QUiNTOS v.

BECK

Facts: Quintos and Beck entered into a contract of lease, whereby the latter occupied the former’s house.
On Jan 14, 1936, the contract of lease was novated, wherein the QUintos gratuitously granted to Beck the
use of the furniture, subject to the condition that Beck should return the furnitures to Quintos upon demand.
Thereafter, Quintos sold the property to Maria and Rosario Lopez. Beck was notified of the conveyance
and given him 60 days to vacate the premises. IN addition, Quintos required Beck to return all the furniture.
Beck refused to return 3 gas heaters and 4 electric lamps since he would use them until the lease was due
to expire. Quintos refused to get the furniture since Beck had declined to return all of them. Beck deposited
all the furniture belonging to QUintos to the sheriff.

ISSUE: WON Beck complied with his obligation of returning the furnitures to Quintos when it deposited the
furnitures to the sheriff.

RULING: 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 the defendant bound himself to 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 Civil Code). 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.
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 nt 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.
REPUBLIC V. BAGTAS

FACTS:

May 8, 1948: Jose V. Bagtas borrowed from the Republic of the Philippines through the Bureau of Animal
Industry three bulls: a Red Sindhi with a book value of P1,176.46, a Bhagnari, of P1,320.56 and a Sahiniwal,
of P744.46, for a period of 1 year for breeding purposes subject to a breeding fee of 10% of the book value
of the bulls
May 7, 1949: Jose requested for a renewal for another year for the three bulls but only one bull was
approved while the others are to be returned
March 25, 1950: He wrote to the Director of Animal Industry that he would pay the value of the 3 bulls
October 17, 1950: he reiterated his desire to buy them at a value with a deduction of yearly depreciation to
be approved by the Auditor General.
October 19, 1950: Director of Animal Industry advised him that either the 3 bulls are to be returned or their
book value without deductions should be paid not later than October 31, 1950 which he was not able to do
December 20, 1950: An action at the CFI was commenced against Jose praying that he be ordered to
return the 3 bulls or to pay their book value of P3,241.45 and the unpaid breeding fee of P199.62, both with
interests, and costs
July 5, 1951: Jose V. Bagtas, through counsel Navarro, Rosete and Manalo, answered that because of the
bad peace and order situation in Cagayan Valley, particularly in the barrio of Baggao, and of the pending
appeal he had taken to the Secretary of Agriculture and Natural Resources and the President of the
Philippines, he could not return the animals nor pay their value and prayed for the dismissal of the complaint.
RTC: granted the action
December 1958: granted an ex-parte motion for the appointment of a special sheriff to serve the writ outside
Manila
December 6, 1958: Felicidad M. Bagtas, the surviving spouse of Jose who died on October 23, 1951 and
administratrix of his estate, was notified
January 7, 1959: she file a motion that the 2 bulls where returned by his son on June 26, 1952 evidenced
by recipt and the 3rd bull died from gunshot wound inflicted during a Huk raid and prayed that the writ of
execution be quashed and that a writ of preliminary injunction be issued.
ISSUE: W/N the contract is commodatum and NOT a lease and the estate should be liable for the loss due
to force majeure due to delay.

HELD: YES. writ of execution appealed from is set aside, without pronouncement as to costs
If contract was commodatum then Bureau of Animal Industry retained ownership or title to the bull it should
suffer its loss due to force majeure. A contract of commodatum is essentially gratuitous. If the breeding fee
be considered a compensation, then the contract would be a lease of the bull. Under article 1671 of the
Civil Code the lessee would be subject to the responsibilities of a possessor in bad faith, because she had
continued possession of the bull after the expiry of the contract. And even if the contract be commodatum,
still the appellant is liable if he keeps it longer than the period stipulated
the estate of the late defendant is only liable for the sum of P859.63, the value of the bull which has not
been returned because it was killed while in the custody of the administratrix of his estate
Special proceedings for the administration and settlement of the estate of the deceased Jose V. Bagtas
having been instituted in the CFI, 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.
REPUBLIC v. CA

Facts:
 The heirs of Domingo Baloy applied for a registration of title for their land. Their claim is anchored on
their possessory information title acquired by Domingo Baloy though the Spanish Mortgage Law,
coupled with their continuous, adverse and public possession over the land in question.
 The Director of Lands opposed the registration alleging that such land became public land through the
operation of Act No. 827 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.
 The trial court denied the application for registration, thus the heirs elevated the case to the Court of
Appeals. The appellate court reversed the decision of the lower court approving the application for
registration pursuant to Sec. 19 of Act 496 (possessory information secured regularly so long ago by
payment of taxes since 1965).

