this
land belonged to the owner of the warehouse which had been built
This was the state of affairs, when, on May 6, 1909, Ruperta
thereon thirty years before.
Pascual, as the guardian of her minor children, the herein
defendants, petitioned the Curt of First Instance of Ilocos Norte for The plaintiffs appealed and this court reversed the judgment of the
authorization to sell "the six-sevenths of the one-half of the lower court and held that the appellants were the owners of the lot
warehouse, of 14 by 11 meters, together with its lot." The plaintiffs in question.
— that is Alejandra Mina, et al. — opposed the petition of Ruperta
Pascual for the reason that the latter had included therein the lot When the judgment became final and executory, a writ of execution
occupied by the warehouse, which they claimed was their exclusive issued and the plaintiffs were given possession of the lot; but soon
property. All this action was taken in a special proceeding in re thereafter the trial court annulled this possession for the reason
that it affected Cu Joco, who had not been a party to the suit in
guardianship.
which that writ was served.
The plaintiffs did more than oppose Pascual's petition; they
It was then that the plaintiffs commenced the present action for the
requested the court, through motion, to decide the question of the
ownership of the lot before it pass upon the petition for the sale of purpose of having the sale of the said lot declared null and void and
the warehouse. But the court before determining the matter of the of no force and effect.
ownership of the lot occupied by the warehouse, ordered the sale An agreement was had ad to the facts, the ninth paragraph of which
of this building, saying: is as follows:
While the trial continues with respect to the ownership of the lot, 9. That the herein plaintiffs excepted to the judgment and
the court orders the sale at public auction of the said warehouse appealed therefrom to the Supreme Court which found for them by
and of the lot on which it is built, with the present boundaries of the holding that they are the owners of the lot in question, although
land and condition of the building, at a price of not less than P2,890 there existed and still exists a commodatum by virtue of which the
Philippine currency . . . . guardianship (meaning the defendants) had and has the use, and
So, the warehouse, together with the lot on which it stands, was the plaintiffs the ownership, of the property, with no finding
sold to Cu Joco, the other defendant in this case, for the price concerning the decree of the lower court that ordered the sale.
mentioned. The obvious purport of the cause "although there existed and still
exists a commodatum," etc., appears to be that it is a part of the
decision of the Supreme Court and that, while finding the plaintiffs it is evident that he who has only the mere use of the thing cannot
to be the owners of the lot, we recognized in principle the existence transfer its ownership. The sale of a thing effected by one who is
of a commodatum under which the defendants held the lot. not its owner is null and void. The defendants never were the
Nothing could be more inexact. Possibly, also, the meaning of that owners of the lot sold. The sale of it by them is necessarily null and
clause is that, notwithstanding the finding made by the Supreme void. On cannot convey to another what he has never had himself.
Court that the plaintiffs were the owners, these former and the
defendants agree that there existed, and still exists, a The returns of the auction contain the following statements:
commodatum, etc. But such an agreement would not affect the I, Ruperta Pascual, the guardian of the minors, etc., by virtue of the
truth of the contents of the decision of this court, and the opinions authorization conferred upon me on the 31st of July, 1909, by the
held by the litigants in regard to this point could have no bearing Court of First Instance of Ilocos Norte, proceeded with the sale at
whatever on the present decision. public auction of the six-sevenths part of the one-half of the
Nor did the decree of the lower court that ordered the sale have the warehouse constructed of rubble stone, etc.
least influence in our previous decision to require our making any Whereas I, Ruperta Pascual, the guardian of the minors, etc., sold at
finding in regard thereto, for, with or without that decree, the public auction all the land and all the rights title, interest, and
Supreme Court had to decide the ownership of the lot consistently ownership in the said property to Cu Joco, who was the highest
with its titles and not in accordance with the judicial acts or bidder, etc.
proceedings had prior to the setting up of the issue in respect to the
ownership of the property that was the subject of the judicial Therefore, . . . I cede and deliver forever to the said purchaser, Cu
decree. Joco, his heirs and assigns, all the interest, ownership and
inheritance rights and others that, as the guardian of the said
What is essentially pertinent to the case is the fact that the minors, I have and may have in the said property, etc.
defendant agree that the plaintiffs have the ownership, and they
themselves only the use, of the said lot. The purchaser could not acquire anything more than the interest
that might be held by a person to whom realty in possession of the
On this premise, the nullity of the sale of the lot is in all respects vendor might be sold, for at a judicial auction nothing else is
quite evident, whatsoever be the manner in which the sale was disposed of. What the minor children of Ruperta Pascual had in
effected, whether judicially or extrajudicially. their possession was the ownership of the six-sevenths part of one-
He who has only the use of a thing cannot validly sell the thing itself. half of the warehouse and the use of the lot occupied by his
The effect of the sale being a transfer of the ownership of the thing, building. This, and nothing more, could the Chinaman Cu Joco
acquire at that sale: not the ownership of the lot; neither the other
half, nor the remaining one-seventh of the said first half, of the the contracting parties who have given it are obliged to comply (art.
warehouse. Consequently, the sale made to him of this one-seventh 1091, idem).
of one-half and the entire other half of the building was null and
void, and likewise with still more reason the sale of the lot the The sole purpose of the action in the beginning was to obtain an
annulment of the sale of the lot; but subsequently the plaintiffs,
building occupies.
through motion, asked for an amendment by their complaint in the
The purchaser could and should have known what it was that was sense that the action should be deemed to be one for the recovery
offered for sale and what it was that he purchased. There is nothing of possession of a lot and for the annulment of its sale. The
that can justify the acquisition by the purchaser of the warehouse of plaintiff's petition was opposed by the defendant's attorney, but
the ownership of the lot that this building occupies, since the was allowed by the court; therefore the complaint seeks, after the
minors represented by Ruperta Pascual never were the owners of judicial annulment of the sale of the lot, to have the defendants
the said lot, nor were they ever considered to be such. sentenced immediately to deliver the same to the plaintiffs.

