Credit Transactions Case Digests

11/14/2018 SUPREME COURT REPORTS ANNOTATED VOLUME 430
492 SUPREME COURT REPORTS ANNOTATED

Pajuyo vs. Court of Appeals
*
G.R. No. 146364. June 3, 2004.
COLITO T. PAJUYO, petitioner, vs. COURT OF APPEALS

and EDDIE GUEVARRA, respondents.
Actions; Appeals; Pleadings and Practice; Decisions of

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
while their decisions involving pure questions of law are
appealable directly to the Supreme Court.—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. Decisions of the regional trial courts involving pure questions
of law are appealable directly to this Court by petition for review.
These modes of appeal are now embodied in Section 2, Rule 41 of
the 1997 Rules of Civil Procedure.
Same; Same; Questions of Law and Questions of Fact; Words
and Phrases; There is a question of law when the doubt or
difference is on what the law is on a certain state of facts and there
is a question of fact when the doubt or difference is on the truth or
falsity of the facts alleged.—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
_______________
* FIRST DIVISION.
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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.
There is a question of fact when the doubt or difference is on the
truth or falsity of the facts alleged.
Same; Same; The Court of Appeals has the power to grant an
extension of time to file a petition for review—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
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, we declared that the
Court of Appeals could grant extension of time in appeals by
petition for review. In Liboro v. Court of Appeals, 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. The drafting of the petition for
review entails more time and effort than filing a notice of appeal.
Hence, the Court of Appeals may allow an extension of time to file
a petition for review.
Same; Same; Judgments; Pleadings and Practice; A judgment
becomes “final and executory” by operation of law; 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.—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. 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.
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.
494
Same; Same; Same; Same; Estoppel; 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.—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. 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.
Same; Certification of Non-Forum Shopping; Verification;
Pleadings and Practice; A party’s failure to sign the certification
against forum shopping is different from the party’s failure to sign
personally 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.—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.
The certification of counsel renders the petition defective. On the
other hand, the requirement on verification of a pleading is a
formal and not a jurisdictional requisite. 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.
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.
Same; Ejectment; Ownership; The defendant’s claim of
ownership of the disputed property does not divest the inferior
court of its jurisdiction over an ejectment case.—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. 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. 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. 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.
495
VOL. 430, JUNE 3, 2004 495
Same; Same; Same; The absence of title over a contested lot is

not a ground for the courts to withhold relief from the parties in an
ejectment case.—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. 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. It does not even matter if a party’s
title to the property is questionable, 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.
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. Neither is the unlawful
withholding of property allowed. Courts will always uphold
respect for prior possession.
Same; Same; 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.—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. The party deprived of possession must not take the
law into his own hands. Ejectment proceedings are summary in
nature so the authorities can settle speedily actions to recover
possession because of the overriding need to quell social
disturbances.
Same; Same; Pari Delicto; One of the exceptions to the
application of the pari delicto principle is where its application
would violate well-established public policy.—Articles 1411 and
1412 of the Civil Code 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. 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.
496
Same; Same; Same; Squatting; The application of the

principle of pari delicto to a case of ejectment between squatters is
fraught with danger; Courts must resolve the issue of possession
even if the parties to the ejectment suit are squatters—courts
should not leave squatters to their own devices in cases involving
recovery of possession.—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. 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.
Same; Same; Administrative Law; Public Lands; The
determination of the respective rights of rival claimants to public
land is distinct from the determination of who has the actual
physical possession or who has a better right of physical
possession; 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.—In
Pitargue, 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. The administrative
disposition and alienation of public lands should be threshed out
in the proper government agency. 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.
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VOL. 430, JUNE 3, 2004 497
Same; Same; 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.—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. 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.
The defendant’s refusal to comply with the demand makes his
continued possession of the property unlawful. 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.
Same; Same; Contracts; Commodatum; Precarium; Words
and Phrases; An essential feature of commodatum is that it is
gratuitous, while another feature is that the use of the thing
belonging to another is for a certain period; 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; Precarium is a kind 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. An essential feature of commodatum is that it is
gratuitous. Another feature of commodatum is that the use of the
thing belonging to another is for a certain period. Thus, the bailor
cannot demand the return of the thing loaned until after
expiration of the period stipulated, or after accomplishment of the
use for which the commodatum is constituted. If the bailor should

have urgent need of the thing, he may demand its return for
temporary use. If the use of the thing is merely tolerated by the
bailor, he can demand the return of the thing at will, in which
case the contractual relation is called a precarium. Under the
Civil Code, precarium is a kind of commodatum.
Contracts; Human Relations; Squatting; There must be honor
even between squatters.—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
498
into the Kasunduan. Guevarra cannot now impugn the

Kasunduan after he had benefited from it. The Kasunduan binds
Guevarra.
Same; Ejectment; Possession; Prior possession is not always a
condition sine qua non in ejectment.—Prior possession is not
always a condition sine qua non in ejectment. This is one of the
distinctions between forcible entry and unlawful detainer. 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. 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.
Same; Same; Same; 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.—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. 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. Actual or
physical occupation is not always necessary.
Same; Same; Squatting; Where the party that has title or a

better right over the property is not impleaded in the case, the
Court cannot evict on its own the contending parties who are
squatters.—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.” 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
499
VOL. 430, JUNE 3, 2004 499
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.
Attorney’s Fees; 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.—The MTC and RTC
failed to justify the award of P3,000 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. Thus, the
award of attorney’s fees is the exception rather than the rule.
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. We therefore delete the attorney’s fees
awarded to Pajuyo.
PETITION for review on certiorari of the decision and

resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.

D.P. Burgos, Jr. for petitioner.
Jason Christopher Rayos Co for SALIGAN.
CARPIO, J.:
The Case
1
Before us
2
is a petition for review of the 21 June 2000
Decision and 14 December 2000 Resolution of the Court of
Appeals in CA-G.R. SP No. 43129. The 3
Court of Appeals set
aside the 11 November 1996 decision of 4
the Regional Trial
Court of Quezon City,5 Branch 81, affirming the 15
December 1995 decision 6 of the Metropolitan Trial Court of
Quezon City, Branch 31.
_______________
1 Under Rule 45 of the 1997 Rules of Court.

2 Penned by Associate Justice Andres B. Reyes, Jr. with Associate
Justices Quirino D. Abad Santos, Jr. and Romeo A. Brawner, concurring.
3 Penned by Judge Wenceslao I. Agnir.
4 Docketed as Civil Case No. Q-96-26943.
5 Penned by Judge Mariano M. Singzon, Jr.
6 Docketed as Civil Case No. 12432.
500

The Antecedents
In June 1979, petitioner Colito T. Pajuyo (“Pajuyo”) paid

P400 to a certain Pedro Perez for the rights over a 250-
square meter lot in Barrio Payatas, Quezon City. Pajuyo
then constructed a house made of light materials on the lot.
Pajuyo and his family lived in the house from 1979 to 7
December 1985.
On 8 December 1985, Pajuyo and private respondent
Eddie Guevarra (“Guevarra”) executed a Kasunduan or
agreement. Pajuyo, as owner of the house, allowed
Guevarra to live in the house for free provided Guevarra
would maintain the cleanliness and orderliness of the
house. Guevarra promised that he would voluntarily vacate
the premises on 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
(P300.00) monthly as reasonable compensation for the use
of the premises starting from the last demand;
‘C) pay plaintiff the sum of P3,000.00 as and by way of
attorney’s fees; and
‘D) pay the cost of suit.
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VOL. 430, JUNE 3, 2004 501

7
“SO ORDERED.’ ”
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. 8
“SO ORDERED.”
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
9
Division of the Supreme
Court issued a Resolution 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 Thirteenth10
Division of the
Court of Appeals issued a Resolution 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.
_______________
7 Rollo, p. 41.
8 Ibid., p. 49.
9 Ibid., p. 221.
10 Ibid., p. 224.
502

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
11
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
12
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.
The RTC rejected Guevarra’s claim of a better right
under Proclamation No. 137, the Revised National
Government Center
_______________
11 Ibid., p. 60.
12 Ibid., p. 73.
503
VOL. 430, JUNE 3, 2004 503

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
504

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
505
VOL. 430, JUNE 3, 2004 505

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
13
of which are the laws between
themselves.
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 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
14
questions
of fact or mixed questions of fact and law. Decisions of the
regional trial courts involving pure questions of law are 15
appealable directly to this Court by petition for review.
These modes of appeal are now embodied in Section 2, Rule
41 of the 1997 Rules of Civil Procedure.
_______________
13 Rollo, p. 134.
14 Macawiwili Gold Mining and Development Co., Inc. v. Court of
Appeals, 358 Phil. 245; 297 SCRA 602 (1998).
15 Ibid.
506

