G.R. No.
L-24968 April 27, 1972 ISSUE: Whether or not there was a perfected contract between the
SAURA IMPORT and EXPORT CO., INC., plaintiff-appellee, vs.
DEVELOPMENT BANK OF THE PHILIPPINES, defendant-appellant.
FACTS:
In July 1952, Saura, Inc., applied to Rehabilitation Finance Corp.,
now DBP, for an industrial loan of P500,000 to be used for the
construction of a factory building, to pay the balance of the jute mill
machinery and equipment and as additional working capital. In
Resolution No.145, the loan application was approved to be secured
first by mortgage on the factory buildings, the land site, and
machinery and equipment to be installed.
The mortgage was registered and documents for the promissory
note were executed. But then, later on, was cancelled to make way
for the registration of a mortgage contract over the same property
in favor of Prudential Bank and Trust Co., the latter having issued
Saura letter of credit for the release of the jute machinery. As
security, Saura execute a trust receipt in favor of the Prudential. For
failure of Saura to pay said obligation, Prudential sued Saura.
After almost 9 years, Saura Inc, commenced an action against RFC,
alleging failure on the latter to comply with its obligations to release
the loan applied for and approved, thereby preventing the plaintiff
from completing or paying contractual commitments it had entered
into, in connection with its jute mill project.
The trial court ruled in favor of Saura, ruling that there was a
perfected contract between the parties and that the RFC was guilty
of breach thereof.
parties. YES. There was indeed a perfected consensual contract.
HELD:
·Article 1934 provides: An accepted promise to deliver something by
way of commodatum or simple loan is binding upon the parties, but
the commodatum or simple loan itself shall not be perfected until
delivery of the object of the contract.
· There was undoubtedly offer and acceptance in the case. The
application of Saura, Inc. for a loan of P500,000.00 was approved by
resolution of the defendant, and the corresponding mortgage was
executed and registered. The defendant failed to fulfill its obligation
and the plaintiff is therefore entitled to recover damages.
· When an application for a loan of money was approved by
resolution of the respondent corporation and the responding
mortgage was executed and registered, there arises a perfected
consensual contract.
· However, it should be noted that RFC imposed two conditions
(availability of raw materials and increased production) when it
restored the loan to the original amount of P500,000.00.
· Saura, Inc. obviously was in no position to comply with RFC’s
conditions. So instead of doing so and insisting that the loan be
released as agreed upon, Saura, Inc. asked that the mortgage be
cancelled.The action thus taken by both parties was in the nature of
mutual desistance which is a mode of extinguishing obligations. It is
a concept that derives from the principle that since mutual
agreement can create a contract, mutual disagreement by the
parties can cause its extinguishment.
G.R. No. L-49101 October 24, 1983
RAOUL S.V. BONNEVIE and HONESTO V. BONNEVIE, petitioners,
vs. THE HONORABLE COURT OF APPEALS and THE PHILIPPINE
BANK OF COMMERCE, respondents.
Lessons Applicable: Simple Loan
Facts:
December 6, 1966: Spouses Jose M. Lozano and Josefa P. Lozano
secured their loan of P75K from Philippine Bank of Commerce (PBC)
by mortgaging their property
December 8, 1966: Executed Deed of Sale with Mortgage to
Honesto Bonnevie where P75K is payable to PBC and P25K is
payable to Spouses Lanzano.
April 28, 1967 to July 12, 1968: Honesto Bonnevie paid a total of
P18,944.22 to PBC
May 4, 1968: Honesto Bonnevie assigned all his rights under the
Deed of Sale with Assumption of Mortgage to his brother,
intervenor Raoul Bonnevie
June 10, 1968: PBC applied for the foreclosure of the mortgage, and
notice of sale was published
January 26, 1971: Honesto Bonnevie filed in the CFI of Rizal against
Philippine Bank of Commerce for the annulment of the Deed of
Mortgage dated December 6, 1966 as well as the extrajudicial
foreclosure made on September 4, 1968.
CFI: Dismissed the complaint with costs against the Bonnevies
CA: Affirmed
ISSUE: W/N the forclosure on the mortgage is validly executed.
HELD: YES. CA affirmed
A contract of loan being a consensual contract is perfected at the
same time the contract of mortgage was executed. The promissory
note executed on December 12, 1966 is only an evidence of
indebtedness and does not indicate lack of consideration of the
mortgage at the time of its execution.
Respondent Bank had every right to rely on the certificate of title. It
was not bound to go behind the same to look for flaws in the
mortgagor's title, the doctrine of innocent purchaser for value being
applicable to an innocent mortgagee for value.
Thru certificate of sale in favor of appellee was registered on
September 2, 1968 and the one year redemption period expired on
September 3, 1969. It was not until September 29, 1969 that
Honesto Bonnevie first wrote respondent and offered to redeem
the property.
loan matured on December 26, 1967 so when respondent Bank
applied for foreclosure, the loan was already six months overdue.
Payment of interest on July 12, 1968 does not make the earlier act
of PBC inequitous nor does it ipso facto result in the renewal of the
loan. In order that a renewal of a loan may be effected, not only the
payment of the accrued interest is necessary but also the payment
of interest for the proposed period of renewal as well. Besides,
whether or not a loan may be renewed does not solely depend on
the debtor but more so on the discretion of the bank.
G.R. No. 133632 February 15, 2002
BPI INVESTMENT CORPORATION, petitioner, vs. HON. COURT OF
APPEALS and ALS MANAGEMENT & DEVELOPMENT
CORPORATION, respondents.
Lessons Applicable: Simple Loan
Facts:
Frank Roa obtained a loan with interest rate of 16 1/4%/annum
from Ayala Investment and Development Corporation (AIDC), the
predecessor of BPI Investment Corp. (BPIIC), for the construction of
a house on his lot in New Alabang Village, Muntinlupa.
He mortgaged the house and lot to AIDC as security for the loan.
1980: Roa sold the house and lot to ALS Management &
Development Corp. and Antonio Litonjua for P850K who paid P350K
in cash and assumed the P500K indebtness of ROA with AIDC.
AIDC proposed to grant ALS and Litonjua a new loan for P500K with
interested rate of 20%/annum and service fee of 1%/annum on the
outstanding balance payable within 10 years through equal monthly
amortization of P9,996.58 and penalty interest of 21%/annum/day
from the date the amortization becomes due and payable.
March 1981: ALS and Litonjua executed a mortgage deed containing
the new stipulation with the provision that the monthly
amortization will commence on May 1, 1981
August 13, 1982: ALS and Litonjua paid BPIIC P190,601.35 reducing
the P500K principal loan to P457,204.90.