The trial court, in the judgment rendered, held that there were no Such a finding appears to be in harmony with the decision rendered
grounds for the requested annulment of the sale, and that the by the Supreme Court in previous suit, wherein it was held that the
plaintiffs were entitled to the P600 deposited with the clerk of the ownership of the lot lay in the plaintiffs, and for this reason steps
court as the value of the lot in question. The defendants, Ruperta were taken to give possession thereof to the defendants; but, as the
Pascual and the Chinaman Cu Joco, were absolved from the purchaser Cu Joco was not a party to that suit, the present action is
complaint, without express finding as to costs. strictly one for recover against Cu Joco to compel him, once the sale
has been annulled, to deliver the lot to its lawful owners, the
The plaintiffs cannot be obliged to acquiesce in or allow the sale
plaintiffs.
made and be compelled to accept the price set on the lot by expert
appraisers, not even though the plaintiffs be considered as coowner As respects this action for recovery, this Supreme Court finds:
of the warehouse. It would be much indeed that, on the ground of
coownership, they should have to abide by and tolerate the sale of 1. That it is a fact admitted by the litigating parties, both in this and
the said building, which point this court does not decide as it is not a in the previous suit, that Andres Fontanilla, the defendants'
question submitted to us for decision, but, as regards the sale of the predecessor in interest, erected the warehouse on the lot, some
lot, it is in all respects impossible to hold that the plaintiffs must thirty years ago, with the explicit consent of his brother Francisco
abide by it and tolerate, it, and this conclusion is based on the fact Fontanilla, the plaintiff's predecessor in interest.
that they did not give their consent (art. 1261, Civil Code), and only 2. That it also appears to be an admitted fact that the plaintiffs and
the defendants are the coowners of the warehouse.
3. That it is a fact explicitly admitted in the agreement, that neither latter was to erect a stone warehouse of considerable value, and so
Andres Fontanilla nor his successors paid any consideration or price it is that for the past thirty years of the lot has been used by both
whatever for the use of the lot occupied by the said building; Andres and his successors in interest. The present contention of the
whence it is, perhaps, that both parties have denominated that use plaintiffs that Cu Joco, now in possession of the lot, should pay rent
a commodatum. for it at the rate of P5 a month, would destroy the theory of the
commodatum sustained by them, since, according to the second
Upon the premise of these facts, or even merely upon that of the paragraph of the aforecited article 1740, "commodatum is
first of them, the sentencing of the defendants to deliver the lot to
essentially gratuitous," and, if what the plaintiffs themselves aver
the plaintiffs does not follow as a necessary corollary of the judicial on page 7 of their brief is to be believed, it never entered
declaration of ownership made in the previous suit, nor of that of Francisco's mind to limit the period during which his brother Andres
the nullity of the sale of the lot, made in the present case. was to have the use of the lot, because he expected that the
The defendants do not hold lawful possession of the lot in question. warehouse would eventually fall into the hands of his son,
Fructuoso Fontanilla, called the adopted son of Andres, which did
But, although both litigating parties may have agreed in their idea of not come to pass for the reason that Fructuoso died before his
the commodatum, on account of its not being, as indeed it is not, a uncle Andres. With that expectation in view, it appears more likely
question of fact but of law, yet that denomination given by them to that Francisco intended to allow his brother Andres a surface right;
the use of the lot granted by Francisco Fontanilla to his brother, but this right supposes the payment of an annual rent, and Andres
Andres Fontanilla, is not acceptable. Contracts are not to be had the gratuitous use of the lot.
interpreted in conformity with the name that the parties thereto
agree to give them, but must be construed, duly considering their Hence, as the facts aforestated only show that a building was
constitutive elements, as they are defined and denominated by law. erected on another's ground, the question should be decided in
accordance with the statutes that, thirty years ago, governed
By the contract of loan, one of the parties delivers to the other, accessions to real estate, and which were Laws 41 and 42, title 28,
either anything not perishable, in order that the latter may use it of the third Partida, nearly identical with the provisions of articles
during the certain period and return it to the former, in which case 361 and 362 of the Civil Code. So, then, pursuant to article 361, the
it is called commodatum . . . (art. 1740, Civil Code). owner of the land on which a building is erected in good faith has a
right to appropriate such edifice to himself, after payment of the
It is, therefore, an essential feature of the commodatum that the
indemnity prescribed in articles 453 and 454, or to oblige the
use of the thing belonging to another shall for a certain period.
builder to pay him the value of the land. Such, and no other, is the
Francisco Fontanilla did not fix any definite period or time during
right to which the plaintiff are entitled.
which Andres Fontanilla could have the use of the lot whereon the
For the foregoing reasons, it is only necessary to annul the sale of the stipulation of facts, subject to the condition that the defendant
the said lot which was made by Ruperta Pascual, in representation would return them to the plaintiff upon the latter's demand. The
of her minor children, to Cu Joco, and to maintain the latter in the plaintiff sold the property to Maria Lopez and Rosario Lopez and on
use of the lot until the plaintiffs shall choose one or the other of the September 14, 1936, these three notified the defendant of the
two rights granted them by article 361 of the Civil Code.1awphil.net conveyance, giving him sixty days to vacate the premises under one
of the clauses of the contract of lease. There after the plaintiff
The judgment appealed from is reversed and the sale of the lot in required the defendant to return all the furniture transferred to him
question is held to be null and void and of no force or effect. No
for them in the house where they were found. On November
special finding is made as to the costs of both instances. 5, 1936, the defendant, through another person, wrote to the
SO ORDERED. plaintiff reiterating that she may call for the furniture in the ground
floor of the house. On the 7th of the same month, the defendant
G.R. No. L-46240 November 3, 1939 wrote another letter to the plaintiff informing her that he could not
give up the three gas heaters and the four electric lamps because he
MARGARITA QUINTOS and ANGEL A. ANSALDO, plaintiffs-
would use them until the 15th of the same month when the lease in
appellants, vs. BECK, defendant-appellee.
due to expire. The plaintiff refused to get the furniture in view of
The plaintiff brought this action to compel the defendant to return the fact that the defendant had declined to make delivery of all of
her certain furniture which she lent him for his use. She appealed them. On November 15th, before vacating the house, the
from the judgment of the Court of First Instance of Manila which defendant deposited with the Sheriff all the furniture belonging to
ordered that the defendant return to her the three has heaters and the plaintiff and they are now on deposit in the warehouse situated
the four electric lamps found in the possession of the Sheriff of said at No. 1521, Rizal Avenue, in the custody of the said sheriff.
city, that she call for the other furniture from the said sheriff of
In their seven assigned errors the plaintiffs contend that the trial
Manila at her own expense, and that the fees which the Sheriff may
court incorrectly applied the law: in holding that they violated the
charge for the deposit of the furniture be paid pro rata by both
contract by not calling for all the furniture on November 5, 1936,
parties, without pronouncement as to the costs.
when the defendant placed them at their disposal; in not ordering
The defendant was a tenant of the plaintiff and as such occupied the defendant to pay them the value of the furniture in case they
the latter's house on M. H. del Pilar street, No. 1175. On January 14, are not delivered; in holding that they should get all the furniture
1936, upon the novation of the contract of lease between the from the Sheriff at their expenses; in ordering them to pay-half of
plaintiff and the defendant, the former gratuitously granted to the the expenses claimed by the Sheriff for the deposit of the furniture;
latter the use of the furniture described in the third paragraph of in ruling that both parties should pay their respective legal expenses
or the costs; and in denying pay their respective legal expenses or the plaintiff under a duty to accept the offer to return the furniture,
the costs; and in denying the motions for reconsideration and new because the defendant wanted to retain the three gas heaters and
trial. To dispose of the case, it is only necessary to decide whether the four electric lamps.
the defendant complied with his obligation to return the furniture
upon the plaintiff's demand; whether the latter is bound to bear the As to the value of the furniture, we do not believe that the plaintiff
deposit fees thereof, and whether she is entitled to the costs of is entitled to the payment thereof by the defendant in case of his
litigation. inability to return some of the furniture because under paragraph 6
of the stipulation of facts, the defendant has neither agreed to nor
The contract entered into between the parties is one of admitted the correctness of the said value. Should the defendant
commadatum, because under it the plaintiff gratuitously granted fail to deliver some of the furniture, the value thereof should be
the use of the furniture to the defendant, reserving for herself the latter determined by the trial Court through evidence which the
ownership thereof; by this contract the defendant bound himself to parties may desire to present.
return the furniture to the plaintiff, upon the latters demand (clause
7 of the contract, Exhibit A; articles 1740, paragraph 1, and 1741 of The costs in both instances should be borne by the defendant
the Civil Code). The obligation voluntarily assumed by the defendant because the plaintiff is the prevailing party (section 487 of the Code
to return the furniture upon the plaintiff's demand, means that he of Civil Procedure). The defendant was the one who breached the
contract of commodatum, and without any reason he refused to
should return all of them to the plaintiff at the latter's residence or
house. The defendant did not comply with this obligation when he return and deliver all the furniture upon the plaintiff's demand. In
merely placed them at the disposal of the plaintiff, retaining for his these circumstances, it is just and equitable that he pay the legal
benefit the three gas heaters and the four eletric lamps. The expenses and other judicial costs which the plaintiff would not have
provisions of article 1169 of the Civil Code cited by counsel for the otherwise defrayed.
parties are not squarely applicable. The trial court, therefore, erred The appealed judgment is modified and the defendant is ordered to
when it came to the legal conclusion that the plaintiff failed to return and deliver to the plaintiff, in the residence to return and
comply with her obligation to get the furniture when they were deliver to the plaintiff, in the residence or house of the latter, all the
offered to her. furniture described in paragraph 3 of the stipulation of facts Exhibit
As the defendant had voluntarily undertaken to return all the A. The expenses which may be occasioned by the delivery to and
furniture to the plaintiff, upon the latter's demand, the Court could deposit of the furniture with the Sheriff shall be for the account of
not legally compel her to bear the expenses occasioned by the the defendant. the defendant shall pay the costs in both instances.
deposit of the furniture at the defendant's behest. The latter, as So ordered.
bailee, was not entitled to place the furniture on deposit; nor was
G.R. No. L-46145 November 26, 1986 provisions of the Spanish Mortgage Law. Applicants presented their
tax declaration on said lands on April 8, 1965.
REPUBLIC OF THE PHILIPPINES (BUREAU OF LANDS), petitioner, vs.
THE HON. COURT OF APPEALS, HEIRS OF DOMINGO P. BALOY, The Director of Lands opposed the registration alleging that this
represented by RICARDO BALOY, ET AL., respondents. land had become public land thru the operation of Act 627 of the
Philippine Commission. On November 26, 1902 pursuant to the
This case originally emanated from a decision of the then Court of
executive order of the President of the U.S., the area was declared
First Instance of Zambales in LRC Case No. 11-0, LRC Record No. N- within the U.S. Naval Reservation. Under Act 627 as amended by Act
29355, denying respondents' application for registration. From said 1138, a period was fixed within which persons affected thereby
order of denial the applicants, heirs of Domingo Baloy, represented could file their application, (that is within 6 months from July 8,
by Ricardo P. Baloy, (herein private respondents) interposed on 1905) otherwise "the said lands or interest therein will be
appeal to the Court of Appeals which was docketed as CA-G.R. No. conclusively adjudged to be public lands and all claims on the part
52039-R. The appellate court, thru its Fifth Division with the Hon. of private individuals for such lands or interests therein not to
Justice Magno Gatmaitan as ponente, rendered a decision dated presented will be forever barred." Petitioner argues that since
February 3, 1977 reversing the decision appealed from and thus Domingo Baloy failed to file his claim within the prescribed period,
approving the application for registration. Oppositors (petitioners the land had become irrevocably public and could not be the
herein) filed their Motion for Reconsideration alleging among other
subject of a valid registration for private ownership.
things that applicants' possessory information title can no longer be
invoked and that they were not able to prove a registerable title Considering the foregoing facts respondents Court of Appeals ruled
over the land. Said Motion for Reconsideration was denied, hence as follows:
this petition for review on certiorari.
... perhaps, the consequence was that upon failure of Domingo
Applicants' claim is anchored on their possessory information title Baloy to have filed his application within that period the land had
(Exhibit F which had been translated in Exhibit F-1) coupled with become irrevocably public; but perhaps also, for the reason that
their continuous, adverse and public possession over the land in warning was from the Clerk of the Court of Land Registration,
question. An examination of the possessory information title shows named J.R. Wilson and there has not been presented a formal order
that the description and the area of the land stated therein or decision of the said Court of Land Registration so declaring the
substantially coincides with the land applied for and that said land public because of that failure, it can with plausibility be said
possessory information title had been regularly issued having been that after all, there was no judicial declaration to that effect, it is
acquired by applicants' predecessor, Domingo Baloy, under the true that the U.S. Navy did occupy it apparently for some time, as a
recreation area, as this Court understands from the communication
of the Department of Foreign Affairs to the U.S. Embassy exhibited ASSIGNMENT OF ERRORS:
in the record, but the very tenor of the communication apparently
seeks to justify the title of herein applicants, in other words, what 1. Respondent court erred in holding that to bar private
this Court has taken from the occupation by the U.S. Navy is that respondents from asserting any right under their possessory
during the interim, the title of applicants was in a state of information title there is need for a court order to that effect.
suspended animation so to speak but it had not died either; and the 2. Respondent court erred in not holding that private respondents'
fact being that this land was really originally private from and after rights by virtue of their possessory information title was lost by
the issuance and inscription of the possessory information Exh. F prescription.
during the Spanish times, it would be most difficult to sustain
position of Director of Lands that it was land of no private owner; 3. Respondent court erred in concluding that applicants have
open to public disposition, and over which he has control; and since registerable title.
immediately after U.S. Navy had abandoned the area, applicant
A cursory reading of Sec. 3, Act 627 reveals that several steps are to
came in and asserted title once again, only to be troubled by first
be followed before any affected land can "be conclusively adjudged
Crispiniano Blanco who however in due time, quitclaimed in favor of
to be public land." Sec. 3, Act 627 reads as follows:
applicants, and then by private oppositors now, apparently
originally tenants of Blanco, but that entry of private oppositors SEC. 3. Immediately upon receipt of the notice from the civil
sought to be given color of ownership when they sought to and did Governor in the preceeding section mentioned it shall be the duty
file tax declaration in 1965, should not prejudice the original rights of the judge of the Court of Land Registration to issue a notice,
of applicants thru their possessory information secured regularly so stating that the lands within the limits aforesaid have been reserved
long ago, the conclusion must have to be that after all, applicants for military purposes, and announced and declared to be military
had succeeded in bringing themselves within the provisions of Sec. reservations, and that claims for all private lands, buildings, and
19 of Act 496, the land should be registered in their favor; interests therein, within the limits aforesaid, must be presented for
registration under the Land Registration Act within six calendar
IN VIEW WHEREOF, this Court is constrained to reverse, as it now
months from the date of issuing the notice, and that all lands,
reverses, judgment appealed from the application is approved, and
buildings, and interests therein within the limits aforesaid not so
once this decision shall have become final, if ever it would be, let
presented within the time therein limited will be conclusively
decree issue in favor of applicants with the personal circumstances
adjudged to be public lands and all claims on the part of private
outlined in the application, costs against private oppositors.
individuals for such lands, buildings, or an interest therein not so
Petitioner now comes to Us with the following: presented will be forever barred. The clerk of the Court of Land
Registration shall immediately upon the issuing of such notice by
the judge cause the same to be published once a week for three Sec. 4 of Act 627 alone. But in construing a statute the entire
successive weeks in two newspapers, one of which newspapers provisions of the law must be considered in order to establish the
shall be in the English Language, and one in the Spanish language in correct interpretation as intended by the law-making body. Act 627
the city or province where the land lies, if there be no such Spanish by its terms is not self-executory and requires implementation by
or English newspapers having a general circulation in the city or the Court of Land Registration. Act 627, to the extent that it creates
province wherein the land lies, then it shall be a sufficient a forfeiture, is a penal statute in derogation of private rights, so it
compliance with this section if the notice be published as herein must be strictly construed so as to safeguard private respondents'
provided, in a daily newspaper in the Spanish language and one in rights. Significantly, petitioner does not even allege the existence of
the English language, in the City of Manila, having a general any judgment of the Land Registration court with respect to the
circulation. The clerk shall also cause a duly attested copy of the land in question. Without a judgment or order declaring the land to
notice in the Spanish language to be posted in conspicuous place at be public, its private character and the possessory information title
each angle formed by the lines of the limits of the land reserved. over it must be respected. Since no such order has been rendered
The clerk shall also issue and cause to be personally served the by the Land Registration Court it necessarily follows that it never
notice in the Spanish language upon every person living upon or in became public land thru the operation of Act 627. To assume
visible possession of any part of the military reservation. If the otherwise is to deprive private respondents of their property
person in possession is the head of the family living upon the hand, without due process of law. In fact it can be presumed that the
it shall be sufficient to serve the notice upon him, and if he is absent notice required by law to be given by publication and by personal
it shall be sufficient to leave a copy at his usual place of residence. service did not include the name of Domingo Baloy and the subject
The clerk shall certify the manner in which the notices have been land, and hence he and his lane were never brought within the
published, posted, and served, and his certificate shall be conclusive operation of Act 627 as amended. The procedure laid down in Sec. 3
proof of such publication, posting, and service, but the court shall is a requirement of due process. "Due process requires that the
have the power to cause such further notice to be given as in its statutes which under it is attempted to deprive a citizen of private
opinion may be necessary. property without or against his consent must, as in expropriation
cases, be strictly complied with, because such statutes are in
Clearly under said provisions, private land could be deemed to have derogation of general rights." (Arriete vs. Director of Public Works,
become public land only by virtue of a judicial declaration after due 58 Phil. 507, 508, 511).
notice and hearing. It runs contrary therefore to the contention of
petitioners that failure to present claims set forth under Sec. 2 of We also find with favor private respondents' views that court
Act 627 made the land ipso facto public without any deed of judicial judgments are not to be presumed. It would be absurd to speak of a
pronouncement. Petitioner in making such declaration relied on judgment by presumption. If it could be contended that such a
judgment may be presumed, it could equally be contended that intended to be transient, as in the case of the U.S. Navy's
applicants' predecessor Domingo Baloy presumably seasonably filed occupation of the land concerned, in which case the owner is not
a claim, in accordance with the legal presumption that a person divested of his title, although it cannot be exercised in the
takes ordinary care of his concerns, and that a judgment in his favor meantime.
was rendered.
WHEREFORE, premises considered, finding no merit in the petition
The finding of respondent court that during the interim of 57 years the appealed decision is hereby AFFIRMED.
from November 26, 1902 to December 17, 1959 (when the U.S.
Navy possessed the area) the possessory rights of Baloy or heirs SO ORDERED.
were merely suspended and not lost by prescription, is supported POLO S. PANTALEON, Petitioner, vs. AMERICAN EXPRESS
by Exhibit "U," a communication or letter No. 1108-63, dated June INTERNATIONAL, INC., Respondent.
24, 1963, which contains an official statement of the position of the
Republic of the Philippines with regard to the status of the land in G.R. No. 174269 August 25, 2010
question. Said letter recognizes the fact that Domingo Baloy and/or
FACTS:
his heirs have been in continuous possession of said land since 1894
as attested by an "Informacion Possessoria" Title, which was After the Amsterdam incident that happened involving the delay of
granted by the Spanish Government. Hence, the disputed property American Express Card to approve his credit card purchases worth
is private land and this possession was interrupted only by the US$13,826.00 at the Coster store, Pantaleon commenced a
occupation of the land by the U.S. Navy in 1945 for recreational complaint for moral and exemplary damages before the RTC against
purposes. The U.S. Navy eventually abandoned the premises. The American Express. He said that he and his family experienced
heirs of the late Domingo P. Baloy, are now in actual possession, inconvenience and humiliation due to the delays in credit
and this has been so since the abandonment by the U.S. Navy. A authorization. RTC rendered a decision in favor of Pantaleon. CA
new recreation area is now being used by the U.S. Navy personnel reversed the award of damages in favor of Pantaleon, holding that
and this place is remote from the land in question. AmEx had not breached its obligations to Pantaleon, as the
purchase at Coster deviated from Pantaleon's established charge
Clearly, the occupancy of the U.S. Navy was not in the concept of
purchase pattern.
owner. It partakes of the character of a commodatum. It cannot
therefore militate against the title of Domingo Baloy and his ISSUE:
successors-in-interest. One's ownership of a thing may be lost by
prescription by reason of another's possession if such possession be 1. Whether or not AmEx had committed a breach of its obligations
under claim of ownership, not where the possession is only to Pantaleon.
2. Whether or not AmEx is liable for damages. G.R. No. 115324 February 19, 2003

