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G.R. No. 146364 June 3, 2004
COLITO T. PAJUYO, petitioner,
vs.
COURT OF APPEALS and EDDIE GUEVARRA, respondents.
D E C I S I O N
CARPIO, J .:
The Case
Before us is a petition for review
1
of the 21 June 2000 Decision
2
and 14 December
2000 Resolution of the Court of Appeals in CA-G.R. SP No. 43129. The Court of
Appeals set aside the 11 November 1996 decision
3
of the Regional Trial Court of
Quezon City, Branch 81,
4
affirming the 15 December 1995 decision
5
of the
Metropolitan Trial Court of Quezon City, Branch 31.
6

The Antecedents
In June 1979, petitioner Colito T. Pajuyo ("Pajuyo") paid P400 to a certain Pedro
Perez for the rights over a 250-square meter lot in Barrio Payatas, Quezon City.
Pajuyo then constructed a house made of light materials on the lot. Pajuyo and his
family lived in the house from 1979 to 7 December 1985.
On 8 December 1985, Pajuyo and private respondent Eddie Guevarra
("Guevarra") executed a Kasunduan or agreement. Pajuyo, as owner of the house,
allowed Guevarra to live in the house for free provided Guevarra would maintain
the cleanliness and orderliness of the house. Guevarra promised that he would
voluntarily vacate the premises on Pajuyos demand.
In September 1994, Pajuyo informed Guevarra of his need of the house and
demanded that Guevarra vacate the house. Guevarra refused.
Pajuyo filed an ejectment case against Guevarra with the Metropolitan Trial Court
of Quezon City, Branch 31 ("MTC").
In his Answer, Guevarra claimed that Pajuyo had no valid title or right of
possession over the lot where the house stands because the lot is within the 150
hectares set aside by Proclamation No. 137 for socialized housing. Guevarra
pointed out that from December 1985 to September 1994, Pajuyo did not show up
or communicate with him. Guevarra insisted that neither he nor Pajuyo has valid
title to the lot.
On 15 December 1995, the MTC rendered its decision in favor of Pajuyo. The
dispositive portion of the MTC decision reads:
WHEREFORE, premises considered, judgment is hereby rendered for the plaintiff
and against defendant, ordering the latter to:
A) vacate the house and lot occupied by the defendant or any other person or
persons claiming any right under him;
B) pay unto plaintiff the sum of THREE HUNDRED PESOS (P300.00) monthly as
reasonable compensation for the use of the premises starting from the last
demand;
C) pay plaintiff the sum of P3,000.00 as and by way of attorneys fees; and
D) pay the cost of suit.
SO ORDERED.
7

Aggrieved, Guevarra appealed to the Regional Trial Court of Quezon City, Branch
81 ("RTC").
On 11 November 1996, the RTC affirmed the MTC decision. The dispositive
portion of the RTC decision reads:
WHEREFORE, premises considered, the Court finds no reversible error in the
decision appealed from, being in accord with the law and evidence presented, and
the same is hereby affirmed en toto.
SO ORDERED.
8

Guevarra received the RTC decision on 29 November 1996. Guevarra had only
until 14 December 1996 to file his appeal with the Court of Appeals. Instead of
filing his appeal with the Court of Appeals, Guevarra filed with the Supreme Court
a "Motion for Extension of Time to File Appeal by Certiorari Based on Rule 42"
("motion for extension"). Guevarra theorized that his appeal raised pure questions
of law. The Receiving Clerk of the Supreme Court received the motion for
extension on 13 December 1996 or one day before the right to appeal expired.
On 3 January 1997, Guevarra filed his petition for review with the Supreme Court.
On 8 January 1997, the First Division of the Supreme Court issued a
Resolution
9
referring the motion for extension to the Court of Appeals which has
concurrent jurisdiction over the case. The case presented no special and important
matter for the Supreme Court to take cognizance of at the first instance.
On 28 January 1997, the Thirteenth Division of the Court of Appeals issued a
Resolution
10
granting the motion for extension conditioned on the timeliness of the
filing of the motion.
On 27 February 1997, the Court of Appeals ordered Pajuyo to comment on
Guevaras petition for review. On 11 April 1997, Pajuyo filed his Comment.
On 21 June 2000, the Court of Appeals issued its decision reversing the RTC
decision. The dispositive portion of the decision reads:
WHEREFORE, premises considered, the assailed Decision of the court a quo in
Civil Case No. Q-96-26943 is REVERSED and SET ASIDE; and it is hereby
declared that the ejectment case filed against defendant-appellant is without
factual and legal basis.
SO ORDERED.
11

Pajuyo filed a motion for reconsideration of the decision. Pajuyo pointed out that
the Court of Appeals should have dismissed outright Guevarras petition for review
because it was filed out of time. Moreover, it was Guevarras counsel and not
Guevarra who signed the certification against forum-shopping.
On 14 December 2000, the Court of Appeals issued a resolution denying Pajuyos
motion for reconsideration. The dispositive portion of the resolution reads:
WHEREFORE, for lack of merit, the motion for reconsideration is hereby DENIED.
No costs.
SO ORDERED.
12

The Ruling of the MTC
The MTC ruled that the subject of the agreement between Pajuyo and Guevarra is
the house and not the lot. Pajuyo is the owner of the house, and he allowed
Guevarra to use the house only by tolerance. Thus, Guevarras refusal to vacate
the house on Pajuyos demand made Guevarras continued possession of the
house illegal.
The Ruling of the RTC
The RTC upheld the Kasunduan, which established the landlord and tenant
relationship between Pajuyo and Guevarra. The terms of the Kasunduan bound
Guevarra to return possession of the house on demand.
The RTC rejected Guevarras claim of a better right under Proclamation No. 137,
the Revised National Government Center Housing Project Code of Policies and
other pertinent laws. In an ejectment suit, the RTC has no power to decide
Guevarras rights under these laws. The RTC declared that in an ejectment case,
the only issue for resolution is material or physical possession, not ownership.
The Ruling of the Court of Appeals
The Court of Appeals declared that Pajuyo and Guevarra are squatters. Pajuyo
and Guevarra illegally occupied the contested lot which the government owned.
Perez, the person from whom Pajuyo acquired his rights, was also a squatter.
Perez had no right or title over the lot because it is public land. The assignment of
rights between Perez and Pajuyo, and the Kasunduan between Pajuyo and
Guevarra, did not have any legal effect. Pajuyo and Guevarra are in pari delicto or
in equal fault. The court will leave them where they are.
The Court of Appeals reversed the MTC and RTC rulings, which held that
the Kasunduan between Pajuyo and Guevarra created a legal tie akin to that of a
landlord and tenant relationship. The Court of Appeals ruled that theKasunduan is
not a lease contract but a commodatum because the agreement is not for a price
certain.
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Since Pajuyo admitted that he resurfaced only in 1994 to claim the property, the
appellate court held that Guevarra has a better right over the property under
Proclamation No. 137. President Corazon C. Aquino ("President Aquino") issued
Proclamation No. 137 on 7 September 1987. At that time, Guevarra was in
physical possession of the property. Under Article VI of the Code of Policies
Beneficiary Selection and Disposition of Homelots and Structures in the National
Housing Project ("the Code"), the actual occupant or caretaker of the lot shall have
first priority as beneficiary of the project. The Court of Appeals concluded that
Guevarra is first in the hierarchy of priority.
In denying Pajuyos motion for reconsideration, the appellate court debunked
Pajuyos claim that Guevarra filed his motion for extension beyond the period to
appeal.
The Court of Appeals pointed out that Guevarras motion for extension filed before
the Supreme Court was stamped "13 December 1996 at 4:09 PM" by the Supreme
Courts Receiving Clerk. The Court of Appeals concluded that the motion for
extension bore a date, contrary to Pajuyos claim that the motion for extension was
undated. Guevarra filed the motion for extension on time on 13 December 1996
since he filed the motion one day before the expiration of the reglementary period
on 14 December 1996. Thus, the motion for extension properly complied with the
condition imposed by the Court of Appeals in its 28 January 1997 Resolution. The
Court of Appeals explained that the thirty-day extension to file the petition for
review was deemed granted because of such compliance.
The Court of Appeals rejected Pajuyos argument that the appellate court should
have dismissed the petition for review because it was Guevarras counsel and not
Guevarra who signed the certification against forum-shopping. The Court of
Appeals pointed out that Pajuyo did not raise this issue in his Comment. The Court
of Appeals held that Pajuyo could not now seek the dismissal of the case after he
had extensively argued on the merits of the case. This technicality, the appellate
court opined, was clearly an afterthought.
The Issues
Pajuyo raises the following issues for resolution:
WHETHER THE COURT OF APPEALS ERRED OR ABUSED ITS AUTHORITY
AND DISCRETION TANTAMOUNT TO LACK OF JURISDICTION:
1) in GRANTING, instead of denying, Private Respondents Motion for an
Extension of thirty days to file petition for review at the time when there was no
more period to extend as the decision of the Regional Trial Court had already
become final and executory.
2) in giving due course, instead of dismissing, private respondents Petition for
Review even though the certification against forum-shopping was signed only by
counsel instead of by petitioner himself.
3) in ruling that the Kasunduan voluntarily entered into by the parties was in fact
a commodatum, instead of a Contract of Lease as found by the Metropolitan Trial
Court and in holding that "the ejectment case filed against defendant-appellant is
without legal and factual basis".
4) in reversing and setting aside the Decision of the Regional Trial Court in Civil
Case No. Q-96-26943 and in holding that the parties are in pari delicto being both
squatters, therefore, illegal occupants of the contested parcel of land.
5) in deciding the unlawful detainer case based on the so-called Code of Policies
of the National Government Center Housing Project instead of deciding the same
under the Kasunduan voluntarily executed by the parties, the terms and conditions
of which are the laws between themselves.
13

The Ruling of the Court
The procedural issues Pajuyo is raising are baseless. However, we find merit in
the substantive issues Pajuyo is submitting for resolution.
Procedural Issues
Pajuyo insists that the Court of Appeals should have dismissed outright Guevarras
petition for review because the RTC decision had already become final and
executory when the appellate court acted on Guevarras motion for extension to
file the petition. Pajuyo points out that Guevarra had only one day before the
expiry of his period to appeal the RTC decision. Instead of filing the petition for
review with the Court of Appeals, Guevarra filed with this Court an undated motion
for extension of 30 days to file a petition for review. This Court merely referred the
motion to the Court of Appeals. Pajuyo believes that the filing of the motion for
extension with this Court did not toll the running of the period to perfect the appeal.
Hence, when the Court of Appeals received the motion, the period to appeal had
already expired.
We are not persuaded.
Decisions of the regional trial courts in the exercise of their appellate jurisdiction
are appealable to the Court of Appeals by petition for review in cases involving
questions of fact or mixed questions of fact and law.
14
Decisions of the regional
trial courts involving pure questions of law are appealable directly to this Court by
petition for review.
15
These modes of appeal are now embodied in Section 2, Rule
41 of the 1997 Rules of Civil Procedure.
Guevarra believed that his appeal of the RTC decision involved only questions of
law. Guevarra thus filed his motion for extension to file petition for review before
this Court on 14 December 1996. On 3 January 1997, Guevarra then filed his
petition for review with this Court. A perusal of Guevarras petition for review gives
the impression that the issues he raised were pure questions of law. There is a
question of law when the doubt or difference is on what the law is on a certain
state of facts.
16
There is a question of fact when the doubt or difference is on the
truth or falsity of the facts alleged.
17

