COMMODATUM
G.R. No. L-8321 October 14, 1913
ALEJANDRA MINA, ET AL., vs. RUPERTA PASCUAL, ET
AL.,
ARELLANO, C.J.:
Francisco Fontanilla and Andres Fontanilla were brothers.
Francisco Fontanilla acquired during his lifetime, on March 12,
1874, a lot in the center of the town of Laoag, the capital of the
Province of Ilocos Norte, the property having been awarded to
him through its purchase at a public auction held by the alcalde
mayor of that province. The lot has a frontage of 120 meters and
a depth of 15.
Andres Fontanilla, with the consent of his brother Francisco,
erected a warehouse on a part of the said lot, embracing 14
meters of its frontage by 11 meters of its depth.
Francisco Fontanilla, the former owner of the lot, being dead, the
herein plaintiffs, Alejandro Mina, et al., were recognized without
discussion as his heirs.
Andres Fontanilla, the former owner of the warehouse, also
having died, the children of Ruperta Pascual were recognized
likes without discussion, though it is not said how, and
consequently are entitled to the said building, or rather, as
Ruperta Pascual herself stated, to only six-sevenths of one-half
of it, the other half belonging, as it appears, to the plaintiffs
themselves, and the remaining one-seventh of the first one-half
to the children of one of the plaintiffs, Elena de Villanueva. The
fact is that the plaintiffs and the defendants are virtually, to all
appearance, the owners of the warehouse; while the plaintiffs
are undoubtedly, the owners of the part of the lot occupied by
that building, as well as of the remainder thereof.
This was the state of affairs, when, on May 6, 1909, Ruperta
Pascual, as the guardian of her minor children, the herein
defendants, petitioned the Curt of First Instance of Ilocos Norte
for authorization to sell "the six-sevenths of the one-half of the
warehouse, of 14 by 11 meters, together with its lot." The
plaintiffs — that is Alejandra Mina, et al. — opposed the petition
of Ruperta Pascual for the reason that the latter had included
therein the lot occupied by the warehouse, which they claimed
was their exclusive property. All this action was taken in a
special proceeding in re guardianship.
The plaintiffs did more than oppose Pascual's petition; they
requested the court, through motion, to decide the question of
the ownership of the lot before it pass upon the petition for the
sale of the warehouse. But the court before determining the
matter of the ownership of the lot occupied by the warehouse,
ordered the sale of this building, saying:
While the trial continues with respect to the ownership of the lot,
the court orders the sale at public auction of the said warehouse
and of the lot on which it is built, with the present boundaries of
the land and condition of the building, at a price of not less than
P2,890 Philippine currency . .
So, the warehouse, together with the lot on which it stands, was
sold to Cu Joco, the other defendant in this case, for the price
mentioned.
The plaintiffs insisted upon a decision of the question of the
ownership of the lot, and the court decided it by holding that this
land belonged to the owner of the warehouse which had been
built thereon thirty years before.
The plaintiffs appealed and this court reversed the judgment of
the lower court and held that the appellants were the owners of
the lot in question.
When the judgment became final and executory, a writ of
execution issued and the plaintiffs were given possession of the
lot; but soon thereafter the trial court annulled this possession
for the reason that it affected Cu Joco, who had not been a party
to the suit in which that writ was served.
It was then that the plaintiffs commenced the present action for
the purpose of having the sale of the said lot declared null and
void and of no force and effect.
An agreement was had ad to the facts, the ninth paragraph of
which is as follows:
9. That the herein plaintiffs excepted to the judgment and
appealed therefrom to the Supreme Court which found for them
by holding that they are the owners of the lot in question,
although there existed and still exists a commodatum by virtue
of which the guardianship (meaning the defendants) had and
has the use, and the plaintiffs the ownership, of the property,
with no finding concerning the decree of the lower court that
ordered the sale.
The obvious purport of the cause "although there existed and
still exists a commodatum," etc., appears to be that it is a part of
the decision of the Supreme Court and that, while finding the
plaintiffs to be the owners of the lot, we recognized in principle
the existence of a commodatum under which the defendants
held the lot. Nothing could be more inexact. Possibly, also, the
meaning of that clause is that, notwithstanding the finding made
by the Supreme Court that the plaintiffs were the owners, these
former and the defendants agree that there existed, and still
exists, a commodatum, etc. But such an agreement would not
affect the truth of the contents of the decision of this court, and
the opinions held by the litigants in regard to this point could
have no bearing whatever on the present decision.
Nor did the decree of the lower court that ordered the sale have
the least influence in our previous decision to require our making
any finding in regard thereto, for, with or without that decree, the
Supreme Court had to decide the ownership of the lot
consistently with its titles and not in accordance with the judicial
acts or proceedings had prior to the setting up of the issue in
respect to the ownership of the property that was the subject of
the judicial decree.
What is essentially pertinent to the case is the fact that the
defendant agree that the plaintiffs have the ownership, and they
themselves only the use, of the said lot.
On this premise, the nullity of the sale of the lot is in all respects
quite evident, whatsoever be the manner in which the sale was
effected, whether judicially or extrajudicially.
1
He who has only the use of a thing cannot validly sell the thing
itself. The effect of the sale being a transfer of the ownership of
the thing, it is evident that he who has only the mere use of the
thing cannot transfer its ownership. The sale of a thing effected
by one who is not its owner is null and void. The defendants
never were the owners of the lot sold. The sale of it by them is
necessarily null and void. On cannot convey to another what he
has never had himself.
The returns of the auction contain the following statements:
I, Ruperta Pascual, the guardian of the minors, etc., by virtue of
the authorization conferred upon me on the 31st of July, 1909,
by the Court of First Instance of Ilocos Norte, proceeded with the
sale at public auction of the six-sevenths part of the one-half of
the warehouse constructed of rubble stone, etc.
Whereas I, Ruperta Pascual, the guardian of the minors, etc.,
sold at public auction all the land and all the rights title, interest,
and ownership in the said property to Cu Joco, who was the
highest bidder, etc.
Therefore, . . . I cede and deliver forever to the said purchaser,
Cu Joco, his heirs and assigns, all the interest, ownership and
inheritance rights and others that, as the guardian of the said
minors, I have and may have in the said property, etc.
The purchaser could not acquire anything more than the interest
that might be held by a person to whom realty in possession of
the vendor might be sold, for at a judicial auction nothing else is
disposed of. What the minor children of Ruperta Pascual had in
their possession was the ownership of the six-sevenths part of
one-half of the warehouse and the use of the lot occupied by his
building. This, and nothing more, could the Chinaman Cu Joco
acquire at that sale: not the ownership of the lot; neither the other
half, nor the remaining one-seventh of the said first half, of the
warehouse. Consequently, the sale made to him of this one-
seventh of one-half and the entire other half of the building was
null and void, and likewise with still more reason the sale of the
lot the building occupies.
The purchaser could and should have known what it was that
was offered for sale and what it was that he purchased. There is
nothing that can justify the acquisition by the purchaser of the
warehouse of the ownership of the lot that this building occupies,
since the minors represented by Ruperta Pascual never were
the owners of the said lot, nor were they ever considered to be
such.
The trial court, in the judgment rendered, held that there were
no grounds for the requested annulment of the sale, and that the
plaintiffs were entitled to the P600 deposited with the clerk of the
court as the value of the lot in question. The defendants, Ruperta
Pascual and the Chinaman Cu Joco, were absolved from the
complaint, without express finding as to costs.
The plaintiffs cannot be obliged to acquiesce in or allow the sale
made and be compelled to accept the price set on the lot by
expert appraisers, not even though the plaintiffs be considered
as coowner of the warehouse. It would be much indeed that, on
the ground of coownership, they should have to abide by and
tolerate the sale of the said building, which point this court does
not decide as it is not a question submitted to us for decision,
but, as regards the sale of the lot, it is in all respects impossible
to hold that the plaintiffs must abide by it and tolerate, it, and this
conclusion is based on the fact that they did not give their
consent (art. 1261, Civil Code), and only the contracting parties
who have given it are obliged to comply (art. 1091, idem).
The sole purpose of the action in the beginning was to obtain an
annulment of the sale of the lot; but subsequently the plaintiffs,
through motion, asked for an amendment by their complaint in
the sense that the action should be deemed to be one for the
recovery of possession of a lot and for the annulment of its sale.
The plaintiff's petition was opposed by the defendant's attorney,
but was allowed by the court; therefore the complaint seeks,
after the judicial annulment of the sale of the lot, to have the
defendants sentenced immediately to deliver the same to the
plaintiffs.
Such a finding appears to be in harmony with the decision
rendered by the Supreme Court in previous suit, wherein it was
held that the ownership of the lot lay in the plaintiffs, and for this
reason steps were taken to give possession thereof to the
defendants; but, as the purchaser Cu Joco was not a party to
that suit, the present action is strictly one for recover against Cu
Joco to compel him, once the sale has been annulled, to deliver
the lot to its lawful owners, the plaintiffs.
As respects this action for recovery, this Supreme Court finds:
1. That it is a fact admitted by the litigating parties, both in this
and in the previous suit, that Andres Fontanilla, the defendants'
predecessor in interest, erected the warehouse on the lot, some
thirty years ago, with the explicit consent of his brother Francisco
Fontanilla, the plaintiff's predecessor in interest.
2. That it also appears to be an admitted fact that the plaintiffs
and the defendants are the coowners of the warehouse.
3. That it is a fact explicitly admitted in the agreement, that
neither Andres Fontanilla nor his successors paid any
consideration or price whatever for the use of the lot occupied
by the said building; whence it is, perhaps, that both parties have
denominated that use a commodatum.
Upon the premise of these facts, or even merely upon that of the
first of them, the sentencing of the defendants to deliver the lot
to the plaintiffs does not follow as a necessary corollary of the
judicial declaration of ownership made in the previous suit, nor
of that of the nullity of the sale of the lot, made in the present
case.
The defendants do not hold lawful possession of the lot in
question.1awphil.net
But, although both litigating parties may have agreed in their
idea of the commodatum, on account of its not being, as indeed
it is not, a question of fact but of law, yet that denomination given
by them to the use of the lot granted by Francisco Fontanilla to
his brother, Andres Fontanilla, is not acceptable. Contracts are
not to be interpreted in conformity with the name that the parties
thereto agree to give them, but must be construed, duly
considering their constitutive elements, as they are defined and
denominated by law.
2

By the contract of loan, one of the parties delivers to the other,
either anything not perishable, in order that the latter may use it
during the certain period and return it to the former, in which
case it is called commodatum . . . (art. 1740, Civil Code).
It is, therefore, an essential feature of the commodatum that the
use of the thing belonging to another shall for a certain period.
Francisco Fontanilla did not fix any definite period or time during
which Andres Fontanilla could have the use of the lot whereon
the latter was to erect a stone warehouse of considerable value,
and so it is that for the past thirty years of the lot has been used
by both Andres and his successors in interest. The present
contention of the plaintiffs that Cu Joco, now in possession of
the lot, should pay rent for it at the rate of P5 a month, would
destroy the theory of the commodatum sustained by them,
since, according to the second paragraph of the aforecited
article 1740, "commodatum is essentially gratuitous," and, if
what the plaintiffs themselves aver on page 7 of their brief is to
be believed, it never entered Francisco's mind to limit the period
during which his brother Andres was to have the use of the lot,
because he expected that the warehouse would eventually fall
into the hands of his son, Fructuoso Fontanilla, called the
adopted son of Andres, which did not come to pass for the
reason that Fructuoso died before his uncle Andres. With that
expectation in view, it appears more likely that Francisco
intended to allow his brother Andres a surface right; but this right
supposes the payment of an annual rent, and Andres had the
gratuitous use of the lot.
Hence, as the facts aforestated only show that a building was
erected on another's ground, the question should be decided in
accordance with the statutes that, thirty years ago, governed
accessions to real estate, and which were Laws 41 and 42, title
28, of the third Partida, nearly identical with the provisions of
articles 361 and 362 of the Civil Code. So, then, pursuant to
article 361, the owner of the land on which a building is erected
in good faith has a right to appropriate such edifice to himself,
after payment of the indemnity prescribed in articles 453 and
454, or to oblige the builder to pay him the value of the land.
Such, and no other, is the right to which the plaintiff are entitled.