Issue:
Whether the occupancy of the US Navy over the subject land is in the concept of an owner, hence, such
possession cannot be acquired by prescription.

Held:
Clearly, the occupancy of the US 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 US 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.
CATHOLIC VICAR APOSTOLIC VS. CA
Facts:
 The whole controversy started when the herein petitioner filed an application for registration of lands 1,
2, 3 and 4 in La Trinidad, Benguet on September 5, 1962.
 The heirs of Juan Valdez and the heirs of Egmidio Octaviano filed an opposition on lots 2 and 3,
respectively.
 On November 17, 1965, the land registration court confirmed the registrable title of the petitioner.
 On appeal by the private respondent heirs, the Court of Appeals reversed the decision and cancelled
Vicar’s title for lots 2 and 3.
 The heirs filed a motion for reconsideration, praying that the lots be ordered registered under their
names. The Court of Appeals denied the motion for lack of sufficient merit. Both parties then came
before the Supreme Court, however, the SC, in a minute resolution, denied both petitions. The heirs
then filed cases for the recovery and possession of the lots.
 During trial, Vicar contended that it has been in possession of the subject lots for 75 years continuously
and peacefully and has constructed permanent structures thereon.
 On the other hand, respondents argue that the petitioner is barred from setting up the defense of
ownership or long and continuous possession by the prior judgment of the Court of Appeals under the
principle of res judicata.

Issues:
1. Wether Vicar had been in possession of the subject lots merely as bailee-borrower in commodatum, a
gratuitous loan for use.
2. Whether the case violated the principle of res judicata.
3. Who is entitled to the possession and ownership of the land?

Held:
1. 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.
2. Petitioner was in possession as borrower in commodatum up to 1951, when it repudiated the trust by
declaring the properties in its name for taxation purposes. When petitioner applied for registration of
Lots 2 and 3 in 1962, it had been in possession in concept of owner only for eleven years. Ordinary
acquisitive prescription requires possession for ten years, but always with just title. Extraordinary
acquisitive prescription requires 30 years. On the above findings of facts supported by evidence and
evaluated by the Court of Appeals, affirmed by this Court, We see no error in respondent appellate
court's ruling that said findings are res judicata between the parties. They can no longer be altered by
presentation of evidence because those issues were resolved with finality a long time ago. To ignore
the principle of res judicata would be to open the door to endless litigations by continuous determination
of issues without end.
3. Pursuant to the said decision in CA-G.R. No. 38830-R, the two lots in question remained part of the
public lands. This is the only logical conclusion when the appellate court found that neither the petitioner
nor private respondents are entitled to confirmation of imperfect title over said lots. Hence, the Court
finds the contention of petitioner to be well taken in that the trial court and the appellate court have no
lawful basis in ordering petitioner to return and surrender possession of said lots to private respondents.
Said property being a public land its disposition is subject to the provision of the Public Land Act, as
amended.
MANZANO V. PEREZ

Facts: Petitioner Emilia Manzano alleged that she is the owner of a residential house and lot situated at
General Luna St. Laguna. In 1979, Nieves Manzano, sister of the petitioner borrowed the aforementioned
property as collateral for a projected loan. Pursuant to their understanding, the petitioner executed two
deeds of conveyance for the sale of the residential lot and the house erected, both for a consideration of
P1.00 plus other valuables allegedly received by her from Nieves Manzano. Nieves Manzano, together with
her husband, respondent Miguel Perez, Sr. obtained a loan fromthe Rural Bank of Infanta, Inc. in the sum
of P30,000.00. To secure payment of their indebtedness, they executed a Real Estate Mortgage over the
subject property in favor of the bank. Nieves Manzano died on 18 December 1979 leaving her husband and
children as heirs. These heirs refused to return the subject property to the petitioner even after the payment
of their loan with the Rural Bank. The petitioner sought the annulment of the deeds of sale and execution
of a deed of transfer or reconveyance of the subject property in her favor, and award of damages. The
Court of Appeals ruled that it was not convinced by petitioner's claim that there was a supposed oral
agreement of commodatum over the disputed house and lot. Hence, this petition.