In his petition for review before this Court, Guevarra no longer disputed the facts.
Guevarras petition for review raised these questions: (1) Do ejectment cases
pertain only to possession of a structure, and not the lot on which the structure
stands? (2) Does a suit by a squatter against a fellow squatter constitute a valid
case for ejectment? (3) Should a Presidential Proclamation governing the lot on
which a squatters structure stands be considered in an ejectment suit filed by the
owner of the structure?
These questions call for the evaluation of the rights of the parties under the law on
ejectment and the Presidential Proclamation. At first glance, the questions
Guevarra raised appeared purely legal. However, some factual questions still have
to be resolved because they have a bearing on the legal questions raised in the
petition for review. These factual matters refer to the metes and bounds of the
disputed property and the application of Guevarra as beneficiary of Proclamation
No. 137.
The Court of Appeals has the power to grant an extension of time to file a petition
for review. In Lacsamana v. Second Special Cases Division of the
Intermediate Appellate Court,
18
we declared that the Court of Appeals could
grant extension of time in appeals by petition for review. In Liboro v. Court of
Appeals,
19
we clarified that the prohibition against granting an extension of time
applies only in a case where ordinary appeal is perfected by a mere notice of
appeal. The prohibition does not apply in a petition for review where the pleading
needs verification. A petition for review, unlike an ordinary appeal, requires
preparation and research to present a persuasive position.
20
The drafting of the
petition for review entails more time and effort than filing a notice of
appeal.
21
Hence, the Court of Appeals may allow an extension of time to file a
petition for review.
In the more recent case of Commissioner of Internal Revenue v. Court of
Appeals,
22
we held that Liborosclarification of Lacsamana is consistent with the
Revised Internal Rules of the Court of Appeals and Supreme Court Circular No. 1-
91. They all allow an extension of time for filing petitions for review with the Court
of Appeals. The extension, however, should be limited to only fifteen days save in
exceptionally meritorious cases where the Court of Appeals may grant a longer
period.
A judgment becomes "final and executory" by operation of law. Finality of judgment
becomes a fact on the lapse of the reglementary period to appeal if no appeal is
perfected.
23
The RTC decision could not have gained finality because the Court of
Appeals granted the 30-day extension to Guevarra.
The Court of Appeals did not commit grave abuse of discretion when it approved
Guevarras motion for extension. The Court of Appeals gave due course to the
motion for extension because it complied with the condition set by the appellate
court in its resolution dated 28 January 1997. The resolution stated that the Court
of Appeals would only give due course to the motion for extension if filed on time.
The motion for extension met this condition.
The material dates to consider in determining the timeliness of the filing of the
motion for extension are (1) the date of receipt of the judgment or final order or
resolution subject of the petition, and (2) the date of filing of the motion for
extension.
24
It is the date of the filing of the motion or pleading, and not the date of
execution, that determines the timeliness of the filing of that motion or pleading.
Thus, even if the motion for extension bears no date, the date of filing stamped on
it is the reckoning point for determining the timeliness of its filing.
Guevarra had until 14 December 1996 to file an appeal from the RTC decision.
Guevarra filed his motion for extension before this Court on 13 December 1996,
the date stamped by this Courts Receiving Clerk on the motion for extension.
Clearly, Guevarra filed the motion for extension exactly one day before the lapse
of the reglementary period to appeal.
Assuming that the Court of Appeals should have dismissed Guevarras appeal on
technical grounds, Pajuyo did not ask the appellate court to deny the motion for
extension and dismiss the petition for review at the earliest opportunity. Instead,
Pajuyo vigorously discussed the merits of the case. It was only when the Court of
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Appeals ruled in Guevarras favor that Pajuyo raised the procedural issues against
Guevarras petition for review.
A party who, after voluntarily submitting a dispute for resolution, receives an
adverse decision on the merits, is estopped from attacking the jurisdiction of the
court.
25
Estoppel sets in not because the judgment of the court is a valid and
conclusive adjudication, but because the practice of attacking the courts
jurisdiction after voluntarily submitting to it is against public policy.
26

In his Comment before the Court of Appeals, Pajuyo also failed to discuss
Guevarras failure to sign the certification against forum shopping. Instead, Pajuyo
harped on Guevarras counsel signing the verification, claiming that the counsels
verification is insufficient since it is based only on "mere information."
A partys failure to sign the certification against forum shopping is different from the
partys failure to sign personally the verification. The certificate of non-forum
shopping must be signed by the party, and not by counsel.
27
The certification of
counsel renders the petition defective.
28

On the other hand, the requirement on verification of a pleading is a formal and not
a jurisdictional requisite.
29
It is intended simply to secure an assurance that what
are alleged in the pleading are true and correct and not the product of the
imagination or a matter of speculation, and that the pleading is filed in good
faith.
30
The party need not sign the verification. A partys representative, lawyer or
any person who personally knows the truth of the facts alleged in the pleading may
sign the verification.
31

We agree with the Court of Appeals that the issue on the certificate against forum
shopping was merely an afterthought. Pajuyo did not call the Court of Appeals
attention to this defect at the early stage of the proceedings. Pajuyo raised this
procedural issue too late in the proceedings.
Absence of Title over the Disputed Property will not Divest the Courts of
J urisdiction to Resolve the Issue of Possession
Settled is the rule that the defendants claim of ownership of the disputed property
will not divest the inferior court of its jurisdiction over the ejectment case.
32
Even if
the pleadings raise the issue of ownership, the court may pass on such issue to
determine only the question of possession, especially if the ownership is
inseparably linked with the possession.
33
The adjudication on the issue of
ownership is only provisional and will not bar an action between the same parties
involving title to the land.
34
This doctrine is a necessary consequence of the nature
of the two summary actions of ejectment, forcible entry and unlawful detainer,
where the only issue for adjudication is the physical or material possession over
the real property.
35

In this case, what Guevarra raised before the courts was that he and Pajuyo are
not the owners of the contested property and that they are mere squatters. Will the
defense that the parties to the ejectment case are not the owners of the disputed
lot allow the courts to renounce their jurisdiction over the case? The Court of
Appeals believed so and held that it would just leave the parties where they are
since they are in pari delicto.
We do not agree with the Court of Appeals.
Ownership or the right to possess arising from ownership is not at issue in an
action for recovery of possession. The parties cannot present evidence to prove
ownership or right to legal possession except to prove the nature of the
possession when necessary to resolve the issue of physical possession.
36
The
same is true when the defendant asserts the absence of title over the property.
The absence of title over the contested lot is not a ground for the courts to withhold
relief from the parties in an ejectment case.
The only question that the courts must resolve in ejectment proceedings is - who is
entitled to the physical possession of the premises, that is, to the possession de
facto and not to the possession de jure.
37
It does not even matter if a partys title to
the property is questionable,
38
or when both parties intruded into public land and
their applications to own the land have yet to be approved by the proper
government agency.
39
Regardless of the actual condition of the title to the property,
the party in peaceable quiet possession shall not be thrown out by a strong hand,
violence or terror.
40
Neither is the unlawful withholding of property allowed. Courts
will always uphold respect for prior possession.
Thus, a party who can prove prior possession can recover such possession even
against the owner himself.
41
Whatever may be the character of his possession, if he
has in his favor prior possession in time, he has the security that entitles him to
remain on the property until a person with a better right lawfully ejects him.
42
To
repeat, the only issue that the court has to settle in an ejectment suit is the right to
physical possession.
In Pitargue v. Sorilla,
43
the government owned the land in dispute. The
government did not authorize either the plaintiff or the defendant in the case of
forcible entry case to occupy the land. The plaintiff had prior possession and had
already introduced improvements on the public land. The plaintiff had a pending
application for the land with the Bureau of Lands when the defendant ousted him
from possession. The plaintiff filed the action of forcible entry against the
defendant. The government was not a party in the case of forcible entry.
The defendant questioned the jurisdiction of the courts to settle the issue of
possession because while the application of the plaintiff was still pending, title
remained with the government, and the Bureau of Public Lands had jurisdiction
over the case. We disagreed with the defendant. We ruled that courts have
jurisdiction to entertain ejectment suits even before the resolution of the application.
The plaintiff, by priority of his application and of his entry, acquired prior physical
possession over the public land applied for as against other private claimants. That
prior physical possession enjoys legal protection against other private claimants
because only a court can take away such physical possession in an ejectment
case.
While the Court did not brand the plaintiff and the defendant in Pitargue
44
as
squatters, strictly speaking, their entry into the disputed land was illegal. Both the
plaintiff and defendant entered the public land without the owners permission. Title
to the land remained with the government because it had not awarded to anyone
ownership of the contested public land. Both the plaintiff and the defendant were in
effect squatting on government property. Yet, we upheld the courts jurisdiction to
resolve the issue of possession even if the plaintiff and the defendant in the
ejectment case did not have any title over the contested land.
Courts must not abdicate their jurisdiction to resolve the issue of physical
possession because of the public need to preserve the basic policy behind the
summary actions of forcible entry and unlawful detainer. The underlying
philosophy behind ejectment suits is to prevent breach of the peace and criminal
disorder and to compel the party out of possession to respect and resort to the law
alone to obtain what he claims is his.
45
The party deprived of possession must not
take the law into his own hands.
46
Ejectment proceedings are summary in nature
so the authorities can settle speedily actions to recover possession because of the
overriding need to quell social disturbances.
47

We further explained in Pitargue the greater interest that is at stake in actions for
recovery of possession. We made the following pronouncements in Pitargue:
The question that is before this Court is: Are courts without jurisdiction to take
cognizance of possessory actions involving these public lands before final award is
made by the Lands Department, and before title is given any of the conflicting
claimants? It is one of utmost importance, as there are public lands everywhere
and there are thousands of settlers, especially in newly opened regions. It also
involves a matter of policy, as it requires the determination of the respective
authorities and functions of two coordinate branches of the Government in
connection with public land conflicts.
Our problem is made simple by the fact that under the Civil Code, either in the old,
which was in force in this country before the American occupation, or in the new,
we have a possessory action, the aim and purpose of which is the recovery of the
physical possession of real property, irrespective of the question as to who has the
title thereto. Under the Spanish Civil Code we had the accion interdictal, a
summary proceeding which could be brought within one year from dispossession
(Roman Catholic Bishop of Cebu vs. Mangaron, 6 Phil. 286, 291); and as early as
October 1, 1901, upon the enactment of the Code of Civil Procedure (Act No. 190
of the Philippine Commission) we implanted the common law action of forcible
entry (section 80 of Act No. 190), the object of which has been stated by this Court
to be "to prevent breaches of the peace and criminal disorder which would
ensue from the withdrawal of the remedy, and the reasonable hope such
withdrawal would create that some advantage must accrue to those persons
who, believing themselves entitled to the possession of property, resort to
force to gain possession rather than to some appropriate action in the court
to assert their claims." (Supia and Batioco vs. Quintero and Ayala, 59 Phil. 312,
314.) So before the enactment of the first Public Land Act (Act No. 926) the action
of forcible entry was already available in the courts of the country. So the question
to be resolved is, Did the Legislature intend, when it vested the power and
authority to alienate and dispose of the public lands in the Lands Department, to
exclude the courts from entertaining the possessory action of forcible entry
between rival claimants or occupants of any land before award thereof to any of
the parties? Did Congress intend that the lands applied for, or all public lands for
that matter, be removed from the jurisdiction of the judicial Branch of the
Government, so that any troubles arising therefrom, or any breaches of the peace
or disorders caused by rival claimants, could be inquired into only by the Lands
Department to the exclusion of the courts? The answer to this question seems to
us evident. The Lands Department does not have the means to police public
lands; neither does it have the means to prevent disorders arising therefrom, or
contain breaches of the peace among settlers; or to pass promptly upon conflicts
of possession. Then its power is clearly limited to disposition and alienation,
and while it may decide conflicts of possession in order to make proper
award, the settlement of conflicts of possession which is recognized in the
court herein has another ultimate purpose, i.e., the protection of actual
possessors and occupants with a view to the prevention of breaches of the
peace. The power to dispose and alienate could not have been intended to
include the power to prevent or settle disorders or breaches of the peace
among rival settlers or claimants prior to the final award. As to this, therefore,
the corresponding branches of the Government must continue to exercise power
and jurisdiction within the limits of their respective functions. The vesting of the
Lands Department with authority to administer, dispose, and alienate public
lands, therefore, must not be understood as depriving the other branches of
the Government of the exercise of the respective functions or powers
thereon, such as the authority to stop disorders and quell breaches of the
peace by the police, the authority on the part of the courts to take
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jurisdiction over possessory actions arising therefrom not involving, directly
or indirectly, alienation and disposition.
Our attention has been called to a principle enunciated in American courts to the
effect that courts have no jurisdiction to determine the rights of claimants to public
lands, and that until the disposition of the land has passed from the control of the
Federal Government, the courts will not interfere with the administration of matters
concerning the same. (50 C. J. 1093-1094.) We have no quarrel with this principle.
The determination of the respective rights of rival claimants to public lands is
different from the determination of who has the actual physical possession or
occupation with a view to protecting the same and preventing disorder and
breaches of the peace. A judgment of the court ordering restitution of the
possession of a parcel of land to the actual occupant, who has been deprived
thereof by another through the use of force or in any other illegal manner, can
never be "prejudicial interference" with the disposition or alienation of public
lands. On the other hand, if courts were deprived of jurisdiction of cases
involving conflicts of possession, that threat of judicial action against
breaches of the peace committed on public lands would be eliminated, and a
state of lawlessness would probably be produced between applicants,
occupants or squatters, where force or might, not right or justice, would rule.
It must be borne in mind that the action that would be used to solve conflicts of
possession between rivals or conflicting applicants or claimants would be no other
than that of forcible entry. This action, both in England and the United States and
in our jurisdiction, is a summary and expeditious remedy whereby one in peaceful
and quiet possession may recover the possession of which he has been deprived
by a stronger hand, by violence or terror; its ultimate object being to prevent
breach of the peace and criminal disorder. (Supia and Batioco vs. Quintero and
Ayala, 59 Phil. 312, 314.) The basis of the remedy is mere possession as a fact, of
physical possession, not a legal possession. (Mediran vs. Villanueva, 37 Phil.
752.) The title or right to possession is never in issue in an action of forcible entry;
as a matter of fact, evidence thereof is expressly banned, except to prove the
nature of the possession. (Second 4, Rule 72, Rules of Court.) With this nature of
the action in mind, by no stretch of the imagination can conclusion be arrived at
that the use of the remedy in the courts of justice would constitute an interference
with the alienation, disposition, and control of public lands. To limit ourselves to the
case at bar can it be pretended at all that its result would in any way interfere with
the manner of the alienation or disposition of the land contested? On the contrary,
it would facilitate adjudication, for the question of priority of possession having
been decided in a final manner by the courts, said question need no longer waste
the time of the land officers making the adjudication or award. (Emphasis ours)
The Principle of Pari Delicto is not Applicable to Ejectment Cases
The Court of Appeals erroneously applied the principle of pari delicto to this case.
Articles 1411 and 1412 of the Civil Code
48
embody the principle of pari delicto. We
explained the principle of pari delicto in these words:
The rule of pari delicto is expressed in the maxims ex dolo malo non eritur actio
and in pari delicto potior est conditio defedentis. The law will not aid either party
to an illegal agreement. It leaves the parties where it finds them.
49