September 13, 1982: BPIIC released to ALS and Litonjua P7,146.87,
purporting to be what was left of their loan after full payment of
Roa’s loan
June 1984: BPIIC instituted foreclosure proceedings against ALS and
Litonjua on the ground that they failed to pay the mortgage
indebtedness which from May 1, 1981 to June 30, 1984 amounting
to P475,585.31
August 13, 1984: Notice of sheriff's sale was published
February 28, 1985: ALS and Litonjua filed Civil Case No. 52093
against BPIIC alleging that they are not in arrears and instead they
made an overpayment as of June 30, 1984 since the P500K loan was
only released September 13, 1982 which marked the start of the
amortization and since only P464,351.77 was released applying legal
compensation the balance of P35,648.23 should be applied to the
monthly amortizations
RTC: in favor of ALS and Litonjua and against BPIIC that the loan
granted by BPI to ALS and Litonjua was only in the principal sum of
P464,351.77 and awarding moral damages, exemplary damages and
attorneys fees for the publication
CA: Affirmed reasoning that a simple loan is perfected upon delivery
of the object of the contract which is on September 13, 1982
ISSUE:
W/N the contract of loan was perfected only on September 13,
1982 or the second release of the loan?
HELD:
YES. AFFIRMED WITH MODIFICATION as to the award of damages.
The award of moral and exemplary damages in favor of private
respondents is DELETED, but the award to them of attorney’s fees in
the amount of P50,000 is UPHELD. Additionally, petitioner is
ORDERED to pay private respondents P25,000 as nominal damages.
Costs against petitioner.
obligation to pay commenced only on October 13, 1982, a month
after the perfection of the contract
contract of loan involves a reciprocal obligation, wherein the
obligation or promise of each party is the consideration for that of
the other. It is a basic principle in reciprocal obligations that neither
party incurs in delay, if the other does not comply or is not ready to
comply in a proper manner with what is incumbent upon him.
Consequently, petitioner could only demand for the payment of the
monthly amortization after September 13, 1982 for it was only then
when it complied with its obligation under the loan contract.
BPIIC was negligent in relying merely on the entries found in the
deed of mortgage, without checking and correspondingly adjusting
its records on the amount actually released and the date when it
was released. Such negligence resulted in damage for which an
award of nominal damages should be given
SSS where we awarded attorney’s fees because private respondents
were compelled to litigate, we sustain the award of P50,000 in favor
of private respondents as attorney’s fees
G.R. No. 118375 October 3, 2003
CELESTINA T. NAGUIAT, petitioner, vs. COURT OF APPEALS and
AURORA QUEAÑO, respondents.
ART. 1934
Emergency Recit: Queano applied for a loan with Naguiat. Naguiat
indorsed to Queano 2 checks for said loan. In return Queano
executed a Real Estate Mortgage in favour of Naguiat. After
receiving a letter from Naqguiat’s lawyer demanding the settlement
of the loan, Queano and Ruebenfeldt (supposedly Naguiat’s agent)
telling the latter that she was not able to receive the proceeds of
the loan. Queano thus filed a case for the annulment of the
mortgage. The mortgage was declared null and void by the
lowercourts, hence this petition. Naguiat cites the rule that public
documents enjoy the presumption of validity and truthfulness of its
contents. However, the presumption of the truthfulness of the
contents ina public document was defeated by the clear and
convincing evidence that pointed to the absence of consideration.
No evidence was presented by Naguiat proving that the checks she
issued were actually encashed or deposited. The mere issuance of
checks does not result to the perfection of a loan. A loan isa real
contract and is perfected only upon the delivery of the object of the
contract.
Facts:
Queaño applied with Naguiat for a loan in the amount of
P200,000.00, which Naguiat granted. Naguiat indorsed to Queaño
Associated Bank Check for the amountP95,000.00, which was earlier
issued to Naguiat by the Corporate Resources FinancingCorporation.
She also issued her own Filmanbank Check, to the order of Queaño,
and for theamount of P95,000.00. The proceeds of these checks
were to constitute the loan granted by Naguiat to Queaño. To
secure the loan, Queaño executed a Deed of Real Estate Mortgage
in favor of Naguiat, and surrendered to the latter the owner’s
duplicates of the titles covering the mortgaged properties. Queaño
issued to Naguiat a promissory note for the amount of P200,000.00,
with interest at 12% per annum. Queaño also issued a Security Bank
and TrustCompany check, postdated for the amount of P200,000.00
and payable to the order of Naguiat.
Upon presentment on its maturity date, the Security Bank check
was dishonored for insufficiency of funds. Queaño received a letter
from Naguiat’s lawyer, demanding settlement of the loan. Queaño
and one Ruby Ruebenfeldt (Ruebenfeldt) met with Naguiat. At the
meeting,Queaño told Naguiat that she did not receive the proceeds
of the loan, adding that the checks were retained by Ruebenfeldt,
who purportedly was Naguiat’s agent. Naguiat applied for
theextrajudicial foreclosure of the mortgage. Before the scheduled
sale, Queaño filed annulment of the mortgage deed.
Issues:
(1) Whether or not the issuance of check resulted in the perfection
of the loan contract, thereby allowing petitioner to validly foreclose
the mortgage properties.
(2) Agency by estoppel between petitioner and Ruebenfeldt.
Rulings:
(1) Absolutely no evidence was submitted by Naguiat that the
checks she issuedor endorsed were actually encashed or deposited.
The mere issuance of the checks did not resultin the perfection of
the contract of loan. For the Civil Code provides that the delivery of
bills of exchange and mercantile documents such as checks shall
produce the effect of payment onlywhen they have been cashed. It
is only after the checks have produced the effect of payment
thatthe contract of loan may be deemed perfected. A loan contract
is a real contract, not consensual,and, as such, is perfected only
upon the delivery of the object of the contract. In this case,
theobjects of the contract are the loan proceeds which Queaño
would enjoy only upon theencashment of the checks signed or
indorsed by Naguiat. Since Naguiat presented no such proof, it
follows that the checks were not encashed or credited to Queaño’s
account. No compelling reason to disturb the finding of the courts a
quo that the lender did not remit and the borrower didnot receive
the proceeds of the loan. That being the case, it follows that the
mortgage which issupposed to secure the loan is null and void.
(2) The existence of an agency relationship between Naguiat and
Ruebenfeldt issupported by ample evidence. Naguiat instructed
Ruebenfeldt to withhold from Queaño thechecks she issued or
indorsed to Queaño, pending delivery by the latter of additional
collateral. Itwas also Ruebenfeldt who accompanied Queaño in her
meeting with Naguiat.
G.R. No. 154878 March 16, 2007
CAROLYN M. GARCIA, Petitioner, vs. RICA MARIE S. THIO,
Respondent.
Respondent Thio received from petitioner Garcia two crossed
checks which amount to US$100,000 and US$500,000, respectively,
payable to the order of Marilou Santiago. According to petitioner,
respondent failed to pay the principal amounts of the loans when
they fell due and so she filed a complaint for sum of money and
damages with the RTC. Respondent denied that she contracted the
two loans and countered that it was Marilou Satiago to whom
petitioner lent the money. She claimed she was merely asked y
petitioner to give the checks to Santiago. She issued the checks for
P76,000 and P20,000 not as payment of interest but to
accommodate petitioner’s request that respondent use her own
checks instead of Santiago’s.
RTC ruled in favor of petitioner. CA reversed RTC and ruled
that there was no contract of loan between the parties.
ISSUE
(1) Whether or not there was a contract of loan between
petitioner and respondent.
(2) Who borrowed money from petitioner, the respondent or
Marilou Santiago?