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 16difference is on what the
law is on a certain state of facts. There is a question of
fact when the doubt 17
or difference is on the truth or falsity
of the facts alleged.
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 18
Cases Division of the
Intermediate Appellate Court, we declared that the Court
of Appeals could grant extension of time in appeals 19
by
petition for review. In Liboro v. Court of Appeals, 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
_______________
16 Ibid.
17 Ibid.
18 227 Phil. 606; 143 SCRA 643 (1986).
19 G.R. No. 101132, 29 January 1993, 218 SCRA 193.
507
VOL. 430, JUNE 3, 2004 507

an ordinary appeal, requires 20preparation and research to

present a persuasive position. The drafting of the petition
for review 21entails more time and effort than filing a notice
of appeal. Hence, the Court of Appeals may allow an
extension of time to file a petition for review.
In the more recent case of 22Commissioner of Internal
Revenue v. Court of Appeals, 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
23
period to appeal if no appeal is
perfected. 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,
24
and (2) the date of filing
of the motion for extension. 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
_______________
20 Ibid.
21 Ibid.
22 Commissioner of Internal Revenue v. Court of Appeals, G.R. No.
110003, 9 February 2001, 351 SCRA 436.
23 City of Manila v. Court of Appeals, G.R. No. 100626, 29 November
1991, 204 SCRA 362.
24 Castilex Industrial Corporation v. Vasquez, Jr., 378 Phil. 1009; 321
SCRA 393 (1999).
508

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 25
estopped from attacking the jurisdiction of the court.
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 jurisdiction26 after voluntarily
submitting to it is against public policy.
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.”
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 27
shopping must be signed by the party, and not by counsel.28
The certification of counsel renders the petition defective.
_______________
25 Refugia v. Court of Appeals, 327 Phil. 982; 258 SCRA 347 (1996).
26 Ibid.
27 Far Eastern Shipping Company v. Court of Appeals, 357 Phil. 703;
297 SCRA 30 (1998).
28 Ibid.
1
509
VOL. 430, JUNE 3, 2004 509

On the other hand, the requirement on verification29 of a

pleading is a formal and not a jurisdictional requisite. 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 matter30 of speculation, and
that the pleading is filed in good faith. The party need not
sign the verification. A party’s representative, lawyer or
any person who personally knows the truth of31 the facts
alleged in the pleading may sign the verification.
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
32
court of
its jurisdiction over the ejectment case. Even if the
pleadings raise the issue of ownership, the court may pass
on such issue to determine only the question of possession,
especially if33 the ownership is inseparably linked with the
possession. The adjudication on the issue of ownership is
only provisional and will not bar an action between the
34
34
same parties involving title to the land. 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 35the physical or
material possession over the real property.
In this case, what Guevarra raised before the courts was
that he and Pajuyo are not the owners of the contested
property and that
_______________
29 Buenaventura v. Uy, G.R. No. L-28156, 31 March 1987, 149 SCRA

220.
30 Ibid.
31 FLORENZ D. REGALADO, REMEDIAL LAW COMPENDIUM, VOL.
I, SIXTH REV. ED., 143.
32 Dizon v. Court of Appeals, 332 Phil. 429; 264 SCRA 391 (1996).
33 Ibid.
34 De Luna v. Court of Appeals, G.R. No. 94490, 6 August 1992, 212
SCRA 276.
35 Ibid.
510

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 36
necessary to resolve the
issue of physical possession. 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 37the possession de
facto and not to the possession de jure. It does not even 38
matter if a party’s title to the property is questionable, or
when both parties intruded into public land and their
applications to own the land have
39
yet to be approved by the
proper government agency. Regardless of the actual
condition of the title to the property, the party in peaceable
quiet possession shall

40
not be thrown out by a strong hand,
violence or terror. 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 41
recover such possession even against the owner himself.
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
_______________
36 Pitargue v. Sorilla, 92 Phil. 5 (1952); Dizon v. Court of Appeals, supra

note 32; Section 16, Rule 70 of the 1997 Rules of Court.
37 Ibid.; Fige v. Court of Appeals, G.R. No. 107951, 30 June 1994, 233
SCRA 586; Oblea v. Court of Appeals, 313 Phil. 804; 244 SCRA 101 (1995).
38 Dizon v. Court of Appeals, supra note 32.
39 Supra note 36.
40 Drilon v. Gaurana, G.R. No. L-35482, 30 April 1987, 149 SCRA 342.
41 Rubio v. The Hon. Municipal Trial Court in Cities, 322 Phil. 179; 252
SCRA 172 (1996).
511
VOL. 430, JUNE 3, 2004 511

property
42
until a person with a better right lawfully ejects
him. To repeat, the only issue that the court has to settle
in an ejectment suit is the43 right to physical possession.
In Pitargue v. Sorilla, 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 did44 not brand the plaintiff and the
defendant in Pitargue 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
_______________
42 Ibid.
43 92 Phil. 5 (1952).
44 Ibid.
512

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 and45
resort to the law alone to obtain what he
claims is his. The party deprived46 of possession must not
take the law into his own hands. Ejectment proceedings
are summary in nature so the authorities can settle
speedily actions to recover possession because
47
of the
overriding need to quell social disturbances.
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 prop-
_______________
45 Ibid.; Reynoso v. Court of Appeals, G.R. No. 49344, 23 February 1989, 170
SCRA 546; Aguilon v. Bohol, G.R. No. L-27169, 20 October 1977, 79 SCRA 482.
46 Ibid.
47 Ibid.
513
VOL. 430, JUNE 3, 2004 513

erty, 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
514

of a parcel of land to the actual occupant, who has been deprived

thereof by another through the use of force or in any other illegal
manner, can never be “prejudicial interference” with the
disposition or alienation of public lands. On the other hand, if
courts were deprived of jurisdiction of cases involving conflicts of
possession, that threat of judicial action against breaches of the
peace committed on public lands would be eliminated, and a state
of lawlessness would probably be produced between applicants,
occupants or squatters, where force or might, not right or justice,
would rule.
It must be borne in mind that the action that would be used to
solve conflicts of possession between rivals or conflicting
applicants or claimants would be no other than that of forcible
entry. This action, both in England and the United States and in
our jurisdiction, is a summary and expeditious remedy whereby
one in peaceful and quiet possession may recover the possession of
which he has been deprived by a stronger hand, by violence or
terror; its ultimate object being to prevent breach of the peace and
criminal disorder. (Supia and Batioco vs. Quintero and Ayala, 59
Phil. 312, 314) The basis of the remedy is mere possession as a
fact, of physical possession, not a legal possession. (Mediran vs.

Villanueva, 37 Phil. 752.) The title or right to possession is never
in issue in an action of forcible entry; as a matter of fact, evidence
thereof is expressly banned, except to prove the nature of the
possession. (Second 4, Rule 72, Rules of Court.) With this nature
of the action in mind, by no stretch of the imagination can
conclusion be arrived at that the use of the remedy in the courts
of justice would constitute an interference with the alienation,
disposition, and control of public lands. To limit ourselves to the
case at bar can it be pretended at all that its result would in any
way interfere with the manner of the alienation or disposition of
the land contested? On the contrary, it would facilitate
adjudication, for the question of priority of possession having been
decided in a final manner by the courts, said question need no
longer waste the time of the land officers making the adjudication
or award. (Emphasis ours)
The Principle of Pari Delicto is not Applicable to

Ejectment Cases
The Court of Appeals erroneously applied the principle of

pari delicto to this case. 48
Articles 1411 and 1412 of the Civil Code embody the
principle of pari delicto. We explained the principle of pari
delicto in these words:
_______________
48 Art. 1411. When the nullity proceeds from the illegality of the cause
or object of the contract, and the act constitutes a criminal offense, both
parties being in pari delicto, they shall have no action against each
515
VOL. 430, JUNE 3, 2004 515

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 party49 to an illegal agreement. It leaves
the parties where it finds them.
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
50
delicto rule
would violate well-established
51
public policy.
In Drilon v. Gaurana, 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
_______________
other, and both shall be prosecuted. Moreover, the provisions of the Penal Code
relative to the disposal of effects or instruments of a crime shall be applicable to
the things or the price of the contract.
This rule shall be applicable when only one of the parties is guilty; but the
innocent one may claim what he has given, and shall not be bound to comply with
his promise.
Art. 1412. If the act in which the unlawful or forbidden cause consists does not
constitute a criminal offense, the following rule shall be observed:
(1) When the fault is on the part of both contracting parties, neither may
recover what he has given by virtue of the contract, or demand the
performance of the other’s undertaking;
(2) When only one of the contracting parties is at fault, he cannot recover what
he has given by reason of the contract, or ask for the fulfillment of what
has been promised to him. The other, who is not at fault, may demand the
return of what he has given without any obligation to comply with his
promise.
49 Top-Weld Manufacturing, Inc. v. ECED S.A., G.R. No. L-44944, 9 August

1985, 138 SCRA 118.
50 Silagan v. Intermediate Appellate Court, 274 Phil. 182; 196 SCRA 774 (1991).
51 Supra note 40.
516