The application of the pari delicto principle is not absolute, as there are exceptions
to its application. One of these exceptions is where the application of the pari
delicto rule would violate well-established public policy.
50

In Drilon v. Gaurana,
51
we reiterated the basic policy behind the summary actions
of forcible entry and unlawful detainer. We held that:
It must be stated that the purpose of an action of forcible entry and detainer is that,
regardless of the actual condition of the title to the property, the party in peaceable
quiet possession shall not be turned out by strong hand, violence or terror. In
affording this remedy of restitution the object of the statute is to prevent breaches
of the peace and criminal disorder which would ensue from the withdrawal of the
remedy, and the reasonable hope such withdrawal would create that some
advantage must accrue to those persons who, believing themselves entitled to the
possession of property, resort to force to gain possession rather than to some
appropriate action in the courts to assert their claims. This is the philosophy at the
foundation of all these actions of forcible entry and detainer which are designed to
compel the party out of possession to respect and resort to the law alone to obtain
what he claims is his.
52

Clearly, the application of the principle of pari delicto to a case of ejectment
between squatters is fraught with danger. To shut out relief to squatters on the
ground of pari delicto would openly invite mayhem and lawlessness. A squatter
would oust another squatter from possession of the lot that the latter had illegally
occupied, emboldened by the knowledge that the courts would leave them where
they are. Nothing would then stand in the way of the ousted squatter from re-
claiming his prior possession at all cost.
Petty warfare over possession of properties is precisely what ejectment cases or
actions for recovery of possession seek to prevent.
53
Even the owner who has title
over the disputed property cannot take the law into his own hands to regain
possession of his property. The owner must go to court.
Courts must resolve the issue of possession even if the parties to the ejectment
suit are squatters. The determination of priority and superiority of possession is a
serious and urgent matter that cannot be left to the squatters to decide. To do so
would make squatters receive better treatment under the law. The law restrains
property owners from taking the law into their own hands. However, the principle
of pari delicto as applied by the Court of Appeals would give squatters free rein to
dispossess fellow squatters or violently retake possession of properties usurped
from them. Courts should not leave squatters to their own devices in cases
involving recovery of possession.
Possession is the only Issue for Resolution in an Ejectment Case
The case for review before the Court of Appeals was a simple case of ejectment.
The Court of Appeals refused to rule on the issue of physical possession.
Nevertheless, the appellate court held that the pivotal issue in this case is who
between Pajuyo and Guevarra has the "priority right as beneficiary of the
contested land under Proclamation No. 137."
54
According to the Court of Appeals,
Guevarra enjoys preferential right under Proclamation No. 137 because Article VI
of the Code declares that the actual occupant or caretaker is the one qualified to
apply for socialized housing.
The ruling of the Court of Appeals has no factual and legal basis.
First. Guevarra did not present evidence to show that the contested lot is part of a
relocation site under Proclamation No. 137. Proclamation No. 137 laid down the
metes and bounds of the land that it declared open for disposition to bona fide
residents.
The records do not show that the contested lot is within the land specified by
Proclamation No. 137. Guevarra had the burden to prove that the disputed lot is
within the coverage of Proclamation No. 137. He failed to do so.
Second. The Court of Appeals should not have given credence to Guevarras
unsubstantiated claim that he is the beneficiary of Proclamation No. 137. Guevarra
merely alleged that in the survey the project administrator conducted, he and not
Pajuyo appeared as the actual occupant of the lot.
There is no proof that Guevarra actually availed of the benefits of Proclamation No.
137. Pajuyo allowed Guevarra to occupy the disputed property in 1985. President
Aquino signed Proclamation No. 137 into law on 11 March 1986. Pajuyo made his
earliest demand for Guevarra to vacate the property in September 1994.
During the time that Guevarra temporarily held the property up to the time that
Proclamation No. 137 allegedly segregated the disputed lot, Guevarra never
applied as beneficiary of Proclamation No. 137. Even when Guevarra already
knew that Pajuyo was reclaiming possession of the property, Guevarra did not
take any step to comply with the requirements of Proclamation No. 137.
Third. Even assuming that the disputed lot is within the coverage of Proclamation
No. 137 and Guevarra has a pending application over the lot, courts should still
assume jurisdiction and resolve the issue of possession. However, the jurisdiction
of the courts would be limited to the issue of physical possession only.
In Pitargue,
55
we ruled that courts have jurisdiction over possessory actions
involving public land to determine the issue of physical possession. The
determination of the respective rights of rival claimants to public land is, however,
distinct from the determination of who has the actual physical possession or who
has a better right of physical possession.
56
The administrative disposition and
alienation of public lands should be threshed out in the proper government
agency.
57

The Court of Appeals determination of Pajuyo and Guevarras rights under
Proclamation No. 137 was premature. Pajuyo and Guevarra were at most merely
potential beneficiaries of the law. Courts should not preempt the decision of the
administrative agency mandated by law to determine the qualifications of
applicants for the acquisition of public lands. Instead, courts should expeditiously
resolve the issue of physical possession in ejectment cases to prevent disorder
and breaches of peace.
58

Pajuyo is Entitled to Physical Possession of the Disputed Property
Guevarra does not dispute Pajuyos prior possession of the lot and ownership of
the house built on it. Guevarra expressly admitted the existence and due execution
of the Kasunduan. The Kasunduan reads:
Ako, si COL[I]TO PAJUYO, may-ari ng bahay at lote sa Bo. Payatas, Quezon City,
ay nagbibigay pahintulot kay G. Eddie Guevarra, na pansamantalang manirahan
sa nasabing bahay at lote ng "walang bayad." Kaugnay nito, kailangang panatilihin
nila ang kalinisan at kaayusan ng bahay at lote.
Sa sandaling kailangan na namin ang bahay at lote, silay kusang aalis ng walang
reklamo.
Page | 5
CREDIT TRANSACTIONS COMMODATUM
Based on the Kasunduan, Pajuyo permitted Guevarra to reside in the house and
lot free of rent, but Guevarra was under obligation to maintain the premises in
good condition. Guevarra promised to vacate the premises on Pajuyos demand
but Guevarra broke his promise and refused to heed Pajuyos demand to vacate.
These facts make out a case for unlawful detainer. Unlawful detainer involves the
withholding by a person from another of the possession of real property to which
the latter is entitled after the expiration or termination of the formers right to hold
possession under a contract, express or implied.
59

Where the plaintiff allows the defendant to use his property by tolerance without
any contract, the defendant is necessarily bound by an implied promise that he will
vacate on demand, failing which, an action for unlawful detainer will lie.
60
The
defendants refusal to comply with the demand makes his continued possession of
the property unlawful.
61
The status of the defendant in such a case is similar to that
of a lessee or tenant whose term of lease has expired but whose occupancy
continues by tolerance of the owner.
62

This principle should apply with greater force in cases where a contract embodies
the permission or tolerance to use the property. The Kasunduan expressly
articulated Pajuyos forbearance. Pajuyo did not require Guevarra to pay any rent
but only to maintain the house and lot in good condition. Guevarra expressly
vowed in theKasunduan that he would vacate the property on demand. Guevarras
refusal to comply with Pajuyos demand to vacate made Guevarras continued
possession of the property unlawful.
We do not subscribe to the Court of Appeals theory that the Kasunduan is one
of commodatum.
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.
63
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.
64
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.
65
If the bailor should have urgent need of the thing,
he may demand its return for temporary use.
66
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.
67
Under the Civil Code, precarium is
a kind of commodatum.
68

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.
69
The tenants withholding of the property would then
be unlawful. This is settled jurisprudence.
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.
71

Guevarra turned his back on the Kasunduan on the sole ground that like him,
Pajuyo is also a squatter. Squatters, Guevarra pointed out, cannot enter into a
contract involving the land they illegally occupy. Guevarra insists that the contract
is void.
Guevarra should know that there must be honor even between squatters.
Guevarra freely entered into theKasunduan. 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 Guevarras recognition of Pajuyos
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.
Guevarra contends that there is "a pernicious evil that is sought to be avoided, and
that is allowing an absentee squatter who (sic) makes (sic) a profit out of his illegal
act."
72
Guevarra bases his argument on the preferential right given to the actual
occupant or caretaker under Proclamation No. 137 on socialized housing.
We are not convinced.
Pajuyo did not profit from his arrangement with Guevarra because Guevarra
stayed in the property without paying any rent. There is also no proof that Pajuyo
is a professional squatter who rents out usurped properties to other squatters.
Moreover, it is for the proper government agency to decide who between Pajuyo
and Guevarra qualifies for socialized housing. The only issue that we are
addressing is physical possession.
Prior possession is not always a condition sine qua non in ejectment.
73
This is one
of the distinctions between forcible entry and unlawful detainer.
74
In forcible entry,
the plaintiff is deprived of physical possession of his land or building by means of
force, intimidation, threat, strategy or stealth. Thus, he must allege and prove prior
possession.
75
But in unlawful detainer, the defendant unlawfully withholds
possession after the expiration or termination of his right to possess under any
contract, express or implied. In such a case, prior physical possession is not
required.
76

Pajuyos withdrawal of his permission to Guevarra terminated the Kasunduan.
Guevarras transient right to possess the property ended as well. Moreover, it was
Pajuyo who was in actual possession of the property because Guevarra had to
seek Pajuyos permission to temporarily hold the property and Guevarra had to
follow the conditions set by Pajuyo in the Kasunduan. Control over the property
still rested with Pajuyo and this is evidence of actual possession.
Pajuyos absence did not affect his actual possession of the disputed property.
Possession in the eyes of the law does not mean that a man has to have his feet
on every square meter of the ground before he is deemed in possession.
77
One
may acquire possession not only by physical occupation, but also by the fact that a
thing is subject to the action of ones will.
78
Actual or physical occupation is not
always necessary.
79

Ruling on Possession Does not Bind Title to the Land in Dispute
We are aware of our pronouncement in cases where we declared that "squatters
and intruders who clandestinely enter into titled government property cannot, by
such act, acquire any legal right to said property."
80
We made this declaration
because the person who had title or who had the right to legal possession over the
disputed property was a party in the ejectment suit and that party instituted the
case against squatters or usurpers.
In this case, the owner of the land, which is the government, is not a party to the
ejectment case. This case is between squatters. Had the government participated
in this case, the courts could have evicted the contending squatters, Pajuyo and
Guevarra.
Since the party that has title or a better right over the property is not impleaded in
this case, we cannot evict on our own the parties. Such a ruling would discourage
squatters from seeking the aid of the courts in settling the issue of physical
possession. Stripping both the plaintiff and the defendant of possession just
because they are squatters would have the same dangerous implications as the
application of the principle of pari delicto. Squatters would then rather settle the
issue of physical possession among themselves than seek relief from the courts if
the plaintiff and defendant in the ejectment case would both stand to lose
possession of the disputed property. This would subvert the policy underlying
actions for recovery of possession.
Since Pajuyo has in his favor priority in time in holding the property, he is entitled
to remain on the property until a person who has title or a better right lawfully
ejects him. Guevarra is certainly not that person. The ruling in this case, however,
does not preclude Pajuyo and Guevarra from introducing evidence and presenting
arguments before the proper administrative agency to establish any right to which
they may be entitled under the law.
81