RULING: PRODUCERS BANK OF THE PHILIPPINES (now FIRST


INTERNATIONAL BANK), petitioner, vs. HON. COURT OF APPEALS
1. Yes. The popular notion that credit card purchases are approved AND FRANKLIN VIVES, respondents.
“within seconds,” there really is no strict, legally determinative
point of demarcation on how long must it take for a credit card FACTS:
company to approve or disapprove a customer’s purchase, much
Sometime in 1979, private respondent Franklin Vives was asked by
less one specifically contracted upon by the parties. One hour
appears to be patently unreasonable length of time to approve or his neighbor and friend Angeles Sanchez to help her friend and
townmate, Col. Arturo Doronilla, in incorporating his business, the
disapprove a credit card purchase.
Sterela Marketing and Services (“Sterela” for brevity). Specifically,
The culpable failure of AmEx herein is not the failure to timely Sanchez asked private respondent to deposit in a bank a certain
approve petitioner’s purchase, but the more elemental failure to amount of money in the bank account of Sterela for purposes of its
timely act on the same, whether favorably or unfavorably. Even incorporation. She assured private respondent that he could
assuming that AmEx’s credit authorizers did not have sufficient withdraw his money from said account within a month’s time. With
basis on hand to make a judgment, we see no reason why it could this, Mrs. Vivies, Sanchez and a certain Estrella Dumagpi, secretary
not have promptly informed Pantaleon the reason for the delay, of Doronilla, went to the bank to open an account with Mrs. Vives
and duly advised him that resolving the same could take some time. and Sanchez as signatories. A passbook was then issued to Mrs.
Vives. Subsequently, private respondent learned that part of the
2. Yes. The reason why Pantaleon is entitled to damages is not money was withdrawn without presentment of the passbook as it
simply because AmEx incurred delay, but because the delay, for was his wife got hold of such. Mrs. Vives could not also withdraw
which culpability lies under Article 1170, led to the particular said remaining amount because it had to answer for some
injuries under Article 2217 of the Civil Code for which moral postdated checks issued by Doronilla who opened a current account
damages are remunerative. The somewhat unusual attending for Sterela and authorized the bank to debit savings.
circumstances to the purchase at Coster – that there was a deadline
for the completion of that purchase by petitioner before any delay Private respondent referred the matter to a lawyer, who made a
would redound to the injury of his several traveling companions – written demand upon Doronilla for the return of his client’s money.
gave rise to the moral shock, mental anguish, serious anxiety, Doronilla issued another check for P212,000.00 in private
wounded feelings and social humiliation sustained by Pantaleon, as respondent’s favor but the check was again dishonored for
concluded by the RTC. insufficiency of funds.
Private respondent instituted an action for recovery of sum of commodatum may have for its object a consumable thing. Article
money in the Regional Trial Court (RTC) in Pasig, Metro Manila 1936 of the Civil Code provides:
against Doronilla, Sanchez, Dumagpi and petitioner. The RTC ruled
in favor of the private respondent which was also affirmed in toto Consumable goods may be the subject of commodatum if the
purpose of the contract is not the consumption of the object, as
by the CA. Hence this petition.
when it is merely for exhibition.
ISSUE: WON THE TRANSACTION BETWEEN THE DORONILLA AND
RESPONDENT VIVES WAS ONE OF SIMPLE LOAN. Thus, if consumable goods are loaned only for purposes of
exhibition, or when the intention of the parties is to lend
HELD: NO. consumable goods and to have the very same goods returned at the
end of the period agreed upon, the loan is a commodatum and not
A circumspect examination of the records reveals that the
a mutuum.
transaction between them was a commodatum. Article 1933 of the
Civil Code distinguishes between the two kinds of loans in this wise: The rule is that the intention of the parties thereto shall be
accorded primordial consideration in determining the actual
By the contract of loan, one of the parties delivers to another, either character of a contract. In case of doubt, the contemporaneous and
something not consumable so that the latter may use the same for subsequent acts of the parties shall be considered in such
a certain time and return it, in which case the contract is called a
determination.
commodatum; or money or other consumable thing, upon the
condition that the same amount of the same kind and quality shall [SAME CASE]
be paid, in which case the contract is simply called a loan or
mutuum. FACTS