For the foregoing reasons, it is only necessary to annul the sale
of the said lot which was made by Ruperta Pascual, in
representation of her minor children, to Cu Joco, and to maintain
the latter in the use of the lot until the plaintiffs shall choose one
or the other of the two rights granted them by article 361 of the
Civil Code.
The judgment appealed from is reversed and the sale of the lot
in question is held to be null and void and of no force or effect.
No special finding is made as to the costs of both instances.
G.R. No. L-46240 November 3, 1939
MARGARITA QUINTOS and ANGEL A. ANSALDO vs. BECK,
IMPERIAL, J.:
The plaintiff brought this action to compel the defendant to return
her certain furniture which she lent him for his use. She appealed
from the judgment of the Court of First Instance of Manila which
ordered that the defendant return to her the three has heaters
and the four electric lamps found in the possession of the Sheriff
of said city, that she call for the other furniture from the said
sheriff of Manila at her own expense, and that the fees which the
Sheriff may charge for the deposit of the furniture be paid pro
rata by both parties, without pronouncement as to the costs.
The defendant was a tenant of the plaintiff and as such occupied
the latter's house on M. H. del Pilar street, No. 1175. On January
14, 1936, upon the novation of the contract of lease between the
plaintiff and the defendant, the former gratuitously granted to the
latter the use of the furniture described in the third paragraph of
the stipulation of facts, subject to the condition that the
defendant would return them to the plaintiff upon the latter's
demand. The plaintiff sold the property to Maria Lopez and
Rosario Lopez and on September 14, 1936, these three notified
the defendant of the conveyance, giving him sixty days to vacate
the premises under one of the clauses of the contract of lease.
There after the plaintiff required the defendant to return all the
furniture transferred to him for them in the house where they
were found. On November 5, 1936, the defendant, through
another person, wrote to the plaintiff reiterating that she may call
for the furniture in the ground floor of the house. On the 7th of
the same month, the defendant wrote another letter to the
plaintiff informing her that he could not give up the three gas
heaters and the four electric lamps because he would use them
until the 15th of the same month when the lease in due to expire.
The plaintiff refused to get the furniture in view of the fact that
the defendant had declined to make delivery of all of them. On
November 15th, before vacating the house, the defendant
deposited with the Sheriff all the furniture belonging to the
plaintiff and they are now on deposit in the warehouse situated
at No. 1521, Rizal Avenue, in the custody of the said sheriff.
In their seven assigned errors the plaintiffs contend that the trial
court incorrectly applied the law: in holding that they violated the
contract by not calling for all the furniture on November 5, 1936,
when the defendant placed them at their disposal; in not
ordering the defendant to pay them the value of the furniture in
case they are not delivered; in holding that they should get all
the furniture from the Sheriff at their expenses; in ordering them
to pay-half of the expenses claimed by the Sheriff for the deposit
of the furniture; in ruling that both parties should pay their
respective legal expenses or the costs; and in denying pay their
respective legal expenses or the costs; and in denying the
motions for reconsideration and new trial. To dispose of the
case, it is only necessary to decide whether the defendant
complied with his obligation to return the furniture upon the
plaintiff's demand; whether the latter is bound to bear the deposit
fees thereof, and whether she is entitled to the costs of
litigation.lawphi1.net
The contract entered into between the parties is one of
commadatum, because under it the plaintiff gratuitously granted
the use of the furniture to the defendant, reserving for herself the
ownership thereof; by this contract the defendant bound himself
to return the furniture to the plaintiff, upon the latters demand
(clause 7 of the contract, Exhibit A; articles 1740, paragraph 1,
and 1741 of the Civil Code). The obligation voluntarily assumed
by the defendant to return the furniture upon the plaintiff's
demand, means that he should return all of them to the plaintiff
at the latter's residence or house. The defendant did not comply
3
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.
G.R. No. L-55912 November 26, 1986
HEIRS OF DOMINGO P. BALOY, represented by RICARDO
BALOY, ET AL., vs. COURT OF APPEALS, DIRECTOR OF
LANDS and PHILIPPINE NAVY
PARAS, J.:
Petitioners seek herein the review on certiorari of the judgment
of the Court of Appeals in CA-G.R. No. 54050-R.
The record shows that petitioners applied with the Court of First
Instance of Zambales for the registration of 2 parcels of land
located in Bo. Barretto, Olongapo City formerly Bo. Batain Subic,
Zambales described as Lot 1 containing an area of 223,874
square meters and Lot 3 containing an area of 8,082 in Psu-
214162 marked as Exhibit R, in technical descriptions marked
as Exhibits S and S-1, and in the surveyors certificate marked
as Exhibit T alleging that these are part of petitioners' ancestral
estate and covered by possessory information title in the name
of Domingo Baloy y Petijono, petitioners' predecessor-in-interest
duly inscribed on pages 80 and 81 of the Judicial Branch of
Subic, Property No. 321, Record 1 (Exh. "D").
Oppositors-appellees, (respondents Director of Lands and
Philippine Navy) maintain that the property used to be part of the
U.S. Naval Reservation by virtue of an Executive Order of Pres.
Theodore Roosevelt dated November 26, 1902; that for failure
of Domingo Baloy to file his claim in accordance with Act No.
627, such claim is now forever barred; that the possession of
Baloy and his heirs was merely tolerated by the U.S.
Government; that when the U.S. Government relinquished to the
Philippine Government all its rights to the use of the property
known as Manga and Makinaya Beach in Zambales, the
President of the Philippines issued Proclamation No. 320
declaring certain tracts of land of the public domain in Olongapo
City and Subic in Zambales as a naval reservation subject
however to the limitation that existing rights shall be respected;
and that the lands in dispute are within such reservation and may
not, therefore, be subject of registration.
On October 4, 1971, the trial court rendered a decision
adjudicating in favor of applicants (petitioners herein) the two
parcels of land. Applicants immediately moved to amend the
decision for the reasons that:
A cursory reading of the dispositive part of the decision which
adjudicated the parcels of land to the applicants shows that their
citizenship, legal capacities, and other personal circumstances
were not stated and reflected which omission will hinder the
issuance of a decree by the Land Registration Commission
under Act 496, hence, it is imperative that the citizenship
capacities, status and other personal circumstances of the
applicants with their respective addresses be reflected therein,
(Sec. 21 of Act 496 as amended).
Likewise, the opposition interposed by the Director of Lands as
well as the Philippine Navy has not been ordered dismissed
despite the decision which held that applicants have a
registerable right on the property and the omission may cause a
possible technical error which oppositors may assign should
they choose to file an appeal. (Record on Appeal, pp. 155-156)
On August 22, 1972, the trial court rendered an Amended
Decision denying the application for registration of applicants
(heirs of Domingo Baloy) in complete reversal of its former
judgment. Applicants appealed to the Court of Appeals with
several
ASSIGNMENT OF ERRORS
I
THE LOWER COURT, AFTER RENDERING A DECISION
ADJUDGING APPLICANTS, THE OWNERS OF THE LOTS
SOUGHT TO BE REGISTERED, AND SUBSEQUENTLY
CONDUCTING A PROCEEDING CONFINED TO THE
MATTER OF APPLICANTS' PERSONAL CIRCUMSTANCES,
ERRED IN RENDERING A SECOND DECISION REVERSING
THE ORIGINAL ONE, AND IN NOT INSTEAD MERELY
4
HANDING OUT A SUPPLEMENT TO THE ORIGINAL
DECISION SETTING FORTH THE DATA BROUGHT OUT IN
THE SAID PROCEEDING.
II
THE LOWER COURT ERRED IN FAILING TO CONSIDER
THAT AT THE TIME IT RENDERED ITS SECOND DECISION,
THE FIRST HAS ALREADY BECOME FINAL AND COULD NO
LONGER BE DISTURBED FOR FAILURE OF OPPOSITORS
EITHER TO MOVE FOR THE RECONSIDERATION THEREOF
OR PERFECT AN APPEAL THEREFROM, AND THAT,
THEREFORE, THE SECOND DECISION IS VOID.
III
ASSUMING, ARGUENDO, ITS SECOND DECISION TO HAVE
BEEN VALIDLY RENDERED, THE LOWER COURT ERRED IN
HOLDING THAT THE LOTS SOUGHT TO BE REGISTERED
USED TO BE PART OF THE LANDS SET APART FOR USE
AS U.S. NAVAL RESERVATION BY THE U.S. PRESIDENT'S
EXECUTIVE ORDER DATED NOVEMBER 26, 1902.
IV
ON THE SAME ASSUMPTION, AND ON THE FURTHER
ASSUMPTION THAT THE AFORESAID U.S. PRESIDENT'S
EXECUTIVE ORDER PURPORTED TO MAKE THE LOTS
SOUGHT TO BE REGISTERED A PART OF A U.S. NAVAL
RESERVATION, THE LOWER COURT ERRED IN NOT
HOLDING THAT THE SAID ORDER WAS IN THAT RESPECT
VOID AND INEFFECTIVE, BY VIRTUE OF THE TREATY OF
PARIS, SINCE THE SAID LOTS WERE THEN ALREADY
PRIVATE LANDS IN THE POSSESSION OF APPLICANTS'
COMMON PREDECESSOR IN INTEREST UNDER A
POSSESSORY INFORMATION TITLE.
V adjudged to be public lands." Sec. 3, Act 627 reads as follows:
ON THE SAME ASSUMPTIONS, THE LOWER COURT
ERRED IN CONSIDERING THE LOTS SOUGHT TO BE
REGISTERED SUBJECT TO THE OPERATION OF ACT NO.
627, SINCE THE SAME WERE NEVER A PART NOR COULD
THEY HAVE BEEN VALIDLY MADE A PART OF A U.S. NAVAL
RESERVATION, AS THEY WERE COVERED BY A
POSSESSORY INFORMATION TITLE.
VI
ON THE SAME ASSUMPTIONS, AND ON THE FURTHER
ASSUMPTION THAT THE LOTS SOUGHT TO BE
REGISTERED BECAME PART OF A U.S. NAVAL
RESERVATION, THE LOWER COURT ERRED IN NOT
HOLDING THAT APPLICANTS NEVERTHELESS HAVE A
REGISTRABLE TITLE TO THE PARCELS OF LAND IN
QUESTION BY VIRTUE OF THEIR POSSESSORY
INFORMATION TITLE AS WELL AS THEIR REQUISITE
POSSESSION AND OCCUPATION FOR MORE THAN THE
REQUISITE PERIOD, ACT NO. 627 NOT-WITHSTANDING.
VII
THE LOWER COURT ERRED IN NOT HOLDING THAT THE
LOT'S SOUGHT TO BE REGISTERED BEING SUBJECT TO
APPLICANTS' PRIVATE RIGHTS, ARE EXCEPTED FROM
THE OPERATION OF PROCLAMATION NO. 328 OF THE
PRESIDENT OF THE PHILIPPINES.
VIII
THE LOWER COURT ERRED IN DENYING APPLICANTS'
APPLICATION FOR REGISTRATION.
Before the rendition of decision by the Court of Appeals in this
case, a sister case, CA-G.R. No. 52039-R, involving a portion of
the same ancestral estate, the same parties and the same
issues, was decided in favor of petitioners herein by the said
court. The decision in said case has been appealed to Us on
certiorari docketed as G.R. No. L-46145 Republic of the
Philippines (Bureau of Lands) versus Hon. Court of Appeals,
and heirs of Domingo Baloy, represented by Ricardo Baloy Et Al
wherein We affirmed the appealed decision rendering a
favorable judgment for the petitioners herein (applicants, heirs
of Domingo Baloy).