In no way should our ruling in this case be interpreted to condone squatting. The
ruling on the issue of physical possession does not affect title to the property nor
constitute a binding and conclusive adjudication on the merits on the issue of
ownership.
82
The owner can still go to court to recover lawfully the property from
the person who holds the property without legal title. Our ruling here does not
diminish the power of government agencies, including local governments, to
condemn, abate, remove or demolish illegal or unauthorized structures in
accordance with existing laws.
Attorneys Fees and Rentals
The MTC and RTC failed to justify the award of P3,000 attorneys fees to Pajuyo.
Attorneys fees as part of damages are awarded only in the instances enumerated
in Article 2208 of the Civil Code.
83
Thus, the award of attorneys fees is the
exception rather than the rule.
84
Attorneys fees are not awarded every time a party
prevails in a suit because of the policy that no premium should be placed on the
right to litigate.
85
We therefore delete the attorneys fees awarded to Pajuyo.
We sustain the P300 monthly rentals the MTC and RTC assessed against
Guevarra. Guevarra did not dispute this factual finding of the two courts. We find
the amount reasonable compensation to Pajuyo. The P300 monthly rental is
counted from the last demand to vacate, which was on 16 February 1995.
WHEREFORE, we GRANT the petition. The Decision dated 21 June 2000 and
Resolution dated 14 December 2000 of the Court of Appeals in CA-G.R. SP No.
43129 are SET ASIDE. The Decision dated 11 November 1996 of the Regional
Trial Court of Quezon City, Branch 81 in Civil Case No. Q-96-26943, affirming the
Decision dated 15 December 1995 of the Metropolitan Trial Court of Quezon City,
Page | 6
CREDIT TRANSACTIONS COMMODATUM
Branch 31 in Civil Case No. 12432, isREINSTATED with MODIFICATION. The
award of attorneys fees is deleted. No costs.
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.
D E C I S I O N
CALLEJO, SR., J .:
This is a petition for review on certiorari of the Decision
1
of the Court of Appeals
dated June 25, 1991 in CA-G.R. CV No. 11791 and of its Resolution
2
dated May 5,
1994, denying the motion for reconsideration of said decision filed by petitioner
Producers Bank of the Philippines.
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 months time. Private respondent asked Sanchez to
bring Doronilla to their house so that they could discuss Sanchezs request.
3

On May 9, 1979, private respondent, Sanchez, Doronilla and a certain Estrella
Dumagpi, Doronillas private secretary, met and discussed the matter. Thereafter,
relying on the assurances and representations of Sanchez and Doronilla, private
respondent issued a check in the amount of Two Hundred Thousand Pesos
(P200,000.00) in favor of Sterela. Private respondent instructed his wife, Mrs.
Inocencia Vives, 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. However, only Sanchez, Mrs. Vives and Dumagpi went to the
bank to deposit the check. They had with them an authorization letter from
Doronilla authorizing Sanchez and her companions, "in coordination with Mr. Rufo
Atienza," to open an account for Sterela Marketing Services in the amount
of P200,000.00. In opening the account, the authorized signatories were Inocencia
Vives and/or Angeles Sanchez. A passbook for Savings Account No. 10-1567 was
thereafter issued to Mrs. Vives.
4

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 No. 10-1567 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 No. 10-1567, Doronilla opened Current Account No. 10-
0320 for Sterela and authorized the Bank to debit Savings Account No. 10-1567
for the amounts necessary to cover overdrawings in Current Account No. 10-0320.
In opening said current account, Sterela, through Doronilla, obtained a loan
of P175,000.00 from the Bank. To cover payment thereof, Doronilla issued three
postdated checks, all of which were dishonored. Atienza also said that Doronilla
could assign or withdraw the money in Savings Account No. 10-1567 because he
was the sole proprietor of Sterela.
5

Private respondent tried to get in touch with Doronilla through Sanchez. On June
29, 1979, he received a letter from Doronilla, assuring him that his money was
intact and would be returned to him. On August 13, 1979, Doronilla 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. Doronilla requested private
respondent to present the same check on September 15, 1979 but when the latter
presented the check, it was again dishonored.
6

Private respondent referred the matter to a lawyer, who made a written demand
upon Doronilla for the return of his clients money. Doronilla issued another check
for P212,000.00 in private respondents favor but the check was again dishonored
for insufficiency of funds.
7

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 case was docketed as Civil Case No. 44485. He also
filed criminal actions against Doronilla, Sanchez and Dumagpi in the RTC.
However, Sanchez passed away on March 16, 1985 while the case was pending
before the trial court. On October 3, 1995, the RTC of Pasig, Branch 157,
promulgated its Decision in Civil Case No. 44485, the dispositive portion of which
reads:
IN VIEW OF THE FOREGOING, judgment is hereby rendered sentencing
defendants Arturo J. Doronila, Estrella Dumagpi and Producers Bank of the
Philippines to pay plaintiff Franklin Vives jointly and severally
(a) the amount of P200,000.00, representing the money deposited, with interest at
the legal rate from the filing of the complaint until the same is fully paid;
(b) the sum of P50,000.00 for moral damages and a similar amount for exemplary
damages;
(c) the amount of P40,000.00 for attorneys fees; and
(d) the costs of the suit.
SO ORDERED.
8

Petitioner appealed the trial courts decision to the Court of Appeals. In its Decision
dated June 25, 1991, the appellate court affirmed in toto the decision of the
RTC.
9
It likewise denied with finality petitioners motion for reconsideration in its
Resolution dated May 5, 1994.
10

On June 30, 1994, petitioner filed the present petition, arguing that
I.
THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THAT THE
TRANSACTION BETWEEN THE DEFENDANT DORONILLA AND
RESPONDENT VIVES WAS ONE OF SIMPLE LOAN AND NOT
ACCOMMODATION;
II.
THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THAT
PETITIONERS BANK MANAGER, MR. RUFO ATIENZA, CONNIVED WITH THE
OTHER DEFENDANTS IN DEFRAUDING PETITIONER (Sic. Should be PRIVATE
RESPONDENT) AND AS A CONSEQUENCE, THE PETITIONER SHOULD BE
HELD LIABLE UNDER THE PRINCIPLE OF NATURAL JUSTICE;
III.
THE HONORABLE COURT OF APPEALS ERRED IN ADOPTING THE ENTIRE
RECORDS OF THE REGIONAL TRIAL COURT AND AFFIRMING THE
JUDGMENT APPEALED FROM, AS THE FINDINGS OF THE REGIONAL TRIAL
COURT WERE BASED ON A MISAPPREHENSION OF FACTS;
IV.
THE HONORABLE COURT OF APPEALS ERRED IN DECLARING THAT THE
CITED DECISION IN SALUDARES VS. MARTINEZ, 29 SCRA 745, UPHOLDING
THE LIABILITY OF AN EMPLOYER FOR ACTS COMMITTED BY AN
EMPLOYEE IS APPLICABLE;
V.
THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THE
DECISION OF THE LOWER COURT THAT HEREIN PETITIONER BANK IS
JOINTLY AND SEVERALLY LIABLE WITH THE OTHER DEFENDANTS FOR
THE AMOUNT OF P200,000.00 REPRESENTING THE SAVINGS ACCOUNT
DEPOSIT, P50,000.00 FOR MORAL DAMAGES, P50,000.00 FOR EXEMPLARY
DAMAGES, P40,000.00 FOR ATTORNEYS FEES AND THE COSTS OF SUIT.
11

Private respondent filed his Comment on September 23, 1994. Petitioner filed its
Reply thereto on September 25, 1995. The Court then required private respondent
to submit a rejoinder to the reply. However, said rejoinder was filed only on April 21,
1997, due to petitioners delay in furnishing private respondent with copy of the
reply
12
and several substitutions of counsel on the part of private respondent.
13
On
January 17, 2001, the Court resolved to give due course to the petition and
required the parties to submit their respective memoranda.
14
Petitioner filed its
memorandum on April 16, 2001 while private respondent submitted his
memorandum on March 22, 2001.
Petitioner contends that the transaction between private respondent and Doronilla
is a simple loan (mutuum) 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
Sterelas 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
Page | 7
CREDIT TRANSACTIONS COMMODATUM
respondents P200,000.00 because it is not privy to the transaction between the
latter and Doronilla.
16

It argues further that petitioners Assistant Manager, Mr. Rufo Atienza, could not be
faulted for allowing Doronilla to withdraw from the savings account of Sterela since
the latter was the sole proprietor of said company. Petitioner asserts that
Doronillas May 8, 1979 letter addressed to the bank, authorizing Mrs. Vives and
Sanchez to open a savings account for Sterela, did not contain any authorization
for these two to withdraw from said account. Hence, the authority to withdraw
therefrom remained exclusively with Doronilla, who was the sole proprietor of
Sterela, and who alone had legal title to the savings account.
17
Petitioner points
out that no evidence other than the testimonies of private respondent and Mrs.
Vives was presented during trial to prove that private respondent deposited
his P200,000.00 in Sterelas account for purposes of its incorporation.
18
Hence,
petitioner should not be held liable for allowing Doronilla to withdraw from Sterelas
savings account.1a\^/phi1.net
Petitioner also asserts that the Court of Appeals erred in affirming the trial courts
decision since the findings of fact therein were not accord with the evidence
presented by petitioner during trial to prove that the transaction between private
respondent and Doronilla was a mutuum, and that it committed no wrong in
allowing Doronilla to withdraw from Sterelas savings account.
19

Finally, petitioner claims that since there is no wrongful act or omission on its part,
it is not liable for the actual damages suffered by private respondent, and neither
may it be held liable for moral and exemplary damages as well as attorneys
fees.
20

Private respondent, on the other hand, argues that the transaction between him
and Doronilla is not a mutuum but an accommodation,
21
since he did not actually
part with the ownership of his P200,000.00 and in fact asked his wife to deposit
said amount in the account of Sterela so that a certification can be issued to the
effect that Sterela had sufficient funds for purposes of its incorporation but at the
same time, he retained some degree of control over his money through his wife
who was made a signatory to the savings account and in whose possession the
savings account passbook was given.
22

He likewise asserts that the trial court did not err in finding that petitioner, Atienzas
employer, is liable for the return of his money. He insists that Atienza, petitioners
assistant manager, connived with Doronilla in defrauding private respondent since
it was Atienza who facilitated the opening of Sterelas current account three days
after Mrs. Vives and Sanchez opened a savings account with petitioner for said
company, as well as the approval of the authority to debit Sterelas savings
account to cover any overdrawings in its current account.
23