Franklin Vives was asked by his friend Angeles Sanchez to help


Commodatum is essentially gratuitous.
Arturo Doronilla, in incorporating his business, the Sterela
Simple loan may be gratuitous or with a stipulation to pay interest. Marketing and Services by depositing in producers bank of the
Philippines amount of money in the bank account of Sterela for
In commodatum, the bailor retains the ownership of the thing purposes of its incorporation. Relying on the assurances and
loaned, while in simple loan, ownership passes to the borrower. representations of Sanchez and Doronilla, private respondent
The foregoing provision seems to imply that if the subject of the vivesissued a check in the amount of Two Hundred Thousand Pesos
contract is a consumable thing, such as money, the contract would (P200,000.00) in favor of Sterela. Private respondent instructed his
be a mutuum. However, there are some instances where a wife, Mrs. InocenciaVives, to accompany Doronilla and Sanchez in
opening a savings account in the name of Sterela in the Buendia, Private respondent instituted an action for recovery of sum of
Makati branch of Producers Bank of the Philippines. In opening the money in the Regional Trial Court (RTC) in Pasig, Metro Manila
account, the authorized signatories were InocenciaVives and/or against Doronilla, Sanchez, Dumagpi and petitioner. RTC ruled that
Angeles Sanchez. defendants Arturo J. Doronila, Estrella Dumagpi and Producers Bank
of the Philippines to pay plaintiff Franklin Vives jointly and severally.
Subsequently, private respondent learned that Sterela was no
longer holding office in the address previously given to him. Petitioner bank, Appealed before the us
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 ISSUE: WON the transaction between theVives and Doronilla is a
Atienza, the assistant manager, who informed them that part of the simple loan (or one of an accommodation) as to dismiss the case
money in Savings Account they opened had been withdrawn by against Producer Bank being not a privy thereto.
Doronilla, and that only P90,000.00 remained therein. He likewise SC RULED: It one of an accommodation.
told them that Mrs. Vives could not withdraw said remaining
amount because it had to answer for some postdated checks issued Bank’s Defenses: The contract between them was a simple loan or
by Doronilla. According to Atienza, after Mrs. Vives and Sanchez mutuum because the subject was money, there was an interest
opened Savings Account, Doronilla opened another Current Account amounting to 12,000 and I was not privy thereto!
for Sterela and authorized the Bank to debit Savings Account for the
- since all the elements of a mutuum are present: first, what
amounts necessary to cover overdrawings in Current Account. In
was delivered by private respondent to Doronilla was money, a
opening said current account, Sterela, through Doronilla, obtained a
consumable thing; and second, the transaction was onerous as
loan of P175,000.00 from the Bank. Atienza, the bank manager, also
Doronilla was obliged to pay interest, as evidenced by the check
said that Doronilla could assign or withdraw the money in Savings
issued by Doronilla in the amount of P212,000.00, or P12,000 more
Account because he was the sole proprietor of Sterela.[5]
than what private respondent deposited in Sterela’s bank
Private respondent tried to get in touch with Doronillaand account.[15] Moreover, the fact that private respondent sued his
subsequently he received a letter from Doronilla, assuring him that good friend Sanchez for his failure to recover his money from
his money was intact and would be returned to himDoronilla issued Doronilla shows that the transaction was not merely gratuitous but
a postdated check for Two Hundred Twelve Thousand Pesos “had a business angle” to it. Hence, petitioner argues that it cannot
(P212,000.00) in favor of private respondent. However, upon be held liable for the return of private respondent’s P200,000.00
presentment thereof by private respondent to the drawee bank, the because it is not privy to the transaction between the latter and
check was dishonored. 2 more checks/demand was made, still of no Doronilla.
avail.
As regards the “subject” be paid, in which case the contract is simply called a loan or
mutuum.
- 1933 may seem to imply that if subject of contract is a
consumable thing, e.g. money, the contract would be a mutuum. Commodatum is essentially gratuitous.
However, there are exceptions to this rule where the loan is
commodatum and not mutuum. Simple loan may be gratuitous or with a stipulation to pay interest.

- if consumable goods are loaned only for purposes of In commodatum, the bailor retains the ownership of the thing
loaned, while in simple loan, ownership passes to the borrower.
exhibition OR

- when the intention of parties is to lend consumable goods The foregoing provision seems to imply that if the subject of the
and to have the very same goods returned at the end of the period contract is a consumable thing, such as money, the contract would
agreed upon be a mutuum. However, there are some instances where a
commodatum may have for its object a consumable thing. Article
- Intention of parties shall be accorded primordial 1936 of the Civil Code provides:
consideration in determining the actual character of a contract. In
case of doubt, the contemporaneous and subsequent acts of the Consumable goods may be the subject of commodatum if the
purpose of the contract is not the consumption of the object, as
parties shall be considered.
when it is merely for exhibition.
No error was committed by the Court of Appeals when it ruled that
the transaction between private respondent and Doronilla was a Thus, if consumable goods are loaned only for purposes of
commodatum and not a mutuum. A circumspect examination of exhibition, or when the intention of the parties is to lend
the records reveals that the transaction between them was a consumable goods and to have the very same goods returned at the
commodatum. Article 1933 of the Civil Code distinguishes between end of the period agreed upon, the loan is a commodatum and not
the two kinds of loans in this wise: a mutuum.

The rule is that the intention of the parties thereto shall be


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 accorded primordial consideration in determining the actual
a certain time and return it, in which case the contract is called a character of a contract.[27] In case of doubt, the contemporaneous
commodatum; or money or other consumable thing, upon the and subsequent acts of the parties shall be considered in such
condition that the same amount of the same kind and quality shall determination.[28]
As correctly pointed out by both the Court of Appeals and the trial petitioner, through its employee Mr. Atienza, was partly responsible
court, the evidence shows that private respondent agreed to for the loss of private respondent’s money and is liable for its
deposit his money in the savings account of Sterela specifically for restitution.
the purpose of making it appear “that said firm had sufficient
capitalization for incorporation, with the promise that the amount Petitioner’s rules for savings deposits written on the passbook it
shall be returned within thirty (30) days.”[29] Private respondent issued Mrs. Vives on behalf of Sterela for Savings Account No. 10-
merely “accommodated” Doronilla by lending his money without 1567 expressly states that—
consideration, as a favor to his good friend Sanchez. It was however “2. Deposits and withdrawals must be made by the depositor
clear to the parties to the transaction that the money would not be personally or upon his written authority duly authenticated, and
removed from Sterela’s savings account and would be returned to neither a deposit nor a withdrawal will be permitted except upon
private respondent after thirty (30) days. the production of the depositor savings bank book in which will be
Doronilla’s attempts to return to private respondent the amount of entered by the Bank the amount deposited or withdrawn.”[30]
P200,000.00 which the latter deposited in Sterela’s account Said rule notwithstanding, Doronilla was permitted by petitioner,
together with an additional P12,000.00, allegedly representing through Atienza, the Assistant Branch Manager for the Buendia
interest on the mutuum, did not convert the transaction from a Branch of petitioner, to withdraw therefrom even without
commodatum into a mutuum because such was not the intent of presenting the passbook (which Atienza very well knew was in the
the parties and because the additionalP12,000.00 corresponds to possession of Mrs. Vives), not just once, but several times. Both the
the fruits of the lending of the P200,000.00. Article 1935 of the Civil Court of Appeals and the trial court found that Atienza allowed said
Code expressly states that “[t]he bailee in commodatum acquires withdrawals because he was party to Doronilla’s “scheme” of
the use of the thing loaned but not its fruits.” Hence, it was only defrauding private respondent.
proper for Doronilla to remit to private respondent the interest
accruing to the latter’s money deposited with petitioner. As regards the “interest”