One of the vital issues is whether or not the property became
public lands pursuant to Act 627 for failure of Domingo Baloy to
claim the same in accordance with the said Act. In the sister
case, We affirmed the judgment of the Court of Appeals
resolving the question in the negative pointing out that the
property could not have been adjudged to be public land
pursuant to Act 627 for the reason that since there has not been
presented a formal order or decision of the Land Registration
Court declaring the land public due to the failure of Domingo
Baloy to file his application within the prescribed period. Quoted
hereunder is the pertinent portion of Our ruling in the sister case:
A cursory reading of Sec. 3, Act 627 reveals that several steps
are to be followed before any affected land can "be conclusively
SEC. 3. Immediately upon receipt of the notice from the Civil
Governor in the preceeding section mentioned it shall be the
duty of the judge of the Court of Land Registration to issue a
notice, stating that the lands within the aforesaid have been
reserved for military purposes, and announced and declared to
be military reservations, and that claims for all private lands,
buildings, and interests therein, within the Emits aforesaid, must
be presented for registration under the Land Registration Act
within six calendar months from the date of issuing the notice,
and that all lands, buildings, and interests therein within the
limits aforesaid not so presented within the time therein limited
win be conclusively adjudged to be public lands, and all claims
on the part of private individuals for such lands, buildings, or an
interest therein not so presented will be forever barred. The clerk
of the Court of Land Registration shall immediately upon the
issuing of such notice by the judge cause the same to be
published once a week for three successive weeks in two
newspapers, one of which newspapers shall be in the English
language, and one in the Spanish language in the city or
province where the land lies, if there be no such Spanish or
English newspapers having a general circulation in the city or
province wherein the land lies then it shall be a sufficient
compliance with this section if the notice be published as herein
5
provided, in a daily newspaper in the Spanish language and one
in the English language, in the City of Manila, having a general
circulation. The clerk shall also cause a duly attested copy of the
notice in the Spanish language upon every person living upon
or in visible possession of any part of the military reservation. If
the person in possession is the head of the family living upon
the land, it shall be sufficient to serve the notice upon him, and
if he is absent it shall be sufficient to leave a copy of his usual
place of residence. The clerk shall certify the manner in which
the notices have been published, posted, and served, and his
certificate shall be conclusive proof of such publication, posting,
and service, but the court shall have power to cause such further
notice to be given as in its opinion may be necessary.
Clearly under said provision, private land could be deemed to
have become public land only by virtue of a judicial declaration
after due notice and hearing. It runs contrary therefore to the
contention of petitioners that failure to present claims set forth
under Sec. 2 of Act 627 made the land ipso facto public without
any need of judicial pronouncements. Petitioner in making such
declaration relied on Sec. 4 of Act 627 alone. But in construing
a statute the entire provisions of the law must be considered in
order to establish the correct interpretation as intended by the
law-making body. Act 627 by its terms is not self-executory and
requires implementation by the Court of Land Registration. Act
627, to the extent that it creates a forfeiture, is a penal statute in
derogation of private rights, so it must be strictly construed so
as to safeguard private respondents' rights. Significantly,
petitioner does not even allege the existence of any judgment of
the Land Registration court with respect to the land in question.
Without a judgment or order declaring the land to be public, its
private character and the possessory information title over it
must be respected. Since no such order has been rendered by
the Land Registration Court it necessarily follows that it never
become public land thru the operation of Act 627. To assume
otherwise is to deprive private respondents of their property
without due process of law. In fact it can be presumed that the
notice required by law to be given by publication and by personal
service did not include the same of Domingo Baloy and the
subject land, and hence he and his land were never brought
within the operation of Act 627 as amended. The procedure laid
down in Sec. 3 is a requirement of due process. "Due process
requires that the statutes under which it is attempted to deprive
a citizen of private property without or against his consent must,
as in expropriation cases, be strictly complied with, because
such statutes are in derogation of general rights. (Arriete vs.
Director of Public Works, 58 Phil. 507, 508, 511).
We also find with favor private respondents' views that court
judgments are not to be presumed. It would be absurd to speak
of a judgment by presumption. If it could be contended that such
a judgment may be presumed, it could equally be contended that
applicants' predecessor Domingo Baloy presumably seasonably
filed a claim, in accordance with the legal presumption that a
person takes ordinary care of his concerns, and that a judgment
in his favor was rendered.
The finding of respondent court that during the interim of 57
years from November 26, 1902 to December 17, 1959 (when the
U. S. Navy possessed the area) the possessory rights of Baloy
or heirs were merely suspended and not lost by prescription, is
supported by Exhibit "U", a communication or letter No. 1108-
63, dated June 24, 1963, which contains an official statement of
the position of the Republic of the Philippines with regard to the
status of the land in question. Said letter recognizes the fact that
Domingo Baloy and/or his heirs have been in continuous
possession of said land since 1894 as attested by an
"Information Possessoria" Title, which was granted by the
Spanish Government. Hence, the disputed property is private
land and this possession was interrupted only by the occupation
of the land by the U.S. Navy in 1945 for recreational purposes.
The U.S. Navy eventually abandoned the premises. The heirs of
the late Domingo P. Baloy, are now in actual possession, and
this was been so since the abandonment by the U.S. Navy. A
new recreation area is now being used by the U.S. Navy
personnel and this place is remote from the land in question.
Clearly, the occupancy of the U.S. Navy was not in the concept
of owner. It partakes of the character of a commodatum. It
cannot therefore militate against the title of Domingo Baloy and
his successors-in-interest. One's ownership of a thing may be
lost by prescription by reason of another's possession if such
possession be under claim of ownership, not where the
possession is only intended to be transient, as in the case of the
U.S. Navy's occupation of the land concerned, in which case the
owner is not divested of his title, although it cannot be exercised
in the meantime.
WHEREFORE, premises considered, finding no merit in the
petition the appealed decision is hereby AFFIRMED. SO
ORDERED.
Moreover, the Director of Lands, in order to support his claim
that the subject property became private pursuant to Act 627,
must also prove that it lies within the military reservation. A map,
(Exhibit 3 for Director of Lands) was presented by the Director
of Lands for the Land Registration Court to consider. Anent this
piece of evidence, petitioners herein pointed out the following
salient facts in the brief they filed with the respondent Court of
Appeals.
But, happily for applicants, this very map, insofar as they are
concerned, establishes that the lots sought to be registered lay
outside of, albeit contiguous to, the naval reservation set apart
by the U.S. President's Executive Order referred to by the court
below. From an examination thereof in connection with the
testimony of cartographer Dela Cruz, as summarized in the
lower court's decision itself, 1 the following appears: (a) the
portion of the map enclosed in red line and marked therein as
Exhibit "3-A" represents the naval reservation set apart by the
U.S. Executive Order adverted to by the court below; (b) the
portion shaded light blue and indicated as Exhibit "3-E"
represents the parcels of land herein sought to be registered;
and (c) plainly, the portion Exhibit "3-E" lies beyond the
boundaries of the portion Exhibit "3-A ", although adjacent
thereto.
Thus, taking into account Exhibit "3" itself of oppositors, the
lower court's second judgment, i. e., that the lots sought to be
registered used to be part of the U.S. naval reservation set apart
by U.S. President Theodore Roosevelt's Executive Order dated
November 26, 1902, falls to the ground. With it, therefore, falls
the trial court's assumption that the said parcels of land were
involved in a land registration proceeding under Act 627 that
6
resulted in barring forever applicants' claim over the lots sought
to be registered.
Not a single word is found in respondent Court of Appeals'
decision presently sought to be reviewed concerning this
controlling piece of evidence, nor concerning the well-nigh
conclusive letter from the Bureau of Lands marked as Exhibit
"F". As pointed out by petitioners in their brief:
Moreover, there is the letter dated June 30, 1966, of the Bureau
of Lands, through the Chief of its Legal Division, officially
declaring that 'the land is not a part of the public domain' and
that therefore 'this Office has no jurisdiction over the premises.'
1a This Bureau of Lands further buttressed by approving the
applicants' survey plan over the tract of land (PSU-214168), 2
and the technical description of the same.3
How, in view of all the foregoing, could there be even a scintilla
of doubt that the tract of land here involved was never a part of
a U. S. naval reservation.
WHEREFORE, premises considered, finding the petition
meritorious, the assailed decision is hereby REVERSED and
SET ASIDE, and a new one is hereby rendered granting the
applications for land registration of the petitioners as prayed for.
SO ORDERED.
G.R. No. 115324 February 19, 2003
PRODUCERS BANK OF THE PHILIPPINES (now FIRST
INTERNATIONAL BANK), vs. HON. COURT OF APPEALS
AND FRANKLIN VIVES
CALLEJO, SR., J.:
This is a petition for review on certiorari of the Decision1 of the
Court of Appeals dated June 25, 1991 in CA-G.R. CV No. 11791
and of its Resolution2 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 month’s time. Private respondent asked Sanchez to
bring Doronilla to their house so that they could discuss
Sanchez’s request.3
On May 9, 1979, private respondent, Sanchez, Doronilla and a
certain Estrella Dumagpi, Doronilla’s 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
(₱200,000.00) 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
₱200,000.00. 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 ₱90,000.00 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 ₱175,000.00 from the
Bank. To cover payment thereof, Doronilla issued three
postdated checks, all of which were dishonored. Atienza also
said that Doronilla could assign or withdraw the money in
Savings Account No. 10-1567 because he was the sole
proprietor of Sterela.5
Private respondent tried to get in touch with Doronilla through
Sanchez. On June 29, 1979, he received a letter from Doronilla,
assuring him that his money was intact and would be returned
to him. On August 13, 1979, Doronilla issued a postdated check
for Two Hundred Twelve Thousand Pesos (₱212,000.00) in
favor of private respondent. However, upon presentment thereof
by private respondent to the drawee bank, the check was
dishonored. Doronilla requested private respondent to present
the same check on September 15, 1979 but when the latter
presented the check, it was again dishonored.6
Private respondent referred the matter to a lawyer, who made a
written demand upon Doronilla for the return of his client’s
money. Doronilla issued another check for ₱212,000.00 in
private respondent’s favor but the check was again dishonored
for insufficiency of funds.7
Private respondent instituted an action for recovery of sum of
money in the Regional Trial Court (RTC) in Pasig, Metro Manila
against Doronilla, Sanchez, Dumagpi and petitioner. The case
was docketed as Civil Case No. 44485. He also filed criminal
actions against Doronilla, Sanchez and Dumagpi in the RTC.
However, Sanchez passed away on March 16, 1985 while the
case was pending before the trial court. On October 3, 1995, the
RTC of Pasig, Branch 157, promulgated its Decision in Civil
Case No. 44485, the dispositive portion of which reads:
IN VIEW OF THE FOREGOING, judgment is hereby rendered
sentencing defendants Arturo J. Doronila, Estrella Dumagpi and
7
Producers Bank of the Philippines to pay plaintiff Franklin Vives
jointly and severally –
(a) the amount of ₱200,000.00, 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 ₱50,000.00 for moral damages and a similar
amount for exemplary damages;
(c) the amount of ₱40,000.00 for attorney’s fees; and
(d) the costs of the suit.
SO ORDERED.8
Petitioner appealed the trial court’s decision to the Court of
Appeals. In its Decision dated June 25, 1991, the appellate court
affirmed in toto the decision of the RTC.9 It likewise denied with
finality petitioner’s motion for reconsideration in its Resolution
dated May 5, 1994.10
On June 30, 1994, petitioner filed the present petition, arguing
that –
I.
THE HONORABLE COURT OF APPEALS ERRED IN
UPHOLDING THAT THE TRANSACTION BETWEEN THE
DEFENDANT DORONILLA AND RESPONDENT VIVES WAS
ONE OF SIMPLE LOAN AND NOT ACCOMMODATION;
II.
THE HONORABLE COURT OF APPEALS ERRED IN
UPHOLDING THAT PETITIONER’S 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
ATTORNEY’S 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 petitioner’s delay in furnishing private respondent
with copy of the reply12 and several substitutions of counsel on
the part of private respondent.13 On January 17, 2001, the
Court resolved to give due course to the petition and required
the parties to submit their respective memoranda.14 Petitioner
filed its memorandum on April 16, 2001 while private respondent
submitted his memorandum on March 22, 2001.
Petitioner contends that the transaction between private
respondent and Doronilla is a simple loan (mutuum) since all the
elements of a mutuum are present: first, what was delivered by
private respondent to Doronilla was money, a consumable thing;
and second, the transaction was onerous as Doronilla was
obliged to pay interest, as evidenced by the check issued by
Doronilla in the amount of ₱212,000.00, or ₱12,000 more than
what private respondent deposited in Sterela’s bank account.15
Moreover, the fact that private respondent sued his good friend
Sanchez for his failure to recover his money from Doronilla
shows that the transaction was not merely gratuitous but "had a
business angle" to it. Hence, petitioner argues that it cannot be
held liable for the return of private respondent’s ₱200,000.00
because it is not privy to the transaction between the latter and
Doronilla.16
It argues further that petitioner’s 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 Doronilla’s
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 ₱200,000.00 in
Sterela’s account for purposes of its incorporation.18 Hence,
petitioner should not be held liable for allowing Doronilla to
withdraw from Sterela’s savings account.1a\^/phi1.net
Petitioner also asserts that the Court of Appeals erred in
affirming the trial court’s 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
Sterela’s savings account.19
8
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 attorney’s 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 ₱200,000.00 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, Atienza’s employer, is liable for the return of his
money. He insists that Atienza, petitioner’s assistant manager,
connived with Doronilla in defrauding private respondent since it
was Atienza who facilitated the opening of Sterela’s 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 Sterela’s savings account to
cover any overdrawings in its current account.23
There is no merit in the petition.