HELD
(1) The Court held in the affirmative. A loan is a real contract,
not consensual, and as such I perfected only upon the delivery of
the object of the contract. Upon delivery of the contract of loan (in
this case the money received by the debtor when the checks were
encashed) the debtor acquires ownership of such money or loan
proceeds and is bound to pay the creditor an equal amount. It is
undisputed that the checks were delivered to respondent.
(2) However, the checks were crossed and payable not to the
order of the respondent but to the order of a certain Marilou
Santiago. Delivery is the act by which the res or substance is thereof
placed within the actual or constructive possession or control of
another. Although respondent did not physically receive the
proceeds of the checks, these instruments were placed in her
control and possession under an arrangement whereby she actually
re-lent the amount to Santiago.
POLO S. PANTALEON, Petitioner, vs. AMERICAN EXPRESS
INTERNATIONAL, INC., Respondent.
G.R. No. 174269 August 25, 2010
FACTS:
After the Amsterdam incident that happened involving the delay of
American Express Card to approve his credit card purchases worth
US$13,826.00 at the Coster store, Pantaleon commenced a
complaint for moral and exemplary damages before the RTC against
American Express. He said that he and his family experienced
inconvenience and humiliation due to the delays in credit
authorization. RTC rendered a decision in favor of Pantaleon. CA
reversed the award of damages in favor of Pantaleon, holding that
AmEx had not breached its obligations to Pantaleon, as the
purchase at Coster deviated from Pantaleon's established charge
purchase pattern.
ISSUE:
1. Whether or not AmEx had committed a breach of its obligations
to Pantaleon.
2. Whether or not AmEx is liable for damages.
RULING:
1. Yes. The popular notion that credit card purchases are approved
“within seconds,” there really is no strict, legally determinative
point of demarcation on how long must it take for a credit card
company to approve or disapprove a customer’s purchase, much
less one specifically contracted upon by the parties. One hour
appears to be patently unreasonable length of time to approve or
disapprove a credit card purchase.
The culpable failure of AmEx herein is not the failure to timely
approve petitioner’s purchase, but the more elemental failure to
timely act on the same, whether favorably or unfavorably. Even
assuming that AmEx’s credit authorizers did not have sufficient
basis on hand to make a judgment, we see no reason why it could
not have promptly informed Pantaleon the reason for the delay,
and duly advised him that resolving the same could take some time.
2. Yes. The reason why Pantaleon is entitled to damages is not
simply because AmEx incurred delay, but because the delay, for
which culpability lies under Article 1170, led to the particular
injuries under Article 2217 of the Civil Code for which moral
damages are remunerative. The somewhat unusual attending
circumstances to the purchase at Coster – that there was a deadline
for the completion of that purchase by petitioner before any delay
would redound to the injury of his several traveling companions –
gave rise to the moral shock, mental anguish, serious anxiety,
wounded feelings and social humiliation sustained by Pantaleon, as
concluded by the RTC.
G.R. No. L-8321 October 14, 1913
ALEJANDRA MINA, ET AL., plaintiffs-appellants, vs. RUPERTA
PASCUAL, ET AL., defendants-appellees.
Art. 1933
Francisco Fontanilla and Andres Fontanilla were brothers. Francisco
Fontanilla acquired during his lifetime, on March 12, 1874, a lot.
Andres Fontanilla, with the consent of his brother Francisco,
erected a warehouse on a part of the said lot, embracing 14 meters
of its frontage by 11 meters of its depth.
Francisco Fontanilla, the former owner of the lot, being dead, the
herein plaintiffs, Alejandro Mina, et al., were recognized without
discussion as his heirs.
Andres Fontanilla, the former owner of the warehouse, also having
died, the children of Ruperta Pascual were recognized, though it is
not said how, and consequently are entitled to the said building, or
rather, as Ruperta Pascual herself stated, to only six-sevenths of
one-half of it, the other half belonging, as it appears, to the
plaintiffs themselves, and the remaining one-seventh of the first
one-half to the children of one of the plaintiffs, Elena de Villanueva.
Ruperta Pascual, as the guardian of her minor children, the herein
defendants, petitioned the Curt of First Instance of Ilocos Norte for
authorization to sell "the six-sevenths of the one-half of the
warehouse, of 14 by 11 meters, together with its lot.
The warehouse, together with the lot on which it stands, was sold
to Cu Joco, the other defendant in this case.
Issue:
WoN there exist a contract of commodatum
Held:
Although both litigating parties may have agreed in their idea of the
commodatum, on account of its not being, as indeed it is not, a
question of fact but of law.
Contracts are not to be interpreted in conformity with the name
that the parties thereto agree to give them, but must be construed,
duly considering their constitutive elements, as they are defined
and denominated by law.
By the contract of loan, one of the parties delivers to the other,
either anything not perishable, in order that the latter may use it
during the certain period and return it to the former, in which case
it is called commodatum.
It is, therefore, an essential feature of the commodatum that the
use of the thing belonging to another shall BE for a certain period.
Francisco Fontanilla did not fix any definite period or time during
which Andres Fontanilla could have the use of the lot whereon the
latter was to erect a stone warehouse of considerable value, and so
it is that for the past thirty years of the lot has been used by both
Andres and his successors in interest.
NOTA BENE: It would seem that the Supreme Court failed to
consider the possibility of a contract of precardium between
Francisco and Andres. Precardium is a kind of commodatum
wherein the bailor may demand the object at will if the contract
does not stipulate a period or use to which the thing is devoted.
G.R. No. L-46240 November 3, 1939
MARGARITA QUINTOS and ANGEL A. ANSALDO, plaintiffs-
appellants, vs. BECK, defendant-appellee.
FACTS:
Beck is a tenantof defendant Margarita Quintos. Quintos granted
gratuitously Beck the use of the furniture found on the leased
house, among thesewere three gas heaters and 4 electric lamps,
subject to the condition that the defendant wouldreturn them to
the plaintiff upon the latter's demand.
Quintos sold the pieces of furniture to MariaLopez and Rosario
Lopez and thereafter notified Beck of the conveyance, giving him
sixty days to vacate the premises under one of the clauses of the
contract of lease. On November 5, 1936, Beck informedQuintos that
the latter can get the furniture at the ground floor of the house.
However, at a laterdate, Beck told Quintos that he will return only
the other furniture but not the gas heaters and theelectric lamps as
he is to return them only after the expiration of the lease
contract.Quintos refused to get the furniture in view of the fact that
the defendant had declined to make delivery of all of them.
When thelease contract expires, Beck deposited all of the furniture
to the sheriff’s warehouse. Consequently, Quintos brought an
action to compel Beck to return her certain furniturewhich she lent
him for his use. The trial court ruled in favor of Beck, holding that
Quintos failedto comply with her obligation to get the furniture
when they were offered to her. On appeal ofthe case, the Court of
First Instance of Manila affirmed the lower court’s decision.
ISSUE:
WON the trial court erred in ruling that Quintos failed to comply
with herobligation to get the furniture when they were offered to
her?
RULING:
YES. It should be Beck to be declared the one who failed to
comply with her obligation as a bailee to return all the furniture
upon bailorQuintos’ demand.