There is no merit in the petition.
At the outset, it must be emphasized that only questions of law may be raised in a
petition for review filed with this Court. The Court has repeatedly held that it is not
its function to analyze and weigh all over again the evidence presented by the
parties during trial.
24
The Courts jurisdiction is in principle limited to reviewing
errors of law that might have been committed by the Court of Appeals.
25
Moreover,
factual findings of courts, when adopted and confirmed by the Court of Appeals,
are final and conclusive on this Court unless these findings are not supported by
the evidence on record.
26
There is no showing of any misapprehension of facts on
the part of the Court of Appeals in the case at bar that would require this Court to
review and overturn the factual findings of that court, especially since the
conclusions of fact of the Court of Appeals and the trial court are not only
consistent but are also amply supported by the evidence on record.
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 Sterelas savings account and would
be returned to private respondent after thirty (30) days.
Doronillas attempts to return to private respondent the amount of P200,000.00
which the latter deposited in Sterelas 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 additional P12,000.00 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 latters money deposited with petitioner.
Neither does the Court agree with petitioners contention that it is not solidarily
liable for the return of private respondents 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 petitioners liability for the return of private respondents 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
respondents money and is liable for its restitution.
Petitioners 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 Doronillas "scheme" of defrauding private respondent:
X X X
But the scheme could not have been executed successfully without the knowledge,
help and cooperation of Rufo Atienza, assistant manager and cashier of the Makati
(Buendia) branch of the defendant bank. Indeed, the evidence indicates that
Atienza had not only facilitated the commission of the fraud but he likewise helped
in devising the means by which it can be done in such manner as to make it
appear that the transaction was in accordance with banking procedure.
To begin with, the deposit was made in defendants Buendia branch precisely
because Atienza was a key officer therein. The records show that plaintiff had
suggested that the P200,000.00 be deposited in his bank, the Manila Banking
Corporation, but Doronilla and Dumagpi insisted that it must be in defendants
branch in Makati for "it will be easier for them to get a certification". In fact before
he was introduced to plaintiff, Doronilla had already prepared a letter addressed to
the Buendia branch manager authorizing Angeles B. Sanchez and company to
open a savings account for Sterela in the amount of P200,000.00, as "per
coordination with Mr. Rufo Atienza, Assistant Manager of the Bank x x x" (Exh. 1).
This is a clear manifestation that the other defendants had been in consultation
with Atienza from the inception of the scheme. Significantly, there were testimonies
and admission that Atienza is the brother-in-law of a certain Romeo Mirasol, a
friend and business associate of Doronilla.1awphi1.nt
Then there is the matter of the ownership of the fund. Because of the
"coordination" between Doronilla and Atienza, the latter knew before hand that the
money deposited did not belong to Doronilla nor to Sterela. Aside from such
foreknowledge, he was explicitly told by Inocencia Vives that the money belonged
to her and her husband and the deposit was merely to accommodate Doronilla.
Atienza even declared that the money came from Mrs. Vives.
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CREDIT TRANSACTIONS COMMODATUM
Although the savings account was in the name of Sterela, the bank records
disclose that the only ones empowered to withdraw the same were Inocencia
Vives and Angeles B. Sanchez. In the signature card pertaining to this account
(Exh. J), the authorized signatories were Inocencia Vives &/or Angeles B. Sanchez.
Atienza stated that it is the usual banking procedure that withdrawals of savings
deposits could only be made by persons whose authorized signatures are in the
signature cards on file with the bank. He, however, said that this procedure was
not followed here because Sterela was owned by Doronilla. He explained that
Doronilla had the full authority to withdraw by virtue of such ownership. The Court
is not inclined to agree with Atienza. In the first place, he was all the time aware
that the money came from Vives and did not belong to Sterela. He was also told by
Mrs. Vives that they were only accommodating Doronilla so that a certification can
be issued to the effect that Sterela had a deposit of so much amount to be sued in
the incorporation of the firm. In the second place, the signature of Doronilla was
not authorized in so far as that account is concerned inasmuch as he had not
signed the signature card provided by the bank whenever a deposit is opened. In
the third place, neither Mrs. Vives nor Sanchez had given Doronilla the authority to
withdraw.
Moreover, the transfer of fund was done without the passbook having been
presented. It is an accepted practice that whenever a withdrawal is made in a
savings deposit, the bank requires the presentation of the passbook. In this case,
such recognized practice was dispensed with. The transfer from the savings
account to the current account was without the submission of the passbook which
Atienza had given to Mrs. Vives. Instead, it was made to appear in a certification
signed by Estrella Dumagpi that a duplicate passbook was issued to Sterela
because the original passbook had been surrendered to the Makati branch in view
of a loan accommodation assigning the savings account (Exh. C). Atienza, who
undoubtedly had a hand in the execution of this certification, was aware that the
contents of the same are not true. He knew that the passbook was in the hands of
Mrs. Vives for he was the one who gave it to her. Besides, as assistant manager of
the branch and the bank official servicing the savings and current accounts in
question, he also was aware that the original passbook was never surrendered. He
was also cognizant that Estrella Dumagpi was not among those authorized to
withdraw so her certification had no effect whatsoever.
The circumstance surrounding the opening of the current account also
demonstrate that Atienzas active participation in the perpetration of the fraud and
deception that caused the loss. The records indicate that this account was opened
three days later after the P200,000.00 was deposited. In spite of his disclaimer, the
Court believes that Atienza was mindful and posted regarding the opening of the
current account considering that Doronilla was all the while in "coordination" with
him. That it was he who facilitated the approval of the authority to debit the savings
account to cover any overdrawings in the current account (Exh. 2) is not hard to
comprehend.
Clearly Atienza had committed wrongful acts that had resulted to the loss subject
of this case. x x x.
31

Under Article 2180 of the Civil Code, employers shall be held primarily and
solidarily liable for damages caused by their employees acting within the scope of
their assigned tasks. To hold the employer liable under this provision, it must be
shown that an employer-employee relationship exists, and that the employee was
acting within the scope of his assigned task when the act complained of was
committed.
32
Case law in the United States of America has it that a corporation
that entrusts a general duty to its employee is responsible to the injured party for
damages flowing from the employees wrongful act done in the course of his
general authority, even though in doing such act, the employee may have failed in
its duty to the employer and disobeyed the latters instructions.
33

There is no dispute that Atienza was an employee of petitioner. Furthermore,
petitioner did not deny that Atienza was acting within the scope of his authority as
Assistant Branch Manager when he assisted Doronilla in withdrawing funds from
Sterelas Savings Account No. 10-1567, in which account private respondents
money was deposited, and in transferring the money withdrawn to Sterelas
Current Account with petitioner. Atienzas acts of helping Doronilla, a customer of
the petitioner, were obviously done in furtherance of petitioners interests
34
even
though in the process, Atienza violated some of petitioners rules such as those
stipulated in its savings account passbook.
35
It was established that the transfer of
funds from Sterelas savings account to its current account could not have been
accomplished by Doronilla without the invaluable assistance of Atienza, and that it
was their connivance which was the cause of private respondents loss.
The foregoing shows that the Court of Appeals correctly held that under Article
2180 of the Civil Code, petitioner is liable for private respondents loss and is
solidarily liable with Doronilla and Dumagpi for the return of theP200,000.00 since
it is clear that petitioner failed to prove that it exercised due diligence to prevent
the unauthorized withdrawals from Sterelas savings account, and that it was not
negligent in the selection and supervision of Atienza. Accordingly, no error was
committed by the appellate court in the award of actual, moral and exemplary
damages, attorneys fees and costs of suit to private respondent.
WHEREFORE, the petition is hereby DENIED. The assailed Decision and
Resolution of the Court of Appeals are AFFIRMED.
SO ORDERED.
G.R. No. L-8321 October 14, 1913
ALEJANDRA MINA, ET AL., plaintiffs-appellants,
vs.
RUPERTA PASCUAL, ET AL., defendants-appellees.
N. Segundo for appellants.
Iigo Bitanga for appellees.

ARELLANO, C.J .:
Francisco Fontanilla and Andres Fontanilla were brothers. Francisco
Fontanilla acquired during his lifetime, on March 12, 1874, a lot in the center of the
town of Laoag, the capital of the Province of Ilocos Norte, the property having
been awarded to him through its purchase at a public auction held by the alcalde
mayor of that province. The lot has a frontage of 120 meters and a depth of 15.
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 likes without discussion, 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. The fact is that the plaintiffs and the defendants are virtually, to all
appearance, the owners of the warehouse; while the plaintiffs are undoubtedly, the
owners of the part of the lot occupied by that building, as well as of the remainder
thereof.
This was the state of affairs, when, on May 6, 1909, 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 plaintiffs that is
Alejandra Mina, et al. opposed the petition of Ruperta Pascual for the reason
that the latter had included therein the lot occupied by the warehouse, which they
claimed was their exclusive property. All this action was taken in a special
proceeding in re guardianship.
The plaintiffs did more than oppose Pascual's petition; they requested the
court, through motion, to decide the question of the ownership of the lot before it
pass upon the petition for the sale of the warehouse. But the court before
determining the matter of the ownership of the lot occupied by the warehouse,
ordered the sale of this building, saying:
While the trial continues with respect to the ownership of the lot, the court
orders the sale at public auction of the said warehouse and of the lot on which it is
built, with the present boundaries of the land and condition of the building, at a
price of not less than P2,890 Philippine currency . . . .
So, the warehouse, together with the lot on which it stands, was sold to Cu
Joco, the other defendant in this case, for the price mentioned.
The plaintiffs insisted upon a decision of the question of the ownership of the
lot, and the court decided it by holding that this land belonged to the owner of the
warehouse which had been built thereon thirty years before.
The plaintiffs appealed and this court reversed the judgment of the lower
court and held that the appellants were the owners of the lot in question.
1