Neither does the Court agree with petitioner’s contention that it is - Attempt to return P200,000 with additional P12,000 does not
not solidarily liable for the return of private respondent’s money convert the transaction from commodatum to muttum absent any
because it was not privy to the transaction between Doronilla and showing of such intention.
private respondent. The nature of said transaction, that is, whether
- In fact, the 12k corresponds to the fruits of the thing.
it is a mutuum or a commodatum, has no bearing on the question of
petitioner’s liability for the return of private respondent’s money - 1935: bailee acquires only the USE but NOT the FRUITS.
because the factual circumstances of the case clearly show that
- It was only proper for Doronilla to remit to Vives the interest the work at the mill was finished; that Magdaleno Jimenea died on
accruing to the money deposited in the bank. the 28th of October, 1904, and the defendant herein was appointed
by the Court of First Instance of Occidental Negros administratrix of
As regards the “privity” his estate and she took over the administration of the same and is
- Whether the transaction was mutuum or commodatum has no still performing her duties as such administratrix; that the plaintiff
bearing on your liability. Your liability is founded upon your presented his claim to the commissioners of the estate of Jimenea,
employee’s fault under 2180 (vicarious). within the legal term, for the return of the said ten carabaos, but
the said commissioners rejected his claim as appears in their report;
- Atienza was in conspiracy with Doronilla’s scheme. The passbook therefore, the plaintiff prayed that judgment be entered against the
in custody of Vives says that one cannot withdraw without that defendant as administratrix of the estate of the deceased, ordering
passbook. How come Doronilla was able to get the money? her to return the ten first-class carabaos loaned to the late Jimenea,
or their present value, and to pay the costs.
- Atienza also knew very well that Vives was the owner of the
money as he was expressly told by the wife. The defendant was duly summoned, and on the 25th of September,
1906, she demurred in writing to the complaint on the ground that
G.R. No. L-4150 February 10, 1910
it was vague; but on the 2d of October of the same year, in answer
FELIX DE LOS SANTOS, plaintiff-appelle, vs. AGUSTINA JARRA, to the complaint, she said that it was true that the late Magdaleno
administratrix of the estate of Magdaleno Jimenea, deceased, Jimenea asked the plaintiff to loan him ten carabaos, but that he
defendant-appellant. only obtained three second-class animals, which were afterwards
transferred by sale by the plaintiff to the said Jimenea; that she
On the 1st of September, 1906, Felix de los Santos brought suit denied the allegations contained in paragraph 3 of the complaint;
against Agustina Jarra, the administratrix of the estate of for all of which she asked the court to absolve her of the complaint
Magdaleno Jimenea, alleging that in the latter part of 1901 Jimenea with the cost against the plaintiff.
borrowed and obtained from the plaintiff ten first-class carabaos, to
be used at the animal-power mill of his hacienda during the season By a writing dated the 11th of December, 1906, Attorney Jose Felix
of 1901-2, without recompense or remuneration whatever for the Martinez notified the defendant and her counsel, Matias Hilado,
use thereof, under the sole condition that they should be returned that he had made an agreement with the plaintiff to the effect that
to the owner as soon as the work at the mill was terminated; that the latter would not compromise the controversy without his
Magdaleno Jimenea, however, did not return the carabaos, consent, and that as fees for his professional services he was to
notwithstanding the fact that the plaintiff claimed their return after receive one half of the amount allowed in the judgment if the same
were entered in favor of the plaintiff.
The case came up for trial, evidence was adduced by both parties, letters produced at the trial by the plaintiff, and that Jimenea
and either exhibits were made of record. On the 10th of January, received them in the presence of some of said persons, one being a
1907, the court below entered judgment sentencing Agustina Jarra, brother of said Jimenea, who saw the animals arrive at the hacienda
as administratrix of the estate of Magdaleno Jimenea, to return to where it was proposed to employ them. Four died of rinderpest,
the plaintiff, Felix de los Santos, the remaining six second and third and it is for this reason that the judgment appealed from only deals
class carabaos, or the value thereof at the rate of P120 each, or a with six surviving carabaos.
total of P720 with the costs.
The alleged purchase of three carabaos by Jimenea from his son-in-
Counsel for the defendant excepted to the foregoing judgment, law Santos is not evidenced by any trustworthy documents such as
and, by a writing dated January 19, moved for anew trial on the those of transfer, nor were the declarations of the witnesses
ground that the findings of fact were openly and manifestly presented by the defendant affirming it satisfactory; for said reason
contrary to the weight of the evidence. The motion was overruled, it can not be considered that Jimenea only received three carabaos
the defendant duly excepted, and in due course submitted the on loan from his son-in-law, and that he afterwards kept them
corresponding bill of exceptions, which was approved and definitely by virtue of the purchase.
submitted to this court.
By the laws in force the transfer of large cattle was and is still made
The defendant has admitted that Magdaleno Jimenea asked the by means of official documents issued by the local authorities; these
plaintiff for the loan of ten carabaos which are now claimed by the documents constitute the title of ownership of the carabao or horse
latter, as shown by two letters addressed by the said Jimenea to so acquired. Furthermore, not only should the purchaser be
Felix de los Santos; but in her answer the said defendant alleged provided with a new certificate or credential, a document which has
that the late Jimenea only obtained three second-class carabaos, not been produced in evidence by the defendant, nor has the loss of
which were subsequently sold to him by the owner, Santos; the same been shown in the case, but the old documents ought to
therefore, in order to decide this litigation it is indispensable that be on file in the municipality, or they should have been delivered to
proof be forthcoming that Jimenea only received three carabaos the new purchaser, and in the case at bar neither did the defendant
from his son-in-law Santos, and that they were sold by the latter to present the old credential on which should be stated the name of
him. the previous owner of each of the three carabaos said to have been
sold by the plaintiff.
The record discloses that it has been fully proven from the
testimony of a sufficient number of witnesses that the plaintiff, From the foregoing it may be logically inferred that the carabaos
Santos, sent in charge of various persons the ten carabaos loaned or given on commodatum to the now deceased Magdaleno
requested by his father-in-law, Magdaleno Jimenea, in the two Jimenea were ten in number; that they, or at any rate the six
surviving ones, have not been returned to the owner thereof, Felix the loan has been in consideration for the person of the bailee, in
de los Santos, and that it is not true that the latter sold to the which case his heirs shall not have the right to continue using the
former three carabaos that the purchaser was already using; thing loaned.
therefore, as the said six carabaos were not the property of the
deceased nor of any of his descendants, it is the duty of the The carabaos delivered to be used not being returned by the
administratrix of the estate to return them or indemnify the owner defendant upon demand, there is no doubt that she is under
for their value. obligation to indemnify the owner thereof by paying him their
value.
The Civil Code, in dealing with loans in general, from which generic
denomination the specific one of commodatum is derived, Article 1101 of said code reads:
establishes prescriptions in relation to the last-mentioned contract Those who in fulfilling their obligations are guilty of fraud,
by the following articles: negligence, or delay, and those who in any manner whatsoever act
ART. 1740. By the contract of loan, one of the parties delivers to the in contravention of the stipulations of the same, shall be subjected
other, either anything not perishable, in order that the latter may to indemnify for the losses and damages caused thereby.
use it during a certain period and return it to the former, in which The obligation of the bailee or of his successors to return either the
case it is called commodatum, or money or any other perishable thing loaned or its value, is sustained by the supreme tribunal of
thing, under the condition to return an equal amount of the same Sapin. In its decision of March 21, 1895, it sets out with precision
kind and quality, in which case it is merely called a loan. the legal doctrine touching commodatum as follows:
Commodatum is essentially gratuitous. Although it is true that in a contract of commodatum the bailor
A simple loan may be gratuitous, or made under a stipulation to pay retains the ownership of the thing loaned, and at the expiration of
interest. the period, or after the use for which it was loaned has been
accomplished, it is the imperative duty of the bailee to return the
ART. 1741. The bailee acquires retains the ownership of the thing thing itself to its owner, or to pay him damages if through the fault
loaned. The bailee acquires the use thereof, but not its fruits; if any of the bailee the thing should have been lost or injured, it is clear
compensation is involved, to be paid by the person requiring the that where public securities are involved, the trial court, in deferring
use, the agreement ceases to be a commodatum. to the claim of the bailor that the amount loaned be returned him
by the bailee in bonds of the same class as those which constituted
ART. 1742. The obligations and rights which arise from the
the contract, thereby properly applies law 9 of title 11 of partida 5.
commodatum pass to the heirs of both contracting parties, unless
With regard to the third assignment of error, based on the fact that is our opinion that it should be affirmed and we do hereby affirm it
the plaintiff Santos had not appealed from the decision of the with the costs against the appellant. So ordered.
commissioners rejecting his claim for the recovery of his carabaos, it
is sufficient to estate that we are not dealing with a claim for the G.R. No. 80294-95 September 21, 1988
payment of a certain sum, the collection of a debt from the estate, CATHOLIC VICAR APOSTOLIC OF THE MOUNTAIN PROVINCE,
or payment for losses and damages (sec. 119, Code of Civil petitioner, vs. COURT OF APPEALS, HEIRS OF EGMIDIO
Procedure), but with the exclusion from the inventory of the OCTAVIANO AND JUAN VALDEZ, respondents.
property of the late Jimenea, or from his capital, of six carabaos
which did not belong to him, and which formed no part of the The principal issue in this case is whether or not a decision of the
inheritance. Court of Appeals promulgated a long time ago can properly be
considered res judicata by respondent Court of Appeals in the
The demand for the exclusion of the said carabaos belonging to a present two cases between petitioner and two private respondents.
third party and which did not form part of the property of the
deceased, must be the subject of a direct decision of the court in an Petitioner questions as allegedly erroneous the Decision dated
ordinary action, wherein the right of the third party to the property August 31, 1987 of the Ninth Division of Respondent Court of
which he seeks to have excluded from the inheritance and the right Appeals 1 in CA-G.R. No. 05148 [Civil Case No. 3607 (419)] and CA-
of the deceased has been discussed, and rendered in view of the G.R. No. 05149 [Civil Case No. 3655 (429)], both for Recovery of
result of the evidence adduced by the administrator of the estate Possession, which affirmed the Decision of the Honorable Nicodemo
and of the claimant, since it is so provided by the second part of T. Ferrer, Judge of the Regional Trial Court of Baguio and Benguet in
section 699 and by section 703 of the Code of Civil Procedure; the Civil Case No. 3607 (419) and Civil Case No. 3655 (429), with the
refusal of the commissioners before whom the plaintiff dispositive portion as follows:
unnecessarily appeared can not affect nor reduce the
WHEREFORE, Judgment is hereby rendered ordering the defendant,
unquestionable right of ownership of the latter, inasmuch as there
Catholic Vicar Apostolic of the Mountain Province to return and
is no law nor principle of justice authorizing the successors of the
surrender Lot 2 of Plan Psu-194357 to the plaintiffs. Heirs of Juan
late Jimenea to enrich themselves at the cost and to the prejudice
Valdez, and Lot 3 of the same Plan to the other set of plaintiffs, the
of Felix de los Santos.
Heirs of Egmidio Octaviano (Leonardo Valdez, et al.). For lack or
For the reasons above set forth, by which the errors assigned to the insufficiency of evidence, the plaintiffs' claim or damages is hereby
judgment appealed from have been refuted, and considering that denied. Said defendant is ordered to pay costs. (p. 36, Rollo)
the same is in accordance with the law and the merits of the case, it
Respondent Court of Appeals, in affirming the trial court's decision, school dormitories, social hall, stonewalls, etc. On March 22, 1963
sustained the trial court's conclusions that the Decision of the Court the Heirs of Juan Valdez and the Heirs of Egmidio Octaviano filed
of Appeals, dated May 4,1977 in CA-G.R. No. 38830-R, in the two their Answer/Opposition on Lots Nos. 2 and 3, respectively,
cases affirmed by the Supreme Court, touched on the ownership of asserting ownership and title thereto. After trial on the merits, the
lots 2 and 3 in question; that the two lots were possessed by the land registration court promulgated its Decision, dated November
predecessors-in-interest of private respondents under claim of 17, 1965, confirming the registrable title of VICAR to Lots 1, 2, 3,
ownership in good faith from 1906 to 1951; that petitioner had and 4.
been in possession of the same lots as bailee in commodatum up to
1951, when petitioner repudiated the trust and when it applied for The Heirs of Juan Valdez (plaintiffs in the herein Civil Case No. 3655)
registration in 1962; that petitioner had just been in possession as and the Heirs of Egmidio Octaviano (plaintiffs in the herein Civil
owner for eleven years, hence there is no possibility of acquisitive Case No. 3607) appealed the decision of the land registration court
prescription which requires 10 years possession with just title and to the then Court of Appeals, docketed as CA-G.R. No. 38830-R. The
30 years of possession without; that the principle of res judicata on Court of Appeals rendered its decision, dated May 9, 1977,
these findings by the Court of Appeals will bar a reopening of these reversing the decision of the land registration court and dismissing
the VICAR's application as to Lots 2 and 3, the lots claimed by the
questions of facts; and that those facts may no longer be altered.
two sets of oppositors in the land registration case (and two sets of
Petitioner's motion for reconsideation of the respondent appellate plaintiffs in the two cases now at bar), the first lot being presently
court's Decision in the two aforementioned cases (CA G.R. No. CV- occupied by the convent and the second by the women's dormitory
05418 and 05419) was denied. and the sister's convent.

