CATHOLIC VICAR APOSTOLIC V CA 165 SCRA 515 (1988) The whole controversy started when Catholic Vicar of the

Mountain Province (Vicar for brevity) filed with the CFI of Baguio, Benguet an application for registration of title for Lots 1,2,3 and 4 of Psu-194357 situated at Poblacion Central, La Trinidad, Benguet. Said lots being the sites of the Catholic Church building, convents, school, etc., Upon learning of the application, the Heirs of Juan Valdez and the Heirs of Emigdio Octaviano filed an Answer/Opposition thereto on Lots 2 and 3,respectively, asserting ownership and title thereto. The land registration court promulgated its decision confirming the registrable title to Vicar. Both heirs of Valdez and Octaviano appealed to the Court of Appeals. The CA modified the decision of the land registration court and found that Lots 2 and 3 were possessed by the predecessors-in-interest of private respondents under claim of ownership in good faith from 1906 to 1951; that Vicar has been in possession of the same lots as bailee in commodatum up to 1951, when Vicar repudiated the trust and when it applied for registration in1962; that Vicar had just been in possession as owner for 11years, hence there is no possibility of acquisitive prescription which requires 10 years possession with just title and 30 years possession without.

ISSUE: WON the failure of Vicar to return the subject property to private respondents would constitute an adverse possession that would entitle Vicar to have a just title in order for ordinary acquisitive prescription to set in. RULING: 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 the predecessors-in-interest and private respondents were possessors under claim of ownership in good faith from 1906; that petitioner Vicar was only a bailee in commodatum; and that the adverse claim and repudiation of trust came only in 1951.

REPUBLIC VS BAGTAS 6 SCRA 262 (1962) Jose Bagtas borrowed from the Republic of the Phils, through the Bureau of Animal Industry three bulls for a period of one year for breeding purposes subject to a government charge of breeding fee of 10% of the book value of the books. Upon the expiration of the contract, Bagtas asked for a renewal for another one year, however, the Secretary of Agriculture and Natural Resources approved only the renewal for one bull and other two bulls be returned. Bagtas then wrote a letter to the Director of Animal Industry that he would pay the value of the three bulls with a deduction of yearly depreciation. The Director advised him that the value cannot be depreciated

and asked Bagtas to either return the bulls or pay their book value. Bagtas neither paid nor returned the bulls. The Republic then commenced an action against Bagtas ordering him to return the bulls or pay their book value. After hearing, the trial Court ruled in favor of the Republic, as such, the Republic moved ex parte for a writ of execution which the court granted. Felicidad Bagtas, the surviving spouse and administrator of Bagtas estate, returned the two bulls and filed a motion to quash the writ of execution since one bull cannot be returned for it was killed by gunshot during a Huk raid. The Court denied her motion hence, this appeal certified by the Court of Appeals because only questions of law are raised. ISSUE: WON the contract was commodatum, and for that reason, since the Republic retained ownership or title to the bull it should suffer its loss due to force majeure. RULING: A contract of commodatum is essentially gratuitous.1 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, because article 1942 of the Civil Code provides that a bailee in a contract of commodatum . . . is liable for loss of the things, even if it should be through a fortuitous event: (2) If he keeps it longer than the period stipulated . . . (3) If 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; The original period of the 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. But the appellant kept and used the bull until November 1953 when during a Huk raid it was killed by stray bullets. Furthermore, when lent and delivered to the deceased husband of the appellant the bulls had each an appraised book value, to with: the Sindhi, at P1,176.46, the Bhagnari at P1,320.56 and the Sahiniwal at P744.46. It was not stipulated that in case of loss of the bull due to fortuitous event the late husband of the appellant would be exempt from liability.

SAURA IMPORT and EXPERT CO., INC., vs DBP (1972) 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. Prior to the loan the jute mill machinery has already been purchased on the strengthe of the letter of credit extended by Prudential Bank, and to secure its release without paying a draft, Saura Inc., executed a trust receipt in favor of said bank. RFC approved the loan of 500,000 but thereafter Saura Inc., requested that it be reduced to 300,000. However, on June 1954 FR Halling cancelled its representation, as such, Saura Inc., requested RFC to restore the loan of P500,000. RFC then passed Resolution No. 9083 restoring the loan to its original amount of 500,000 with the condition that the raw materials needed by the company to carry out its operation are available in the immediate vicinity and that there should be an increased production of the raw materials

to provide adequately for the requirement of the factory. Saura Inc. did not pursue the matter further. Instead, it requested RFC to cancel the mortgage, and so, on June 17 1955 RFC executed the corresponding deed of cancellation and delivered it to Ramon F. Saura. After 9 years, Saura Inc, commenced an actin against DBP for damages, alleging failure on the latter to comply with its obligations to release the loan applied for an approved.