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 52respect and resort to the law
alone to obtain what he claims is his.
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
53
53
seek to prevent. 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
_______________
52 Ibid.
53 Dizon v. Concilia, 141 Phil. 589; 303 SCRA 897 (1969); Cine Ligaya v.
Labrador, 66 Phil. 659 (1938).
517
VOL. 430, JUNE 3, 2004 517

has the “priority right as beneficiary

54
of the contested land
under Proclamation No. 137.” 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
54
availed of the
benefits of Proclamation No. 137.” Pajuyo allowed
Guevarra to occupy the disputed property in 1985.
President Aquino signed Proclamation No. 137 into law on
11 March 1986. Pajuyo made his earliest demand for
Guevarra to vacate the property in September 1994.
During the time that Guevarra temporarily held the
property up to the time that Proclamation No. 137
allegedly segregated the disputed lot, Guevarra never
applied as beneficiary of Proclamation No. 137. Even when
Guevarra already knew that Pajuyo was reclaiming
possession of the property, Guevarra did not take any step
to comply with the requirements of Proclamation No. 137.
Third. Even assuming that the disputed lot is within the
coverage of Proclamation No. 137 and Guevarra has a
pending application over the lot, courts should still assume
jurisdiction and resolve the issue of possession. However,
the jurisdiction of the courts would be limited to the issue
of physical possession only.
_______________
54 Rollo, p. 54.
518

55
In Pitargue, 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
56
or who has a better right of
physical possession. The administrative disposition and
alienation of public lands 57should be threshed out in the
proper government agency.
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
58
cases to prevent disorder and
breaches of peace.
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 prom-
_______________
55 Supra note 43.

56 Ibid.; Aguilon v. Bohol, supra note 45; Reynoso v. Court of Appeals,
supra note 45.
57 Reynoso v. Court of Appeals, supra note 45.
58 Aguilon v. Bohol, supra note 45.
519
VOL. 430, JUNE 3, 2004 519

ised 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
59
to hold possession under a contract, express
or implied.
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, 60
failing which, an action for unlawful
detainer will lie. The defendant’s refusal to comply with
the demand makes his continued possession of the property
61
61
unlawful. The status of the defendant in such a case is
similar to that of a lessee or tenant whose term of lease has
expired62 but whose occupancy continues by tolerance of the
owner.
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 63
may use the same for a certain time and return it. An
essential feature of
_______________
59 Section 1, Rule 70 of the 1964 Rules of Court.

60 Arcal v. Court of Appeals, 348 Phil. 813; 285 SCRA 34 (1998).
61 Ibid.
62 Ibid.
63 Art. 1933. 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.
520

commodatum is that it is gratuitous. Another feature of

commodatum is that the use of 64
the thing belonging to
another is for a certain period. Thus, the bailor cannot
demand the return of the thing loaned until after
expiration of the period stipulated, or after accomplishment
65
of the use for which the commodatum is constituted. If the
bailor should have urgent need of the 66
thing, he may
demand its return for temporary use. If the use of the
thing is merely tolerated by the bailor, he can demand the
return of the thing at will, in which
67
case the contractual
relation is called a precarium. Under 68
the Civil Code,
precarium is a kind of commodatum.
The Kasunduan reveals that the accommodation
accorded by Pajuyo to Guevarra was not essentially
gratuitous. While the Kasunduan did not require Guevarra

to pay rent, it obligated him to maintain the property in
good condition. The imposition of this obligation makes the
Kasunduan a contract different from a commodatum. The
effects of the Kasunduan are also different from that of a
commodatum. Case law on ejectment has treated
relationship based on tolerance as one that is akin to a
landlord-tenant relationship where the withdrawal of
permission would result in
_______________
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.
64 Pascual v. Mina, 20 Phil. 202 (1911).
65 Art. 1946. The bailor cannot demand the return of the thing loaned
till after the expiration of the period stipulated, or after the
accomplishment of the use for which the commodatum has been
constituted. However, if in the meantime, he should have urgent need of
the thing, he may demand its return or temporary use.
In case of temporary use by the bailor, the contract of commodatum is
suspended while the thing is in the possession of the bailor.
66 Ibid.
67 Art. 1947. The bailor may demand the thing at will, and the
contractual relation is called a precarium, in the following cases:
(1) If neither the duration of the contract nor the use to which the
thing loaned should be devoted, has been stipulated; or
(2) If the use of the thing is merely tolerated by the owner.
68 ARTURO M. TOLENTINO, COMMENTARIES AND

JURISPRUDENCE ON THE CIVIL CODE OF THE PHILIPPINES, Vol.
V, 448.
521
VOL. 430, JUNE 3, 2004 521

69
the termination of the lease. 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
70
of commission, administration
and commodatum. These contracts certainly involve 71
the
obligation to deliver or return the thing received.
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
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
72
who (sic) makes (sic) a profit out of his illegal
act.” 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
_______________
69 Arcal v. Court of Appeals, supra note 60; Dakudao v. Consolacion,

207 Phil. 750; 122 SCRA 877 (1983); Calubayan v. Pascual, 21 SCRA 146;
128 Phil. 160; (1967).
70 United States v. Camara, 28 Phil. 238 (1914).
71 Ibid.
72 Rollo, p. 87.
522

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
73
is not always a condition sine qua non
in ejectment. This is one of the 74distinctions between
forcible entry and unlawful detainer. In forcible entry, the
plaintiff is deprived of physical possession of his land or
building by means of force, intimidation, threat, strategy or
75
stealth. Thus, he must allege and prove prior possession.
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.
76
In such a case, prior physical possession is not required.
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 meter77
of the ground before he is deemed in
possession. One may acquire possession not only by
physical occupation, but also by the78 fact that a thing is
subject to the action of one’s will.79
Actual or physical
occupation is not always necessary.
_______________
73 Benitez v. Court of Appeals, G.R. No. 104828, 16 January 1997, 266

SCRA 242.
74 Ibid.
75 Ibid.
76 Ibid.
77 Dela Rosa v. Carlos, G.R. No. 147549, 23 October 2003, 414 SCRA
226.
78 Benitez v. Court of Appeals, supra note 73.
79 Ibid.
523
VOL. 430, JUNE 3, 2004 523

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,
80
by such act,
acquire any legal right to said property.” 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 81
any right to
which they may be entitled under the law.
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 conclu-
_______________
80 Caballero v. Court of Appeals, G.R. No. 59888, 29 January 1993, 218

SCRA 56; Florendo, Jr. v. Coloma, G.R. No. L-60544, 19 May 1984, 214
SCRA 268.
81 Florendo, Jr. v. Coloma, supra note 80.
524

82
sive adjudication on the merits on the issue of ownership.
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 P3,000

attorney’s fees to Pajuyo. Attorney’s fees as part of
damages are awarded only in the instances
83
enumerated in
Article 2208 of the Civil Code. Thus, the award of84
attorney’s fees is the exception rather than the rule.
Attorney’s fees are not awarded every time a party prevails
in a suit because of the policy that
85
no premium should be
placed on the right to litigate. We therefore delete the
attorney’s fees awarded to Pajuyo.
We sustain the P300 monthly rentals the MTC and RTC
assessed against Guevarra. Guevarra did not dispute this
factual finding of the two courts. We find the amount
reasonable compensation to Pajuyo. The P300 monthly
rental is counted from the last demand to vacate, which
was on 16 February 1995.
WHEREFORE, we GRANT the petition. The Decision
dated 21 June 2000 and Resolution dated 14 December
2000 of the Court of Appeals in CA-G.R. SP No. 43129 are
SET ASIDE. The Decision dated 11 November 1996 of the
Regional Trial Court of Quezon City, Branch 81 in Civil
Case No. Q-96-26943, affirming the Decision dated 15
December 1995 of the Metropolitan Trial Court of Quezon
City, Branch 31 in Civil Case No. 12432, is REINSTATED
with MODIFICATION. The award of attorney’s fees is
deleted. No costs.
SO ORDERED.
Davide, Jr. (C.J., Chairman), Panganiban, Ynares-

Santiago and Azcuna, JJ., concur.
_______________
82 Dizon v. Court of Appeals, supra note 32; Section 7, Rule 70 of the

1964 Rules of Court.
83 Padillo v. Court of Appeals, 442 Phil. 344; 371 SCRA 27 (2001).
84 Ibid.
85 Ibid.
525
VOL. 430, JUNE 3, 2004 525

Philippine Appliance Corporation (PHILACOR) vs. Court
of Appeals
Petition granted, assailed decision set aside.
Notes.—A final judgment may be amended if

necessitated by compelling circumstances. (Ramos vs.
Court of Appeals, 244 SCRA 72 [1995])
A party’s occupation of a parcel of land, after the denial
of its application for Miscellaneous Sales Patent, becomes
illegal and it, as a consequence, becomes a squatter.
Squatters acquire no legal right over the land they occupy.
(Cagayan de Oro City Landless Residents Association, Inc.