The facts and background of these cases as narrated by the trail On May 9, 1977, the Heirs of Octaviano filed a motion for
court are as follows — reconsideration praying the Court of Appeals to order the
registration of Lot 3 in the names of the Heirs of Egmidio Octaviano,
... The documents and records presented reveal that the whole and on May 17, 1977, the Heirs of Juan Valdez and Pacita Valdez
controversy started when the defendant Catholic Vicar Apostolic of filed their motion for reconsideration praying that both Lots 2 and 3
the Mountain Province (VICAR for brevity) filed with the Court of be ordered registered in the names of the Heirs of Juan Valdez and
First Instance of Baguio Benguet on September 5, 1962 an Pacita Valdez. On August 12,1977, the Court of Appeals denied the
application for registration of title over Lots 1, 2, 3, and 4 in Psu- motion for reconsideration filed by the Heirs of Juan Valdez on the
194357, situated at Poblacion Central, La Trinidad, Benguet, ground that there was "no sufficient merit to justify reconsideration
docketed as LRC N-91, said Lots being the sites of the Catholic one way or the other ...," and likewise denied that of the Heirs of
Church building, convents, high school building, school gymnasium,
Egmidio Octaviano.
Thereupon, the VICAR filed with the Supreme Court a petition for It was at that stage that the instant cases were filed. The Heirs of
review on certiorari of the decision of the Court of Appeals Egmidio Octaviano filed Civil Case No. 3607 (419) on July 24, 1979,
dismissing his (its) application for registration of Lots 2 and 3, for recovery of possession of Lot 3; and the Heirs of Juan Valdez
docketed as G.R. No. L-46832, entitled 'Catholic Vicar Apostolic of filed Civil Case No. 3655 (429) on September 24, 1979, likewise for
the Mountain Province vs. Court of Appeals and Heirs of Egmidio recovery of possession of Lot 2 (Decision, pp. 199-201, Orig. Rec.).
Octaviano.'
In Civil Case No. 3607 (419) trial was held. The plaintiffs Heirs of
From the denial by the Court of Appeals of their motion for Egmidio Octaviano presented one (1) witness, Fructuoso Valdez,
reconsideration the Heirs of Juan Valdez and Pacita Valdez, on who testified on the alleged ownership of the land in question (Lot
September 8, 1977, filed with the Supreme Court a petition for 3) by their predecessor-in-interest, Egmidio Octaviano (Exh. C ); his
review, docketed as G.R. No. L-46872, entitled, Heirs of Juan Valdez written demand (Exh. B—B-4 ) to defendant Vicar for the return of
and Pacita Valdez vs. Court of Appeals, Vicar, Heirs of Egmidio the land to them; and the reasonable rentals for the use of the land
Octaviano and Annable O. Valdez. at P10,000.00 per month. On the other hand, defendant Vicar
presented the Register of Deeds for the Province of Benguet, Atty.
On January 13, 1978, the Supreme Court denied in a minute Nicanor Sison, who testified that the land in question is not covered
resolution both petitions (of VICAR on the one hand and the Heirs of by any title in the name of Egmidio Octaviano or any of the plaintiffs
Juan Valdez and Pacita Valdez on the other) for lack of merit. Upon
(Exh. 8). The defendant dispensed with the testimony of
the finality of both Supreme Court resolutions in G.R. No. L-46832 Mons.William Brasseur when the plaintiffs admitted that the
and G.R. No. L- 46872, the Heirs of Octaviano filed with the then witness if called to the witness stand, would testify that defendant
Court of First Instance of Baguio, Branch II, a Motion For Execution Vicar has been in possession of Lot 3, for seventy-five (75) years
of Judgment praying that the Heirs of Octaviano be placed in continuously and peacefully and has constructed permanent
possession of Lot 3. The Court, presided over by Hon. Salvador J. structures thereon.
Valdez, on December 7, 1978, denied the motion on the ground
that the Court of Appeals decision in CA-G.R. No. 38870 did not In Civil Case No. 3655, the parties admitting that the material facts
grant the Heirs of Octaviano any affirmative relief. are not in dispute, submitted the case on the sole issue of whether
or not the decisions of the Court of Appeals and the Supreme Court
On February 7, 1979, the Heirs of Octaviano filed with the Court of touching on the ownership of Lot 2, which in effect declared the
Appeals a petitioner for certiorari and mandamus, docketed as CA-
plaintiffs the owners of the land constitute res judicata.
G.R. No. 08890-R, entitled Heirs of Egmidio Octaviano vs. Hon.
Salvador J. Valdez, Jr. and Vicar. In its decision dated May 16, 1979, In these two cases , the plaintiffs arque that the defendant Vicar is
the Court of Appeals dismissed the petition. barred from setting up the defense of ownership and/or long and
continuous possession of the two lots in question since this is 5. ERROR IN FINDING THAT VALDEZ AND OCTAVIANO HAD
barred by prior judgment of the Court of Appeals in CA-G.R. No. FREE PATENT APPLICATIONS AND THE PREDECESSORS OF PRIVATE
038830-R under the principle of res judicata. Plaintiffs contend that RESPONDENTS ALREADY HAD FREE PATENT APPLICATIONS SINCE
the question of possession and ownership have already been 1906;
determined by the Court of Appeals (Exh. C, Decision, CA-G.R. No.
038830-R) and affirmed by the Supreme Court (Exh. 1, Minute 6. ERROR IN FINDING THAT PETITIONER DECLARED LOTS 2
Resolution of the Supreme Court). On his part, defendant Vicar AND 3 ONLY IN 1951 AND JUST TITLE IS A PRIME NECESSITY UNDER
ARTICLE 1134 IN RELATION TO ART. 1129 OF THE CIVIL CODE FOR
maintains that the principle of res judicata would not prevent them
from litigating the issues of long possession and ownership because ORDINARY ACQUISITIVE PRESCRIPTION OF 10 YEARS;
the dispositive portion of the prior judgment in CA-G.R. No. 038830- 7. ERROR IN FINDING THAT THE DECISION OF THE COURT OF
R merely dismissed their application for registration and titling of APPEALS IN CA G.R. NO. 038830 WAS AFFIRMED BY THE SUPREME
lots 2 and 3. Defendant Vicar contends that only the dispositive COURT;
portion of the decision, and not its body, is the controlling
pronouncement of the Court of Appeals. 2 8. ERROR IN FINDING THAT THE DECISION IN CA G.R. NO.
038830 TOUCHED ON OWNERSHIP OF LOTS 2 AND 3 AND THAT
The alleged errors committed by respondent Court of Appeals PRIVATE RESPONDENTS AND THEIR PREDECESSORS WERE IN
according to petitioner are as follows: POSSESSION OF LOTS 2 AND 3 UNDER A CLAIM OF OWNERSHIP IN
1. ERROR IN APPLYING LAW OF THE CASE AND RES JUDICATA; GOOD FAITH FROM 1906 TO 1951;