Contention of petitioner: The petitioner alleged that properties in question after they have been
transferred to Nieves Manzano, were mortgaged in favor of the Rural Bank of Infanta, Inc to secure payment
of the loan. The documents covering said properties which were given to the bank as collateral of said loan,
upon payment and release to the private respondents, were returned to petitioner by Florencio Perez.
These are a clear recognition by respondents that petitioner is the owner of the properties in question

Contention of respondents: the respondents countered that they are the owners of the property in
question being the legal heirs of Nieves Manzano who purchased the same from the petitioner for value
and in good faith, as shown by the deeds of sale which contain the true agreements between the parties
therein that except for the petitioner's bare allegations, she failed to show any proof that the transaction she
entered into with her sister was a loan and not a sale.

Resolution: The court ruled that petitioner has presented no convincing proof of her continued ownership
of the subject property. In addition to her own oral testimony, she submitted proof of payment of real
property taxes, but such payment was made only after her Complaint had already been lodged before the
trial court. Neither can the court give weight to her allegation that respondent's possession of the subject
property was merely by virtue of her tolerance. Oral testimony cannot, as a rule, prevail over a written
agreement of the parties. In order to contradict the facts contained in a notarial document, such
as the two “Kasulatan ng Bilihang Tuluyan” in this case, as well as the presumption of regularity in the
execution thereof, there must be clear and convincing evidence that is more than merely
preponderant. Here petitioner has failed to come up with even a preponderance of evidence to prove her
claim.

Courts are not blessed with the ability to read what goes on in the minds of people. That is why parties to
a case are given all the opportunity to present evidence to help the courts decide on who are telling the
truth and who are lying, who are entitled to their claim and who are not. The Supreme Court cannot depart
from these guidelines and decide on the basis of compassion alone because, aside from being contrary to
the rule of law and our judicial system, this course of action would ultimately lead to anarchy.
We reiterate, the evidence offered by petitioner to prove her claim is sadly lacking. Jurisprudence on the
subject matter, when applied thereto, points to the existence of a sale, not a commodatum over the subject
house and lot.
WHEREFORE, the Petition is hereby DENIED and the assailed Decision AFFIRMED. Costs against
petitioner.
Producers Bank of the Philippines vs CA (2003)
Facts:
 Vives (will be the creditor in this case) was asked by his friend Sanchez to help the latter’s friend,
Doronilla (will be the debtor in this case) in incorporating Doronilla’s business “Strela”. This “help”
basically involved Vives depositing a certain amount of money in Strela’s bank account for purposes
of incorporation (rationale: Doronilla had to show that he had sufficient funds for incorporation). This
amount shall later be returned to Vives.
 Relying on the assurances and representations of Sanchez and Doronilla, Vives issued a check of
P200,00 in favor of Strela and deposited the same into Strela’s newly-opened bank account (the
passbook was given to the wife of Vives and the passbook had an instruction that no
withdrawals/deposits will be allowed unless the passbook is presented).
 Later on, Vives learned that Strela was no longer holding office in the address previously given to
him. He later found out that the funds had already been withdrawn leaving only a balance of
P90,000. The Vives spouses tried to withdraw the amount, but it was unable to since the balance
had to answer for certain postdated checks issued by Doronilla.
 Doronilla made various tenders of check in favor of Vives in order to pay his debt. All of which were
dishonored.
 Hence, Vives filed an action for recovery of sum against Doronilla, Sanchez, Dumagpi and
Producer’s Bank.
 TC & CA: ruled in favor of Vives.
Issue/s:
(1) WON the transaction is a commodatum or a mutuum. COMMODATUM.
(2) WON the fact that there is an additional P 12,000 (allegedly representing interest) in the amount
to be returned to Vives converts the transaction from commodatum to mutuum. NO.
(3) WON Producer’s Bank is solidarily liable to Vives, considering that it was not privy to the
transaction between Vives and Doronilla. YES.
Held/Ratio:
(1) The transaction is a commodatum.
 CC 1933 (the provision distinguishing between the two kinds of loans) seem to imply that if the
subject of the contract is a consummable thing, such as money, the contract would be a mutuum.
However, there are instances when a commodatum may have for its object a consummable thing.
Such can be found in CC 1936 which states that “consummable goods may be the subject of
commodatum if the purpose of the contract is not the consumption of the object, as when it is merely
for exhibition”. In this case, the intention of the parties was merely for exhibition. Vives agreed to
deposit his money in Strela’s account specifically for purpose of making it appear that Streal had
sufficient capitalization for incorporation, with the promise that the amount should be returned withing
30 days.
(2) CC 1935 states that “the bailee in commodatum acquires the use of the thing loaned but not its
fruits”. In this case, the additional P 12,000 corresponds to the fruits of the lending of the P 200,000.
(3) Atienza, the Branch Manager of Producer’s Bank, allowed the withdrawals on the account of Strela
despite the rule written in the passbook that neither a deposit, nor a withdrawal will be permitted
except upon the production of the passbook (recall in this case that the passbook was in the
possession of the wife of Vives all along). Hence, this only proves to show that Atienza allowed the
withdrawals because he was party to Doronilla’s scheme of defrauding Vives. By virtue of CC 2180,
PNB, as employer, is held primarily and solidarily liable for damages caused by their employees
acting within the scope of their assigned tasks. Atienza’s acts, in helpong Doronilla, a customer of the
bank, were obviously done in furtherance of the business of the bank, even though in the process,
Atienza violated some rules.
Pajuyo v. CA
GR No. 146364 June 3, 2004