The contract entered into between the parties is one of
commadatum, because under it the plaintiff gratuitously granted
the use of the furniture to the defendant, reserving for herself the
ownership thereof; by this contract, defendant Beck bound himself
to return the furniture to plaintiff, Quintosupon the latter’s
demand. The obligation voluntarily assumed by the defendant to
return the furniture upon the plaintiff's demand, means that he
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
merely placed them at the disposal of the plaintiff, retaining for his
benefit the three gas heaters and the four eletric lamps. The trial
court, therefore, erred when it came to the legal conclusion that the
plaintiff failed to comply with her obligation to get the furniture
when they were offered to her.
As the defendant had voluntarily undertaken to return all the
furniture to the plaintiff, upon the latter's demand, the Court could
not legally compel her to bear the expenses occasioned by the
deposit of the furniture at the defendant's behest. The latter, as
bailee, was not entitled to place the furniture on deposit; nor was
the plaintiff under a duty to accept the offer to return the furniture,
because the defendant wanted to retain the three gas heaters and
the four electric lamps.
The costs in both instances should be borne by the defendant
because the plaintiff is the prevailing party (Sec. 487 of the Code of
Civil Procedure). Defendant Beck was the one who breached the
contract of commodatum, and without any reason he refused to
return and deliver all the furniture upon the plaintiff's demand. In
these circumstances, it is just and equitable that he pay the legal
expenses and other judicial costs which the plaintiff would not have
otherwise defrayed.
G.R. No. L-46145 November 26, 1986
REPUBLIC OF THE PHILIPPINES (BUREAU OF LANDS), petitioner, vs.
THE HON. COURT OF APPEALS, HEIRS OF DOMINGO P. BALOY,
represented by RICARDO BALOY, ET AL., respondents.
This case originally emanated from a decision of the CFI of
Zambales, denying respondents' application for registration. From
said order of denial the applicants, heirs of Domingo Baloy (herein
private respondents) interposed on appeal to the CA. The CA
reversed the decision appealed from and thus approving the
application for registration. Oppositors (petitioners herein) filed
their MR alleging among other things that applicants' possessory
information title can no longer be invoked and that they were not
able to prove a registerable title over the land. Such was denied,
hence this petition for review on certiorari.
Applicants' claim is anchored on their possessory information title
coupled with their continuous, adverse and public possession over
the land in question. An examination of the possessory information
title shows that the description and the area of the land stated
therein substantially coincides with the land applied for and that
said possessory information title had been regularly issued having
been acquired by applicants' predecessor, Domingo Baloy, under
the provisions of the Spanish Mortgage Law. Applicants presented
their tax declaration on said lands on April 8, 1965.
The Director of Lands opposed the registration alleging that this
land had become public land thru the operation of Act 627 of the
Philippine Commission. On November 26, 1902 pursuant to the
executive order of the President of the U.S., the area was declared
within the U.S. Naval Reservation. Under Act 627 as amended by Act
1138, a period was fixed within which persons affected thereby
could file their application, (that is within 6 months from July 8,
1905) otherwise "the said lands or interest therein will be
conclusively adjudged to be public lands and all claims on the part
of private individuals for such lands or interests therein not to
presented will be forever barred." Petitioner argues that since
Domingo Baloy failed to file his claim within the prescribed period,
the land had become irrevocably public and could not be the
subject of a valid registration for private ownership.
Considering the foregoing facts respondents Court of Appeals ruled
as follows:
... perhaps, the consequence was that upon failure of Domingo
Baloy to have filed his application within that period the land had
become irrevocably public; but perhaps also, for the reason that
warning was from the Clerk of the Court of Land Registration, and
there has not been presented a formal order or decision of the said
Court of Land Registration so declaring the land public because of
that failure, it can with plausibility be said that after all, there was
no judicial declaration to that effect, it is true that the U.S. Navy did
occupy it apparently for some time, as a recreation area, but what
this Court has taken from the occupation by the U.S. Navy is that
during the interim, the title of applicants was in a state of
suspended animation so to speak but it had not died either; and
the fact being that this land was really originally private from and
after the issuance and inscription of the possessory information
during the Spanish times, it would be most difficult to sustain
position of Director of Lands that it was land of no private owner;
open to public disposition, and over which he has control; and since
immediately after U.S. Navy had abandoned the area, applicant
came in and asserted title once again, only to be troubled by first
Crispiniano Blanco who however, quitclaimed in favor of applicants,
and then by private oppositors now, apparently originally tenants of
Blanco, but that entry of private oppositors sought to be given color
of ownership when they sought to and did file tax declaration in
1965, should not prejudice the original rights of applicants thru their
possessory information secured regularly so long ago, the conclusion
must have to be that after all, applicants had succeeded in bringing
themselves within the provisions of Sec. 19 of Act 496, the land
should be registered in their favor;
Petitioner now comes to Us with the following:
HELD: CA WAS AFFIRMED
A cursory reading of Sec. 3, Act 627 reveals that several steps are to
be followed before any affected land can "be conclusively adjudged
to be public land." Under said provision, private land could be
deemed to have become public land only by virtue of a judicial
declaration after due notice and hearing. It runs contrary therefore
to the contention of petitioners that failure to present claims set
forth under Sec. 2 of Act 627 made the land ipso facto public
without any deed of judicial pronouncement. Petitioner in making
such declaration relied on Sec. 4 of Act 627 alone. But in construing
a statute the entire provisions of the law must be considered in
order to establish the correct interpretation as intended by the law-
making body. Act 627 by its terms is not self-executory and requires
implementation by the Court of Land Registration. Act 627, to the
extent that it creates a forfeiture, is a penal statute in derogation of
private rights, so it must be strictly construed so as to safeguard
private respondents' rights. Significantly, petitioner does not even
allege the existence of any judgment of the Land Registration court
with respect to the land in question. Without a judgment or order
declaring the land to be public, its private character and the
possessory information title over it must be respected. Since no
such order has been rendered by the Land Registration Court it
necessarily follows that it never became public land thru the
operation of Act 627. To assume otherwise is to deprive private
respondents of their property without due process of law. In fact it
can be presumed that the notice required by law to be given by
publication and by personal service did not include the name of
Domingo Baloy and the subject land, and hence he and his lane
were never brought within the operation of Act 627 as amended.
The procedure laid down in Sec. 3 is a requirement of due process.
"Due process requires that the statutes which under it is attempted
to deprive a citizen of private property without or against his
consent must, as in expropriation cases, be strictly complied with,
because such statutes are in derogation of general rights."
We also find with favor private respondents' views that court
judgments are not to be presumed.
The finding of respondent court that during the interim of 57 years
from November 26, 1902 to December 17, 1959 (when the U.S.
Navy possessed the area) the possessory rights of Baloy or heirs
were merely suspended and not lost by prescription, is supported
by a communication dated June 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 question. Said letter recognizes
the fact that Domingo Baloy and/or his heirs have been in
continuous possession of said land since 1894 as attested by an
"Informacion Possessoria" Title, which was granted by the Spanish
Government. Hence, the disputed property is private land and this
possession was interrupted only by the occupation of the land by
the U.S. Navy in 1945 for recreational purposes. The U.S. Navy
eventually abandoned the premises. The heirs of the late Domingo
P. Baloy, are now in actual possession, and this has been so since
the abandonment by the U.S. Navy. A new recreation area is now
being used by the U.S. Navy personnel and this place is remote from
the land in question.