[COCLAI] vs. Court of Appeals, 254 SCRA 220 [1996])
The specter of landlessness on one hand and the uneasy
partnership between the landed and the landless on the
other have often haunted our country’s restive socio-
economic past. Now more pronounced than ever is this
affliction with the mushrooming of squatter colonies in the
urban centers and of landless tenant-farmers in the rural
areas. This case is a miniature representation of this
continuing societal malady that breeds discord and
lawlessness. (People vs. Lopez, 342 SCRA 431 [2000])
——o0o——
© Copyright 2018 Central Book Supply, Inc. All rights reserved.
VOL. 397, FEBRUARY 19, 2003 651

Producers Bank of the Philippines vs. Court of Appeals
*
G.R. No. 115324. February 19, 2003.
PRODUCERS BANK OF THE PHILIPPINES (now FIRST

INTERNATIONAL BANK), petitioner, vs. HON. COURT
OF APPEALS AND FRANKLIN VIVES, respondents.
Civil Procedure; Pleadings and Practice; Appeals; Only

questions of law may be raised in a petition for review filed with
the Court.—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. The Court’s jurisdiction is in
principle limited to reviewing errors of law that might have been
committed by the Court of Appeals. 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.
_______________
* SECOND DIVISION.
652
Civil Law; Contracts; Loan; Distinguished from

Commodatum; Article 1933 of the Civil Code distinguishes
between the two kinds of loans.—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.
http://www.central.com.ph/sfsreader/session/000001670dd5bab90de3df7d003600fb002c009e/t/?o=False 1/15
Same; Quasi-Delicts; Employer-Employee Relationship;

Solidary Liability; Employers shall be held primarily and
solidarily liable for damages caused by their employees acting
within the scope of their assigned tasks.—Under Article 2180 of
the Civil Code, employers shall be held primarily and solidarily
liable for damages caused by their employees acting within the
scope of their assigned tasks. To hold the employer liable under
this provision, it must be shown that an employer-employee
relationship exists, and that the employee was acting within the
scope of his assigned task when the act complained of was
committed. 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.
PETITION for review on certiorari of the decision and

resolution of the Court of Appeals.

Domingo &Dizon for petitioner.
Mauricio Law Office for private respondent.
CALLEJO, SR., J.:

1
This is a petition for review on certiorari of the Decision of
the Court of Appeals dated June 25, 2
1991 in CA-G.R. CV
No. 11791 and of its Resolution dated May 5, 1994,
denying the motion for
_______________
1 Justice Asaali S. Isnani, Ponente, with Justices Rodolfo A. Nocon,

Presiding Justice, and Antonio M. Martinez, concurring.
2 Rollo, pp. 54-55.
653
VOL. 397, FEBRUARY 19, 2003 653

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 their3
house so that they could discuss
Sanchez’s request.
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 (P200,000.00) in
favor of Sterela. Private respondent instructed his wife,
Mrs. Inocencia Vives, to accompany Doronilla and Sanchez
in opening a savings account in the name of Sterela in the
Buendia, Makati branch of Producers Bank of the
Philippines. However, only Sanchez, Mrs. Vives and
Dumagpi went to the bank to deposit the check. They had
with them an authorization letter from Doronilla
authorizing Sanchez and her companions, “in coordination
with Mr, Rufo Atienza,” to open an account for Sterela
Marketing Services in the amount of P200,000.00. In
opening the account, the authorized signatories were
Inocencia Vives and/or Angeles Sanchez. A passbook for
Savings4
Account No. 10-1567 was thereafter issued to Mrs.
Vives.
Subsequently, private respondent learned that Sterela
was no longer holding office in the address previously given
to him. Alarmed, he and his wife went to the Bank to verify
if their money was still intact. The bank manager referred
them to Mr. Rufo Atienza, the assistant manager, who
informed them that part of the money in Savings Account
No. 10-1567 had been withdrawn by Doronilla, and that
only P90,000.00 remained therein. He likewise told them
that Mrs. Vives could not withdraw said remaining
_______________
3 Id. at p. 37.
4 Ibid.
654

amount because it had to answer for some postdated checks

issued by Doronilla. According to Atienza, after Mrs. Vives
and Sanchez opened Savings Account No. 10-1567,
Doronilla opened Current Account No. 10-0320 for Sterela
and authorized the Bank to debit Savings Account No. 10-
1567 for the amounts necessary to cover overdrawings in
Current Account No. 10-0320. In opening said current
account, Sterela, through Doronilla, obtained a loan of
P175,000.00 from the Bank. To cover payment thereof,
Doronilla issued three postdated checks, all of which were
dishonored. Atienza also said that Doronilla could assign or

withdraw the money in Savings Account No. 10-1567
because he was 5
the sole proprietor
of Sterela.
Private respondent tried to get in touch with Doronilla
through Sanchez. On June 29, 1979, he received a letter
from Doronilla, assuring him that his money was intact
and would be returned to him. On August 13, 1979,
Doronilla issued a postdated check for Two Hundred
Twelve Thousand Pesos (P212,000.00) in favor of private
respondent. However, upon presentment thereof by private
respondent to the drawee bank, the check was dishonored.
Doronilla requested private respondent to present the same
check on September 15, 1979 but when 6
the latter presented
the check, it was again dishonored.
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
P212,000.00 in private respondent’s favor but7 the check
was again dishonored for insufficiency of funds.
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:
_______________
5 Id., at pp. 37-38.

6 Id., at p. 38.
7 Id.
655
VOL. 397, FEBRUARY 19, 2003 655

“IN VIEW OF THE FOREGOING, judgment is hereby rendered

sentencing defendants Arturo J. Doronila, Estrella Dumagpi and
Producers Bank of the Philippines to pay plaintiff Franklin Vives
jointly and severally—
(a) the amount of P200,000.00, representing the money

deposited, with interest at the legal rate from the filing of
the complaint until the same is fully paid;
(b) the sum of P50,000.00 for moral damages and a similar
amount for exemplary damages;
(c) the amount of P40,000.00 for attorney’s fees; and
(d) the costs of the suit.

8
SO ORDERED.”
Petitioner appealed the trial court’s decision to the Court of

Appeals. In its Decision dated June 25, 1991, the 9
appellate
court affirmed in toto the decision of the RTC. It likewise
denied with finality petitioner’s motion
10
for reconsideration
in its Resolution dated May 5, 1994.
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.

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;
_______________
8 Id., at p. 63.
9 Id., at pp. 35-47.
10 Id., at pp. 54-55.
656

III.

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.

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.

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
11
FOR
ATTORNEY’S FEES AND THE COSTS OF SUIT.
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
12
in
furnishing private respondent with copy of the reply and
several substitutions
13
of counsel on the part of private
respondent. On January 17, 2001, the Court resolved to
give due course to the petition and required
14
the parties to
submit their respective memoranda. 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
_______________
11 Id., at pp. 18-19.

12 Id., at pp. 148, 181.
13 Id., at pp. 176, 199.
14 Id., at p. 227.
657
VOL. 397, FEBRUARY 19, 2003 657

private respondent to Doronilla was money, a consumable

thing; and second, the transaction was onerous as
Doronilla was obliged to pay interest, as evidenced by the
check issued by Doronilla in the amount of P212,000.00, or
P12,000 more than what 15
private respondent deposited in
Sterela’s bank account. 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 P200,000.00
because it is not
16
privy to the transaction between the latter
and Doronilla.
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, 17and who alone had legal title to the savings
account. Petitioner points out that no evidence other than
the testimonies of private respondent and Mrs. Vives was
presented during trial to prove that private respondent
deposited his P200,000.00
18
in Sterela’s account for purposes
of its incorporation. Hence, petitioner should not be held
liable for allowing Doronilla to withdraw from Sterela’s
savings account.
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 19
Doronilla to
withdraw from Sterela’s savings account.
_______________
15 Id., at p. 21.
16 Id., at p. 22.
17 Id., at pp. 24-27.
18 Id., at p. 23.
19 Id., at p. 28.
658

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
20
moral and exemplary damages as well
as attorney’s fees.
Private respondent, on the other hand, argues that the
transaction between him 21
and Doronilla is not a mutuum
but an accommodation, since he did not actually part with
the ownership of his P200,000.00 and in fact asked his wife
to deposit said amount in the account of Sterela so that a
certification can be issued to the effect that Sterela had
sufficient funds for purposes of its incorporation but at the
same time, he retained some degree of control over his
money through his wife who was made a signatory to the
savings account and in whose 22

possession the savings
account passbook was given.
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 savings23 account to cover any
overdrawings in its current account.
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 24
the evidence
presented by the parties during trial. The Court’s
jurisdiction is in principle limited to reviewing errors of law
25
that might have been committed by the Court of Appeals.
Moreover, factual findings of courts, when adopted and
confirmed by the Court of Appeals, are final and conclusive
on this
_______________
20 Rollo, Petitioner’s Memorandum, pp. 13-14.