Facts: Pajuyo entrusted a house to Guevara for the latter's use provided he should return the same upon
demand and with the condition that Guevara should be responsible of the maintenance of the property.
Upon demand Guevara refused to return the property to Pajuyo. The petitioner then filed an ejectment case
against Guevara with the MTC who ruled in favor of the petitioner. On appeal with the CA, the appellate
court reversed the judgment of the lower court on the ground that both parties are illegal settlers on the
property thus have no legal right so that the Court should leave the present situation with respect to
possession of the property as it is, and ruling further that the contractual relationship of Pajuyo and Guevara
was that of a commodatum.

Issue: Is the contractual relationship of Pajuyo and Guevara that of a commodatum?

Held: No. The Court of Appeals’ theory that the Kasunduan is one of commodatum is devoid of merit. 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.
TOLENTINO V GONZALES

FACTS:
1. Before Nov 28, 1922, Severino Tolentino and Potenciana Manio purchased Luzon Rice Mills, Inc.,
parcel of land in Tarlac for P25,000.00 to be paid in three installments.
a. First installment is P2,000 due on or before May 2, 1921
b. Second installment is P8,000 due on or before May 31, 1921
c. Third installment of P15,000 at 12% interest due on or before Nov 30, 1922
One of the conditions of the contract of purchase was that if Tolentino and Manio failed to pay the balance
of any of the installments on the date agreed upon, the property bought would revert to the original owner.
The first and second installments were paid but the balance was paid on Dec 1, 1922
2. On Nov 7, 1922, a representative of vendor of said property wrote Manio , notifying her that if the
balance of said indebtedness was not paid, they would recover the property with damages for non
compliance with the condition of the contract of purchase.
3. Tolentino and Manio borrowed money from Benito Gonzales Sy Chiam to satisfy their indebtedness
to the vendor.
4. Gonzales agreed to loan the P17,500 upon condition that they execute and deliver to him a pacto
de retro of the property.
5. The contract includes a contract of lease on the property whereby the lessees as vendors
apparently bind themselves to pay rent at the rate of P375 per month and whereby "Default in the payment
of the rent agreed for two consecutive months will terminate this lease and will forfeit our right of repurchase,
as though the term had expired naturally"
6. Upon maturation of loan, Tolentino defaulted payment and Gonzales demanded recovery of land.
Tolentino’s argument: that the pacto de retro sale is a mortgage and not an absolute sale and that the rental
price paid during the period of the existence of the right to repurchase, or the sum of P375 per month,
based upon the value of the property, amounted to usury.

ISSUE: WoN the contract in question is a mortgage

HELD: No.

