[G.R. No. 146364.
June 3, 2004] the house, allowed Guevarra to live in the house for free provided
COLITO T. PAJUYO, petitioner, vs. COURT OF APPEALS and
EDDIE GUEVARRA, respondents.
DECISION
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
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:
1
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.
2
 The Ruling of the MTC
On 21 June 2000, the Court of Appeals issued its decision reversing
the RTC decision. The dispositive portion of the decision reads:
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.
WHEREFORE, premises considered, the assailed Decision of the
Thus, Guevarras refusal to vacate the house on Pajuyos demand
court a quo in Civil Case No. Q-96-26943 is REVERSED and SET
made Guevarras continued possession of the house illegal.
ASIDE; and it is hereby declared that the ejectment case filed against
defendant-appellant is without factual and legal basis.
The Ruling of the RTC
SO ORDERED.[11]
The RTC upheld the Kasunduan, which established the landlord and
tenant relationship between Pajuyo and Guevarra. The terms of the
Pajuyo filed a motion for reconsideration of the decision. Pajuyo
Kasunduan bound Guevarra to return possession of the house on
pointed out that the Court of Appeals should have dismissed outright
demand.
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.
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
On 14 December 2000, the Court of Appeals issued a resolution
ejectment suit, the RTC has no power to decide Guevarras rights
denying Pajuyos motion for reconsideration. The dispositive portion
under these laws. The RTC declared that in an ejectment case, the
of the resolution reads:
only issue for resolution is material or physical possession, not
ownership.

WHEREFORE, for lack of merit, the motion for reconsideration is

hereby DENIED. No costs.
The Ruling of the Court of Appeals

SO ORDERED.[12]

3
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 the Kasunduan is not a lease contract but a
commodatum because the agreement is not for a price certain.
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:
4
 5) in deciding the unlawful detainer case based on the so-called Code
of Policies of the National Government Center Housing Project
WHETHER THE COURT OF APPEALS ERRED OR ABUSED
instead of deciding the same under the Kasunduan voluntarily
ITS AUTHORITY AND DISCRETION TANTAMOUNT TO
executed by the parties, the terms and conditions of which are the
LACK OF JURISDICTION:
laws between themselves.[13]

1) in GRANTING, instead of denying, Private Respondents Motion

The Ruling of the Court
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.
The procedural issues Pajuyo is raising are baseless. However, we
find merit in the substantive issues Pajuyo is submitting for
resolution.
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
Procedural Issues
himself.

Pajuyo insists that the Court of Appeals should have dismissed

3) in ruling that the Kasunduan voluntarily entered into by the parties
outright Guevarras petition for review because the RTC decision had
was in fact a commodatum, instead of a Contract of Lease as found
already become final and executory when the appellate court acted
by the Metropolitan Trial Court and in holding that the ejectment
on Guevarras motion for extension to file the petition. Pajuyo points
case filed against defendant-appellant is without legal and factual
out that Guevarra had only one day before the expiry of his period to
basis.
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
4) in reversing and setting aside the Decision of the Regional Trial
Court merely referred the motion to the Court of Appeals. Pajuyo
Court in Civil Case No. Q-96-26943 and in holding that the parties
believes that the filing of the motion for extension with this Court
are in pari delicto being both squatters, therefore, illegal occupants of
did not toll the running of the period to perfect the appeal. Hence,
the contested parcel of land.
when the Court of Appeals received the motion, the period to appeal
had already expired.

5
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 Liboros clarification 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.
6
 the motion for extension exactly one day before the lapse of the
reglementary period to appeal.
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
Assuming that the Court of Appeals should have dismissed
could not have gained finality because the Court of Appeals granted
Guevarras appeal on technical grounds, Pajuyo did not ask the
the 30-day extension to Guevarra.
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
The Court of Appeals did not commit grave abuse of discretion when
Court of Appeals ruled in Guevarras favor that Pajuyo raised the
it approved Guevarras motion for extension. The Court of Appeals
procedural issues against Guevarras petition for review.
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
A party who, after voluntarily submitting a dispute for resolution,
only give due course to the motion for extension if filed on time. The
receives an adverse decision on the merits, is estopped from
motion for extension met this condition.
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
The material dates to consider in determining the timeliness of the
jurisdiction after voluntarily submitting to it is against public
filing of the motion for extension are (1) the date of receipt of the
policy.[26]
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
In his Comment before the Court of Appeals, Pajuyo also failed to
determines the timeliness of the filing of that motion or pleading.
discuss Guevarras failure to sign the certification against forum
Thus, even if the motion for extension bears no date, the date of
shopping. Instead, Pajuyo harped on Guevarras counsel signing the
filing stamped on it is the reckoning point for determining the
verification, claiming that the counsels verification is insufficient
timeliness of its filing.
since it is based only on mere information.