2. ERROR IN FINDING THAT THE TRIAL COURT RULED THAT 9. ERROR IN FINDING THAT PETITIONER HAD BEEN IN
LOTS 2 AND 3 WERE ACQUIRED BY PURCHASE BUT WITHOUT POSSESSION OF LOTS 2 AND 3 MERELY AS BAILEE BOR ROWER) IN
DOCUMENTARY EVIDENCE PRESENTED; COMMODATUM, A GRATUITOUS LOAN FOR USE;

3. ERROR IN FINDING THAT PETITIONERS' CLAIM IT 10. ERROR IN FINDING THAT PETITIONER IS A POSSESSOR AND
BUILDER IN GOOD FAITH WITHOUT RIGHTS OF RETENTION AND
PURCHASED LOTS 2 AND 3 FROM VALDEZ AND OCTAVIANO WAS AN
IMPLIED ADMISSION THAT THE FORMER OWNERS WERE VALDEZ REIMBURSEMENT AND IS BARRED BY THE FINALITY AND
AND OCTAVIANO; CONCLUSIVENESS OF THE DECISION IN CA G.R. NO. 038830. 3

4. ERROR IN FINDING THAT IT WAS PREDECESSORS OF The petition is bereft of merit.


PRIVATE RESPONDENTS WHO WERE IN POSSESSION OF LOTS 2 AND
3 AT LEAST FROM 1906, AND NOT PETITIONER;
Petitioner questions the ruling of respondent Court of Appeals in the lands in question under its ownership, on its evaluation of
CA-G.R. Nos. 05148 and 05149, when it clearly held that it was in evidence and conclusion of facts.
agreement with the findings of the trial court that the Decision of
the Court of Appeals dated May 4,1977 in CA-G.R. No. 38830-R, on The Court of Appeals found that petitioner did not meet the
the question of ownership of Lots 2 and 3, declared that the said requirement of 30 years possession for acquisitive prescription over
Court of Appeals Decision CA-G.R. No. 38830-R) did not positively Lots 2 and 3. Neither did it satisfy the requirement of 10 years
declare private respondents as owners of the land, neither was it possession for ordinary acquisitive prescription because of the
absence of just title. The appellate court did not believe the findings
declared that they were not owners of the land, but it held that the
predecessors of private respondents were possessors of Lots 2 and of the trial court that Lot 2 was acquired from Juan Valdez by
3, with claim of ownership in good faith from 1906 to 1951. purchase and Lot 3 was acquired also by purchase from Egmidio
Petitioner was in possession as borrower in commodatum up to Octaviano by petitioner Vicar because there was absolutely no
1951, when it repudiated the trust by declaring the properties in its documentary evidence to support the same and the alleged
name for taxation purposes. When petitioner applied for purchases were never mentioned in the application for registration.
registration of Lots 2 and 3 in 1962, it had been in possession in By the very admission of petitioner Vicar, Lots 2 and 3 were owned
concept of owner only for eleven years. Ordinary acquisitive by Valdez and Octaviano. Both Valdez and Octaviano had Free
prescription requires possession for ten years, but always with just Patent Application for those lots since 1906. The predecessors of
title. Extraordinary acquisitive prescription requires 30 years. 4 private respondents, not petitioner Vicar, were in possession of the
On the above findings of facts supported by evidence and evaluated questioned lots since 1906.
by the Court of Appeals in CA-G.R. No. 38830-R, affirmed by this There is evidence that petitioner Vicar occupied Lots 1 and 4, which
Court, We see no error in respondent appellate court's ruling that are not in question, but not Lots 2 and 3, because the buildings
said findings are res judicata between the parties. They can no standing thereon were only constructed after liberation in 1945.
longer be altered by presentation of evidence because those issues Petitioner Vicar only declared Lots 2 and 3 for taxation purposes in
were resolved with finality a long time ago. To ignore the principle 1951. The improvements oil Lots 1, 2, 3, 4 were paid for by the
of res judicata would be to open the door to endless litigations by Bishop but said Bishop was appointed only in 1947, the church was
continuous determination of issues without end. constructed only in 1951 and the new convent only 2 years before
An examination of the Court of Appeals Decision dated May 4, 1977, the trial in 1963.
First Division 5 in CA-G.R. No. 38830-R, shows that it reversed the
trial court's Decision 6 finding petitioner to be entitled to register
When petitioner Vicar was notified of the oppositor's claims, the of the Court of Appeals in CA-G.R. No. 38830-R is governing, under
parish priest offered to buy the lot from Fructuoso Valdez. Lots 2 the principle of res judicata, hence the rule, in the present cases CA-
and 3 were surveyed by request of petitioner Vicar only in 1962. G.R. No. 05148 and CA-G.R. No. 05149. The facts as supported by
evidence established in that decision may no longer be altered.
Private respondents were able to prove that their predecessors'
house was borrowed by petitioner Vicar after the church and the WHEREFORE AND BY REASON OF THE FOREGOING, this petition is
convent were destroyed. They never asked for the return of the DENIED for lack of merit, the Decision dated Aug. 31, 1987 in CA-
house, but when they allowed its free use, they became bailors in G.R. Nos. 05148 and 05149, by respondent Court of Appeals is
commodatum and the petitioner the bailee. The bailees' failure to AFFIRMED, with costs against petitioner.
return the subject matter of commodatum to the bailor did not
mean adverse possession on the part of the borrower. The bailee SO ORDERED.
held in trust the property subject matter of commodatum. The G.R. No. 146364 June 3, 2004
adverse claim of petitioner came only in 1951 when it declared the
lots for taxation purposes. The action of petitioner Vicar by such COLITO T. PAJUYO, petitioner, vs. COURT OF APPEALS and EDDIE
adverse claim could not ripen into title by way of ordinary GUEVARRA, respondents.
acquisitive prescription because of the absence of just title.
FACTS:
The Court of Appeals found that the predecessors-in-interest and
Petitioner Pajuyo paid P400 to a certain Pedro Perez for the rights
private respondents were possessors under claim of ownership in
over a lot, where Pajuyo subsequently built a house. In 1985, Pajuyo
good faith from 1906; that petitioner Vicar was only a bailee in
and private respondent Guevarra executed a Kasunduan wherein
commodatum; and that the adverse claim and repudiation of trust
Pajuyo allowed Guevarra to live in the house for free, on the
came only in 1951.
condition that Guevarra would maintain the cleanliness and
We find no reason to disregard or reverse the ruling of the Court of orderliness of the house. Guevarra promised that he would vacate
Appeals in CA-G.R. No. 38830-R. Its findings of fact have become the premises upon Pajuyo’s demand.
incontestible. This Court declined to review said decision, thereby in
In 1994, Pajuyo informed Guevarra of his need of the house and
effect, affirming it. It has become final and executory a long time
demanded that the latter vacate the house. Guevarra refused.
ago.
Pajuyo filed an ejectment case against Guevarra before the MTC.
Respondent appellate court did not commit any reversible error, Guevarra claimed that Pajuyo had no valid title over the lot since it
much less grave abuse of discretion, when it held that the Decision is within the area set aside for socialized housing. MTC rendered its
decision in favor of Pajuyo, which was affirmed by RTC. (MTC and While the Kasunduan did not require Guevarra to pay rent, it
RTC basically ruled that the Kasunduan created a legal tie akin to obligated him to maintain the property in good condition. The
that of a landlord and tenant relationship). CA reversed the RTC imposition of this obligation makes the Kasunduan a contract
decision, stating that the ejectment case is without legal basis since different from a commodatum. The effects of the Kasunduan are
both Pajuyo and Guevarra illegally occupied the said lot. CA further also different from that of a commodatum. Case law on ejectment
stated that both parties are in pari delicto; thus, the court will leave has treated relationship based on tolerance as one that is akin to a
them where they are. CA ruled that the Kasunduan is not a lease landlord-tenant relationship where the withdrawal of permission
contract, but a commodatum because the agreement is not for a would result in the termination of the lease. The tenant’s
price certain. withholding of the property would then be unlawful. Even assuming
that the relationship between Pajuyo and Guevarra is one of
ISSUE: W/N the contractual relationship between Pajuyo and commodatum, Guevarra as bailee would still have the duty to turn
Guevarra was that of a commodatum over possession of the property to Pajuyo, the bailor. The obligation
HELD: NO. to deliver or to return the thing received attaches to contracts for
safekeeping, or contracts of commission, administration and
In a contract of commodatum, one of the parties delivers to another commodatum.70 These contracts certainly involve the obligation to
something not consumable so that the latter may use the same for deliver or return the thing received. Guevarra turned his back on
a certain time and return it. An essential feature of commodatum is the Kasunduan on the sole ground that like him, Pajuyo is also a
that it is gratuitous. squatter. Guevarra should know that there must be honor even
between squatters. Guevarra freely entered into the Kasunduan.
Another feature of commodatum is that the use of the thing
Guevarra cannot now impugn the Kasunduan after he had benefited
belonging to another is for a certain period. Thus, the bailor cannot
from it. The Kasunduan binds Guevarra. The Kasunduan is not void
demand the return of the thing loaned until after expiration of the
for purposes of determining who between Pajuyo and Guevarra has
period stipulated, or after accomplishment of the use for which the
a right to physical possession of the contested property. The
commodatum is constituted. If the bailor should have urgent need
Kasunduan is the undeniable evidence of Guevarra’s recognition of
of the thing, he may demand its return for temporary use. If the use
Pajuyo’s better right of physical possession. Guevarra is clearly a
of the thing is merely tolerated by the bailor, he can demand the
possessor in bad faith. The absence of a contract would not yield a
return of the thing at will, in which case the contractual relation is
different result, as there would still be an implied promise to vacate.
called a precarium. Under the Civil Code, precarium is a kind of
commodatum. The Kasunduan reveals that the accommodation G.R. No. L-17474 October 25, 1962
accorded by Pajuyo to Guevarra was not essentially gratuitous.
REPUBLIC OF THE PHILIPPINES, plaintiff-appellee, vs. JOSE V. Instance of Manila the Republic of the Philippines commenced an
BAGTAS, defendant, action against him praying that he be ordered to return the three
bulls loaned to him or to pay their book value in the total sum of
FELICIDAD M. BAGTAS, Administratrix of the Intestate Estate left P3,241.45 and the unpaid breeding fee in the sum of P199.62, both
by the late Jose V. Bagtas, petitioner-appellant. with interests, and costs; and that other just and equitable relief be
PADILLA, J.: granted in (civil No. 12818).