RATIO: The contract is a pacto de retro and not a mortgage. There is not a word, a phrase, a sentence or
a paragraph in the entire record, which justifies this court in holding that the said contract of pacto de retro
is a mortgage and not a sale with the right to repurchase.
The purpose of the contract is expressed clearly that there can certainly be no doubt as to the purpose of
the Tolentino to sell the property in question, reserving the right only to repurchase the same:
Second. That is a condition of this sale that if in the course of five (5) years from the 1st of December, 1922,
we return to Don Benito Gonzales Sy Chiam the above-mentioned price of seventeen thousand five
hundred (P17,500), Mr. Benito Gonzales Sy Chiam is forced to return the farm; but if it passes the above
mentioned term of five (5) years without exercising to the right of redemption that we have saved ourselves,
then this sale will be absolute and irrevocable.
From the foregoing, we are driven to the following conclusions: First, that the contract of pacto de retro is
an absolute sale of the property with the right to repurchase and not a mortgage; and, second, that by virtue
of the said contract the vendor became the tenant of the purchaser, under the conditions mentioned in
paragraph 3 of said contact. When the vendor of property under a pacto de retro rents the property and
agrees to pay a rental value for the property during the period of his right to repurchase, he thereby becomes
a "tenant" and in all respects stands in the same relation with the purchaser as a tenant under any other
contract of lease.
In the present case the property in question was sold. It was an absolute sale with the right only to
repurchase. During the period of redemption the purchaser was the absolute owner of the property. During
the period of redemption the vendor was not the owner of the property. During the period of redemption the
vendor was a tenant of the purchaser. During the period of redemption the relation which existed between
the vendor and the vendee was that of landlord and tenant. That relation can only be terminated by a
repurchase of the property by the vendor in accordance with the terms of the said contract. The contract
was one of rent. The contract was not a loan, as that word is used in Act No. 2655.
Loan v Rent as discussed under Usury Law in relation to Act No. 2655 "An Act fixing rates of interest upon
'loans' and declaring the effect of receiving or taking usurious rates."
Usury, generally speaking, may be defined as contracting for or receiving something in excess of the
amount allowed by law for the loan or forbearance of money—the taking of more interest for the use of
money than the law allows.
It will be noted that said statute imposes a penalty upon a "loan" or forbearance of any money, goods,
chattels or credits, etc. The central idea of said statute is to prohibit a rate of interest on "loans." A contract
of "loan," is very different contract from that of "rent". A "loan," as that term is used in the statute, signifies
the giving of a sum of money, goods or credits to another, with a promise to repay, but not a promise to
return the same thing. To "loan," in general parlance, is to deliver to another for temporary use, on condition
that the thing or its equivalent be returned; or to deliver for temporary use on condition that an equivalent
in kind shall be returned with a compensation for its use. The word "loan," however, as used in the statute,
has a technical meaning. It never means the return of the same thing. It means the return of an equivalent
only, but never the same thing loaned. A "loan" has been properly defined as an advance payment of
money, goods or credits upon a contract or stipulation to repay, not to return, the thing loaned at some
future day in accordance with the terms of the contract. Under the contract of "loan," as used in said statute,
the moment the contract is completed the money, goods or chattels given cease to be the property of the
former owner and becomes the property of the obligor to be used according to his own will, unless the
contract itself expressly provides for a special or specific use of the same. At all events, the money, goods
or chattels, the moment the contract is executed, cease to be the property of the former owner and becomes
the absolute property of the obligor.
A contract of "loan" differs materially from a contract of "rent." In a contract of "rent" the owner of the property
does not lose his ownership. He simply loses his control over the property rented during the period of the
contract. In a contract of "loan" the thing loaned becomes the property of the obligor. In a contract of "rent"
the thing still remains the property of the lessor. He simply loses control of the same in a limited way during
the period of the contract of "rent" or lease. In a contract of "rent" the relation between the contractors is
that of landlord and tenant. In a contract of "loan" of money, goods, chattels or credits, the relation between
the parties is that of obligor and obligee. "Rent" may be defined as the compensation either in money,
provisions, chattels, or labor, received by the owner of the soil from the occupant thereof. It is defined as
the return or compensation for the possession of some corporeal inheritance, and is a profit issuing out of
lands or tenements, in return for their use. It is that, which is to paid for the use of land, whether in money,
labor or other thing agreed upon. A contract of "rent" is a contract by which one of the parties delivers to
the other some nonconsumable thing, in order that the latter may use it during a certain period and return
it to the former; whereas a contract of "loan", as that word is used in the statute, signifies the delivery of
money or other consumable things upon condition of returning an equivalent amount of the same kind or
quantity, in which cases it is called merely a "loan." In the case of a contract of "rent," under the civil law, it
is called a "commodatum."