Guevarra had until 14 December 1996 to file an appeal from the

A partys failure to sign the certification against forum shopping is
RTC decision. Guevarra filed his motion for extension before this
different from the partys failure to sign personally the verification.
Court on 13 December 1996, the date stamped by this Courts
The certificate of non-forum shopping must be signed by the party,
Receiving Clerk on the motion for extension. Clearly, Guevarra filed

7
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 Jurisdiction 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
8
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]
9
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
10
part of the courts to take 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:
11
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
12
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]
13
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.
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 the
Kasunduan 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.
14

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 the Kasunduan. Guevarra
cannot now impugn the Kasunduan after he had benefited from it.
The Kasunduan binds Guevarra.
The Kasunduan is not void for purposes of determining who between
Pajuyo and Guevarra has a right to physical possession of the
contested property. The Kasunduan is the undeniable evidence of
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.
15
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
16
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, Branch 31 in Civil Case No. 12432, is REINSTATED
with MODIFICATION. The award of attorneys fees is deleted. No
costs.
SO ORDERED.
17
EN BANC 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
G.R. No. L-46240 November 3, 1939 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 would return
MARGARITA QUINTOS and ANGEL A. ANSALDO, plaintiffs- them to the plaintiff upon the latter's demand. The plaintiff sold the
appellants, property to Maria Lopez and Rosario Lopez and on September 14,
1936, these three notified the defendant of the conveyance, giving
vs. 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
BECK, defendant-appellee.
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
Mauricio Carlos for appellants. call for the furniture in the ground floor of the house. On the 7th of
Felipe Buencamino, Jr. for appellee. 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
IMPERIAL, J.: 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
The plaintiff brought this action to compel the defendant to return warehouse situated at No. 1521, Rizal Avenue, in the custody of the
her certain furniture which she lent him for his use. She appealed said sheriff.
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, In their seven assigned errors the plaintiffs contend that the trial
that she call for the other furniture from the said sheriff of Manila at court incorrectly applied the law: in holding that they violated the
her own expense, and that the fees which the Sheriff may charge for contract by not calling for all the furniture on November 5, 1936,
the deposit of the furniture be paid pro rata by both parties, without when the defendant placed them at their disposal; in not ordering the
pronouncement as to the costs. 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

18
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 of
commodatum, and without any reason he refused to return and
deliver all the furniture upon the plaintiff's demand. In these
circumstances, it is just and equitable that he pay the legal expenses
and other judicial costs which the plaintiff would not have otherwise
defrayed.
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.
19
[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.
DECISION
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
20
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]
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

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 (d) the costs of the suit.
respondents favor but the check was again dishonored for
insufficiency of funds.[7]
SO ORDERED.[8]

Private respondent instituted an action for recovery of sum of money

in the Regional Trial Court (RTC) in Pasig, Metro Manila against
Petitioner appealed the trial courts decision to the Court of Appeals.
Doronilla, Sanchez, Dumagpi and petitioner. The case was docketed
In its Decision dated June 25, 1991, the appellate court affirmed in
as Civil Case No. 44485. He also filed criminal actions against
toto the decision of the RTC.[9] It likewise denied with finality
Doronilla, Sanchez and Dumagpi in the RTC. However, Sanchez
petitioners motion for reconsideration in its Resolution dated May 5,
passed away on March 16, 1985 while the case was pending before
1994.[10]
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:
On June 30, 1994, petitioner filed the present petition, arguing that

21

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
22
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
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.
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
23
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.
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.

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 Commodatum is essentially gratuitous.
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 Simple loan may be gratuitous or with a stipulation to pay interest.
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 In commodatum, the bailor retains the ownership of the thing loaned,
unless these findings are not supported by the evidence on while in simple loan, ownership passes to the borrower.
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,
The foregoing provision seems to imply that if the subject of the
especially since the conclusions of fact of the Court of Appeals and
contract is a consumable thing, such as money, the contract would be
the trial court are not only consistent but are also amply supported by
a mutuum. However, there are some instances where a commodatum
the evidence on record.
may have for its object a consumable thing. Article 1936 of the Civil
Code provides:

No error was committed by the Court of Appeals when it ruled that

the transaction between private respondent and Doronilla was a
Consumable goods may be the subject of commodatum if the
commodatum and not a mutuum. A circumspect examination of the
purpose of the contract is not the consumption of the object, as when
records reveals that the transaction between them was a
it is merely for exhibition.