21 Id., at pp. 11 -12.
22 Rollo, p. 75; Private respondent’s Memorandum, pp. 8-9.
23 Id., at pp. 75-77; Id., at pp. 12-16.
24 Flores v. Uy, G.R. No. 121492, October 26, 2001, 368 SCRA 347; Lim
v. People, G.R. No. 143231, October 26, 2001, 368 SCRA 436.
25 Section 1, Rule 45, Revised Rules of Civil Procedure.
659
VOL. 397, FEBRUARY 19, 2003 659

Court unless these findings

26
are not supported by the
evidence on record. 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
_______________
26 Bañas, Jr. v. Court of Appeals, 325 SCRA 259 (2000); Philippine

National Construction Corporation v. Mars Construction Enterprises, Inc.,
325 SCRA 624 (2000).
660

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
27
in determining the
actual character of a contract. In case of doubt, the
contemporaneous and subsequent acts 28
of the parties shall
be considered in such determination.
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 that29 the amount shall be

returned within thirty (30) days.” 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 P200,000.00 which the latter deposited in
Sterela’s account together with an additional P12,000.00,
allegedly representing interest on the mutuum, did not
convert the transaction from a commodatum into a
mutuum because such was not the intent of the parties and
because the additional P12,000.00 corresponds to the fruits
of the lending of the P200,000.00. Article 1935 of the Civil
Code expressly states that “[t]he bailee in commodatum
acquires the use of the thing loaned but not its fruits.”
Hence, it was only proper for Doronilla to remit to private
respondent the interest accruing to the 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,
_______________
27 Tanguilig v. Court of Appeals, 266 SCRA 78, 83-84 (1997), citing

Kasilag v. Rodriguez, 69 Phil. 217 (1939); 17A Am. Jur. 2d 27 Contracts, §
5, citing Wallace Bank & Trust Co. v. First National Bank, 40 Idaho 712,
237 P 284, 50 ALR 316.
28 Tanguilig v. Court of Appeals, supra, p. 84.
29 Rollo, pp. 40-41, 60.
661
VOL. 397, FEBRUARY 19, 2003 661

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. 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 which30 will be
entered by the Bank the amount deposited or withdrawn.”
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 P200,000.00 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
_______________
30 Exhibit “B”, Folder of Exhibits, p. 3, emphasis supplied.
662

for Sterela in the amount of P200,000.00, as “per coordination

with Mr. Rufo Atienza, Assistant Manager of the Bank x x x”
(Exh. “1”). This is a clear manifestation that the other defendants
had been in consultation with Atienza from the inception of the
scheme. Significantly, there were testimonies and admission that
Atienza is the brother-in-law of a certain Romeo Mirasol, a friend
and business associate of Doronilla.
Then there is the matter of the ownership of the fund. Because
of the “coordination” between Doronilla and Atienza, the latter
knew before hand that the money deposited did not belong to
Doronilla nor to Sterela. Aside from such foreknowledge, he was
explicitly told by Inocencia Vives that the money belonged to her
and her husband and the deposit was merely to accommodate
Doronilla. Atienza even declared that the money came from Mrs.
Vives.
Although the savings account was in the name of Sterela, the
bank records disclose that the only ones empowered to withdraw
the same were Inocencia Vives and Angeles B. Sanchez. In the
signature card pertaining to this account (Exh. “J”), the
authorized signatories were Inocencia Vives &/or Angeles B.
Sanchez. Atienza stated that it is the usual banking procedure
that withdrawals of savings deposits could only be made by
persons whose authorized signatures are in the signature cards-
on file with the bank. He, however, said that this procedure was
not followed here because Sterela was owned by Doronilla. He
explained that Doronilla had the full authority to withdraw by
virtue of such ownership. The Court is not inclined to agree with
Atienza. In the first place, he was all the time aware that the
money came from Vives and did not belong to Sterela. He was also
told by Mrs. Vives that they were only accommodating Doronilla
so that a certification can be issued to the effect that Sterela had a
deposit of so much amount to be sued in the incorporation of the
firm. In the second place, the signature of Doronilla was not
authorized in so far as that account is concerned inasmuch as he
had not signed the signature card provided by the bank whenever
a deposit is opened. In the third place, neither Mrs. Vives nor
Sanchez had given Doronilla the authority to withdraw.
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
663
VOL. 397, FEBRUARY 19, 2003 663

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 P200,000.00 was deposited. In spite of his
disclaimer, the Court believes that Atienza was mindful and
posted regarding the opening of the current account considering
that Doronilla was all the while in “coordination” with him. That
it was he who facilitated the approval of the authority to debit the
savings account to cover any overdrawings in the current account
(Exh. “2”) is not hard to comprehend.
Clearly Atienza had committed wrongful
31
acts that had resulted
to the loss subject of this case. x x x.
Under Article 2180 of the Civil Code, employers shall be

held primarily and solidarily liable for damages caused by
their employees acting within the scope of their assigned
tasks. To hold the employer liable under this provision, it
must be shown that an employer-employee relationship
exists, and that the employee was acting within the scope
of his assigned
32
task when the act complained of was
committed. 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 33
to the
employer and disobeyed the latter’s instructions.
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
_______________
31 Rollo, pp. 43-47, citing the Decision of the Regional Trial Court, pp.
5-8.
32 Castilex Industrial Corporation v. Vasquez, Jr., 321 SCRA 393
(1999).
33 18B Am. Jur. 2d, p. 947, Corporations § 2125, citing Pittsburgh, C.C.
& S.L.R. Co. v. Sullivan, 40 NE 138.
664

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 34
obviously done in
furtherance of petitioner’s interests even though in the
process, Atienza violated some of petitioner’s rules35such as
those stipulated in its savings account passbook. 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
P200,000.00 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.
Bellosillo (Chairman), Mendoza, Quisumbing and

Austria-Martinez, JJ., concur.
Petition denied, judgment affirmed and resolution

affirmed.
Note.—The liability of the registered owner of a public

service vehicle, like petitioner Philtranco, for damages
arising from the tortuous acts of the driver is primary,
direct, and joint and severally or solidary with the driver.
(Philtranco Service Enterprises, Inc. vs. CA, 273 SCRA 562
[1997])
——o0o——
_______________
34 See note 31.

35 Exhibit “B”, Folder of Exhibits, p. 3.
665

11/14/2018 PHILIPPINE REPORTS ANNOTATED VOLUME 025
[No. 8321. October 14, 1913.]
ALEJANDRA MINA ET AL., plaintiffs and appellants, vs.

RUPERTA PASCUAL ET AL., defendants and appellees.
1. REALTY; SALE OF LAND BY ONE NOT THE OWNER.

—A sale of land belonging to another, on which a building
of the vendor's is located, is null and void, for the vendor
cannot sell or transfer property that does not belong to
him.
2. ID.; BUILDING ON LAND OF ANOTHER; OPTION OF

OWNER OF THE LAND,—Inasmuch as the acts involved
were all performed prior to the enactment of the Civil
Code, the controversy must be settled in accordance with
the provisions of Laws 41 and 42, title 28, third Partida,
nearly identical with articles 361 and 362 of the Civil
Code. Therefore, as prescribed by article 361, the owner of
the land on which a building has been erected by another
in good faith has the option either to appropriate and pay
for the building, under articles 453 and 454, or to oblige
the builder to purchase the land.
APPEAL from a judgment of the Court of First Instance of

Ilocos Norte. Chanco, J.
The facts are stated in the opinion of the court.
N. Segundo, for appellants.
Iñigo Bitanga, for appellees.
ARELLANO, C. J.:
Francisco Fontanilla and Andres Fontanilla were brothers.