The Court of Appeals certified this case to this Court because only On 5 July 1951 Jose V. Bagtas, through counsel Navarro, Rosete and
questions of law are raised. Manalo, answered that because of the bad peace and order
situation in Cagayan Valley, particularly in the barrio of Baggao, and
On 8 May 1948 Jose V. Bagtas borrowed from the Republic of the of the pending appeal he had taken to the Secretary of Agriculture
Philippines through the Bureau of Animal Industry three bulls: a Red and Natural Resources and the President of the Philippines from the
Sindhi with a book value of P1,176.46, a Bhagnari, of P1,320.56 and refusal by the Director of Animal Industry to deduct from the book
a Sahiniwal, of P744.46, for a period of one year from 8 May 1948 to value of the bulls corresponding yearly depreciation of 8% from the
7 May 1949 for breeding purposes subject to a government charge date of acquisition, to which depreciation the Auditor General did
of breeding fee of 10% of the book value of the bulls. Upon the not object, he could not return the animals nor pay their value and
expiration on 7 May 1949 of the contract, the borrower asked for a prayed for the dismissal of the complaint.
renewal for another period of one year. However, the Secretary of
Agriculture and Natural Resources approved a renewal thereof of After hearing, on 30 July 1956 the trial court render judgment —
only one bull for another year from 8 May 1949 to 7 May 1950 and . . . sentencing the latter (defendant) to pay the sum of P3,625.09
requested the return of the other two. On 25 March 1950 Jose V. the total value of the three bulls plus the breeding fees in the
Bagtas wrote to the Director of Animal Industry that he would pay amount of P626.17 with interest on both sums of (at) the legal rate
the value of the three bulls. On 17 October 1950 he reiterated his
from the filing of this complaint and costs.
desire to buy them at a value with a deduction of yearly
depreciation to be approved by the Auditor General. On 19 October On 9 October 1958 the plaintiff moved ex parte for a writ of
1950 the Director of Animal Industry advised him that the book execution which the court granted on 18 October and issued on 11
value of the three bulls could not be reduced and that they either November 1958. On 2 December 1958 granted an ex-parte motion
be returned or their book value paid not later than 31 October filed by the plaintiff on November 1958 for the appointment of a
1950. Jose V. Bagtas failed to pay the book value of the three bulls special sheriff to serve the writ outside Manila. Of this order
or to return them. So, on 20 December 1950 in the Court of First appointing a special sheriff, on 6 December 1958, Felicidad M.
Bagtas, the surviving spouse of the defendant Jose Bagtas who died its value to the appellee. The contention is without merit. The loan
on 23 October 1951 and as administratrix of his estate, was notified. by the appellee to the late defendant Jose V. Bagtas of the three
On 7 January 1959 she file a motion alleging that on 26 June 1952 bulls for breeding purposes for a period of one year from 8 May
the two bull Sindhi and Bhagnari were returned to the Bureau 1948 to 7 May 1949, later on renewed for another year as regards
Animal of Industry and that sometime in November 1958 the third one bull, was subject to the payment by the borrower of breeding
bull, the Sahiniwal, died from gunshot wound inflicted during a Huk fee of 10% of the book value of the bulls. The appellant contends
raid on Hacienda Felicidad Intal, and praying that the writ of that the contract was commodatum and that, for that reason, as the
execution be quashed and that a writ of preliminary injunction be appellee retained ownership or title to the bull it should suffer its
issued. On 31 January 1959 the plaintiff objected to her motion. On loss due to force majeure. A contract of commodatum is essentially
6 February 1959 she filed a reply thereto. On the same day, 6 gratuitous.1 If the breeding fee be considered a compensation, then
February, the Court denied her motion. Hence, this appeal certified the contract would be a lease of the bull. Under article 1671 of the
by the Court of Appeals to this Court as stated at the beginning of Civil Code the lessee would be subject to the responsibilities of a
this opinion. possessor in bad faith, because she had continued possession of the
bull after the expiry of the contract. And even if the contract be
It is true that on 26 June 1952 Jose M. Bagtas, Jr., son of the commodatum, still the appellant is liable, because article 1942 of
appellant by the late defendant, returned the Sindhi and Bhagnari the Civil Code provides that a bailee in a contract of commodatum
bulls to Roman Remorin, Superintendent of the NVB Station, Bureau —
of Animal Industry, Bayombong, Nueva Vizcaya, as evidenced by a
memorandum receipt signed by the latter (Exhibit 2). That is why in . . . is liable for loss of the things, even if it should be through a
its objection of 31 January 1959 to the appellant's motion to quash fortuitous event:
the writ of execution the appellee prays "that another writ of
execution in the sum of P859.53 be issued against the estate of (2) If he keeps it longer than the period stipulated . . .
defendant deceased Jose V. Bagtas." She cannot be held liable for (3) If the thing loaned has been delivered with appraisal of its
the two bulls which already had been returned to and received by value, unless there is a stipulation exempting the bailee from
the appellee. responsibility in case of a fortuitous event;
The appellant contends that the Sahiniwal bull was accidentally The original period of the loan was from 8 May 1948 to 7 May 1949.
killed during a raid by the Huk in November 1953 upon the The loan of one bull was renewed for another period of one year to
surrounding barrios of Hacienda Felicidad Intal, Baggao, Cagayan, end on 8 May 1950. But the appellant kept and used the bull until
where the animal was kept, and that as such death was due to force November 1953 when during a Huk raid it was killed by stray
majeure she is relieved from the duty of returning the bull or paying
bullets. Furthermore, when lent and delivered to the deceased administration of the estate of the late Jose Bagtas and that "all
husband of the appellant the bulls had each an appraised book persons having claims for monopoly against the deceased Jose V.
value, to with: the Sindhi, at P1,176.46, the Bhagnari at P1,320.56 Bagtas, arising from contract express or implied, whether the same
and the Sahiniwal at P744.46. It was not stipulated that in case of be due, not due, or contingent, for funeral expenses and expenses
loss of the bull due to fortuitous event the late husband of the of the last sickness of the said decedent, and judgment for
appellant would be exempt from liability. monopoly against him, to file said claims with the Clerk of this Court
at the City Hall Bldg., Highway 54, Quezon City, within six (6) months
The appellant's contention that the demand or prayer by the
from the date of the first publication of this order, serving a copy
appellee for the return of the bull or the payment of its value being thereof upon the aforementioned Felicidad M. Bagtas, the
a money claim should be presented or filed in the intestate appointed administratrix of the estate of the said deceased," is not
proceedings of the defendant who died on 23 October 1951, is not a notice to the court and the appellee who were to be notified of
altogether without merit. However, the claim that his civil the defendant's death in accordance with the above-quoted rule,
personality having ceased to exist the trial court lost jurisdiction and there was no reason for such failure to notify, because the
over the case against him, is untenable, because section 17 of Rule attorney who appeared for the defendant was the same who
3 of the Rules of Court provides that — represented the administratrix in the special proceedings instituted
After a party dies and the claim is not thereby extinguished, the for the administration and settlement of his estate. The appellee or
court shall order, upon proper notice, the legal representative of its attorney or representative could not be expected to know of the
the deceased to appear and to be substituted for the deceased, death of the defendant or of the administration proceedings of his
within a period of thirty (30) days, or within such time as may be estate instituted in another court that if the attorney for the
granted. . . . deceased defendant did not notify the plaintiff or its attorney of
such death as required by the rule.
and after the defendant's death on 23 October 1951 his counsel
failed to comply with section 16 of Rule 3 which provides that — As the appellant already had returned the two bulls to the appellee,
the estate of the late defendant is only liable for the sum of
Whenever a party to a pending case dies . . . it shall be the duty of P859.63, the value of the bull which has not been returned to the
his attorney to inform the court promptly of such death . . . and to appellee, because it was killed while in the custody of the
give the name and residence of the executory administrator, administratrix of his estate. This is the amount prayed for by the
guardian, or other legal representative of the deceased . . . . appellee in its objection on 31 January 1959 to the motion filed on 7
January 1959 by the appellant for the quashing of the writ of
The notice by the probate court and its publication in the Voz de
execution.
Manila that Felicidad M. Bagtas had been issue letters of
Special proceedings for the administration and settlement of the
estate of the deceased Jose V. Bagtas having been instituted in the
Court of First Instance of Rizal (Q-200), the money judgment
rendered in favor of the appellee cannot be enforced by means of a
writ of execution but must be presented to the probate court for
payment by the appellant, the administratrix appointed by the
court.

ACCORDINGLY, the writ of execution appealed from is set aside,


without pronouncement as to costs.