Clearly, the occupancy of the U.S. Navy was not in the concept of
owner. It partakes of the character of a commodatum. It cannot
therefore militate against the title of Domingo Baloy and his
successors-in-interest. One's ownership of a thing may be lost by
prescription by reason of another's possession if such possession be
under claim of ownership, not where the possession is only
intended to be transient, as in the case of the U.S. Navy's
occupation of the land concerned, in which case the owner is not
divested of his title, although it cannot be exercised in the
meantime.
WHEREFORE, premises considered, finding no merit in the petition
the appealed decision is hereby AFFIRMED.
SO ORDERED.
G.R. No. 115324 February 19, 2003
PRODUCERS BANK OF THE PHILIPPINES (now FIRST
INTERNATIONAL BANK), petitioner, vs. HON. COURT OF APPEALS
AND FRANKLIN VIVES, respondents.
FACTS:
Sometime in 1979, private respondent Franklin Vives was asked by
his neighbor and friend Angeles Sanchez to help her friend and
townmate, Col. Arturo Doronilla, in incorporating his business, the
Sterela Marketing and Services (“Sterela” for brevity). Specifically,
Sanchez asked private respondent to deposit in a bank a certain
amount of money in the bank account of Sterela for purposes of its
incorporation. She assured private respondent that he could
withdraw his money from said account within a month’s time. With
this, Mrs. Vivies, Sanchez and a certain Estrella Dumagpi, secretary
of Doronilla, went to the bank to open an account with Mrs. Vives
and Sanchez as signatories. A passbook was then issued to Mrs.
Vives. Subsequently, private respondent learned that part of the
money was withdrawn without presentment of the passbook as it
was his wife got hold of such. Mrs. Vives could not also withdraw
said remaining amount because it had to answer for some
postdated checks issued by Doronilla who opened a current account
for Sterela and authorized the bank to debit savings.
Private respondent referred the matter to a lawyer, who made a
written demand upon Doronilla for the return of his client’s money.
Doronilla issued another check for P212,000.00 in private
respondent’s favor but the check was again dishonored for
insufficiency of funds.
Private respondent instituted an action for recovery of sum of
money in the Regional Trial Court (RTC) in Pasig, Metro Manila
against Doronilla, Sanchez, Dumagpi and petitioner. The RTC ruled
in favor of the private respondent which was also affirmed in toto
by the CA. Hence this petition.
ISSUE: WON THE TRANSACTION BETWEEN THE DORONILLA AND
RESPONDENT VIVES WAS ONE OF SIMPLE LOAN.
HELD: NO.
A circumspect examination of the records reveals that the
transaction between them was a commodatum. Article 1933 of the
Civil Code distinguishes between the two kinds of loans in this wise:
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
a certain time and return it, in which case the contract is called a
commodatum; or money or other consumable thing, upon the
condition that the same amount of the same kind and quality shall
be paid, in which case the contract is simply called a loan or
mutuum.
Commodatum is essentially gratuitous.
Simple loan may be gratuitous or with a stipulation to pay interest.
In commodatum, the bailor retains the ownership of the thing
loaned, while in simple loan, ownership passes to the borrower.
The foregoing provision seems to imply that if the subject of the
contract is a consumable thing, such as money, the contract would
be a mutuum. However, there are some instances where a
commodatum may have for its object a consumable thing. Article
1936 of the Civil Code provides:
Consumable goods may be the subject of commodatum if the
purpose of the contract is not the consumption of the object, as
when it is merely for exhibition.
Thus, if consumable goods are loaned only for purposes of
exhibition, or when the intention of the parties is to lend
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 mutuum.
The rule is that the intention of the parties thereto shall be
accorded primordial consideration in determining the actual
character of a contract. In case of doubt, the contemporaneous and
subsequent acts of the parties shall be considered in such
determination.
[SAME CASE]
FACTS
Franklin Vives was asked by his friend Angeles Sanchez to help
Arturo Doronilla, in incorporating his business, the Sterela
Marketing and Services by depositing in producers bank of the
Philippines amount of money in the bank account of Sterela for
purposes of its incorporation. Relying on the assurances and
representations of Sanchez and Doronilla, private respondent
vivesissued a check in the amount of Two Hundred Thousand Pesos
(P200,000.00) in favor of Sterela. Private respondent instructed his
wife, Mrs. InocenciaVives, to accompany Doronilla and Sanchez in
opening a savings account in the name of Sterela in the Buendia,
Makati branch of Producers Bank of the Philippines. In opening the
account, the authorized signatories were InocenciaVives and/or
Angeles Sanchez.
Subsequently, private respondent learned that Sterela was no
longer holding office in the address previously given to him.
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
Atienza, the assistant manager, who informed them that part of the
money in Savings Account they opened had been withdrawn by
Doronilla, and that only P90,000.00 remained therein. He likewise
told them that Mrs. Vives could not withdraw said remaining
amount because it had to answer for some postdated checks issued
by Doronilla. According to Atienza, after Mrs. Vives and Sanchez
opened Savings Account, Doronilla opened another Current Account
for Sterela and authorized the Bank to debit Savings Account for the
amounts necessary to cover overdrawings in Current Account. In
opening said current account, Sterela, through Doronilla, obtained a
loan of P175,000.00 from the Bank. Atienza, the bank manager, also
said that Doronilla could assign or withdraw the money in Savings
Account because he was the sole proprietor of Sterela.[5]
Private respondent tried to get in touch with Doronillaand
subsequently he received a letter from Doronilla, assuring him that
his money was intact and would be returned to himDoronilla issued
a postdated check for Two Hundred Twelve Thousand Pesos
(P212,000.00) in favor of private respondent. However, upon
presentment thereof by private respondent to the drawee bank, the
check was dishonored. 2 more checks/demand was made, still of no
avail.
Private respondent instituted an action for recovery of sum of
money in the Regional Trial Court (RTC) in Pasig, Metro Manila
against Doronilla, Sanchez, Dumagpi and petitioner. RTC ruled that
defendants Arturo J. Doronila, Estrella Dumagpi and Producers Bank
of the Philippines to pay plaintiff Franklin Vives jointly and severally.
Petitioner bank, Appealed before the us
ISSUE: WON the transaction between theVives and Doronilla is a
simple loan (or one of an accommodation) as to dismiss the case
against Producer Bank being not a privy thereto.
SC RULED: It one of an accommodation.
Bank’s Defenses: The contract between them was a simple loan or
mutuum because the subject was money, there was an interest
amounting to 12,000 and I was not privy thereto!