When the judgment became final and executory, a writ of execution issued
and the plaintiffs were given possession of the lot; but soon thereafter the trial
court annulled this possession for the reason that it affected Cu Joco, who had not
been a party to the suit in which that writ was served.
It was then that the plaintiffs commenced the present action for the purpose
of having the sale of the said lot declared null and void and of no force and effect.
An agreement was had ad to the facts, the ninth paragraph of which is as
follows:
9. That the herein plaintiffs excepted to the judgment and appealed
therefrom to the Supreme Court which found for them by holding that they are the
owners of the lot in question, although there existed and still exists a commodatum
by virtue of which the guardianship (meaning the defendants) had and has the use,
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CREDIT TRANSACTIONS COMMODATUM
and the plaintiffs the ownership, of the property, with no finding concerning the
decree of the lower court that ordered the sale.
The obvious purport of the cause "although there existed and still exists a
commodatum," etc., appears to be that it is a part of the decision of the Supreme
Court and that, while finding the plaintiffs to be the owners of the lot, we
recognized in principle the existence of a commodatum under which the
defendants held the lot. Nothing could be more inexact. Possibly, also, the
meaning of that clause is that, notwithstanding the finding made by the Supreme
Court that the plaintiffs were the owners, these former and the defendants agree
that there existed, and still exists, a commodatum, etc. But such an agreement
would not affect the truth of the contents of the decision of this court, and the
opinions held by the litigants in regard to this point could have no bearing whatever
on the present decision.
Nor did the decree of the lower court that ordered the sale have the least
influence in our previous decision to require our making any finding in regard
thereto, for, with or without that decree, the Supreme Court had to decide the
ownership of the lot consistently with its titles and not in accordance with the
judicial acts or proceedings had prior to the setting up of the issue in respect to the
ownership of the property that was the subject of the judicial decree.
What is essentially pertinent to the case is the fact that the defendant agree
that the plaintiffs have the ownership, and they themselves only the use, of the
said lot.
On this premise, the nullity of the sale of the lot is in all respects quite
evident, whatsoever be the manner in which the sale was effected, whether
judicially or extrajudicially.
He who has only the use of a thing cannot validly sell the thing itself. The
effect of the sale being a transfer of the ownership of the thing, it is evident that he
who has only the mere use of the thing cannot transfer its ownership. The sale of a
thing effected by one who is not its owner is null and void. The defendants never
were the owners of the lot sold. The sale of it by them is necessarily null and void.
On cannot convey to another what he has never had himself.
The returns of the auction contain the following statements:
I, Ruperta Pascual, the guardian of the minors, etc., by virtue of the
authorization conferred upon me on the 31st of July, 1909, by the Court of First
Instance of Ilocos Norte, proceeded with the sale at public auction of the six-
sevenths part of the one-half of the warehouse constructed of rubble stone, etc.
Whereas I, Ruperta Pascual, the guardian of the minors, etc., sold at public
auction all the land and all the rights title, interest, and ownership in the said
property to Cu Joco, who was the highest bidder, etc.
Therefore, . . . I cede and deliver forever to the said purchaser, Cu Joco, his
heirs and assigns, all the interest, ownership and inheritance rights and others that,
as the guardian of the said minors, I have and may have in the said property, etc.
The purchaser could not acquire anything more than the interest that might
be held by a person to whom realty in possession of the vendor might be sold, for
at a judicial auction nothing else is disposed of. What the minor children of Ruperta
Pascual had in their possession was the ownership of the six-sevenths part of one-
half of the warehouse and the use of the lot occupied by his building. This, and
nothing more, could the Chinaman Cu Joco acquire at that sale: not the ownership
of the lot; neither the other half, nor the remaining one-seventh of the said first half,
of the warehouse. Consequently, the sale made to him of this one-seventh of one-
half and the entire other half of the building was null and void, and likewise with
still more reason the sale of the lot the building occupies.
The purchaser could and should have known what it was that was offered
for sale and what it was that he purchased. There is nothing that can justify the
acquisition by the purchaser of the warehouse of the ownership of the lot that this
building occupies, since the minors represented by Ruperta Pascual never were
the owners of the said lot, nor were they ever considered to be such.
The trial court, in the judgment rendered, held that there were no grounds
for the requested annulment of the sale, and that the plaintiffs were entitled to the
P600 deposited with the clerk of the court as the value of the lot in question. The
defendants, Ruperta Pascual and the Chinaman Cu Joco, were absolved from the
complaint, without express finding as to costs.
The plaintiffs cannot be obliged to acquiesce in or allow the sale made and
be compelled to accept the price set on the lot by expert appraisers, not even
though the plaintiffs be considered as coowner of the warehouse. It would be
much indeed that, on the ground of coownership, they should have to abide by and
tolerate the sale of the said building, which point this court does not decide as it is
not a question submitted to us for decision, but, as regards the sale of the lot, it is
in all respects impossible to hold that the plaintiffs must abide by it and tolerate, it,
and this conclusion is based on the fact that they did not give their consent (art.
1261, Civil Code), and only the contracting parties who have given it are obliged to
comply (art. 1091, idem).
The sole purpose of the action in the beginning was to obtain an annulment
of the sale of the lot; but subsequently the plaintiffs, through motion, asked for an
amendment by their complaint in the sense that the action should be deemed to be
one for the recovery of possession of a lot and for the annulment of its sale. The
plaintiff's petition was opposed by the defendant's attorney, but was allowed by the
court; therefore the complaint seeks, after the judicial annulment of the sale of the
lot, to have the defendants sentenced immediately to deliver the same to the
plaintiffs.
Such a finding appears to be in harmony with the decision rendered by the
Supreme Court in previous suit, wherein it was held that the ownership of the lot
lay in the plaintiffs, and for this reason steps were taken to give possession thereof
to the defendants; but, as the purchaser Cu Joco was not a party to that suit, the
present action is strictly one for recover against Cu Joco to compel him, once the
sale has been annulled, to deliver the lot to its lawful owners, the plaintiffs.
As respects this action for recovery, this Supreme Court finds:
1. That it is a fact admitted by the litigating parties, both in this and in the previous
suit, that Andres Fontanilla, the defendants' predecessor in interest, erected the
warehouse on the lot, some thirty years ago, with the explicit consent of his brother
Francisco Fontanilla, the plaintiff's predecessor in interest.
2. That it also appears to be an admitted fact that the plaintiffs and the defendants
are the coowners of the warehouse.
3. That it is a fact explicitly admitted in the agreement, that neither Andres
Fontanilla nor his successors paid any consideration or price whatever for the use
of the lot occupied by the said building; whence it is, perhaps, that both parties
have denominated that use a commodatum.
Upon the premise of these facts, or even merely upon that of the first of
them, the sentencing of the defendants to deliver the lot to the plaintiffs does not
follow as a necessary corollary of the judicial declaration of ownership made in the
previous suit, nor of that of the nullity of the sale of the lot, made in the present
case.
The defendants do not hold lawful possession of the lot in
question.1awphil.net
But, 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, yet that denomination given by them to the use of the lot granted by
Francisco Fontanilla to his brother, Andres Fontanilla, is not acceptable. 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 calledcommodatum . . . (art.
1740, Civil Code).
It is, therefore, an essential feature of the commodatum that the use of the
thing belonging to another shall 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. The present contention of the plaintiffs that Cu Joco,
now in possession of the lot, should pay rent for it at the rate of P5 a month, would
destroy the theory of the commodatum sustained by them, since, according to the
second paragraph of the aforecited article 1740, "commodatum is essentially
gratuitous," and, if what the plaintiffs themselves aver on page 7 of their brief is to
be believed, it never entered Francisco's mind to limit the period during which his
brother Andres was to have the use of the lot, because he expected that the
warehouse would eventually fall into the hands of his son, Fructuoso Fontanilla,
called the adopted son of Andres, which did not come to pass for the reason that
Fructuoso died before his uncle Andres. With that expectation in view, it appears
more likely that Francisco intended to allow his brother Andres a surface right; but
this right supposes the payment of an annual rent, and Andres had the gratuitous
use of the lot.
Hence, as the facts aforestated only show that a building was erected on
another's ground, the question should be decided in accordance with the statutes
that, thirty years ago, governed accessions to real estate, and which were Laws 41
and 42, title 28, of the third Partida, nearly identical with the provisions of articles
361 and 362 of the Civil Code. So, then, pursuant to article 361, the owner of the
land on which a building is erected in good faith has a right to appropriate such
edifice to himself, after payment of the indemnity prescribed in articles 453 and
454, or to oblige the builder to pay him the value of the land. Such, and no other, is
the right to which the plaintiff are entitled.
For the foregoing reasons, it is only necessary to annul the sale of the said
lot which was made by Ruperta Pascual, in representation of her minor children, to
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CREDIT TRANSACTIONS COMMODATUM
Cu Joco, and to maintain the latter in the use of the lot until the plaintiffs shall
choose one or the other of the two rights granted them by article 361 of the Civil
Code.1awphil.net
The judgment appealed from is reversed and the sale of the lot in question
is held to be null and void and of no force or effect. No special finding is made as
to the costs of both instances.
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.
Matias Hilado, for appellant.
Jose Felix Martinez, for appellee.
TORRES, J .:
On the 1st of September, 1906, Felix de los Santos brought suit against Agustina
Jarra, the administratrix of the estate of Magdaleno Jimenea, alleging that in the
latter part of 1901 Jimenea borrowed and obtained from the plaintiff ten first-class
carabaos, to be used at the animal-power mill of his hacienda during the season of
1901-2, without recompense or remuneration whatever for the use thereof, under
the sole condition that they should be returned to the owner as soon as the work at
the mill was terminated; that Magdaleno Jimenea, however, did not return the
carabaos, notwithstanding the fact that the plaintiff claimed their return after the
work at the mill was finished; that Magdaleno Jimenea died on the 28th of October,
1904, and the defendant herein was appointed by the Court of First Instance of
Occidental Negros administratrix of his estate and she took over the administration
of the same and is still performing her duties as such administratrix; that the
plaintiff presented his claim to the commissioners of the estate of Jimenea, within
the legal term, for the return of the said ten carabaos, but the said commissioners
rejected his claim as appears in their report; therefore, the plaintiff prayed that
judgment be entered against the defendant as administratrix of the estate of the
deceased, ordering her to return the ten first-class carabaos loaned to the late
Jimenea, or their present value, and to pay the costs.
The defendant was duly summoned, and on the 25th of September, 1906, she
demurred in writing to the complaint on the ground that it was vague; but on the 2d
of October of the same year, in answer to the complaint, she said that it was true
that the late Magdaleno Jimenea asked the plaintiff to loan him ten carabaos, but
that he only obtained three second-class animals, which were afterwards
transferred by sale by the plaintiff to the said Jimenea; that she denied the
allegations contained in paragraph 3 of the complaint; for all of which she asked
the court to absolve her of the complaint with the cost against the plaintiff.
By a writing dated the 11th of December, 1906, Attorney Jose Felix Martinez
notified the defendant and her counsel, Matias Hilado, that he had made an
agreement with the plaintiff to the effect that the latter would not compromise the
controversy without his consent, and that as fees for his professional services he
was to receive one half of the amount allowed in the judgment if the same were
entered in favor of the plaintiff.
The case came up for trial, evidence was adduced by both parties, and either
exhibits were made of record. On the 10th of January, 1907, the court below
entered judgment sentencing Agustina Jarra, as administratrix of the estate of
Magdaleno Jimenea, to return to the plaintiff, Felix de los Santos, the remaining six
second and third class carabaos, or the value thereof at the rate of P120 each, or
a total of P720 with the costs.
Counsel for the defendant excepted to the foregoing judgment, and, by a writing
dated January 19, moved for anew trial on the ground that the findings of fact were
openly and manifestly contrary to the weight of the evidence. The motion was
overruled, the defendant duly excepted, and in due course submitted the
corresponding bill of exceptions, which was approved and submitted to this court.
The defendant has admitted that Magdaleno Jimenea asked the plaintiff for the
loan of ten carabaos which are now claimed by the latter, as shown by two letters
addressed by the said Jimenea to Felix de los Santos; but in her answer the said
defendant alleged that the late Jimenea only obtained three second-class
carabaos, which were subsequently sold to him by the owner, Santos; therefore, in
order to decide this litigation it is indispensable that proof be forthcoming that
Jimenea only received three carabaos from his son-in-law Santos, and that they
were sold by the latter to him.
The record discloses that it has been fully proven from the testimony of a sufficient
number of witnesses that the plaintiff, Santos, sent in charge of various persons
the ten carabaos requested by his father-in-law, Magdaleno Jimenea, in the two
letters produced at the trial by the plaintiff, and that Jimenea received them in the
presence of some of said persons, one being a brother of said Jimenea, who saw
the animals arrive at the hacienda where it was proposed to employ them. Four
died of rinderpest, and it is for this reason that the judgment appealed from only
deals with six surviving carabaos.
The alleged purchase of three carabaos by Jimenea from his son-in-law Santos is
not evidenced by any trustworthy documents such as those of transfer, nor were
the declarations of the witnesses presented by the defendant affirming it
satisfactory; for said reason it can not be considered that Jimenea only received
three carabaos on loan from his son-in-law, and that he afterwards kept them
definitely by virtue of the purchase.
By the laws in force the transfer of large cattle was and is still made by means of
official documents issued by the local authorities; these documents constitute the
title of ownership of the carabao or horse so acquired. Furthermore, not only
should the purchaser be provided with a new certificate or credential, a document
which has not been produced in evidence by the defendant, nor has the loss of the
same been shown in the case, but the old documents ought to be on file in the
municipality, or they should have been delivered to the new purchaser, and in the
case at bar neither did the defendant present the old credential on which should be
stated the name of the previous owner of each of the three carabaos said to have
been sold by the plaintiff.
From the foregoing it may be logically inferred that the carabaos loaned or given
on commodatum to the now deceased Magdaleno Jimenea were ten in number;
that they, or at any rate the six surviving ones, have not been returned to the
owner thereof, Felix de los Santos, and that it is not true that the latter sold to the
former three carabaos that the purchaser was already using; therefore, as the said
six carabaos were not the property of the deceased nor of any of his descendants,
it is the duty of the administratrix of the estate to return them or indemnify the
owner for their value.
The Civil Code, in dealing with loans in general, from which generic denomination
the specific one of commodatum is derived, establishes prescriptions in relation to
the last-mentioned contract by the following articles:
ART. 1740. 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 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 bailee acquires retains the 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 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 not being returned by the defendant upon
demand, there is no doubt that she is under obligation to indemnify the owner
thereof by paying him their value.
Article 1101 of said code reads:
Those who in fulfilling their obligations are guilty of fraud, negligence, or delay, and
those who in any manner whatsoever act in contravention of the stipulations of the
same, shall be subjected to indemnify for the losses and damages caused thereby.
The obligation of the bailee or of his successors to return either the thing loaned or
its value, is sustained by the supreme tribunal of Sapin. In its decision of March 21,
1895, it sets out with precision the legal doctrine touching commodatum as follows:
Although it is true that in a contract of commodatum the bailor retains the
ownership of the thing loaned, and 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, it is clear that where
public securities are involved, the trial court, in deferring to the claim of the bailor
that the amount loaned be returned him by the bailee in bonds of the same class
as those which constituted the contract, thereby properly applies law 9 of title 11
ofpartida 5.
With regard to the third assignment of error, based on the fact that the plaintiff
Santos had not appealed from the decision of the commissioners rejecting his
claim for the recovery of his carabaos, it is sufficient to estate that we are not
dealing with a claim for the payment of a certain sum, the collection of a debt from
the estate, or payment for losses and damages (sec. 119, Code of Civil Procedure),
but with the exclusion from the inventory of the property of the late Jimenea, or
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from his capital, of six carabaos which did not belong to him, and which formed no
part of the inheritance.
The demand for the exclusion of the said carabaos belonging to a third party and
which did not form part of the property of the deceased, must be the subject of a
direct decision of the court in an ordinary action, wherein the right of the third party
to the property which he seeks to have excluded from the inheritance and the right
of the deceased has been discussed, and rendered in view of the result of the
evidence adduced by the administrator of the estate and of the claimant, since it is
so provided by the second part of section 699 and by section 703 of the Code of
Civil Procedure; the refusal of the commissioners before whom the plaintiff
unnecessarily appeared can not affect nor reduce the unquestionable right of
ownership of the latter, inasmuch as there is no law nor principle of justice
authorizing the successors of the late Jimenea to enrich themselves at the cost
and to the prejudice of Felix de los Santos.
For the reasons above set forth, by which the errors 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 the appellant. So ordered.
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.
D. T. Reyes, Liaison and Associates for petitioner-appellant.
Office of the Solicitor General for plaintiff-appellee.
PADILLA, J .:
The Court of Appeals certified this case to this Court because only questions of
law are raised.
On 8 May 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 one year from 8 May 1948 to 7 May 1949 for breeding purposes subject to a
government charge of breeding fee of 10% of the book value of the bulls. Upon the
expiration on 7 May 1949 of the contract, the borrower asked for a renewal for
another period of one year. However, the Secretary of Agriculture and Natural
Resources approved a renewal thereof of only one bull for another year from 8
May 1949 to 7 May 1950 and requested the return of the other two. On 25 March
1950 Jose V. Bagtas wrote to the Director of Animal Industry that he would pay the
value of the three bulls. On 17 October 1950 he reiterated his desire to buy them
at a value with a deduction of yearly depreciation to be approved by the Auditor
General. On 19 October 1950 the Director of Animal Industry advised him that the
book value of the three bulls could not be reduced and that they either be returned
or their book value paid not later than 31 October 1950. Jose V. Bagtas failed to
pay the book value of the three bulls or to return them. So, on 20 December 1950
in the Court of First Instance of Manila the Republic of the Philippines commenced
an action against him praying that he be ordered to return the three bulls loaned to
him or to pay their book value in the total sum of P3,241.45 and the unpaid
breeding fee in the sum of P199.62, both with interests, and costs; and that other
just and equitable relief be granted in (civil No. 12818).
On 5 July 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 from the refusal by the Director of Animal Industry to deduct from the
book value of the bulls corresponding yearly depreciation of 8% from the date of
acquisition, to which depreciation the Auditor General did not object, he could not
return the animals nor pay their value and prayed for the dismissal of the complaint.
After hearing, on 30 July 1956 the trial court render judgment
. . . sentencing the latter (defendant) to pay the sum of P3,625.09 the total value of
the three bulls plus the breeding fees in the amount of P626.17 with interest on
both sums of (at) the legal rate from the filing of this complaint and costs.
On 9 October 1958 the plaintiff moved ex parte for a writ of execution which the
court granted on 18 October and issued on 11 November 1958. On 2 December
1958 granted an ex-parte motion filed by the plaintiff on November 1958 for the
appointment of a special sheriff to serve the writ outside Manila. Of this order
appointing a special sheriff, on 6 December 1958, Felicidad M. Bagtas, the
surviving spouse of the defendant Jose Bagtas who died on 23 October 1951 and
as administratrix of his estate, was notified. On 7 January 1959 she file a motion
alleging that on 26 June 1952 the two bull Sindhi and Bhagnari were returned to
the Bureau Animal of Industry and that sometime in November 1958 the third bull,
the Sahiniwal, died from gunshot wound inflicted during a Huk raid on Hacienda
Felicidad Intal, and praying that the writ of execution be quashed and that a writ of
preliminary injunction be issued. On 31 January 1959 the plaintiff objected to her
motion. On 6 February 1959 she filed a reply thereto. On the same day, 6
February, the Court denied her motion. Hence, this appeal certified by the Court of
Appeals to this Court as stated at the beginning of this opinion.
It is true that on 26 June 1952 Jose M. Bagtas, Jr., son of the appellant by the late
defendant, returned the Sindhi and Bhagnari bulls to Roman Remorin,
Superintendent of the NVB Station, Bureau of Animal Industry, Bayombong,
Nueva Vizcaya, as evidenced by a memorandum receipt signed by the latter
(Exhibit 2). That is why in its objection of 31 January 1959 to the appellant's motion
to quash the writ of execution the appellee prays "that another writ of execution in
the sum of P859.53 be issued against the estate of defendant deceased Jose V.
Bagtas." She cannot be held liable for the two bulls which already had been
returned to and received by the appellee.
The appellant contends that the Sahiniwal bull was accidentally killed during a raid
by the Huk in November 1953 upon the surrounding barrios of Hacienda Felicidad
Intal, Baggao, Cagayan, where the animal was kept, and that as such death was
due to force majeure she is relieved from the duty of returning the bull or paying its
value to the appellee. The contention is without merit. The loan by the appellee to
the late defendant Jose V. Bagtas of the three bulls for breeding purposes for a
period of one year from 8 May 1948 to 7 May 1949, later on renewed for another
year as regards one bull, was subject to the payment by the borrower of breeding
fee of 10% of the book value of the bulls. The appellant contends that the contract
was commodatum and that, for that reason, as the appellee retained ownership or
title to the bull it should suffer its loss due to force majeure. A contract
ofcommodatum 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.
The appellant's contention that the demand or prayer by the appellee for the return
of the bull or the payment of its value being a money claim should be presented or
filed in the intestate proceedings of the defendant who died on 23 October 1951, is
not altogether without merit. However, the claim that his civil personality having
ceased to exist the trial court lost jurisdiction over the case against him, is
untenable, because section 17 of Rule 3 of the Rules of Court provides that
After a party dies and the claim is not thereby extinguished, the court shall order,
upon proper notice, the legal representative of the deceased to appear and to be
substituted for the deceased, within a period of thirty (30) days, or within such time
as may be granted. . . .
and after the defendant's death on 23 October 1951 his counsel failed to comply
with section 16 of Rule 3 which provides that
Whenever a party to a pending case dies . . . it shall be the duty of his attorney to
inform the court promptly of such death . . . and to give the name and residence of
the executory administrator, guardian, or other legal representative of the
deceased . . . .
The notice by the probate court and its publication in the Voz de Manila that
Felicidad M. Bagtas had been issue letters of administration of the estate of the
late Jose Bagtas and that "all persons having claims for monopoly against the
deceased Jose V. Bagtas, arising from contract express or implied, whether the
same be due, not due, or contingent, for funeral expenses and expenses of the
last sickness of the said decedent, and judgment for monopoly against him, to file
said claims with the Clerk of this Court at the City Hall Bldg., Highway 54, Quezon
City, within six (6) months from the date of the first publication of this order, serving
a copy thereof upon the aforementioned Felicidad M. Bagtas, the appointed
administratrix of the estate of the said deceased," is not a notice to the court and
the appellee who were to be notified of the defendant's death in accordance with
the above-quoted rule, and there was no reason for such failure to notify, because
the attorney who appeared for the defendant was the same who represented the
administratrix in the special proceedings instituted for the administration and
settlement of his estate. The appellee or its attorney or representative could not be
expected to know of the death of the defendant or of the administration
proceedings of his estate instituted in another court that if the attorney for the
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deceased defendant did not notify the plaintiff or its attorney of such death as
required by the rule.
As the appellant already had returned the two bulls to the appellee, the estate of
the late defendant is only liable for the sum of P859.63, the value of the bull which
has not been returned to the appellee, because it was killed while in the custody of
the administratrix of his estate. This is the amount prayed for by the appellee in its
objection on 31 January 1959 to the motion filed on 7 January 1959 by the
appellant for the quashing of the writ of execution.
Special proceedings for the administration and settlement of the estate of the
deceased Jose V. Bagtas having been instituted in the Court of First Instance of
Rizal (Q-200), the money judgment rendered in favor of the appellee cannot be
enforced by means of a writ of execution but must be presented to the probate
court for payment by the appellant, the administratrix appointed by the court.
ACCORDINGLY, the writ of execution appealed from is set aside, without
pronouncement as to costs.
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.
Valdez, Ereso, Polido & Associates for petitioner.
Claustro, Claustro, Claustro Law Office collaborating counsel for petitioner.
Jaime G. de Leon for the Heirs of Egmidio Octaviano.
Cotabato Law Office for the Heirs of Juan Valdez.