Francisco Fontanilla acquired during his lifetime, on
March 12, 1874, a lot in the center of the town of Laoag, the
capital of the Province of Ilocos Norte, the property having
been awarded to him through its purchase at a public
auction held by the alcalde mayor of that province. The lot
has a frontage of 120 meters and a depth of 15.
Andres Fontanilla, with the consent of his brother
Francisco, erected a warehouse on a part of the said lot,
embracing 14 meters of its frontage by 11 meters of its
depth.
Francisco Fontanilla, the former owner of the lot, being
dead, the herein plaintiffs, Alejandra 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 rec-
http://www.central.com.ph/sfsreader/session/000001670dd9e956e79c5e49003600fb002c009e/t/?o=False 1/8
541
VOL. 25, OCTOBER 14, 1913. 541

Mina vs. Pascual.
ognized likewise 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
plaintiff s are undoubtedly the owners of the part of the lot
occupied by that building, as well also 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 Court 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 def endant in this
case, for the price mentioned.
542
542 PHILIPPINE REPORTS ANNOTATED

Mina vs. Pascual.
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 held1 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 as to the facts, the ninth
paragraph of which is as f ollows:
"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 clause "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
________________
1 Pascual vs. Mina, 20 Phil. Rep., 202.
543
VOL. 25, OCTOBER 14, 1913. 543

Mina vs. Pascual.
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 defendants agree that the plaintiffs have the
ownership, and they themselves only the use, of the said
lot.
On this premise, the nullity of the sale of the lot is in all
respects quite evident, whatsoever be the manner in which
the sale was effected, whether judicially or extrajudicially.
He who has only the use of a thing cannot validly sell
the thing itself. The effect of the sale being a transfer of the
ownership of the thing, it is evident that he who has only
the mere use of the thing cannot transfer its ownership.
The sale of a thing effected by one who is not its owner is
null and void. The defendants never were the owners of the
lot sold. The sale of it by them is necessarily null and void.
One 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 sixsevenths
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
544

Mina vs. Pascual.
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 this 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 oneseventh 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 coöwners of the warehouse. It would be
much indeed that, on the ground of coöwnership, they
should have to abide by and tolerate the sale of the said
building,
545
VOL. 25, OCTOBER 14, 1913. 545

Mina, vs. Pascual.
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 of
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 plaintiffs' petition was
opposed by the defendants' attorney, but was allowed by
the court; therefore the complaint seeks, after the judicial
annulment of the sale of the lot, to have the def endants
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 the 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 recovery 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 f act 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 plaintiffs' predecessor in
interest.
2. That it also appears to be an admitted fact that the
plaintiffs and the defendants are the coöwners of
the warehouse.
3. That it is a fact explicity admitted in the
agreement,
546

Mina vs. Pascual.
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.
But, although both litigating parties may have agreed in
their idea of the commodatum, on account of its not being,
as indeed it is not, a question of fact but of law, yet that
denomination given by them to the use of the lot granted by
Francisco Fontanilla to his brother, Andres Fontanilla, is
not acceptable. Contracts are not to be interpreted in
conformity with the name that the parties thereto agree to
give them, but must be construed, duly considering their
constitutive elements, as they are defined and denominated
by law.
"By the contract of loan, one of the parties delivers to the
other, either anything not perishable, in order that the
latter may use it during a 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 be for a
certain period. Francisco Fontanilla did not fix any definite
period of 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 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,
accord-
547
VOL. 25, OCTOBER 14, 1913. 547

Mina vs. Pascual.
ing 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
de.cided 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 plaintiffs 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 f
orce or effect. No special finding is made as to the costs of
both instances.
Torres, Johnson, Carson, Moreland, and Trent, JJ.,

concur.
Judgment reversed.
548

Maloles and Malvar vs. Director of Lands.
[No. 4150. February 10, 1910.]
FELIX DE LOS SANTOS, plaintiff and appellee, vs.

AGUSTINA JARRA, administratrix of the estate of
Magdaleno Jimenea, deceased, defendant and appellant.
1. ESTATES; ACTION AGAINST ADMINISTRATOR J

BAILMENT; COMMODATUM.—In a contract of
commodatum whereby one of the parties thereto delivers
to the other a thing that is not perishable, to be used for a
certain time and afterwards returned, it is the imperative
duty of the bailee, if he should be unable to return the
thing itself to the owner, to pay damages to the latter if,
through the fault of the bailee, the thing loaned was lost
or destroyed, inasmuch as the bailor retains the
ownership thereof.
2. ID.; ID.; THIRD PARTY'S RIGHTS.—A demand for the

exclusion of certain property belonging to a third party,
and which forms no part of the estate of a deceased
person, should be tried in an ordinary action and should
be the subject of a direct decision by the court, at the same
time taking into account the right of the third party to the
property excluded as well as the right of the deceased or of
his heirs.

Occidental Negros. Jocson, J.
Matias Hilado, for appellant.
Jose Felix Martinez, for appellee.
148

De los Santos vs. Jarra.
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
http://www.central.com.ph/sfsreader/session/000001670ddb98fea229da87003600fb002c009e/t/?o=False 1/6
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 costs against
the plaintiff.
149
VOL. 15, FEBRUARY 10, 1910 149

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 f avor of the plaintiff.
The case came up for trial, evidence was adduced by
both parties, and their 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 a
new 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 f ully proven f rom
the testimony of a sufficient number of witnesses that the
150

plaintiff, Santos, sent in charge of various persons the ten

carabaos requested by his father-in-law, Magdaleno
Jimenea, in the two letters produced at the trial by the
plaintiff, and that Jimenea received them in the presence
of some of said persons, one being a brother of said
Jimenea, who saw the animals arrive at the hacienda
where it was proposed to employ them. Four died of
rinderpest, and it is for this reason that the judgment
appealed from only deals with six surviving carabaos.
The alleged purchase of three carabaos by Jimenea from
his son-in-law Santos is not evidenced by any trustworthy
documents such as those of transfer, nor were the
declarations of the witnesses presented by the defendant
affirming it satisfactory; for said reason it can not be
considered that Jimenea only received three carabaos on
loan from his sonin-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
151
VOL. 15, FEBRUARY 10, 1910 151

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 lastmentioned 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 bailor 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 made 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 subject
to indemnify for the losses and damages caused thereby."
152

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 Spain. 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 state 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 Pro-
153
VOL. 15, FEBRUARY 10, 1910 153
Paterno vs. Solis.
cedure; the refusal of the commissioners before whom the

plaintiff unnecessarily appeared can not affect nor reduce
the unquestionable right of ownership of the latter,
inasmuch as there is no law nor principle of justice
authorizing the successors of the late Jimenea to enrich
themselves at the cost and to the prejudice of Felix de los
Santos.
For the reasons above set forth, by which the errors
assigned to the judgment appealed from have been refuted,
and considering that the same is in accordance with the
law and the merits of the case, it is our opinion that it
should be affirmed and we do hereby affirm it with the
costs against the appellant. So ordered.
Arellano, C. J., Johnson, Moreland, and Elliott, JJ.,

concur.
Carson, J., reserved his vote.
Judgment affirmed.
_________________
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Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-17474 October 25, 1962
REPUBLIC OF THE PHILIPPINES, plaintiff-appellee,

vs.
JOSE V. BAGTAS, defendant,
FELICIDAD M. BAGTAS, Administratrix of the Intestate Estate left by the late Jose V. Bagtas, petitioner-
appellant.
D. T. Reyes, Liaison and Associates for petitioner-appellant.