- since all the elements of a mutuum are present: first, what
was delivered by private respondent to Doronilla was money, a
consumable thing; and second, the transaction was onerous as
Doronilla was obliged to pay interest, as evidenced by the check
issued by Doronilla in the amount of P212,000.00, or P12,000 more
than what private respondent deposited in Sterela’s bank
account.[15] Moreover, the fact that private respondent sued his
good friend Sanchez for his failure to recover his money from
Doronilla shows that the transaction was not merely gratuitous but
“had a business angle” to it. Hence, petitioner argues that it cannot
be held liable for the return of private respondent’s P200,000.00
because it is not privy to the transaction between the latter and
Doronilla.
As regards the “subject”
- 1933 may seem to imply that if subject of contract is a
consumable thing, e.g. money, the contract would be a mutuum.
However, there are exceptions to this rule where the loan is
commodatum and not mutuum.
- if consumable goods are loaned only for purposes of
exhibition OR
- when the intention of parties is to lend consumable goods
and to have the very same goods returned at the end of the period
agreed upon
- Intention of parties shall be accorded primordial
consideration in determining the actual character of a contract. In
case of doubt, the contemporaneous and subsequent acts of the
parties shall be considered.
No error was committed by the Court of Appeals when it ruled that
the transaction between private respondent and Doronilla was a
commodatum and not a mutuum. A circumspect examination of
the records reveals that the transaction between them was a
commodatum. Article 1933 of the Civil Code distinguishes between
the two kinds of loans in this wise:
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
a certain time and return it, in which case the contract is called a
commodatum; or money or other consumable thing, upon the
condition that the same amount of the same kind and quality shall
be paid, in which case the contract is simply called a loan or
mutuum.
Commodatum is essentially gratuitous.
Simple loan may be gratuitous or with a stipulation to pay interest.
In commodatum, the bailor retains the ownership of the thing
loaned, while in simple loan, ownership passes to the borrower.
The foregoing provision seems to imply that if the subject of the
contract is a consumable thing, such as money, the contract would
be a mutuum. However, there are some instances where a
commodatum may have for its object a consumable thing. Article
1936 of the Civil Code provides:
Consumable goods may be the subject of commodatum if the
purpose of the contract is not the consumption of the object, as
when it is merely for exhibition.
Thus, if consumable goods are loaned only for purposes of
exhibition, or when the intention of the parties is to lend
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 mutuum.
The rule is that the intention of the parties thereto shall be
accorded primordial consideration in determining the actual
character of a contract.[27] In case of doubt, the contemporaneous
and subsequent acts of the parties shall be considered in such
determination.[28]
As correctly pointed out by both the Court of Appeals and the trial
court, the evidence shows that private respondent agreed to
deposit his money in the savings account of Sterela specifically for
the purpose of making it appear “that said firm had sufficient
capitalization for incorporation, with the promise that the amount
shall be returned within thirty (30) days.”[29] Private respondent
merely “accommodated” Doronilla by lending his money without
consideration, as a favor to his good friend Sanchez. It was however
clear to the parties to the transaction that the money would not be
removed from Sterela’s savings account and would be returned to
private respondent after thirty (30) days.
Doronilla’s attempts to return to private respondent the amount of
P200,000.00 which the latter deposited in Sterela’s account
together with an additional P12,000.00, allegedly representing
interest on the mutuum, did not convert the transaction from a
commodatum into a mutuum because such was not the intent of
the parties and because the additionalP12,000.00 corresponds to
the fruits of the lending of the P200,000.00. Article 1935 of the Civil
Code expressly states that “[t]he bailee in commodatum acquires
the use of the thing loaned but not its fruits.” Hence, it was only
proper for Doronilla to remit to private respondent the interest
accruing to the latter’s money deposited with petitioner.
Neither does the Court agree with petitioner’s contention that it is
not solidarily liable for the return of private respondent’s money
because it was not privy to the transaction between Doronilla and
private respondent. The nature of said transaction, that is, whether
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
because the factual circumstances of the case clearly show that
petitioner, through its employee Mr. Atienza, was partly responsible
for the loss of private respondent’s money and is liable for its
restitution.
Petitioner’s rules for savings deposits written on the passbook it
issued Mrs. Vives on behalf of Sterela for Savings Account No. 10-
1567 expressly states that—
“2. Deposits and withdrawals must be made by the depositor
personally or upon his written authority duly authenticated, and
neither a deposit nor a withdrawal will be permitted except upon
the production of the depositor savings bank book in which will be
entered by the Bank the amount deposited or withdrawn.”[30]
Said rule notwithstanding, Doronilla was permitted by petitioner,
through Atienza, the Assistant Branch Manager for the Buendia
Branch of petitioner, to withdraw therefrom even without
presenting the passbook (which Atienza very well knew was in the
possession of Mrs. Vives), not just once, but several times. Both the
Court of Appeals and the trial court found that Atienza allowed said
withdrawals because he was party to Doronilla’s “scheme” of
defrauding private respondent.
As regards the “interest”
- Attempt to return P200,000 with additional P12,000 does not
convert the transaction from commodatum to muttum absent any
showing of such intention.
- In fact, the 12k corresponds to the fruits of the thing.
- 1935: bailee acquires only the USE but NOT the FRUITS.
- It was only proper for Doronilla to remit to Vives the interest
accruing to the money deposited in the bank.
As regards the “privity”
- Whether the transaction was mutuum or commodatum has no
bearing on your liability. Your liability is founded upon your
employee’s fault under 2180 (vicarious).
- Atienza was in conspiracy with Doronilla’s scheme. The passbook
in custody of Vives says that one cannot withdraw without that
passbook. How come Doronilla was able to get the money?
- Atienza also knew very well that Vives was the owner of the
money as he was expressly told by the wife.
G.R. No. L-4150 February 10, 1910
FELIX DE LOS SANTOS, plaintiff-appelle, vs. AGUSTINA JARRA,
administratrix of the estate of Magdaleno Jimenea, deceased,
defendant-appellant.
EMERGENCY RECIT:
De los Santos owned 10 carabaos which he lent to Jimenea to be
used in his hacienda. The 10 carabaos were not returned upon de
los santos’ demand. Jimenea died and Jarra was appointed to be the
administratrix of his estate. De los Santos filed for the exclusion of
his carabaos with the commissioners of Jimenea’s estate. The
commissioners rejected her claim. Jarra was contending that only 3
carabaos were given to Jimenea and afterwards these 3 were also
sold to him (jimenea). The court stated that Jarra had no basis in his
claim and rendered judgment against to him to give 6 carabaos or
it’s equivalent value (120 each). Jarra appealed. The supreme court
held that there is no evidence of the sale between Jimenea and de
los Santos. Therefore it is not true.The carabaos delivered to be
used were not returned by Jiminea upon demand. There is no doubt
that Jarra is under the obligation to indemnify delos Santos.
The obligation of the bailee or of his successors to return either the
thing loaned or its value is sustained by the tribunal of Spain which
said in its decision. (mentioned jurisprudence): legal doctrine
touching commodatum as follows:
Although it is true that in a contract of commodatum the bailor
retains the ownership of thing loaned at the expiration of 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
thing itself to its owner, or to pay him damages if through the fault
of the baileethe thing should have been lost or injured…
Facts: (this is a case of appeal from a judgment of the CFI of
Occidental negros)
1) Felix de los Santos brought suit against Agusitina Jarra (the
administratrix of the estate of Magdaleno Jimenea, he alleges that
Jimenea borrowed and obtained from the plaintiff 10 first class
carabos, to be used at the animal power mill of JImenea’s hacienda,
without recompense or remuneration for the use of it and under
the sole condition that they should be returned to the owner as
soon as the work at the mill was terminated. Jimenea however, did
not return the carabaos even though de los Santos claimed their
return after the work at the mill was finished.