GANCAYCO, J .:
The principal issue in this case is whether or not a decision of the Court of Appeals
promulgated a long time ago can properly be considered res judicata by
respondent Court of Appeals in the present two cases between petitioner and two
private respondents.
Petitioner questions as allegedly erroneous the Decision dated August 31, 1987 of
the Ninth Division of Respondent Court of Appeals
1
in CA-G.R. No. 05148 [Civil
Case No. 3607 (419)] and CA-G.R. No. 05149 [Civil Case No. 3655 (429)], both for
Recovery of Possession, which affirmed the Decision of the Honorable Nicodemo
T. Ferrer, Judge of the Regional Trial Court of Baguio and Benguet in Civil Case
No. 3607 (419) and Civil Case No. 3655 (429), with the dispositive portion as
follows:
WHEREFORE, Judgment is hereby rendered ordering the defendant, Catholic
Vicar Apostolic of the Mountain Province to return and surrender Lot 2 of Plan
Psu-194357 to the plaintiffs. Heirs of Juan Valdez, and Lot 3 of the same Plan to
the other set of plaintiffs, the Heirs of Egmidio Octaviano (Leonardo Valdez, et al.).
For lack or insufficiency of evidence, the plaintiffs' claim or damages is hereby
denied. Said defendant is ordered to pay costs. (p. 36, Rollo)
Respondent Court of Appeals, in affirming the trial court's decision, sustained the
trial court's conclusions that the Decision of the Court of Appeals, dated May
4,1977 in CA-G.R. No. 38830-R, in the two cases affirmed by the Supreme Court,
touched on the ownership of lots 2 and 3 in question; that the two lots were
possessed by the predecessors-in-interest of private respondents under claim of
ownership in good faith from 1906 to 1951; that petitioner had been in possession
of the same lots as bailee in commodatum up to 1951, when petitioner repudiated
the trust and when it applied for registration in 1962; that petitioner had just been
in possession as owner for eleven years, hence there is no possibility of
acquisitive prescription which requires 10 years possession with just title and 30
years of possession without; that the principle of res judicata on these findings by
the Court of Appeals will bar a reopening of these questions of facts; and that
those facts may no longer be altered.
Petitioner's motion for reconsideation of the respondent appellate court's Decision
in the two aforementioned cases (CA G.R. No. CV-05418 and 05419) was denied.
The facts and background of these cases as narrated by the trail court are as
follows
... The documents and records presented reveal that the whole controversy started
when the defendant Catholic Vicar Apostolic of the Mountain Province (VICAR for
brevity) filed with the Court of First Instance of Baguio Benguet on September 5,
1962 an application for registration of title over Lots 1, 2, 3, and 4 in Psu-194357,
situated at Poblacion Central, La Trinidad, Benguet, docketed as LRC N-91, said
Lots being the sites of the Catholic Church building, convents, high school building,
school gymnasium, school dormitories, social hall, stonewalls, etc. On March 22,
1963 the Heirs of Juan Valdez and the Heirs of Egmidio Octaviano filed their
Answer/Opposition on Lots Nos. 2 and 3, respectively, asserting ownership and
title thereto. After trial on the merits, the land registration court promulgated its
Decision, dated November 17, 1965, confirming the registrable title of VICAR to
Lots 1, 2, 3, and 4.
The Heirs of Juan Valdez (plaintiffs in the herein Civil Case No. 3655) and the
Heirs of Egmidio Octaviano (plaintiffs in the herein Civil Case No. 3607) appealed
the decision of the land registration court to the then Court of Appeals, docketed
as CA-G.R. No. 38830-R. The Court of Appeals rendered its decision, dated May 9,
1977, reversing the decision of the land registration court and dismissing the
VICAR's application as to Lots 2 and 3, the lots claimed by the two sets of
oppositors in the land registration case (and two sets of plaintiffs in the two cases
now at bar), the first lot being presently occupied by the convent and the second
by the women's dormitory and the sister's convent.
On May 9, 1977, the Heirs of Octaviano filed a motion for reconsideration praying
the Court of Appeals to order the registration of Lot 3 in the names of the Heirs of
Egmidio Octaviano, and on May 17, 1977, the Heirs of Juan Valdez and Pacita
Valdez filed their motion for reconsideration praying that both Lots 2 and 3 be
ordered registered in the names of the Heirs of Juan Valdez and Pacita Valdez.
On August 12,1977, the Court of Appeals denied the motion for reconsideration
filed by the Heirs of Juan Valdez on the ground that there was "no sufficient merit
to justify reconsideration one way or the other ...," and likewise denied that of the
Heirs of Egmidio Octaviano.
Thereupon, the VICAR filed with the Supreme Court a petition for review on
certiorari of the decision of the Court of Appeals dismissing his (its) application for
registration of Lots 2 and 3, docketed as G.R. No. L-46832, entitled 'Catholic Vicar
Apostolic of the Mountain Province vs. Court of Appeals and Heirs of Egmidio
Octaviano.'
From the denial by the Court of Appeals of their motion for reconsideration the
Heirs of Juan Valdez and Pacita Valdez, on September 8, 1977, filed with the
Supreme Court a petition for review, docketed as G.R. No. L-46872, entitled, Heirs
of Juan Valdez and Pacita Valdez vs. Court of Appeals, Vicar, Heirs of Egmidio
Octaviano and Annable O. Valdez.
On January 13, 1978, the Supreme Court denied in a minute resolution both
petitions (of VICAR on the one hand and the Heirs of Juan Valdez and Pacita
Valdez on the other) for lack of merit. Upon the finality of both Supreme Court
resolutions in G.R. No. L-46832 and G.R. No. L- 46872, the Heirs of Octaviano
filed with the then Court of First Instance of Baguio, Branch II, a Motion For
Execution of Judgment praying that the Heirs of Octaviano be placed in
possession of Lot 3. The Court, presided over by Hon. Salvador J. Valdez, on
December 7, 1978, denied the motion on the ground that the Court of Appeals
decision in CA-G.R. No. 38870 did not grant the Heirs of Octaviano any affirmative
relief.
On February 7, 1979, the Heirs of Octaviano filed with the Court of Appeals a
petitioner for certiorari and mandamus, docketed as CA-G.R. No. 08890-R,
entitled Heirs of Egmidio Octaviano vs. Hon. Salvador J. Valdez, Jr. and Vicar. In
its decision dated May 16, 1979, the Court of Appeals dismissed the petition.
It was at that stage that the instant cases were filed. The Heirs of Egmidio
Octaviano filed Civil Case No. 3607 (419) on July 24, 1979, for recovery of
possession of Lot 3; and the Heirs of Juan Valdez filed Civil Case No. 3655 (429)
on September 24, 1979, likewise for recovery of possession of Lot 2 (Decision, pp.
199-201, Orig. Rec.).
In Civil Case No. 3607 (419) trial was held. The plaintiffs Heirs of Egmidio
Octaviano presented one (1) witness, Fructuoso Valdez, who testified on the
alleged ownership of the land in question (Lot 3) by their predecessor-in-interest,
Egmidio Octaviano (Exh. C ); his written demand (Exh. BB-4 ) to defendant Vicar
for the return of the land to them; and the reasonable rentals for the use of the land
at P10,000.00 per month. On the other hand, defendant Vicar presented the
Register of Deeds for the Province of Benguet, Atty. Nicanor Sison, who testified
that the land in question is not covered by any title in the name of Egmidio
Octaviano or any of the plaintiffs (Exh. 8). The defendant dispensed with the
testimony of Mons.William Brasseur when the plaintiffs admitted that the witness if
called to the witness stand, would testify that defendant Vicar has been in
possession of Lot 3, for seventy-five (75) years continuously and peacefully and
has constructed permanent structures thereon.
In Civil Case No. 3655, the parties admitting that the material facts are not in
dispute, submitted the case on the sole issue of whether or not the decisions of the
Court of Appeals and the Supreme Court touching on the ownership of Lot 2,
which in effect declared the plaintiffs the owners of the land constitute res judicata.
In these two cases , the plaintiffs arque that the defendant Vicar is barred from
setting up the defense of ownership and/or long and continuous possession of the
two lots in question since this is barred by prior judgment of the Court of Appeals
in CA-G.R. No. 038830-R under the principle of res judicata. Plaintiffs contend that
the question of possession and ownership have already been determined by the
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CREDIT TRANSACTIONS COMMODATUM
Court of Appeals (Exh. C, Decision, CA-G.R. No. 038830-R) and affirmed by the
Supreme Court (Exh. 1, Minute Resolution of the Supreme Court). On his part,
defendant Vicar maintains that the principle of res judicata would not prevent them
from litigating the issues of long possession and ownership because the
dispositive portion of the prior judgment in CA-G.R. No. 038830-R merely
dismissed their application for registration and titling of lots 2 and 3. Defendant
Vicar contends that only the dispositive portion of the decision, and not its body, is
the controlling pronouncement of the Court of Appeals.
2