HERRERA vs PETROPHIL CORP. 146 S 385 On December 5, 1969, Herrera and ESSO Standard, (later substituted by Petrophil Corp.,) entered into a lease agreement, whereby the former leased to the latter a portion of his property for a period of 20years from said date subject to the condition that monthly rentals should be paid and there should be an advance payment of rentals for the first eight years of the contract, to which ESSO paid on December 31, 1969. However, ESSO deducted the amount of 101, 010.73 as interest or discount for the eight years advance rental. On August 20, 1970, ESSO informed Herrera that there had been a mistake in the computation of the interest thus it was reduced to 98, 828.03. As such, Herrera sued ESSO for the sum of 98, 828.03, with interest, claiming that this had been illegally deducted to him in violation of the Usury Law. ESSO argued that amount deducted was not usurious interest but rather a discount given to it for paying the rentals in advance. Judgment on the pleadings was rendered in favor of ESSO. Thus, the matter was elevated to the SC for only questions of law was involve. ISSUE: WON the lower court erred in the computation of the interest collected out of the rentals paid for eight years; that such interest was excessive and violattive of the usury Law; and that he neither agreed nor accepted the computation of the total amount to be deducted. RULING: contract between the parties is one of lease and not of loan. It is clearly denominated a "LEASE AGREEMENT." Nowhere in the contract is there any showing that the parties intended a loan rather than a lease. The provision for the payment of rentals in advance cannot be construed as a repayment of a loan because there was no grant or forbearance of money as to constitute an indebtedness on the part of the lessor. On the contrary, the defendant-appellee was discharging its obligation in advance by paying the eight years rentals, and it was for this advance payment that it was getting a rebate or discount. There is no usury in this case because no money was given by the defendant-appellee to the plaintiff-appellant, nor did it allow him to use its money already in his possession. 9 There was neither loan nor forbearance but a mere discount which the plaintiff-appellant allowed the defendant-appellee to deduct from the total payments because they were being made in advance for eight years. The discount was in effect a reduction of the rentals which the lessor had the right to determine, and any reduction thereof, by any amount, would not contravene the Usury Law. The difference between a discount and a loan or forbearance is that the former does not have to be repaid. The loan or forbearance is subject to repayment and is therefore governed by the laws on usury. 10 To constitute usury, "there must be loan or forbearance; the loan must be of money or something circulating as money; it must be repayable absolutely and in all events; and something must be exacted for the use of the money in excess of and in addition to interest allowed by law." 11

It has been held that the elements of usury are (1) a loan, express or implied; (2) an understanding between the parties that the money lent shall or may be returned; that for such loan a greater rate or interest that is allowed by law shall be paid, or agreed to be paid, as the case may be; and (4) a corrupt intent to take more than the legal rate for the use of money loaned. Unless these four things concur in every transaction, it is safe to affirm that no case of usury can be declared. 12

INTEGRATED REALTY CORP., VS PNB 174 S 295 Sometime in 1967, Raul Santos made two time deposits with Overseas Bank of Manila (OBM) amounting to 700,000. The corresponding certificates of time deposit were issued in favor of Santos and thereafter used as security for a loan by Integrated Realty Corp., through its President Santos, to Phil. National Bank (PNB) amounting to 700,000. A Deed of Assignment was thereafter executed by Santos in favor of PNB and a Deed of Conformity of Assignment was also executed by OBM. After the due dates of the time deposit certificates, OBM did not pay PNB hence the latter demanded payment from IRC and Santos. IRC and Santos, informed PNB that the loan obligation was deemed paid with the irrevocable assignment of the time deposit certificates. Thus PNB filed an action for collection of money against IRC and Santos. IRC and Santos then filed a cross-claim against OBM. OBM admitted its failure to pay due to its distressed financial situation. After trial, the trial court ruled in favor of PNB and ordered IRC and Santos to pay PNB the loan obligation plus interest. OBM on the other hand, would pay IRC and Santos whatever amounts the latter would pay to PNB. On appeal, the appellate court modified the decision of the trial court by deleting the portion of the judgment ordering OBM to pay IRC and Santos whatever amounts they will pay to PNB plus interests.