At the outset, it must be emphasized that only questions of law
may be raised in a petition for review filed with this Court. The
Court has repeatedly held that it is not its function to analyze and
weigh all over again the evidence presented by the parties
during trial.24 The Court’s jurisdiction is in principle limited to
reviewing errors of law that might have been committed by the
Court of Appeals.25 Moreover, factual findings of courts, when
adopted and confirmed by the Court of Appeals, are final and
conclusive on this Court unless these findings are not supported
by the evidence on record.26 There is no showing of any
misapprehension of facts on the part of the Court of Appeals in
the case at bar that would require this Court to review and
overturn the factual findings of that court, especially since the
conclusions of fact of the Court of Appeals and the trial court are
not only consistent but are also amply supported by the
evidence on record.
No error was committed by the Court of Appeals when it ruled
that the transaction between private respondent and Doronilla
was a commodatum and not a mutuum. A circumspect
examination of the records reveals that the transaction between
them was a commodatum. Article 1933 of the Civil Code
distinguishes between the two kinds of loans in this wise:
By the contract of loan, one of the parties delivers to another,
either something not consumable so that the latter may use the
same for a certain time and return it, in which case the contract
is called a commodatum; or money or other consumable thing,
upon the condition that the same amount of the same kind and
quality shall be paid, in which case the contract is simply called
a loan or mutuum.
Commodatum is essentially gratuitous.
Simple loan may be gratuitous or with a stipulation to pay
interest.
In commodatum, the bailor retains the ownership of the thing
loaned, while in simple loan, ownership passes to the borrower.
The foregoing provision seems to imply that if the subject of the
contract is a consumable thing, such as money, the contract
would be a mutuum. However, there are some instances where
a commodatum may have for its object a consumable thing.
Article 1936 of the Civil Code provides:
Consumable goods may be the subject of commodatum if the
purpose of the contract is not the consumption of the object, as
when it is merely for exhibition.
Thus, if consumable goods are loaned only for purposes of
exhibition, or when the intention of the parties is to lend
consumable goods and to have the very same goods returned
at the end of the period agreed upon, the loan is a commodatum
and not a mutuum.
The rule is that the intention of the parties thereto shall be
accorded primordial consideration in determining the actual
character of a contract.27 In case of doubt, the
contemporaneous and subsequent acts of the parties shall be
considered in such determination.28
As correctly pointed out by both the Court of Appeals and the
trial court, the evidence shows that private respondent agreed
to deposit his money in the savings account of Sterela
specifically for the purpose of making it appear "that said firm
had sufficient capitalization for incorporation, with the promise
that the amount shall be returned within thirty (30) days."29
Private respondent merely "accommodated" Doronilla by
lending his money without consideration, as a favor to his good
friend Sanchez. It was however clear to the parties to the
transaction that the money would not be removed from Sterela’s
savings account and would be returned to private respondent
after thirty (30) days.
Doronilla’s attempts to return to private respondent the amount
of ₱200,000.00 which the latter deposited in Sterela’s account
together with an additional ₱12,000.00, allegedly representing
interest on the mutuum, did not convert the transaction from a
commodatum into a mutuum because such was not the intent of
the parties and because the additional ₱12,000.00 corresponds
to the fruits of the lending of the ₱200,000.00. Article 1935 of the
Civil Code expressly states that "[t]he bailee in commodatum
acquires the use of the thing loaned but not its fruits." Hence, it
was only proper for Doronilla to remit to private respondent the
interest accruing to the latter’s money deposited with petitioner.
Neither does the Court agree with petitioner’s contention that it
is not solidarily liable for the return of private respondent’s
money because it was not privy to the transaction between
Doronilla and private respondent. The nature of said transaction,
that is, whether it is a mutuum or a commodatum, has no bearing
on the question of petitioner’s liability for the return of private
respondent’s money because the factual circumstances of the
case clearly show that petitioner, through its employee Mr.
9
Atienza, was partly responsible for the loss of private
respondent’s money and is liable for its restitution.
Petitioner’s rules for savings deposits written on the passbook it
issued Mrs. Vives on behalf of Sterela for Savings Account No.
10-1567 expressly states that—
"2. Deposits and withdrawals must be made by the depositor
personally or upon his written authority duly authenticated, and
neither a deposit nor a withdrawal will be permitted except upon
the production of the depositor savings bank book in which will
be entered by the Bank the amount deposited or withdrawn."30
Said rule notwithstanding, Doronilla was permitted by petitioner,
through Atienza, the Assistant Branch Manager for the Buendia
Branch of petitioner, to withdraw therefrom even without
presenting the passbook (which Atienza very well knew was in
the possession of Mrs. Vives), not just once, but several times.
Both the Court of Appeals and the trial court found that Atienza
allowed said withdrawals because he was party to Doronilla’s
"scheme" of defrauding private respondent:
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 defendant’s Buendia
branch precisely because Atienza was a key officer therein. The
records show that plaintiff had suggested that the ₱200,000.00
be deposited in his bank, the Manila Banking Corporation, but
Doronilla and Dumagpi insisted that it must be in defendant’s
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
₱200,000.00, as "per coordination with Mr. Rufo Atienza,
Assistant Manager of the Bank x x x" (Exh. 1). This is a clear
manifestation that the other defendants had been in consultation
with Atienza from the inception of the scheme. Significantly,
there were testimonies and admission that Atienza is the
brother-in-law of a certain Romeo Mirasol, a friend and business
associate of Doronilla.1awphi1.nét
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.
Moreover, the transfer of fund was done without the passbook
having been presented. It is an accepted practice that whenever
a withdrawal is made in a savings deposit, the bank requires the
presentation of the passbook. In this case, such recognized
practice was dispensed with. The transfer from the savings
account to the current account was without the submission of
the passbook which Atienza had given to Mrs. Vives. Instead, it
was made to appear in a certification signed by Estrella
Dumagpi that a duplicate passbook was issued to Sterela
because the original passbook had been surrendered to the
Makati branch in view of a loan accommodation assigning the
savings account (Exh. C). Atienza, who undoubtedly had a hand
in the execution of this certification, was aware that the contents
of the same are not true. He knew that the passbook was in the
hands of Mrs. Vives for he was the one who gave it to her.
Besides, as assistant manager of the branch and the bank
official servicing the savings and current accounts in question,
he also was aware that the original passbook was never
surrendered. He was also cognizant that Estrella Dumagpi was
not among those authorized to withdraw so her certification had
no effect whatsoever.
The circumstance surrounding the opening of the current
account also demonstrate that Atienza’s active participation in
the perpetration of the fraud and deception that caused the loss.
The records indicate that this account was opened three days
later after the ₱200,000.00 was deposited. In spite of his
disclaimer, the Court believes that Atienza was mindful and
posted regarding the opening of the current account considering
that Doronilla was all the while in "coordination" with him. That it
was he who facilitated the approval of the authority to debit the
savings account to cover any overdrawings in the current
account (Exh. 2) is not hard to comprehend.
Clearly Atienza had committed wrongful acts that had resulted
to the loss subject of this case. x x x.31
Under Article 2180 of the Civil Code, employers shall be held
primarily and solidarily liable for damages caused by their
employees acting within the scope of their assigned tasks. To
hold the employer liable under this provision, it must be shown
10
that an employer-employee relationship exists, and that the
employee was acting within the scope of his assigned task when
the act complained of was committed.32 Case law in the United
States of America has it that a corporation that entrusts a
general duty to its employee is responsible to the injured party
for damages flowing from the employee’s wrongful act done in
the course of his general authority, even though in doing such
act, the employee may have failed in its duty to the employer
and disobeyed the latter’s instructions.33
There is no dispute that Atienza was an employee of petitioner.
Furthermore, petitioner did not deny that Atienza was acting
within the scope of his authority as Assistant Branch Manager
when he assisted Doronilla in withdrawing funds from Sterela’s
Savings Account No. 10-1567, in which account private
respondent’s money was deposited, and in transferring the
money withdrawn to Sterela’s Current Account with petitioner.
Atienza’s acts of helping Doronilla, a customer of the petitioner,
were obviously done in furtherance of petitioner’s interests34
even though in the process, Atienza violated some of petitioner’s
rules such as those stipulated in its savings account
passbook.35 It was established that the transfer of funds from
Sterela’s savings account to its current account could not have
been accomplished by Doronilla without the invaluable
assistance of Atienza, and that it was their connivance which
was the cause of private respondent’s loss.
The foregoing shows that the Court of Appeals correctly held
that under Article 2180 of the Civil Code, petitioner is liable for
private respondent’s loss and is solidarily liable with Doronilla
and Dumagpi for the return of the ₱200,000.00 since it is clear
that petitioner failed to prove that it exercised due diligence to
prevent the unauthorized withdrawals from Sterela’s 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, attorney’s fees and costs of suit to private respondent.
WHEREFORE, the petition is hereby DENIED. The assailed
Decision and Resolution of the Court of Appeals are
AFFIRMED. SO ORDERED.
G.R. No. L-4150 February 10, 1910
FELIX DE LOS SANTOS, vs. AGUSTINA JARRA,
administratrix of the estate of Magdaleno Jimenea,
deceased
TORRES, J.:
On the 1st of September, 1906, Felix de los Santos brought suit
against Agustina Jarra, the administratrix of the estate of
Magdaleno Jimenea, alleging that in the latter part of 1901
Jimenea borrowed and obtained from the plaintiff ten first-class
carabaos, to be used at the animal-power mill of his hacienda
during the season of 1901-2, without recompense or
remuneration whatever for the use thereof, under the sole
condition that they should be returned to the owner as soon as
the work at the mill was terminated; that Magdaleno Jimenea,
however, did not return the carabaos, notwithstanding the fact
that the plaintiff claimed their return after the work at the mill was
finished; that Magdaleno Jimenea died on the 28th of October,
1904, and the defendant herein was appointed by the Court of
First Instance of Occidental Negros administratrix of his estate
and she took over the administration of the same and is still
performing her duties as such administratrix; that the plaintiff
presented his claim to the commissioners of the estate of
Jimenea, within the legal term, for the return of the said ten
carabaos, but the said commissioners rejected his claim as
appears in their report; therefore, the plaintiff prayed that
judgment be entered against the defendant as administratrix of
the estate of the deceased, ordering her to return the ten first-
class carabaos loaned to the late Jimenea, or their present
value, and to pay the costs.
The defendant was duly summoned, and on the 25th of
September, 1906, she demurred in writing to the complaint on
the ground that it was vague; but on the 2d of October of the
same year, in answer to the complaint, she said that it was true
that the late Magdaleno Jimenea asked the plaintiff to loan him
ten carabaos, but that he only obtained three second-class
animals, which were afterwards transferred by sale by the
plaintiff to the said Jimenea; that she denied the allegations
contained in paragraph 3 of the complaint; for all of which she
asked the court to absolve her of the complaint with the cost
against the plaintiff.
By a writing dated the 11th of December, 1906, Attorney Jose
Felix Martinez notified the defendant and her counsel, Matias
Hilado, that he had made an agreement with the plaintiff to the
effect that the latter would not compromise the controversy
without his consent, and that as fees for his professional
services he was to receive one half of the amount allowed in the
judgment if the same were entered in favor of the plaintiff.
The case came up for trial, evidence was adduced by both
parties, and either exhibits were made of record. On the 10th of
January, 1907, the court below entered judgment sentencing
Agustina Jarra, as administratrix of the estate of Magdaleno
Jimenea, to return to the plaintiff, Felix de los Santos, the
remaining six second and third class carabaos, or the value
thereof at the rate of P120 each, or a total of P720 with the costs.
Counsel for the defendant excepted to the foregoing judgment,
and, by a writing dated January 19, moved for anew trial on the
ground that the findings of fact were openly and manifestly
contrary to the weight of the evidence. The motion was
overruled, the defendant duly excepted, and in due course
submitted the corresponding bill of exceptions, which was
approved and submitted to this court.