24
 [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
Thus, if consumable goods are loaned only for purposes of
private respondent the interest accruing to the latters money
exhibition, or when the intention of the parties is to lend consumable
deposited with petitioner.
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.
Neither does the Court agree with petitioners contention that it is not
solidarily liable for the return of private respondents money because
The rule is that the intention of the parties thereto shall be accorded
it was not privy to the transaction between Doronilla and private
primordial consideration in determining the actual character of a
respondent. The nature of said transaction, that is, whether it is a
contract.[27] In case of doubt, the contemporaneous and subsequent
mutuum or a commodatum, has no bearing on the question of
acts of the parties shall be considered in such determination.[28]
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
As correctly pointed out by both the Court of Appeals and the trial for the loss of private respondents money and is liable for its
court, the evidence shows that private respondent agreed to deposit restitution.
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
Petitioners rules for savings deposits written on the passbook it
shall be returned within thirty (30) days.[29] Private respondent
issued Mrs. Vives on behalf of Sterela for Savings Account No. 10-
merely accommodated Doronilla by lending his money without
1567 expressly states that
consideration, as a favor to his good friend Sanchez. It was however
clear to the parties to the transaction that the money would not be
removed from Sterelas savings account and would be returned to
2. Deposits and withdrawals must be made by the depositor
private respondent after thirty (30) days.
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
Doronillas attempts to return to private respondent the amount of
entered by the Bank the amount deposited or withdrawn.[30]
P200,000.00 which the latter deposited in 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
Said rule notwithstanding, Doronilla was permitted by petitioner,
mutuum because such was not the intent of the parties and because
through Atienza, the Assistant Branch Manager for the Buendia
the additional P12,000.00 corresponds to the fruits of the lending of
Branch of petitioner, to withdraw therefrom even without presenting
the P200,000.00. Article 1935 of the Civil Code expressly states that

25
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:
XXX
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.
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.
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.
26
 Clearly Atienza had committed wrongful acts that had resulted to the
loss subject of this case. x x x.[31]
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
Under Article 2180 of the Civil Code, employers shall be held
presentation of the passbook. In this case, such recognized practice
primarily and solidarily liable for damages caused by their
was dispensed with. The transfer from the savings account to the
employees acting within the scope of their assigned tasks. To hold
current account was without the submission of the passbook which
the employer liable under this provision, it must be shown that an
Atienza had given to Mrs. Vives. Instead, it was made to appear in a
employer-employee relationship exists, and that the employee was
certification signed by Estrella Dumagpi that a duplicate passbook
acting within the scope of his assigned task when the act complained
was issued to Sterela because the original passbook had been
of was committed.[32] Case law in the United States of America has
surrendered to the Makati branch in view of a loan accommodation
it that a corporation that entrusts a general duty to its employee is
assigning the savings account (Exh. C). Atienza, who undoubtedly
responsible to the injured party for damages flowing from the
had a hand in the execution of this certification, was aware that the
employees wrongful act done in the course of his general authority,
contents of the same are not true. He knew that the passbook was in
even though in doing such act, the employee may have failed in its
the hands of Mrs. Vives for he was the one who gave it to her.
duty to the employer and disobeyed the latters instructions.[33]
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 There is no dispute that Atienza was an employee of petitioner.
withdraw so her certification had no effect whatsoever. 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
The circumstance surrounding the opening of the current account
was deposited, and in transferring the money withdrawn to Sterelas
also demonstrate that Atienzas active participation in the perpetration
Current Account with petitioner. Atienzas acts of helping Doronilla,
of the fraud and deception that caused the loss. The records indicate
a customer of the petitioner, were obviously done in furtherance of
that this account was opened three days later after the P200,000.00
petitioners interests[34] even though in the process, Atienza violated
was deposited. In spite of his disclaimer, the Court believes that
some of petitioners rules such as those stipulated in its savings
Atienza was mindful and posted regarding the opening of the current
account passbook.[35] It was established that the transfer of funds
account considering that Doronilla was all the while in coordination
from Sterelas savings account to its current account could not have
with him. That it was he who facilitated the approval of the authority
been accomplished by Doronilla without the invaluable assistance of
to debit the savings account to cover any overdrawings in the current
Atienza, and that it was their connivance which was the cause of
account (Exh. 2) is not hard to comprehend.
private respondents loss.

27
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 the P200,000.00 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.

28
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 —
29
. . . 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 of commodatum is essentially gratuitous.1 If the
breeding fee be considered a compensation, then the contract would
be a lease of the bull. Under article 1671 of the Civil Code the lessee
would be subject to the responsibilities of a possessor in bad faith,
because she had continued possession of the bull after the expiry of
the contract. And even if the contract be commodatum, still the
appellant is liable, because article 1942 of the Civil Code provides
that a bailee in a contract of commodatum —
. . . is liable for loss of the things, even if it should be through a
fortuitous event:
30
(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
31
administration proceedings of his estate instituted in another court
that if the attorney for the 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.

Bengzon, C.J., Bautista Angelo, Labrador, Concepcion, Reyes,

J.B.L., Paredes, Dizon, Regala and Makalintal, JJ., concur.
Barrera, J., concurs in the result.

32