RULING When respondent Santos invested his money in time deposits with OBM they entered into a contract of simple loan or mutuum, 18 not a contract of deposit. Thus, when PNB demanded from OBM payment of the amounts due on the two time deposits which matured on January 11, 1968 and February 6, 1968, respectively, there was as yet no obstacle to the faithful compliance by OBM of its liabilities thereunder. Consequently, for having incurred in delay in the performance of its obligation, OBM should be held liable for damages. 17 While it is true that under Article 1956 of the Civil Code no interest shall be due unless it has been expressly stipulated in writing, this applies only to interest for the use of money. It does not comprehend interest paid as damages. 19 OBM contends that it had agreed to pay interest only up to the dates of maturity of the certificates of time deposit and that respondent Santos is not entitled to interest after the maturity dates had expired, unless the contracts are renewed. This is true with respect to the stipulated interest, but the obligations consisting as they did in the payment of money, under Article 1108 of the Civil Code he has the right to recover damages resulting from the default of OBM and the measure of such damages is interest at the legal rate of six percent (6%) per annum on the amounts due and unpaid at the expiration of the periods respectively provided in the contracts. In fine, OBM is being required to pay such interest, not as interest income stipulated in the certificates of time deposit, but as damages for failure and delay in the payment of its obligations which thereby compelled IRC and Santos to resort to the courts.

REPUBLIC VS COURT OF APPEALS 146 S 15 The Heirs of Domingo Baloy, herein private respondents, applied for a registration of title for their land. Their claim is anchored on their possessory information title acquired by Domingo Balay through the Spanish Mortgage Law, coupled with their continous, adverse and public possession of the land in question. The Director of Lands opposed the registration alleging that such land became public land through the operation of Act 627 of the Philippine Commission. On Nov 26, 1902, pursuant to the executive order of the President of U.S., the area was declared within the US Naval Reservation. The trial court denied the registration. The Heirs of Domingo Baloy appealed to the Court of Appeals. The appellate court reversed the decision of the trial court thus approving the application for registration. Petitioners motion for reconsideration was denied, hence this petition for review on certiorari.

ISSUE: WON the occupancy of the US Navy over the subject land is in the concept of an owner, hence, such possession can be acquired by prescription.

RULING: the occupancy of the U.S. Navy was not in the concept of owner. It partakes of the character of acommodatum. 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. 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. 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.

QUINTOS VS BECK 69 PHIL 108 Quintos and Beck entered into a contract of lease, whereby the latter occupied the formers 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 vs GRIJALDO 15 S 638 In the year 1943, Jose Grijaldo obtained five loans from the Bank of Taiwan, LTD., in Bacolod City, in the total sum of 1281.97, with interest at 6% per annum, compounded quarterly. The said loans were evidenced by promissory notes executed by Grijaldo in favor of Bank of Taiwan. To secure payment of the loans, Grijaldo executed a chattel mortgage on the standing crops on his land, known as Haciend Campugas in Hinigiran, Negros Occidental. By virtue of Vesting Order P4, and under the authority providing for in the Trading with the Enemy Act, the assets in the Phils., of Bank of Taiwan were vested in the Government of the United States. Pursuant to the Phil. Property Act of 1946 of the United States, these assets, including the loans in question were subsequently transferred to the Republic of the Phils. The Republic of the Phils,filed a complaint in the Justice of the Peace to collect the unpaid account in question. The Justice of the Peace, after hearing, dismissed the case on the ground that the action had prescribed. On appeal, the Court of First Instance, ordered Grijaldo to pay the Republic the total amount of the loans plus interests. Grijaldo appealed directly of the Supreme Court.

ISSUE: WON the obligation of Grijaldo to pay the loan was extinguished upon the destruction of the mortgaged crops. RULING: The SC held that the destruction of the crops did not extinguish Grijaldos obligation to pay. The appellant maintains, in support of his contention that the appellee has no cause of of action, that because the loans were secured by a chattel mortgage on the standing crops on a land owned by him and these crops were lost or destroyed through enemy action his obligation to pay the loans was thereby extinguished. This argument is untenable. The terms of the promissory notes and the chattel mortgage that the appellant executed in favor of the Bank of Taiwan, Ltd. do not support the claim of

appellant. The obligation of the appellant under the five promissory notes was not to deliver a determinate thing namely, the crops to be harvested from his land, or the value of the crops that would be harvested from his land. Rather, his obligation was to pay a generic thing the amount of money representing the total sum of the five loans, with interest. The transaction between the appellant and the Bank of Taiwan, Ltd. was a series of five contracts of simple loan of sums of money. "By a contract of (simple) loan, one of the parties delivers to another ... money or other consumable thing upon the condition that the same amount of the same kind and quality shall be paid." (Article 1933, Civil Code) The obligation of the appellant under the five promissory notes evidencing the loans in questions is to pay the value thereof; that is, to deliver a sum of money a clear case of an obligation to deliver, a generic thing. Article 1263 of the Civil Code provides: In an obligation to deliver a generic thing, the loss or destruction of anything of the same kind does not extinguish the obligation. The chattel mortgage on the crops growing on appellant's land simply stood as a security for the fulfillment of appellant's obligation covered by the five promissory notes, and the loss of the crops did not extinguish his obligation to pay, because the account could still be paid from other sources aside from the mortgaged crops.