The defendant has admitted that Magdaleno Jimenea asked the
plaintiff for the loan of ten carabaos which are now claimed by
the latter, as shown by two letters addressed by the said
Jimenea to Felix de los Santos; but in her answer the said
defendant alleged that the late Jimenea only obtained three
second-class carabaos, which were subsequently sold to him by
the owner, Santos; therefore, in order to decide this litigation it
is indispensable that proof be forthcoming that Jimenea only
received three carabaos from his son-in-law Santos, and that
they were sold by the latter to him.
The record discloses that it has been fully proven from the
testimony of a sufficient number of witnesses that the plaintiff,
Santos, sent in charge of various persons the ten carabaos
11
requested by his father-in-law, Magdaleno Jimenea, in the two
letters produced at the trial by the plaintiff, and that Jimenea
received them in the presence of some of said persons, one
being a brother of said Jimenea, who saw the animals arrive at
the hacienda where it was proposed to employ them. Four died
of rinderpest, and it is for this reason that the judgment appealed
from only deals with six surviving carabaos.
The alleged purchase of three carabaos by Jimenea from his
son-in-law Santos is not evidenced by any trustworthy
documents such as those of transfer, nor were the declarations
of the witnesses presented by the defendant affirming it
satisfactory; for said reason it can not be considered that
Jimenea only received three carabaos on loan from his son-in-
law, and that he afterwards kept them definitely by virtue of the
purchase.
By the laws in force the transfer of large cattle was and is still
made by means of official documents issued by the local
authorities; these documents constitute the title of ownership of
the carabao or horse so acquired. Furthermore, not only should
the purchaser be provided with a new certificate or credential, a
document which has not been produced in evidence by the
defendant, nor has the loss of the same been shown in the case,
but the old documents ought to be on file in the municipality, or
they should have been delivered to the new purchaser, and in
the case at bar neither did the defendant present the old
credential on which should be stated the name of the previous
owner of each of the three carabaos said to have been sold by
the plaintiff.
From the foregoing it may be logically inferred that the carabaos
loaned or given on commodatum to the now deceased
Magdaleno Jimenea were ten in number; that they, or at any rate
the six surviving ones, have not been returned to the owner
thereof, Felix de los Santos, and that it is not true that the latter
sold to the former three carabaos that the purchaser was already
using; therefore, as the said six carabaos were not the property
of the deceased nor of any of his descendants, it is the duty of
the administratrix of the estate to return them or indemnify the
owner for their value.
The Civil Code, in dealing with loans in general, from which
generic denomination the specific one of commodatum is
derived, establishes prescriptions in relation to the last-
mentioned contract by the following articles:
ART. 1740. By the contract of loan, one of the parties delivers to
the other, either anything not perishable, in order that the latter
may use it during a certain period and return it to the former, in
which case it is called commodatum, or money or any other
perishable thing, under the condition to return an equal amount
of the same kind and quality, in which case it is merely called a
loan.
Commodatum is essentially gratuitous.
A simple loan may be gratuitous, or made under a stipulation to
pay interest.
ART. 1741. The bailee acquires retains the ownership of the
thing loaned. The bailee acquires the use thereof, but not its
fruits; if any compensation is involved, to be paid by the person
requiring the use, the agreement ceases to be a commodatum.
ART. 1742. The obligations and rights which arise from the
commodatum pass to the heirs of both contracting parties,
unless the loan has been in consideration for the person of the
bailee, in which case his heirs shall not have the right to continue
using the thing loaned.
The carabaos delivered to be used not being returned by the
defendant upon demand, there is no doubt that she is under
obligation to indemnify the owner thereof by paying him their
value.
Article 1101 of said code reads:
Those who in fulfilling their obligations are guilty of fraud,
negligence, or delay, and those who in any manner whatsoever
act in contravention of the stipulations of the same, shall be
subjected to indemnify for the losses and damages caused
thereby.
The obligation of the bailee or of his successors to return either
the thing loaned or its value, is sustained by the supreme tribunal
of Sapin. In its decision of March 21, 1895, it sets out with
precision the legal doctrine touching commodatum as follows:
Although it is true that in a contract of commodatum the bailor
retains the ownership of the thing loaned, and at the expiration
of the period, or after the use for which it was loaned has been
accomplished, it is the imperative duty of the bailee to return the
thing itself to its owner, or to pay him damages if through the
fault of the bailee the thing should have been lost or injured, it is
clear that where public securities are involved, the trial court, in
deferring to the claim of the bailor that the amount loaned be
returned him by the bailee in bonds of the same class as those
which constituted the contract, thereby properly applies law 9 of
title 11 of partida 5.
With regard to the third assignment of error, based on the fact
that the plaintiff Santos had not appealed from the decision of
the commissioners rejecting his claim for the recovery of his
carabaos, it is sufficient to estate that we are not dealing with a
claim for the payment of a certain sum, the collection of a debt
from the estate, or payment for losses and damages (sec. 119,
Code of Civil Procedure), but with the exclusion from the
inventory of the property of the late Jimenea, or from his capital,
of six carabaos which did not belong to him, and which formed
no part of the inheritance.
The demand for the exclusion of the said carabaos belonging to
a third party and which did not form part of the property of the
deceased, must be the subject of a direct decision of the court
in an ordinary action, wherein the right of the third party to the
property which he seeks to have excluded from the inheritance
and the right of the deceased has been discussed, and rendered
in view of the result of the evidence adduced by the administrator
of the estate and of the claimant, since it is so provided by the
second part of section 699 and by section 703 of the Code of
Civil Procedure; the refusal of the commissioners before whom
the plaintiff unnecessarily appeared can not affect nor reduce
the unquestionable right of ownership of the latter, inasmuch as
12
there is no law nor principle of justice authorizing the successors
of the late Jimenea to enrich themselves at the cost and to the
prejudice of Felix de los Santos.
For the reasons above set forth, by which the errors assigned to
the judgment appealed from have been refuted, and considering
that the same is in accordance with the law and the merits of the
case, it is our opinion that it should be affirmed and we do hereby
affirm it with the costs against the appellant. So ordered.
G.R. No. 80294-95 September 21, 1988
CATHOLIC VICAR APOSTOLIC OF THE MOUNTAIN
PROVINCE, vs. COURT OF APPEALS, HEIRS OF EGMIDIO
OCTAVIANO AND JUAN VALDEZ
GANCAYCO, J.:
The principal issue in this case is whether or not a decision of
the Court of Appeals promulgated a long time ago can properly
be considered res judicata by respondent Court of Appeals in
the present two cases between petitioner and two private
respondents.
Petitioner questions as allegedly erroneous the Decision dated
August 31, 1987 of the Ninth Division of Respondent Court of
Appeals 1 in CA-G.R. No. 05148 [Civil Case No. 3607 (419)] and
CA-G.R. No. 05149 [Civil Case No. 3655 (429)], both for
Recovery of Possession, which affirmed the Decision of the
Honorable Nicodemo T. Ferrer, Judge of the Regional Trial
Court of Baguio and Benguet in Civil Case No. 3607 (419) and
Civil Case No. 3655 (429), with the dispositive portion as follows:
WHEREFORE, Judgment is hereby rendered ordering the
defendant, Catholic Vicar Apostolic of the Mountain Province to
return and surrender Lot 2 of Plan Psu-194357 to the plaintiffs.
Heirs of Juan Valdez, and Lot 3 of the same Plan to the other
set of plaintiffs, the Heirs of Egmidio Octaviano (Leonardo
Valdez, et al.). For lack or insufficiency of evidence, the plaintiffs'
claim or damages is hereby denied. Said defendant is ordered
to pay costs. (p. 36, Rollo)
Respondent Court of Appeals, in affirming the trial court's
decision, sustained the trial court's conclusions that the Decision
of the Court of Appeals, dated May 4,1977 in CA-G.R. No.
38830-R, in the two cases affirmed by the Supreme Court,
touched on the ownership of lots 2 and 3 in question; that the
two lots were possessed by the predecessors-in-interest of
private respondents under claim of ownership in good faith from
1906 to 1951; that petitioner had been in possession of the same
lots as bailee in commodatum up to 1951, when petitioner
repudiated the trust and when it applied for registration in 1962;
that petitioner had just been in possession as owner for eleven
years, hence there is no possibility of acquisitive prescription
which requires 10 years possession with just title and 30 years
of possession without; that the principle of res judicata on these
findings by the Court of Appeals will bar a reopening of these
questions of facts; and that those facts may no longer be altered.
Petitioner's motion for reconsideration of the respondent
appellate court's Decision in the two aforementioned cases (CA
G.R. No. CV-05418 and 05419) was denied.
The facts and background of these cases as narrated by the trail
court are as follows —
... The documents and records presented reveal that the whole
controversy started when the defendant Catholic Vicar Apostolic
of the Mountain Province (VICAR for brevity) filed with the Court
of First Instance of Baguio Benguet on September 5, 1962 an
application for registration of title over Lots 1, 2, 3, and 4 in Psu-
194357, situated at Poblacion Central, La Trinidad, Benguet,
docketed as LRC N-91, said Lots being the sites of the Catholic
Church building, convents, high school building, school
gymnasium, school dormitories, social hall, stonewalls, etc. On
March 22, 1963 the Heirs of Juan Valdez and the Heirs of
Egmidio Octaviano filed their Answer/Opposition on Lots Nos. 2
and 3, respectively, asserting ownership and title thereto. After
trial on the merits, the land registration court promulgated its
Decision, dated November 17, 1965, confirming the registrable
title of VICAR to Lots 1, 2, 3, and 4.
The Heirs of Juan Valdez (plaintiffs in the herein Civil Case No.
3655) and the Heirs of Egmidio Octaviano (plaintiffs in the herein
Civil Case No. 3607) appealed the decision of the land
registration court to the then Court of Appeals, docketed as CA-
G.R. No. 38830-R. The Court of Appeals rendered its decision,
dated May 9, 1977, reversing the decision of the land
registration court and dismissing the VICAR's application as to
Lots 2 and 3, the lots claimed by the two sets of oppositors in
the land registration case (and two sets of plaintiffs in the two
cases now at bar), the first lot being presently occupied by the
convent and the second by the women's dormitory and the
sister's convent.
On May 9, 1977, the Heirs of Octaviano filed a motion for
reconsideration praying the Court of Appeals to order the
registration of Lot 3 in the names of the Heirs of Egmidio
Octaviano, and on May 17, 1977, the Heirs of Juan Valdez and
Pacita Valdez filed their motion for reconsideration praying that
both Lots 2 and 3 be ordered registered in the names of the
Heirs of Juan Valdez and Pacita Valdez. On August 12,1977,
the Court of Appeals denied the motion for reconsideration filed
by the Heirs of Juan Valdez on the ground that there was "no
sufficient merit to justify reconsideration one way or the other ...,"
and likewise denied that of the Heirs of Egmidio Octaviano.
Thereupon, the VICAR filed with the Supreme Court a petition
for review on certiorari of the decision of the Court of Appeals
dismissing his (its) application for registration of Lots 2 and 3,
docketed as G.R. No. L-46832, entitled 'Catholic Vicar Apostolic
of the Mountain Province vs. Court of Appeals and Heirs of
Egmidio Octaviano.'
From the denial by the Court of Appeals of their motion for
reconsideration the Heirs of Juan Valdez and Pacita Valdez, on
September 8, 1977, filed with the Supreme Court a petition for
review, docketed as G.R. No. L-46872, entitled, Heirs of Juan
Valdez and Pacita Valdez vs. Court of Appeals, Vicar, Heirs of
Egmidio Octaviano and Annable O. Valdez.
On January 13, 1978, the Supreme Court denied in a minute
resolution both petitions (of VICAR on the one hand and the
Heirs of Juan Valdez and Pacita Valdez on the other) for lack of
13
merit. Upon the finality of both Supreme Court resolutions in
G.R. No. L-46832 and G.R. No. L- 46872, the Heirs of Octaviano
filed with the then Court of First Instance of Baguio, Branch II, a
Motion For Execution of Judgment praying that the Heirs of
Octaviano be placed in possession of Lot 3. The Court, presided
over by Hon. Salvador J. Valdez, on December 7, 1978, denied
the motion on the ground that the Court of Appeals decision in
CA-G.R. No. 38870 did not grant the Heirs of Octaviano any
affirmative relief.