Office of the Solicitor General for plaintiff-appellee.
PADILLA, J.:
The Court of Appeals certified this case to this Court because only questions of law are raised.
On 8 May 1948 Jose V. Bagtas borrowed from the Republic of the Philippines through the Bureau of Animal Industry
three bulls: a Red Sindhi with a book value of P1,176.46, a Bhagnari, of P1,320.56 and a Sahiniwal, of P744.46, for
a period of one year from 8 May 1948 to 7 May 1949 for breeding purposes subject to a government charge of
breeding fee of 10% of the book value of the bulls. Upon the expiration on 7 May 1949 of the contract, the borrower
asked for a renewal for another period of one year. However, the Secretary of Agriculture and Natural Resources
approved a renewal thereof of only one bull for another year from 8 May 1949 to 7 May 1950 and requested the
return of the other two. On 25 March 1950 Jose V. Bagtas wrote to the Director of Animal Industry that he would pay
the value of the three bulls. On 17 October 1950 he reiterated his desire to buy them at a value with a deduction of
yearly depreciation to be approved by the Auditor General. On 19 October 1950 the Director of Animal Industry
advised him that the book value of the three bulls could not be reduced and that they either be returned or their book
value paid not later than 31 October 1950. Jose V. Bagtas failed to pay the book value of the three bulls or to return
them. So, on 20 December 1950 in the Court of First Instance of Manila the Republic of the Philippines commenced
an action against him praying that he be ordered to return the three bulls loaned to him or to pay their book value in
the total sum of P3,241.45 and the unpaid breeding fee in the sum of P199.62, both with interests, and costs; and
that other just and equitable relief be granted in (civil No. 12818).
On 5 July 1951 Jose V. Bagtas, through counsel Navarro, Rosete and Manalo, answered that because of the bad
peace and order situation in Cagayan Valley, particularly in the barrio of Baggao, and of the pending appeal he had
taken to the Secretary of Agriculture and Natural Resources and the President of the Philippines from the refusal by
the Director of Animal Industry to deduct from the book value of the bulls corresponding yearly depreciation of 8%
from the date of acquisition, to which depreciation the Auditor General did not object, he could not return the animals
nor pay their value and prayed for the dismissal of the complaint.
After hearing, on 30 July 1956 the trial court render judgment —
. . . sentencing the latter (defendant) to pay the sum of P3,625.09 the total value of the three bulls plus the
breeding fees in the amount of P626.17 with interest on both sums of (at) the legal rate from the filing of this
complaint and costs.
On 9 October 1958 the plaintiff moved ex parte for a writ of execution which the court granted on 18 October and
issued on 11 November 1958. On 2 December 1958 granted an ex-parte motion filed by the plaintiff on November
1958 for the appointment of a special sheriff to serve the writ outside Manila. Of this order appointing a special
sheriff, on 6 December 1958, Felicidad M. Bagtas, the surviving spouse of the defendant Jose Bagtas who died on
23 October 1951 and as administratrix of his estate, was notified. On 7 January 1959 she file a motion alleging that
on 26 June 1952 the two bull Sindhi and Bhagnari were returned to the Bureau Animal of Industry and that
sometime in November 1958 the third bull, the Sahiniwal, died from gunshot wound inflicted during a Huk raid on
Hacienda Felicidad Intal, and praying that the writ of execution be quashed and that a writ of preliminary injunction
be issued. On 31 January 1959 the plaintiff objected to her motion. On 6 February 1959 she filed a reply thereto. On
the same day, 6 February, the Court denied her motion. Hence, this appeal certified by the Court of Appeals to this
Court as stated at the beginning of this opinion.
It is true that on 26 June 1952 Jose M. Bagtas, Jr., son of the appellant by the late defendant, returned the Sindhi
and Bhagnari bulls to Roman Remorin, Superintendent of the NVB Station, Bureau of Animal Industry, Bayombong,
Nueva Vizcaya, as evidenced by a memorandum receipt signed by the latter (Exhibit 2). That is why in its objection
of 31 January 1959 to the appellant's motion to quash the writ of execution the appellee prays "that another writ of
execution in the sum of P859.53 be issued against the estate of defendant deceased Jose V. Bagtas." She cannot
be held liable for the two bulls which already had been returned to and received by the appellee.
The appellant contends that the Sahiniwal bull was accidentally killed during a raid by the Huk in November 1953
upon the surrounding barrios of Hacienda Felicidad Intal, Baggao, Cagayan, where the animal was kept, and that as
such death was due to force majeure she is relieved from the duty of returning the bull or paying its value to the
appellee. The contention is without merit. The loan by the appellee to the late defendant Jose V. Bagtas of the three
bulls for breeding purposes for a period of one year from 8 May 1948 to 7 May 1949, later on renewed for another
year as regards one bull, was subject to the payment by the borrower of breeding fee of 10% of the book value of
the bulls. The appellant contends that the contract was commodatum and that, for that reason, as the appellee
retained ownership or title to the bull it should suffer its loss due to force majeure. A contract of commodatum is
essentially gratuitous.1 If the breeding fee be considered a compensation, then the contract would be a lease of the
bull. Under article 1671 of the Civil Code the lessee would be subject to the responsibilities of a possessor in bad
faith, because she had continued possession of the bull after the expiry of the contract. And even if the contract be
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commodatum, still the appellant is liable, because article 1942 of the Civil Code provides that a bailee in a contract
of commodatum —
. . . is liable for loss of the things, even if it should be through a fortuitous event:
(2) If he keeps it longer than the period stipulated . . .
(3) If the thing loaned has been delivered with appraisal of its value, unless there is a stipulation exempting
the bailee from responsibility in case of a fortuitous event;
The original period of the loan was from 8 May 1948 to 7 May 1949. The loan of one bull was renewed for another
period of one year to end on 8 May 1950. But the appellant kept and used the bull until November 1953 when during
a Huk raid it was killed by stray bullets. Furthermore, when lent and delivered to the deceased husband of the
appellant the bulls had each an appraised book value, to with: the Sindhi, at P1,176.46, the Bhagnari at P1,320.56
and the Sahiniwal at P744.46. It was not stipulated that in case of loss of the bull due to fortuitous event the late
husband of the appellant would be exempt from liability.
The appellant's contention that the demand or prayer by the appellee for the return of the bull or the payment of its
value being a money claim should be presented or filed in the intestate proceedings of the defendant who died on
23 October 1951, is not altogether without merit. However, the claim that his civil personality having ceased to exist
the trial court lost jurisdiction over the case against him, is untenable, because section 17 of Rule 3 of the Rules of
Court provides that —
After a party dies and the claim is not thereby extinguished, the court shall order, upon proper notice, the legal
representative of the deceased to appear and to be substituted for the deceased, within a period of thirty (30)
days, or within such time as may be granted. . . .
and after the defendant's death on 23 October 1951 his counsel failed to comply with section 16 of Rule 3 which
provides that —
Whenever a party to a pending case dies . . . it shall be the duty of his attorney to inform the court promptly of
such death . . . and to give the name and residence of the executory administrator, guardian, or other legal
representative of the deceased . . . .
The notice by the probate court and its publication in the Voz de Manila that Felicidad M. Bagtas had been issue
letters of administration of the estate of the late Jose Bagtas and that "all persons having claims for monopoly
against the deceased Jose V. Bagtas, arising from contract express or implied, whether the same be due, not due,
or contingent, for funeral expenses and expenses of the last sickness of the said decedent, and judgment for
monopoly against him, to file said claims with the Clerk of this Court at the City Hall Bldg., Highway 54, Quezon City,
within six (6) months from the date of the first publication of this order, serving a copy thereof upon the
aforementioned Felicidad M. Bagtas, the appointed administratrix of the estate of the said deceased," is not a notice
to the court and the appellee who were to be notified of the defendant's death in accordance with the above-quoted
rule, and there was no reason for such failure to notify, because the attorney who appeared for the defendant was
the same who represented the administratrix in the special proceedings instituted for the administration and
settlement of his estate. The appellee or its attorney or representative could not be expected to know of the death of
the defendant or of the administration proceedings of his estate instituted in another court that if the attorney for the
deceased defendant did not notify the plaintiff or its attorney of such death as required by the rule.
As the appellant already had returned the two bulls to the appellee, the estate of the late defendant is only liable for
the sum of P859.63, the value of the bull which has not been returned to the appellee, because it was killed while in
the custody of the administratrix of his estate. This is the amount prayed for by the appellee in its objection on 31
January 1959 to the motion filed on 7 January 1959 by the appellant for the quashing of the writ of execution.
Special proceedings for the administration and settlement of the estate of the deceased Jose V. Bagtas having been
instituted in the Court of First Instance of Rizal (Q-200), the money judgment rendered in favor of the appellee
cannot be enforced by means of a writ of execution but must be presented to the probate court for payment by the
appellant, the administratrix appointed by the court.
ACCORDINGLY, the writ of execution appealed from is set aside, without pronouncement as to costs.
Bengzon, C.J., Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Paredes, Dizon, Regala and Makalintal, JJ.,
concur.
Barrera, J., concurs in the result.
Footnotes
1 Article 1933 of the Civil Code.
The Lawphil Project - Arellano Law Foundation
https://lawphil.net/judjuris/juri1962/oct1962/gr_l-17474_1962.html 2/2
VOL. 165, SEPTEMBER 21, 1988 515

Catholic Vicar Apostolic of the Mt. Prov. vs. Court of
Appeals
*
Nos. L-80294-95. September 21, 1988.
CATHOLIC VICAR APOSTOLIC OF THE MOUNTAIN

PROVINCE, petitioner, vs. COURT OF APPEALS, HEIRS
OF EGMIDIO OCTAVIANO AND JUAN VALDEZ,
respondents.
Land Titles and Deeds; Property; Prescription; Acquisitive

Prescription, Ordinary and Extra-ordinary; Ordinary acquisitive
prescription requires possession for ten years, but always with just
title. Extra-Ordinary Acquisitive prescription requires 30 years.
Petitioner failed to meet the requirements of both ordinary and
extra-ordinary prescription.—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. x x x 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
________________
* FIRST DIVISION.
516
Catholic Vicar Apostolic of the Mt. Prov. vs. Court of Appeals
http://www.central.com.ph/sfsreader/session/000001670de902428019f408003600fb002c009e/t/?o=False 1/10
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.
Civil Law; Credit Transactions; Commodatum; Property;
Adverse Possession; Adverse Claim; Acquisitive Prescription; When
petitioner borrowed the house of private respondents’ predecessors,
and petitioner was allowed its free use, private respondents became
bailors in commodatum, and petitioner, the bailee.—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.
Remedial Law; Civil Procedure; Judgments; Res Judicata;
The principle of res judicata applies in the instant case. The
presentation of evidence cannot alter the findings on the issues
resolved with finality a long time ago.—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.
PETITION to review the decision of the Court of Appeals.