The alleged errors committed by respondent Court of Appeals according to
petitioner are as follows:
1. ERROR IN APPLYING LAW OF THE CASE AND RES JUDICATA;
2. ERROR IN FINDING THAT THE TRIAL COURT RULED THAT LOTS 2 AND 3
WERE ACQUIRED BY PURCHASE BUT WITHOUT DOCUMENTARY
EVIDENCE PRESENTED;
3. ERROR IN FINDING THAT PETITIONERS' CLAIM IT PURCHASED LOTS 2
AND 3 FROM VALDEZ AND OCTAVIANO WAS AN IMPLIED ADMISSION THAT
THE FORMER OWNERS WERE VALDEZ AND OCTAVIANO;
4. ERROR IN FINDING THAT IT WAS PREDECESSORS OF PRIVATE
RESPONDENTS WHO WERE IN POSSESSION OF LOTS 2 AND 3 AT LEAST
FROM 1906, AND NOT PETITIONER;
5. ERROR IN FINDING THAT VALDEZ AND OCTAVIANO HAD FREE PATENT
APPLICATIONS AND THE PREDECESSORS OF PRIVATE RESPONDENTS
ALREADY HAD FREE PATENT APPLICATIONS SINCE 1906;
6. ERROR IN FINDING THAT PETITIONER DECLARED LOTS 2 AND 3 ONLY IN
1951 AND JUST TITLE IS A PRIME NECESSITY UNDER ARTICLE 1134 IN
RELATION TO ART. 1129 OF THE CIVIL CODE FOR ORDINARY ACQUISITIVE
PRESCRIPTION OF 10 YEARS;
7. ERROR IN FINDING THAT THE DECISION OF THE COURT OF APPEALS IN
CA G.R. NO. 038830 WAS AFFIRMED BY THE SUPREME COURT;
8. ERROR IN FINDING THAT THE DECISION IN CA G.R. NO. 038830
TOUCHED ON OWNERSHIP OF LOTS 2 AND 3 AND THAT PRIVATE
RESPONDENTS AND THEIR PREDECESSORS WERE IN POSSESSION OF
LOTS 2 AND 3 UNDER A CLAIM OF OWNERSHIP IN GOOD FAITH FROM 1906
TO 1951;
9. ERROR IN FINDING THAT PETITIONER HAD BEEN IN POSSESSION OF
LOTS 2 AND 3 MERELY AS BAILEE BOR ROWER) IN COMMODATUM, A
GRATUITOUS LOAN FOR USE;
10. ERROR IN FINDING THAT PETITIONER IS A POSSESSOR AND BUILDER
IN GOOD FAITH WITHOUT RIGHTS OF RETENTION AND REIMBURSEMENT
AND IS BARRED BY THE FINALITY AND CONCLUSIVENESS OF THE
DECISION IN CA G.R. NO. 038830.
3

The petition is bereft of merit.
Petitioner questions the ruling of respondent Court of Appeals in CA-G.R. Nos.
05148 and 05149, when it clearly held that it was in agreement with the findings of
the trial court that the Decision of the Court of Appeals dated May 4,1977 in CA-
G.R. No. 38830-R, on the question of ownership of Lots 2 and 3, declared that the
said Court of Appeals Decision CA-G.R. No. 38830-R) did not positively declare
private respondents as owners of the land, neither was it declared that they were
not owners of the land, but it held that the predecessors of private respondents
were possessors of Lots 2 and 3, with claim of ownership in good faith from 1906
to 1951. 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.
4

On the above findings of facts supported by evidence and evaluated by the Court
of Appeals in CA-G.R. No. 38830-R, 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.
An examination of the Court of Appeals Decision dated May 4, 1977, First
Division
5
in CA-G.R. No. 38830-R, shows that it reversed the trial court's
Decision
6
finding petitioner to be entitled to register the lands in question under its
ownership, on its evaluation of evidence and conclusion of facts.
The Court of Appeals found that petitioner 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.
By the very admission of petitioner Vicar, Lots 2 and 3 were owned by Valdez and
Octaviano. Both Valdez and Octaviano had Free Patent Application for those lots
since 1906. The predecessors of private respondents, not petitioner Vicar, were in
possession of the questioned lots since 1906.
There is evidence that petitioner Vicar occupied Lots 1 and 4, which are not in
question, but not Lots 2 and 3, because the buildings standing thereon were only
constructed after liberation in 1945. Petitioner Vicar only declared Lots 2 and 3 for
taxation purposes in 1951. The improvements oil Lots 1, 2, 3, 4 were paid for by
the Bishop but said Bishop was appointed only in 1947, the church was
constructed only in 1951 and the new convent only 2 years before the trial in 1963.
When petitioner Vicar was notified of the oppositor's claims, the parish priest
offered to buy the lot from Fructuoso Valdez. Lots 2 and 3 were surveyed by
request of petitioner Vicar only in 1962.
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.
We find no reason to disregard or reverse the ruling of the Court of Appeals in CA-
G.R. No. 38830-R. Its findings of fact have become incontestible. This Court
declined to review said decision, thereby in effect, affirming it. It has become final
and executory a long time ago.
Respondent appellate court did not commit any reversible error, much less grave
abuse of discretion, when it held that the Decision of the Court of Appeals in CA-
G.R. No. 38830-R is governing, under the principle of res judicata, hence the rule,
in the present cases CA-G.R. No. 05148 and CA-G.R. No. 05149. The facts as
supported by evidence established in that decision may no longer be altered.
WHEREFORE AND BY REASON OF THE FOREGOING, this petition is DENIED
for lack of merit, the Decision dated Aug. 31, 1987 in CA-G.R. Nos. 05148 and
05149, by respondent Court of Appeals is AFFIRMED, with costs against petitioner.
SO ORDERED.
G.R. No. L-46240 November 3, 1939
MARGARITA QUINTOS and ANGEL A. ANSALDO, plaintiffs-appellants,
vs.
BECK, defendant-appellee.
Mauricio Carlos for appellants.
Felipe Buencamino, Jr. for appellee.

IMPERIAL, J .:
The plaintiff brought this action to compel the defendant to return her certain
furniture which she lent him for his use. She appealed from the judgment of the
Court of First Instance of Manila which ordered that the defendant return to her the
three has heaters and the four electric lamps found in the possession of the Sheriff
of said city, that she call for the other furniture from the said sheriff of Manila at her
own expense, and that the fees which the Sheriff may charge for the deposit of the
furniture be paid pro rata by both parties, without pronouncement as to the costs.
The defendant was a tenant of the plaintiff and as such occupied the latter's
house on M. H. del Pilar street, No. 1175. On January 14, 1936, upon the novation
of the contract of lease between the plaintiff and the defendant, the former
gratuitously granted to the latter the use of the furniture described in the third
paragraph of the stipulation of facts, subject to the condition that the defendant
Page | 14
CREDIT TRANSACTIONS COMMODATUM
would return them to the plaintiff upon the latter's demand. The plaintiff sold the
property to Maria Lopez and Rosario Lopez and on September 14, 1936, these
three notified the defendant of the conveyance, giving him sixty days to vacate the
premises under one of the clauses of the contract of lease. There after the plaintiff
required the defendant to return all the furniture transferred to him for them in the
house where they were found. On November 5, 1936, the defendant,
through another person, wrote to the plaintiff reiterating that she may call for the
furniture in the ground floor of the house. On the 7th of the same month, the
defendant wrote another letter to the plaintiff informing her that he could not give
up the three gas heaters and the four electric lamps because he would use them
until the 15th of the same month when the lease in due to expire. The plaintiff
refused to get the furniture in view of the fact that the defendant had declined to
make delivery of all of them. On November 15th, before vacating the house,
the defendant deposited with the Sheriff all the furniture belonging to the plaintiff
and they are now on deposit in the warehouse situated at No. 1521, Rizal Avenue,
in the custody of the said sheriff.
In their seven assigned errors the plaintiffs contend that the trial court
incorrectly applied the law: in holding that they violated the contract by not calling
for all the furniture on November 5, 1936, when the defendant placed them at their
disposal; in not ordering the defendant to pay them the value of the furniture in
case they are not delivered; in holding that they should get all the furniture from
the Sheriff at their expenses; in ordering them to pay-half of the expenses claimed
by the Sheriff for the deposit of the furniture; in ruling that both parties should pay
their respective legal expenses or the costs; and in denying pay their respective
legal expenses or the costs; and in denying the motions for reconsideration and
new trial. To dispose of the case, it is only necessary to decide whether the
defendant complied with his obligation to return the furniture upon the plaintiff's
demand; whether the latter is bound to bear the deposit fees thereof, and whether
she is entitled to the costs of litigation.lawphi1.net
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. The provisions of
article 1169 of the Civil Code cited by counsel for the parties are not squarely
applicable. 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.
As to the value of the furniture, we do not believe that the plaintiff is entitled
to the payment thereof by the defendant in case of his inability to return some of
the furniture because under paragraph 6 of the stipulation of facts, the defendant
has neither agreed to nor admitted the correctness of the said value. Should the
defendant fail to deliver some of the furniture, the value thereof should be latter
determined by the trial Court through evidence which the parties may desire to
present.
The costs in both instances should be borne by the defendant because the
plaintiff is the prevailing party (section 487 of the Code of Civil Procedure). The
defendant was the one who breached the contract ofcommodatum, 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.
The appealed judgment is modified and the defendant is ordered to return
and deliver to the plaintiff, in the residence to return and deliver to the plaintiff, in
the residence or house of the latter, all the furniture described in paragraph 3 of
the stipulation of facts Exhibit A. The expenses which may be occasioned by the
delivery to and deposit of the furniture with the Sheriff shall be for the account of
the defendant. the defendant shall pay the costs in both instances. So ordered.