On February 7, 1979, the Heirs of Octaviano filed with the Court
of Appeals a petitioner for certiorari and mandamus, docketed
as CA-G.R. No. 08890-R, entitled Heirs of Egmidio Octaviano
vs. Hon. Salvador J. Valdez, Jr. and Vicar. In its decision dated
May 16, 1979, the Court of Appeals dismissed the petition.
It was at that stage that the instant cases were filed. The Heirs
of Egmidio Octaviano filed Civil Case No. 3607 (419) on July 24,
1979, for recovery of possession of Lot 3; and the Heirs of Juan
Valdez filed Civil Case No. 3655 (429) on September 24, 1979,
likewise for recovery of possession of Lot 2 (Decision, pp. 199-
201, Orig. Rec.).
In Civil Case No. 3607 (419) trial was held. The plaintiffs Heirs
of Egmidio Octaviano presented one (1) witness, Fructuoso
Valdez, who testified on the alleged ownership of the land in
question (Lot 3) by their predecessor-in-interest, Egmidio
Octaviano (Exh. C ); his written demand (Exh. B—B-4 ) to
defendant Vicar for the return of the land to them; and the
reasonable rentals for the use of the land at P10,000.00 per
month. On the other hand, defendant Vicar presented the
Register of Deeds for the Province of Benguet, Atty. Nicanor
Sison, who testified that the land in question is not covered by
any title in the name of Egmidio Octaviano or any of the plaintiffs
(Exh. 8). The defendant dispensed with the testimony of
Mons.William Brasseur when the plaintiffs admitted that the
witness if called to the witness stand, would testify that
defendant Vicar has been in possession of Lot 3, for seventy-
five (75) years continuously and peacefully and has constructed
permanent structures thereon.
In Civil Case No. 3655, the parties admitting that the material
facts are not in dispute, submitted the case on the sole issue of
whether or not the decisions of the Court of Appeals and the
Supreme Court touching on the ownership of Lot 2, which in
effect declared the plaintiffs the owners of the land constitute res
judicata.
In these two cases , the plaintiffs arque that the defendant Vicar
is barred from setting up the defense of ownership and/or long
and continuous possession of the two lots in question since this
is barred by prior judgment of the Court of Appeals in CA-G.R.
No. 038830-R under the principle of res judicata. Plaintiffs
contend that the question of possession and ownership have
already been determined by the Court of Appeals (Exh. C,
Decision, CA-G.R. No. 038830-R) and affirmed by the Supreme
Court (Exh. 1, Minute Resolution of the Supreme Court). On his
part, defendant Vicar maintains that the principle of res judicata
would not prevent them from litigating the issues of long
possession and ownership because the dispositive portion of the
prior judgment in CA-G.R. No. 038830-R merely dismissed their
application for registration and titling of lots 2 and 3. Defendant
Vicar contends that only the dispositive portion of the decision,
and not its body, is the controlling pronouncement of the Court
of Appeals. 2
The alleged errors committed by respondent Court of Appeals
according to petitioner are as follows:
1. ERROR IN APPLYING LAW OF THE CASE AND RES
JUDICATA;
2. ERROR IN FINDING THAT THE TRIAL COURT
RULED THAT LOTS 2 AND 3 WERE ACQUIRED BY
PURCHASE BUT WITHOUT DOCUMENTARY EVIDENCE
PRESENTED;
3. ERROR IN FINDING THAT PETITIONERS' CLAIM IT
PURCHASED LOTS 2 AND 3 FROM VALDEZ AND
OCTAVIANO WAS AN IMPLIED ADMISSION THAT THE
FORMER OWNERS WERE VALDEZ AND OCTAVIANO;
4. ERROR IN FINDING THAT IT WAS
PREDECESSORS OF PRIVATE RESPONDENTS WHO
WERE IN POSSESSION OF LOTS 2 AND 3 AT LEAST FROM
1906, AND NOT PETITIONER;
5. ERROR IN FINDING THAT VALDEZ AND
OCTAVIANO HAD FREE PATENT APPLICATIONS AND THE
PREDECESSORS OF PRIVATE RESPONDENTS ALREADY
HAD FREE PATENT APPLICATIONS SINCE 1906;
6. ERROR IN FINDING THAT PETITIONER DECLARED
LOTS 2 AND 3 ONLY IN 1951 AND JUST TITLE IS A PRIME
NECESSITY UNDER ARTICLE 1134 IN RELATION TO ART.
1129 OF THE CIVIL CODE FOR ORDINARY ACQUISITIVE
PRESCRIPTION OF 10 YEARS;
7. ERROR IN FINDING THAT THE DECISION OF THE
COURT OF APPEALS IN CA G.R. NO. 038830 WAS
AFFIRMED BY THE SUPREME COURT;
8. ERROR IN FINDING THAT THE DECISION IN CA
G.R. NO. 038830 TOUCHED ON OWNERSHIP OF LOTS 2
AND 3 AND THAT PRIVATE RESPONDENTS AND THEIR
PREDECESSORS WERE IN POSSESSION OF LOTS 2 AND
3 UNDER A CLAIM OF OWNERSHIP IN GOOD FAITH FROM
1906 TO 1951;
9. ERROR IN FINDING THAT PETITIONER HAD BEEN
IN POSSESSION OF LOTS 2 AND 3 MERELY AS BAILEE BOR
ROWER) IN COMMODATUM, A GRATUITOUS LOAN FOR
USE;
10. ERROR IN FINDING THAT PETITIONER IS A
POSSESSOR AND BUILDER IN GOOD FAITH WITHOUT
RIGHTS OF RETENTION AND REIMBURSEMENT AND IS
BARRED BY THE FINALITY AND CONCLUSIVENESS OF
THE DECISION IN CA G.R. NO. 038830. 3
The petition is bereft of merit.
Petitioner questions the ruling of respondent Court of Appeals in
CA-G.R. Nos. 05148 and 05149, when it clearly held that it was
14
in agreement with the findings of the trial court that the Decision
of the Court of Appeals dated May 4,1977 in CA-G.R. No.
38830-R, on the question of ownership of Lots 2 and 3, declared
that the said Court of Appeals Decision CA-G.R. No. 38830-R)
did not positively declare private respondents as owners of the
land, neither was it declared that they were not owners of the
land, but it held that the predecessors of private respondents
were possessors of Lots 2 and 3, with claim of ownership in good
faith from 1906 to 1951. Petitioner was in possession as
borrower in commodatum up to 1951, when it repudiated the
trust by declaring the properties in its name for taxation
purposes. When petitioner applied for registration of Lots 2 and
3 in 1962, it had been in possession in concept of owner only for
eleven years. Ordinary acquisitive prescription requires
possession for ten years, but always with just title. Extraordinary
acquisitive prescription requires 30 years. 4
On the above findings of facts supported by evidence and
evaluated by the Court of Appeals in CA-G.R. No. 38830-R,
affirmed by this Court, We see no error in respondent appellate
court's ruling that said findings are res judicata between the
parties. They can no longer be altered by presentation of
evidence because those issues were resolved with finality a long
time ago. To ignore the principle of res judicata would be to open
the door to endless litigations by continuous determination of
issues without end.
An examination of the Court of Appeals Decision dated May 4,
1977, First Division 5 in CA-G.R. No. 38830-R, shows that it
reversed the trial court's Decision 6 finding petitioner to be
entitled to register the lands in question under its ownership, on
its evaluation of evidence and conclusion of facts.
The Court of Appeals found that petitioner did not meet the
requirement of 30 years possession for acquisitive prescription
over Lots 2 and 3. Neither did it satisfy the requirement of 10
years possession for ordinary acquisitive prescription because
of the absence of just title. The appellate court did not believe
the findings of the trial court that Lot 2 was acquired from Juan
Valdez by purchase and Lot 3 was acquired also by purchase
from Egmidio Octaviano by petitioner Vicar because there was
absolutely no documentary evidence to support the same and
the alleged purchases were never mentioned in the application
for registration.
By the very admission of petitioner Vicar, Lots 2 and 3 were
owned by Valdez and Octaviano. Both Valdez and Octaviano
had Free Patent Application for those lots since 1906. The
predecessors of private respondents, not petitioner Vicar, were
in possession of the questioned lots since 1906.
There is evidence that petitioner Vicar occupied Lots 1 and 4,
which are not in question, but not Lots 2 and 3, because the
buildings standing thereon were only constructed after liberation
in 1945. Petitioner Vicar only declared Lots 2 and 3 for taxation
purposes in 1951. The improvements oil Lots 1, 2, 3, 4 were paid
for by the Bishop but said Bishop was appointed only in 1947,
the church was constructed only in 1951 and the new convent
only 2 years before the trial in 1963.
When petitioner Vicar was notified of the oppositor's claims, the
parish priest offered to buy the lot from Fructuoso Valdez. Lots
2 and 3 were surveyed by request of petitioner Vicar only in
1962.
Private respondents were able to prove that their predecessors'
house was borrowed by petitioner Vicar after the church and the
convent were destroyed. They never asked for the return of the
house, but when they allowed its free use, they became bailors
in commodatum and the petitioner the bailee. The bailees' failure
to return the subject matter of commodatum to the bailor did not
mean adverse possession on the part of the borrower. The
bailee held in trust the property subject matter of commodatum.
The adverse claim of petitioner came only in 1951 when it
declared the lots for taxation purposes. The action of petitioner
Vicar by such adverse claim could not ripen into title by way of
ordinary acquisitive prescription because of the absence of just
title.
The Court of Appeals found that the predecessors-in-interest
and private respondents were possessors under claim of
ownership in good faith from 1906; that petitioner Vicar was only
a bailee in commodatum; and that the adverse claim and
repudiation of trust came only in 1951.
We find no reason to disregard or reverse the ruling of the Court
of Appeals in CA-G.R. No. 38830-R. Its findings of fact have
become incontestible. This Court declined to review said
decision, thereby in effect, affirming it. It has become final and
executory a long time ago.
Respondent appellate court did not commit any reversible error,
much less grave abuse of discretion, when it held that the
Decision of the Court of Appeals in CA-G.R. No. 38830-R is
governing, under the principle of res judicata, hence the rule, in
the present cases CA-G.R. No. 05148 and CA-G.R. No. 05149.
The facts as supported by evidence established in that decision
may no longer be altered.
WHEREFORE AND BY REASON OF THE FOREGOING, this
petition is DENIED for lack of merit, the Decision dated Aug. 31,
1987 in CA-G.R. Nos. 05148 and 05149, by respondent Court
of Appeals is AFFIRMED, with costs against petitioner.SO
ORDERED.
G.R. No. 146364 June 3, 2004
COLITO T. PAJUYO vs. COURT OF APPEALS and EDDIE
GUEVARRA,
CARPIO, J.:
Before us is a petition for review1 of the 21 June 2000 Decision2
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 decision3 of the Regional Trial Court of Quezon
City, Branch 81,4 affirming the 15 December 1995 decision5 of
the Metropolitan Trial Court of Quezon City, Branch 31.6
The Antecedents
In June 1979, petitioner Colito T. Pajuyo ("Pajuyo") paid ₱400 to
a certain Pedro Perez for the rights over a 250-square meter lot
in Barrio Payatas, Quezon City. Pajuyo then constructed a
15
house made of light materials on the lot. Pajuyo and his family
lived in the house from 1979 to 7 December 1985.
On 8 December 1985, Pajuyo and private respondent Eddie
Guevarra ("Guevarra") executed a Kasunduan or agreement.
Pajuyo, as owner of the house, allowed Guevarra to live in the
house for free provided Guevarra would maintain the cleanliness
and orderliness of the house. Guevarra promised that he would
voluntarily vacate the premises on Pajuyo’s demand.
In September 1994, Pajuyo informed Guevarra of his need of
the house and demanded that Guevarra vacate the house.
Guevarra refused.
Pajuyo filed an ejectment case against Guevarra with the
Metropolitan Trial Court of Quezon City, Branch 31 ("MTC").
In his Answer, Guevarra claimed that Pajuyo had no valid title or
right of possession over the lot where the house stands because
the lot is within the 150 hectares set aside by Proclamation No.
137 for socialized housing. Guevarra pointed out that from
December 1985 to September 1994, Pajuyo did not show up or
communicate with him. Guevarra insisted that neither he nor
Pajuyo has valid title to the lot.