Valdez, Ereso, Polido & Associates for petitioner.
Claustro, Claustro, Claustro Law Office collaborating
counsel for petitioner.
Jaime G. de Leon for the Heirs of Egmidio Octaviano.
Cabato Law Office for the Heirs of Juan Valdez.
517
VOL. 165, SEPTEMBER 21, 1988 517

Appeals
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, 11987 of the Ninth Division of Respondent
Court of Appeals 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
________________
1 Associate Justices Conrado T. Limcaoco, Jose C. Campos, Jr. and

Gloria C. Paras.
518

Appeals
judicata on these findings by the Court of Appeals will bar

a reopening of these questions of fact; 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 the cases as narrated by
the trial court are as follows—
“x x x. 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
519
VOL. 165, SEPTEMBER 21, 1988 519

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 x x x,” 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
Amable O. Valdez.
On January 13, 1978, the Supreme Court denied in a minute
resolution both petitions (of VICAR on the one hand and the Heirs of
Juan Valdez and Pacita Valdez on the other) for lack of merit. Upon the
finality of both Supreme Court resolutions in G.R. No. L-46832 and G.R.
No. L-46872, the Heirs of Octaviano filed with the then Court of First
Instance of Baguio, Branch II, a Motion For Execution of Judgment
praying that the Heirs of Octaviano be placed in possession of Lot 3. The
Court, presided over by Hon. Salvador J. Valdez, on December 7, 1978,
denied the motion on the ground that the Court of Appeals decision in
CA-G.R. No. 38870 did not grant the Heirs of Octaviano any affirmative
relief.
On February 7, 1979, the Heirs of Octaviano filed with the Court of
Appeals a petition 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)
520

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 argue 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
2
body, is the controlling pronouncement of the Court of
Appeals.”
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
_______________
2 Decision in CA-G.R. No. CV Nos. 05148 and 05149 dated August 31,
1987; pp. 112-117, Rollo.
521
VOL. 165, SEPTEMBER 21, 1988 521

Appeals
WITHOUT DOCUMENTARY EVIDENCE

PRESENTED;
3. ERROR IN FINDING THAT PETITIONER’S
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 (BORROWER) 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 3
OF THE
DECISION IN CA G.R. NO. 038830.
The petition is bereft of merit.

Petitioner questions the ruling of respondent Court of
Appeals in CA-G.R. Nos. 05148 and 05149, when it clearly
held that it was in agreement with the findings of the trial
court
_______________
3 Pp. 5-15, Petition; pp. 6-17, Rollo.
522

Appeals
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. 4 Extraordinary acquisitive prescription
requires 30 years.
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
5
of Appeals Decision dated
May 4, 1977, First Division in CA-G.R. No. 6
38830-R, shows
that it reversed the trial court’s Decision 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
________________
4 Arts. 1134 and 1129, Civil Code.

5 Presiding Justice Magno S. Gatmaitan, Associate Justices Pacifico P.
de Castro and Samuel Reyes.
6 Land Reg. No. N91, LRC Rec. No. N-22991 of the then C.F.I. of
Baguio City.
523
VOL. 165, SEPTEMBER 21, 1988 523

Appeals
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 on 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
524

Appeals
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.
Narvasa, Cruz, Griño-Aquino and Medialdea, JJ.,

concur.
Petition denied. Decision affirmed.
Note.—Claim of ownership of property having been filed

only after more than ten (10) years, ordinary acquisitive
prescription sets in. (Samonte vs. Court of Appeals, 141
SCRA 189.)
——o0o——
525
[No. 46240. November 3, 1939]
MARGARITA QUINTOS and ANGEL A. ANSALDO,

plaintiffs and appellants, vs. BECK, defendant and
appellee.
1. COMMODATUM; OBLIGATION OF THE PARTIES.—

The contract entered into between the parties is one of
commodatum, 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 latter's demand (Clause
7 of the contract, Exhibit "A"; articles 1740, paragraph 1,
and 1741 of the Civil Code). The obligation voluntarily
assumed by the defendant to return the furniture upon
the plaintiff's demand, means that he should return all of
them to the plaintiff at the latter's residence or house. The
defendant did not comply with this obligation when he
merely placed them at the disposal of
109
VOL. 69, NOVEMBER 3, 1939 109
Quintos and Ansaldo vs. Beck
the plaintiff, retaining for his benefit the three gas heaters
and the four electric lamps.
2. ID.; ID.; EXPENSES FOR DEPOSIT OF FURNITURE.—

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.
3. ID.; ID.; VALUE OF FURNITURE.—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
http://www.central.com.ph/sfsreader/session/000001670df0637a36dcee9c003600fb002c009e/t/?o=False 1/5
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 later determined by
the trial Court through evidence which the parties may
desire to present.
4. COSTS OF LITIGATION.—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.

Manila. Vera, J.
Mauricio Carlos for appellants.
Felipe Buencamino, Jr. for appellee.
IMPERIAL, J.:
The plaintiff brought this action to compel the defendant to

return to 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 gas heaters and the four electric
lamps found in the possession of the Sheriff of said city,
110

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 his use. The defendant answered that she may call for
them in the house where they are 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 is
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 furni-
111
VOL. 69, NOVEMBER 3, 1939 111

ture 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
deilvered; in holding that they should get all the furniture
from the Sheriff at their expenses; in ordering them to pay
one-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 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.
The contract entered into between the parties is one of
commodatum, 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 latter's demand (clause 7 of the contract,
Exhibit A; articles 1740, paragraph 1, and 1741 of the Civil
Code). The obligation voluritarily assumed by the
defendant to return the furniture upon the plaintiff's
demand, means that he should return all of them to the
plaintiff at the latter's residence or house. The defendant
did not comply with this obligation when he merely placed
them at the disposal of the plaintiff, retaining for his

benefit the three gas heaters and the four electric 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
112

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
later 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 or house of the latter, all the f urniture 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.
Avanceña, C. J., Villa-Real, Diaz, Laurel, Concepcion,

and Moran, JJ., concur.
Judgment modified.
_______________
113
VOL. 69, NOVEMBER 4, 1939 113

Arnaldo vs. Locsin et al.

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11/14/2018 SUPREME COURT REPORTS ANNOTATED VOLUME 430

492 SUPREME COURT REPORTS ANNOTATED

COLITO T. PAJUYO, petitioner, vs. COURT OF APPEALS

Actions; Appeals; Pleadings and Practice; Decisions of

VOL. 430, JUNE 3, 2004 493

Pajuyo vs. Court of Appeals

pure questions of law. There is a question of law when the doubt

494 SUPREME COURT REPORTS ANNOTATED

Pajuyo vs. Court of Appeals

Same; Same; Same; Same; Estoppel; Estoppel sets in not

VOL. 430, JUNE 3, 2004 495

Pajuyo vs. Court of Appeals

Same; Same; Same; The absence of title over a contested lot is

principle is not absolute, as there are exceptions to its application.

496 SUPREME COURT REPORTS ANNOTATED

Pajuyo vs. Court of Appeals

Same; Same; Same; Squatting; The application of the

in the proper government agency. The Court of Appeals’

VOL. 430, JUNE 3, 2004 497

Pajuyo vs. Court of Appeals

Same; Same; Unlawful Detainer; Unlawful detainer involves

use for which the commodatum is constituted. If the bailor should

498 SUPREME COURT REPORTS ANNOTATED

Pajuyo vs. Court of Appeals

into the Kasunduan. Guevarra cannot now impugn the

Same; Same; Squatting; Where the party that has title or a

VOL. 430, JUNE 3, 2004 499

Pajuyo vs. Court of Appeals

plaintiff and the defendant of possession just because they are

PETITION for review on certiorari of the decision and

The facts are stated in the opinion of the Court.

1 Under Rule 45 of the 1997 Rules of Court.

500 SUPREME COURT REPORTS ANNOTATED

In June 1979, petitioner Colito T. Pajuyo (“Pajuyo”) paid

aside by Proclamation No. 137 for socialized housing.

“WHEREFORE, premises considered, judgment is hereby

VOL. 430, JUNE 3, 2004 501

Aggrieved, Guevarra appealed to the Regional Trial Court

“WHEREFORE, premises considered, the Court finds no

Guevarra received the RTC decision on 29 November 1996.

extension to the Court of Appeals, which has concurrent

502 SUPREME COURT REPORTS ANNOTATED

On 21 June 2000, the Court of Appeals issued its decision

“WHEREFORE, premises considered, the assailed Decision of the

Pajuyo filed a motion for reconsideration of the decision.

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

The Ruling of the MTC

The MTC ruled that the subject of the agreement between

house only by tolerance. Thus, Guevarra’s refusal to vacate

The Ruling of the RTC

The RTC upheld the Kasunduan, which established the

VOL. 430, JUNE 3, 2004 503

Housing Project Code of Policies and other pertinent laws.

The Ruling of the Court of Appeals

The Court of Appeals declared that Pajuyo and Guevarra

issued Proclamation No. 137 on 7 September 1987. At that

504 SUPREME COURT REPORTS ANNOTATED

Court of Appeals concluded that the motion for extension

Pajuyo raises the following issues for resolution:

WHETHER THE COURT OF APPEALS ERRED OR ABUSED

1) in GRANTING, instead of denying, Private Respondent’s

review at the time when there was no more period to

VOL. 430, JUNE 3, 2004 505

the parties are in pari delicto being both squatters, therefore,