2) Jimenea died in 1904 (before the suit)and Jarra was
appointed by the CFI as administratrix of his estate.
3) De los Santos presented his claim to the commissioners of
the estate of Jimenea for return of the carabaos. (for the carabaos
to be exluded from the estate of Jimenea). the commissioners
rejected his claim, and thus a lawsuit ensued.
4) Jarra answered and said that it was true that the late
Jimenea asked the plaintiff to loan him ten carabaos, but that he
only obtained THREE (3) second-class carabaos, which were
afterwards sold by the Delos Santos to Jimenea. (basically Jarra
denied all the allegations in the complaint)
5) The case came up for trial and the court rendered judgment
against Jarra and ordering her to return to de los Santos 6 second-
class and third class carabaos. The value of which was 120 each so
720 pesos.
6) Jarra moved for a new trial on the ground that the findings
of fact were openly and manifestly contrary to the weight of the
evidence.
7) Jarra needs to prove that Jimenea only received 3 second
class carabaos to substantiate her claim.
8) The record however, discloses that it has been fully proven
from the testimonies of a number of witnesses that Santos, sent in
charge of various persons, the 10 carabaos requiested by Jiminea (it
was revealed that Jimenea is the father in law of de los Santos).
Also, de los Santos produced 2 letters proving that jimenea received
them in the presence of said persons (brother of Jimenea) who saw
the animals arrive at the hacienda. FOUR of the carabaos died of
rinderpest and thus the judgment appealed from only deals with 6
carabaos.
9) THE ALLEGED PURCHASE of 3 carabaos by Jimenea from his
son-in-law Santos is not evidenced by any trustworthy evidence.
Therefore, it is not true.
10) From the foregoing, it may be logically inferred that the
carabaos loaned or given on commodatum to the deceased Jimenea
were ten in number, that 6 survived and that these carabaos have
not been returned to the owner delos Santos, and lastly, that the 6
carabaos were not the property of the deceased nor any of his
descendants, it is the duty of the administratrix to return them or
indemnify the owner for the value.
Issue:
(NOT STATED EXPLICITLY) WON the carabaos belonged to the estate
of Jimenea.
Held:
NO. it was not part of Jimenea’s estate. Therefore Agustina Jarra
should exclude it or indemnify De los Santos… “for the reasons
above set forth, by which the erros assigned to the judgment
appealed from have been refuted, and considering that the same is
in accordance with the law and the merits of the case, it is our
opinion that it should be affirmed and we do hereby affirm it with
the costs against appellant.
Ratio: The ratio differentiates a loan from a commodatum.
Art 1740. (old civil code) By the contract of loan , one of the parties
delivers to the other, either anything not perishable (in the new civil
code it’s consumable), in order that the latter may use it during a
certain period and return it to the former, in which case it is called
commodatum, or money or any other perishable thing, under the
condition to return an equal amount of the same kind and quality,
in which case it is merely called a loan.
Commodatum is essentially gratuitous.
A simple loan may be gratuitous, or made under a stipulation to pay
interest.
Art 1741. The bailor retains ownership of the thing loaned the
bailee acquires the use thereof, but not its fruits; if any
compensation is involved, to be paid by the person requiring the
use, the agreement ceases to be a commodatum.
Art 1742. The obligations and rights which arise from the
commodatum pass to the heirs of both contracting parties, unless
the loan has been made in consideration for the person of the
bailee, in which case his heirs shall not have the right to continue
using the thing loaned.
The carabaos delivered to be used were not returned by Jiminea
upon demand. There is no doubt that Jarra is under the obligation
to indemnify delos Santos.
Article 101. those who in fulfilling their obligations are guilty of
fraud, negligence or delay….
The obligation of the bailee or of his successors to return either the
thing loaned or its value is sustained by the tribunal of Spain which
said in its decision. (mentioned jurisprudence): legal doctrine
touching commodatum as follows:
Although it is true that in a contract of commodatum the bailor
retains the ownership of thing loaned at the expiration of 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
thing itself to its owner, or to pay him damages if through the fault
of the bailee the thing should have been lost or injured…
G.R. No. 80294-95 September 21, 1988
CATHOLIC VICAR APOSTOLIC OF THE MOUNTAIN PROVINCE,
petitioner, vs. COURT OF APPEALS, HEIRS OF EGMIDIO
OCTAVIANO AND JUAN VALDEZ, respondents.
Facts:
- 1962: Catholic Vicar Apostolic of the Mountain Province (Vicar),
petitioner, filed with the court an application for the registration of
title over lots 1, 2, 3 and 4 situated in Poblacion Central, Benguet,
said lots being used as sites of the Catholic Church, building,
convents, high school building, school gymnasium, dormitories,
social hall and stonewalls.
- 1963: Heirs of Juan Valdez and Heirs of Egmidio Octaviano claimed
that they have ownership over lots 1, 2 and 3. (2 separate civil
cases)
- 1965: The land registration court confirmed the registrable title of
Vicar to lots 1 , 2, 3 and 4. Upon appeal by the private respondents
(heirs), the decision of the lower court was reversed. Title for lots 2
and 3 were cancelled.
- VICAR filed with the Supreme Court a petition for review on
certiorari of the decision of the Court of Appeals dismissing his
application for registration of Lots 2 and 3.
- During trial, the Heirs of Octaviano presented one (1) witness, who
testified on the alleged ownership of the land in question (Lot 3) by
their predecessor-in-interest, Egmidio Octaviano; his written
demand to Vicar for the return of the land to them; and the
reasonable rentals for the use of the land at P10,000 per month. On
the other hand, Vicar presented the Register of Deeds for the
Province of Benguet, Atty. Sison, who testified that the land in
question is not covered by any title in the name of Egmidio
Octaviano or any of the heirs. Vicar dispensed with the testimony of
Mons. Brasseur when the heirs admitted that the witness if called to
the witness stand, would testify that Vicar has been in possession of
Lot 3, for 75 years continuously and peacefully and has constructed
permanent structures thereon.
Issue: WON Vicar had been in possession of lots 2 and 3 merely as
bailee borrower in commodatum, a gratuitous loan for use.
Held: YES.
Private respondents were able to prove that their predecessors'
house was borrowed by petitioner Vicar after the church and the
convent were destroyed. They never asked for the return of the
house, but when they allowed its free use, they became bailors in
commodatum and the petitioner the bailee.
The bailees' failure to return the subject matter of commodatum to
the bailor did not mean adverse possession on the part of the
borrower. The bailee held in trust the property subject matter of
commodatum. The adverse claim of petitioner came only in 1951
when it declared the lots for taxation purposes. The action of
petitioner Vicar by such adverse claim could not ripen into title by
way of ordinary acquisitive prescription because of the absence of
just title.