On 15 December 1995, the MTC rendered its decision in favor
of Pajuyo. The dispositive portion of the MTC decision reads:
WHEREFORE, premises considered, judgment is hereby
rendered for the plaintiff and against defendant, ordering the
latter to:
A) vacate the house and lot occupied by the defendant or any
other person or persons claiming any right under him;
B) pay unto plaintiff the sum of THREE HUNDRED PESOS
(₱300.00) monthly as reasonable compensation for the use of
the premises starting from the last demand;
C) pay plaintiff the sum of ₱3,000.00 as and by way of attorney’s
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 Resolution9 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 Resolution10 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 Guevara’s petition for review. On 11 April 1997,
Pajuyo filed his Comment.
On 21 June 2000, the Court of Appeals issued its decision
reversing the RTC decision. The dispositive portion of the
decision reads:
WHEREFORE, premises considered, the assailed Decision of
the court a quo in Civil Case No. Q-96-26943 is REVERSED and
SET ASIDE; and it is hereby declared that the ejectment case
filed against defendant-appellant is without factual and legal
basis. SO ORDERED.
Pajuyo filed a motion for reconsideration of the decision. Pajuyo
pointed out that the Court of Appeals should have dismissed
outright Guevarra’s petition for review because it was filed out of
time. Moreover, it was Guevarra’s counsel and not Guevarra
who signed the certification against forum-shopping.
On 14 December 2000, the Court of Appeals issued a resolution
denying Pajuyo’s motion for reconsideration. The dispositive
portion of the resolution reads:
WHEREFORE, for lack of merit, the motion for reconsideration
is hereby DENIED. No costs. SO ORDERED.
The Ruling of the MTC
The MTC ruled that the subject of the agreement between
Pajuyo and Guevarra is the house and not the lot. Pajuyo is the
owner of the house, and he allowed Guevarra to use the house
only by tolerance. Thus, Guevarra’s refusal to vacate the house
on Pajuyo’s demand made Guevarra’s continued possession of
the house illegal.
The Ruling of the RTC
The RTC upheld the Kasunduan, which established the landlord
and tenant relationship between Pajuyo and Guevarra. The
terms of the Kasunduan bound Guevarra to return possession
of the house on demand.
16

The RTC rejected Guevarra’s claim of a better right under
Proclamation No. 137, the Revised National Government Center
Housing Project Code of Policies and other pertinent laws. In an
ejectment suit, the RTC has no power to decide Guevarra’s
rights under these laws. The RTC declared that in an ejectment
case, the only issue for resolution is material or physical
possession, not ownership.
The Ruling of the Court of Appeals
The Court of Appeals declared that Pajuyo and Guevarra are
squatters. Pajuyo and Guevarra illegally occupied the contested
lot which the government owned.
Perez, the person from whom Pajuyo acquired his rights, was
also a squatter. Perez had no right or title over the lot because
it is public land. The assignment of rights between Perez and
Pajuyo, and the Kasunduan between Pajuyo and Guevarra, did
not have any legal effect. Pajuyo and Guevarra are in pari delicto
or in equal fault. The court will leave them where they are.
The Court of Appeals reversed the MTC and RTC rulings, which
held that the Kasunduan between Pajuyo and Guevarra created
a legal tie akin to that of a landlord and tenant relationship. The
Court of Appeals ruled that 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 Pajuyo’s motion for reconsideration, the appellate
court debunked Pajuyo’s claim that Guevarra filed his motion for
extension beyond the period to appeal.
The Court of Appeals pointed out that Guevarra’s motion for
extension filed before the Supreme Court was stamped "13
December 1996 at 4:09 PM" by the Supreme Court’s Receiving
Clerk. The Court of Appeals concluded that the motion for
extension bore a date, contrary to Pajuyo’s 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 Pajuyo’s argument that the
appellate court should have dismissed the petition for review
because it was Guevarra’s counsel and not Guevarra who
signed the certification against forum-shopping. The Court of
Appeals pointed out that Pajuyo did not raise this issue in his
Comment. The Court of Appeals held that Pajuyo could not now
seek the dismissal of the case after he had extensively argued
on the merits of the case. This technicality, the appellate court
opined, was clearly an afterthought.
The Issues
Pajuyo raises the following issues for resolution:
WHETHER THE COURT OF APPEALS ERRED OR ABUSED
ITS AUTHORITY AND DISCRETION TANTAMOUNT TO LACK
OF JURISDICTION:
1) in GRANTING, instead of denying, Private Respondent’s
Motion for an Extension of thirty days to file petition for review at
the time when there was no more period to extend as the
decision of the Regional Trial Court had already become final
and executory.
2) in giving due course, instead of dismissing, private
respondent’s Petition for Review even though the certification
against forum-shopping was signed only by counsel instead of
by petitioner himself.
3) in ruling that the Kasunduan voluntarily entered into by the
parties was in fact a commodatum, instead of a Contract of
Lease as found by the Metropolitan Trial Court and in holding
that "the ejectment case filed against defendant-appellant is
without legal and factual basis".
4) in reversing and setting aside the Decision of the Regional
Trial Court in Civil Case No. Q-96-26943 and in holding that the
parties are in pari delicto being both squatters, therefore, illegal
occupants of the contested parcel of land.
5) in deciding the unlawful detainer case based on the so-called
Code of Policies of the National Government Center Housing
Project instead of deciding the same under the Kasunduan
voluntarily executed by the parties, the terms and conditions of
which are the laws between themselves.13
The Ruling of the Court
The procedural issues Pajuyo is raising are baseless. However,
we find merit in the substantive issues Pajuyo is submitting for
resolution.
Procedural Issues
Pajuyo insists that the Court of Appeals should have dismissed
outright Guevarra’s petition for review because the RTC
decision had already become final and executory when the
appellate court acted on Guevarra’s motion for extension to file
the petition. Pajuyo points out that Guevarra had only one day
before the expiry of his period to appeal the RTC decision.
Instead of filing the petition for review with the Court of Appeals,
Guevarra filed with this Court an undated motion for extension
of 30 days to file a petition for review. This Court merely referred
the motion to the Court of Appeals. Pajuyo believes that the filing
of the motion for extension with this Court did not toll the running
17
of the period to perfect the appeal. Hence, when the Court of
Appeals received the motion, the period to appeal had already
expired.
We are not persuaded.
Decisions of the regional trial courts in the exercise of their
appellate jurisdiction are appealable to the Court of Appeals by
petition for review in cases involving questions of fact or mixed
questions of fact and law.14 Decisions of the regional trial courts
involving pure questions of law are appealable directly to this
Court by petition for review.15 These modes of appeal are now
embodied in Section 2, Rule 41 of the 1997 Rules of Civil
Procedure.
Guevarra believed that his appeal of the RTC decision involved
only questions of law. Guevarra thus filed his motion for
extension to file petition for review before this Court on 14
December 1996. On 3 January 1997, Guevarra then filed his
petition for review with this Court. A perusal of Guevarra’s
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. Guevarra’s 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 squatter’s 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 Liboro’s 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.
A judgment becomes "final and executory" by operation of law.
Finality of judgment becomes a fact on the lapse of the
reglementary period to appeal if no appeal is perfected.23 The
RTC decision could not have gained finality because the Court
of Appeals granted the 30-day extension to Guevarra.
The Court of Appeals did not commit grave abuse of discretion
when it approved Guevarra’s motion for extension. The Court of
Appeals gave due course to the motion for extension because it
complied with the condition set by the appellate court in its
resolution dated 28 January 1997. The resolution stated that the
Court of Appeals would only give due course to the motion for
extension if filed on time. The motion for extension met this
condition.
The material dates to consider in determining the timeliness of
the filing of the motion for extension are (1) the date of receipt of
the judgment or final order or resolution subject of the petition,
and (2) the date of filing of the motion for extension.24 It is the
date of the filing of the motion or pleading, and not the date of
execution, that determines the timeliness of the filing of that
motion or pleading. Thus, even if the motion for extension bears
no date, the date of filing stamped on it is the reckoning point for
determining the timeliness of its filing.
Guevarra had until 14 December 1996 to file an appeal from the
RTC decision. Guevarra filed his motion for extension before this
Court on 13 December 1996, the date stamped by this Court’s
Receiving Clerk on the motion for extension. Clearly, Guevarra
filed the motion for extension exactly one day before the lapse
of the reglementary period to appeal.
Assuming that the Court of Appeals should have dismissed
Guevarra’s appeal on technical grounds, Pajuyo did not ask the
appellate court to deny the motion for extension and dismiss the
petition for review at the earliest opportunity. Instead, Pajuyo
vigorously discussed the merits of the case. It was only when
the Court of Appeals ruled in Guevarra’s favor that Pajuyo raised
the procedural issues against Guevarra’s petition for review.
A party who, after voluntarily submitting a dispute for resolution,
receives an adverse decision on the merits, is estopped from
attacking the jurisdiction of the court.25 Estoppel sets in not
because the judgment of the court is a valid and conclusive
adjudication, but because the practice of attacking the court’s
jurisdiction after voluntarily submitting to it is against public
policy.26
In his Comment before the Court of Appeals, Pajuyo also failed
to discuss Guevarra’s failure to sign the certification against
forum shopping. Instead, Pajuyo harped on Guevarra’s counsel
signing the verification, claiming that the counsel’s verification is
insufficient since it is based only on "mere information."
18
A party’s failure to sign the certification against forum shopping
is different from the party’s failure to sign personally the
verification. The certificate of non-forum shopping must be
signed by the party, and not by counsel.27 The certification of
counsel renders the petition defective.28
On the other hand, the requirement on verification of a pleading
is a formal and not a jurisdictional requisite.29 It is intended
simply to secure an assurance that what are alleged in the
pleading are true and correct and not the product of the
imagination or a matter of speculation, and that the pleading is
filed in good faith.30 The party need not sign the verification. A
party’s 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 defendant’s 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 party’s title to
the property is questionable,38 or when both parties intruded
into public land and their applications to own the land have yet
to be approved by the proper government agency.39
Regardless of the actual condition of the title to the property, the
party in peaceable quiet possession shall not be thrown out by
a strong hand, violence or terror.40 Neither is the unlawful
withholding of property allowed. Courts will always uphold
respect for prior possession.
Thus, a party who can prove prior possession can recover such
possession even against the owner himself.41 Whatever may
be the character of his possession, if he has in his favor prior
possession in time, he has the security that entitles him to
remain on the property until a person with a better right lawfully
ejects him.42 To repeat, the only issue that the court has to
settle in an ejectment suit is the right to physical possession.
In Pitargue v. Sorilla,43 the government owned the land in
dispute. The government did not authorize either the plaintiff or
the defendant in the case of forcible entry case to occupy the
land. The plaintiff had prior possession and had already
introduced improvements on the public land. The plaintiff had a
pending application for the land with the Bureau of Lands when
the defendant ousted him from possession. The plaintiff filed the
action of forcible entry against the defendant. The government
was not a party in the case of forcible entry.
The defendant questioned the jurisdiction of the courts to settle
the issue of possession because while the application of the
plaintiff was still pending, title remained with the government,
and the Bureau of Public Lands had jurisdiction over the case.
We disagreed with the defendant. We ruled that courts have
jurisdiction to entertain ejectment suits even before the
resolution of the application. The plaintiff, by priority of his
application and of his entry, acquired prior physical possession
over the public land applied for as against other private
claimants. That prior physical possession enjoys legal protection
against other private claimants because only a court can take
away such physical possession in an ejectment case.
While the Court did not brand the plaintiff and the defendant in
Pitargue44 as squatters, strictly speaking, their entry into the
disputed land was illegal. Both the plaintiff and defendant
entered the public land without the owner’s 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
19
authorities can settle speedily actions to recover possession
because of the overriding need to quell social disturbances.47
We further explained in Pitargue the greater interest that is at
stake in actions for recovery of possession. We made the
following pronouncements in Pitargue:
The question that is before this Court is: Are courts without
jurisdiction to take cognizance of possessory actions involving
these public lands before final award is made by the Lands
Department, and before title is given any of the conflicting
claimants? It is one of utmost importance, as there are public
lands everywhere and there are thousands of settlers, especially
in newly opened regions. It also involves a matter of policy, as it
requires the determination of the respective authorities and
functions of two coordinate branches of the Government in
connection with public land conflicts.
Our problem is made simple by the fact that under the Civil
Code, either in the old, which was in force in this country before
the American occupation, or in the new, we have a possessory
action, the aim and purpose of which is the recovery of the
physical possession of real property, irrespective of the question
as to who has the title thereto. Under the Spanish Civil Code we
had the accion interdictal, a summary proceeding which could
be brought within one year from dispossession (Roman Catholic
Bishop of Cebu vs. Mangaron, 6 Phil. 286, 291); and as early as
October 1, 1901, upon the enactment of the Code of Civil
Procedure (Act No. 190 of the Philippine Commission) we
implanted the common law action of forcible entry (section 80 of
Act No. 190), the object of which has been stated by this Court
to be "to prevent breaches of the peace and criminal disorder
which would ensue from the withdrawal of the remedy, and the
reasonable hope such withdrawal would create that some
advantage must accrue to those persons who, believing
themselves entitled to the possession of property, resort to force
to gain possession rather than to some appropriate action in the
court to assert their claims." (Supia and Batioco vs. Quintero and
Ayala, 59 Phil. 312, 314.) So before the enactment of the first
Public Land Act (Act No. 926) the action of forcible entry was
already available in the courts of the country. So the question to
be resolved is, Did the Legislature intend, when it vested the
power and authority to alienate and dispose of the public lands
in the Lands Department, to exclude the courts from entertaining
the possessory action of forcible entry between rival claimants
or occupants of any land before award thereof to any of the
parties? Did Congress intend that the lands applied for, or all
public lands for that matter, be removed from the jurisdiction of
the judicial Branch of the Government, so that any troubles
arising therefrom, or any breaches of the peace or disorders
caused by rival claimants, could be inquired into only by the
Lands Department to the exclusion of the courts? The answer to
this question seems to us evident. The Lands Department does
not have the means to police public lands; neither does it have
the means to prevent disorders arising therefrom, or contain
breaches of the peace among settlers; or to pass promptly upon
conflicts of possession. Then its power is clearly limited to
disposition and alienation, and while it may decide conflicts of
possession in order to make proper award, the settlement of
conflicts of possession which is recognized in the court herein
has another ultimate purpose, i.e., the protection of actual
possessors and occupants with a view to the prevention of
breaches of the peace. The power to dispose and alienate could
not have been intended to include the power to prevent or settle
disorders or breaches of the peace among rival settlers or
claimants prior to the final award. As to this, therefore, the
corresponding branches of the Government must continue to
exercise power and jurisdiction within the limits of their
respective functions. The vesting of the Lands Department with
authority to administer, dispose, and alienate public lands,
therefore, must not be understood as depriving the other
branches of the Government of the exercise of the respective
functions or powers thereon, such as the authority to stop
disorders and quell breaches of the peace by the police, the
authority on the part of the courts to take 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
20
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 Code48 embody the principle
of pari delicto. We explained the principle of pari delicto in these
words:
The rule of pari delicto is expressed in the maxims ‘ex dolo malo
non eritur actio’ and ‘in pari delicto potior est conditio defedentis.’
The law will not aid either party to an illegal agreement. It leaves
the parties where it finds them.49
The application of the pari delicto principle is not absolute, as
there are exceptions to its application. One of these exceptions
is where the application of the pari delicto rule would violate well-
established public policy.50
In Drilon v. Gaurana,51 we reiterated the basic policy behind the
summary actions of forcible entry and unlawful detainer. We
held that:
It must be stated that the purpose of an action of forcible entry
and detainer is that, regardless of the actual condition of the title
to the property, the party in peaceable quiet possession shall not
be turned out by strong hand, violence or terror. In affording this
remedy of restitution the object of the statute is to prevent
breaches of the peace and criminal disorder which would ensue
from the withdrawal of the remedy, and the reasonable hope
such withdrawal would create that some advantage must accrue
to those persons who, believing themselves entitled to the
possession of property, resort to force to gain possession rather
than to some appropriate action in the courts to assert their
claims. This is the philosophy at the foundation of all these
actions of forcible entry and detainer which are designed to
compel the party out of possession to respect and resort to the
law alone to obtain what he claims is his.52
Clearly, the application of the principle of pari delicto to a case
of ejectment between squatters is fraught with danger. To shut
out relief to squatters on the ground of pari delicto would openly
invite mayhem and lawlessness. A squatter would oust another
squatter from possession of the lot that the latter had illegally
occupied, emboldened by the knowledge that the courts would
leave them where they are. Nothing would then stand in the way
of the ousted squatter from re-claiming his prior possession at
all cost.
Petty warfare over possession of properties is precisely what
ejectment cases or actions for recovery of possession seek to
prevent.53 Even the owner who has title over the disputed
property cannot take the law into his own hands to regain
possession of his property. The owner must go to court.
Courts must resolve the issue of possession even if the parties
to the ejectment suit are squatters. The determination of priority
and superiority of possession is a serious and urgent matter that
cannot be left to the squatters to decide. To do so would make
squatters receive better treatment under the law. The law
restrains property owners from taking the law into their own
hands. However, the principle of pari delicto as applied by the
Court of Appeals would give squatters free rein to dispossess
fellow squatters or violently retake possession of properties
usurped from them. Courts should not leave squatters to their
own devices in cases involving recovery of possession.
Possession is the only Issue for Resolution in an Ejectment
Case
The case for review before the Court of Appeals was a simple
case of ejectment. The Court of Appeals refused to rule on the
issue of physical possession. Nevertheless, the appellate court
held that the pivotal issue in this case is who between Pajuyo
and Guevarra has the "priority right as beneficiary of the
contested land under Proclamation No. 137."54 According to the
Court of Appeals, Guevarra enjoys preferential right under
Proclamation No. 137 because Article VI of the Code declares
that the actual occupant or caretaker is the one qualified to apply
for socialized housing.
The ruling of the Court of Appeals has no factual and legal basis.
First. Guevarra did not present evidence to show that the
contested lot is part of a relocation site under Proclamation No.
137. Proclamation No. 137 laid down the metes and bounds of
the land that it declared open for disposition to bona fide
residents.
The records do not show that the contested lot is within the land
specified by Proclamation No. 137. Guevarra had the burden to
prove that the disputed lot is within the coverage of Proclamation
No. 137. He failed to do so.
Second. The Court of Appeals should not have given credence
to Guevarra’s 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
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the courts would be limited to the issue of physical possession
only.
In Pitargue,55 we ruled that courts have jurisdiction over
possessory actions involving public land to determine the issue
of physical possession. The determination of the respective
rights of rival claimants to public land is, however, distinct from
the determination of who has the actual physical possession or
who has a better right of physical possession.56 The
administrative disposition and alienation of public lands should
be threshed out in the proper government agency.57
The Court of Appeals’ determination of Pajuyo and Guevarra’s
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 Pajuyo’s 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, sila’y
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 Pajuyo’s demand but
Guevarra broke his promise and refused to heed Pajuyo’s
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 former’s 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
defendant’s 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 Pajuyo’s
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. Guevarra’s refusal to comply with Pajuyo’s
demand to vacate made Guevarra’s continued possession of the
property unlawful.
We do not subscribe to the Court of Appeals’ theory that the
Kasunduan is one of commodatum.
In a contract of commodatum, one of the parties delivers to
another something not consumable so that the latter may use
the same for a certain time and return it.63 An essential feature
of commodatum is that it is gratuitous. Another feature of
commodatum is that the use of the thing belonging to another is
for a certain period.64 Thus, the bailor cannot demand the return
of the thing loaned until after expiration of the period stipulated,
or after accomplishment of the use for which the commodatum
is constituted.65 If the bailor should have urgent need of the
thing, he may demand its return for temporary use.66 If the use
of the thing is merely tolerated by the bailor, he can demand the
return of the thing at will, in which case the contractual relation
is called a precarium.67 Under the Civil Code, precarium is a
kind of commodatum.68
The Kasunduan reveals that the accommodation accorded by
Pajuyo to Guevarra was not essentially gratuitous. While the
Kasunduan did not require Guevarra to pay rent, it obligated him
to maintain the property in good condition. The imposition of this
obligation makes the Kasunduan a contract different from a
commodatum. The effects of the Kasunduan are also different
from that of a commodatum. Case law on ejectment has treated
relationship based on tolerance as one that is akin to a landlord-
tenant relationship where the withdrawal of permission would
result in the termination of the lease.69 The tenant’s 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 Guevarra’s recognition of Pajuyo’s
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better right of physical possession. Guevarra is clearly a
possessor in bad faith. The absence of a contract would not yield
a different result, as there would still be an implied promise to
vacate.
Guevarra contends that there is "a pernicious evil that is sought
to be avoided, and that is allowing an absentee squatter who
(sic) makes (sic) a profit out of his illegal act."72 Guevarra bases
his argument on the preferential right given to the actual
occupant or caretaker under Proclamation No. 137 on socialized
housing.
We are not convinced.
Pajuyo did not profit from his arrangement with Guevarra
because Guevarra stayed in the property without paying any
rent. There is also no proof that Pajuyo is a professional squatter
who rents out usurped properties to other squatters. Moreover,
it is for the proper government agency to decide who between
Pajuyo and Guevarra qualifies for socialized housing. The only
issue that we are addressing is physical possession.
Prior possession is not always a condition sine qua non in
ejectment.73 This is one of the distinctions between forcible
entry and unlawful detainer.74 In forcible entry, the plaintiff is
deprived of physical possession of his land or building by means
of force, intimidation, threat, strategy or stealth. Thus, he must
allege and prove prior possession.75 But in unlawful detainer,
the defendant unlawfully withholds possession after the
expiration or termination of his right to possess under any
contract, express or implied. In such a case, prior physical
possession is not required.76
Pajuyo’s withdrawal of his permission to Guevarra terminated
the Kasunduan. Guevarra’s 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
Pajuyo’s 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.
Pajuyo’s 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 one’s will.78 Actual
or physical occupation is not always necessary.79
Ruling on Possession Does not Bind Title to the Land in Dispute
We are aware of our pronouncement in cases where we
declared that "squatters and intruders who clandestinely enter
into titled government property cannot, by such act, acquire any
legal right to said property."80 We made this declaration
because the person who had title or who had the right to legal
possession over the disputed property was a party in the
ejectment suit and that party instituted the case against
squatters or usurpers.
In this case, the owner of the land, which is the government, is
not a party to the ejectment case. This case is between
squatters. Had the government participated in this case, the
courts could have evicted the contending squatters, Pajuyo and
Guevarra.
Since the party that has title or a better right over the property is
not impleaded in this case, we cannot evict on our own the
parties. Such a ruling would discourage squatters from seeking
the aid of the courts in settling the issue of physical possession.
Stripping both the plaintiff and the defendant of possession just
because they are squatters would have the same dangerous
implications as the application of the principle of pari delicto.
Squatters would then rather settle the issue of physical
possession among themselves than seek relief from the courts
if the plaintiff and defendant in the ejectment case would both
stand to lose possession of the disputed property. This would
subvert the policy underlying actions for recovery of possession.
Since Pajuyo has in his favor priority in time in holding the
property, he is entitled to remain on the property until a person
who has title or a better right lawfully ejects him. Guevarra is
certainly not that person. The ruling in this case, however, does
not preclude Pajuyo and Guevarra from introducing evidence
and presenting arguments before the proper administrative
agency to establish any right to which they may be entitled under
the law.81
In no way should our ruling in this case be interpreted to
condone squatting. The ruling on the issue of physical
possession does not affect title to the property nor constitute a
binding and conclusive adjudication on the merits on the issue
of ownership.82 The owner can still go to court to recover
lawfully the property from the person who holds the property
without legal title. Our ruling here does not diminish the power
of government agencies, including local governments, to
condemn, abate, remove or demolish illegal or unauthorized
structures in accordance with existing laws.
Attorney’s Fees and Rentals
The MTC and RTC failed to justify the award of ₱3,000
attorney’s fees to Pajuyo. Attorney’s fees as part of damages
are awarded only in the instances enumerated in Article 2208 of
the Civil Code.83 Thus, the award of attorney’s fees is the
exception rather than the rule.84 Attorney’s 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 attorney’s fees awarded to
Pajuyo.
We sustain the ₱300 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 ₱300 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,
23
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 attorney’s fees is deleted. No costs.

SO ORDERED.

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