The Court of Appeals found that petitioner Vicar did not meet the
requirement of 30 years possession for acquisitive prescription over
Lots 2 and 3. Neither did it satisfy the requirement of 10 years
possession for ordinary acquisitive prescription because of the
absence of just title. The appellate court did not believe the findings
of the trial court that Lot 2 was acquired from Juan Valdez by
purchase and Lot 3 was acquired also by purchase from Egmidio
Octaviano by petitioner Vicar because there was absolutely no
documentary evidence to support the same and the alleged
purchases were never mentioned in the application for registration.
G.R. No. 146364 June 3, 2004
COLITO T. PAJUYO, petitioner, vs. COURT OF APPEALS and EDDIE
GUEVARRA, respondents.
FACTS:
Petitioner Pajuyo paid P400 to a certain Pedro Perez for the rights
over a lot, where Pajuyo subsequently built a house. In 1985, Pajuyo
and private respondent Guevarra executed a Kasunduan wherein
Pajuyo allowed Guevarra to live in the house for free, on the
condition that Guevarra would maintain the cleanliness and
orderliness of the house. Guevarra promised that he would vacate
the premises upon Pajuyo’s demand.
In 1994, Pajuyo informed Guevarra of his need of the house and
demanded that the latter vacate the house. Guevarra refused.
Pajuyo filed an ejectment case against Guevarra before the MTC.
Guevarra claimed that Pajuyo had no valid title over the lot since it
is within the area set aside for socialized housing. MTC rendered its
decision in favor of Pajuyo, which was affirmed by RTC. (MTC and
RTC basically ruled that the Kasunduan created a legal tie akin to
that of a landlord and tenant relationship). CA reversed the RTC
decision, stating that the ejectment case is without legal basis since
both Pajuyo and Guevarra illegally occupied the said lot. CA further
stated that both parties are in pari delicto; thus, the court will leave
them where they are. CA ruled that the Kasunduan is not a lease
contract, but a commodatum because the agreement is not for a
price certain.
ISSUE: W/N the contractual relationship between Pajuyo and
Guevarra was that of a commodatum
HELD: NO.
In a contract of commodatum, one of the parties delivers to another
something not consumable so that the latter may use the same for
a certain time and return it. An essential feature of commodatum is
that it is gratuitous.
Another feature of commodatum is that the use of the thing
belonging to another is for a certain period. Thus, the bailor cannot
demand the return of the thing loaned until after expiration of the
period stipulated, or after accomplishment of the use for which the
commodatum is constituted. If the bailor should have urgent need
of the thing, he may demand its return for temporary use. If the use
of the thing is merely tolerated by the bailor, he can demand the
return of the thing at will, in which case the contractual relation is
called a precarium. Under the Civil Code, precarium is a kind of
commodatum. The Kasunduan reveals that the accommodation
accorded by Pajuyo to Guevarra was not essentially gratuitous.
While the Kasunduan did not require Guevarra to pay rent, it
obligated him to maintain the property in good condition. The
imposition of this obligation makes the Kasunduan a contract
different from a commodatum. The effects of the Kasunduan are
also different from that of a commodatum. Case law on ejectment
has treated relationship based on tolerance as one that is akin to a
landlord-tenant relationship where the withdrawal of permission
would result in the termination of the lease. The tenant’s
withholding of the property would then be unlawful. Even assuming
that the relationship between Pajuyo and Guevarra is one of
commodatum, Guevarra as bailee would still have the duty to turn
over possession of the property to Pajuyo, the bailor. The obligation
to deliver or to return the thing received attaches to contracts for
safekeeping, or contracts of commission, administration and
commodatum.70 These contracts certainly involve the obligation to
deliver or return the thing received. Guevarra turned his back on
the Kasunduan on the sole ground that like him, Pajuyo is also a
squatter. Guevarra should know that there must be honor even
between squatters. Guevarra freely entered into the Kasunduan.
Guevarra cannot now impugn the Kasunduan after he had benefited
from it. The Kasunduan binds Guevarra. The Kasunduan is not void
for purposes of determining who between Pajuyo and Guevarra has
a right to physical possession of the contested property. The
Kasunduan is the undeniable evidence of Guevarra’s recognition of
Pajuyo’s better right of physical possession. Guevarra is clearly a
possessor in bad faith. The absence of a contract would not yield a
different result, as there would still be an implied promise to vacate.
G.R. No. L-17474 October 25, 1962
REPUBLIC OF THE PHILIPPINES, plaintiff-appellee, vs. JOSE V.
BAGTAS, defendant, FELICIDAD M. BAGTAS, Administratrix of the
Intestate Estate left by the late Jose V. Bagtas, petitioner-
appellant.
PADILLA, J.:
Facts:
(1) On 8 May 1948, Jose borrowed from the Republic, through the
Bureau of Animal Industry, three bulls for a period of one year. This
was for breeding purposes subject to a government charge, which
was the breeding fee of 10% of the book value of the bulls. The
three bulls and their book values are as follows:
(a) Red Sindhi – PhP 1,176.46;
(b) Bhagnari – PhP 1,320.56; and
(c) Sahiniwal – PhP 744.46
(2) Upon the expiration of the contract on 7 May 1949, Jose asked
Republic for a renewal of the same for another year. The Republic,
through the Secretary of Agricul ture and Natural Resources,
however, only approved the renewal of only one bull for another
year. It also requested the return of the other two bulls.
(3) On 25 March 1950, Jose wrote to the Director of Animal Industry
that he would pay the value of the three bulls. Moreover, he
expressed his desire to buy them at lower value. On 19 October
1950, the Director advised him that the books value of the bulls
cannot be reduced and the they either be returned or their book
value paid not later than 31 October 1950. Subsequently, Jose failed
to either return or pay them.
(4) On 20 December 1950, the Republic commenced an action
against Jose in the CFI of Manila ordering the return of the bulls and
the payment of their book value. On 5 July 1951, however, Jose
replied that he could neither return the bulls nor pay their book
value due to the bad peace and order situation in Cagayan Valley.
Later on, it was found out that the Sahiniwal died from a gunshot
wound inflicted during a Huk raid sometime in November 1953.
Issue:
Whether or not Jose is liable for the death of the Sahiniwal.
Ruling:
Yes, Jose is liable for the death of the Sahiniwal. This liability is
based on Article 1942 of the New Civil Code (NCC) regarding the
obligations of the bailee in commodatum.
Ratio:
(1) The bailee in commodatum is liable for the loss of the things,
even if it should be through a fortuitous event if:
(a) he keeps it longer than the period stipulated (Article 1942(2),
NCC); and
(b) the thing loaned has been delivered with appraisal of its value,
unless there is a stipulation exempting the bailee from responsibility
in case of a fortuitous event.
(2) The original period of loan was from 8 May 1948 to 7 May 1949.
The loan of one bull was renewed for another period of one year to
end on 8 May 1950. Nevertheless, Jose kept and used the bull until
November 1953 when it was killed by stray bullets during a Huk
raid.

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

(a) Red Sindhi – PhP 1,176.46;

(b) Bhagnari – PhP 1,320.56; and

(c) Sahiniwal – PhP 744.46.

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