CATHOLIC VICAR APOSTOLIC OF THE
MOUNTAIN PROVINCE, petitioner,
vs.
COURT OF APPEALS, HEIRS OF EGMIDIO
OCTAVIANO AND JUAN VALDEZ, respondents.
G.R. No. 80294-95 September 21, 1988
FACTS:
The defendant Catholic Vicar Apostolic of the
Mountain Province (VICAR for brevity) filed with the
Court of First Instance an application for registration of
title over Lots 1, 2, 3, and 4 in Psu-194357, situated at
Poblacion Central, La Trinidad, Benguet, 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, confirming the registrable title of VICAR to
Lots 1, 2, 3, and 4.
The Heirs of Juan Valdez and the Heirs of
Egmidio Octaviano appealed the decision of the land
registration court to the then Court of Appeals. The Court
of Appeals rendered its decision reversing the decision of
the land registration court and dismissing the VICAR's
application as to Lots 2 and 3, the lots claimed by the two
sets of oppositors in the land registration case (and two
sets of plaintiffs in the two cases now at bar), the first lot
being presently occupied by the convent and the second
by the women's dormitory and the sister's convent.
On May 9, 1977, the Heirs of Octaviano filed a
motion for reconsideration praying the Court of Appeals
to order the registration of Lot 3 in the names of the Heirs
of Egmidio Octaviano, and on May 17, 1977, the Heirs of
Juan Valdez and Pacita Valdez filed their motion for
reconsideration praying that both Lots 2 and 3 be ordered
registered in the names of the Heirs of Juan Valdez and
Pacita Valdez. On August 12,1977, the Court of Appeals
denied the motion for reconsideration filed by the Heirs
of Juan Valdez on the ground that there was "no sufficient
merit to justify reconsideration one way or the other ...,"
and likewise denied that of the Heirs of Egmidio
Octaviano.
Thereupon, the VICAR filed with the Supreme
Court a petition for review on certiorari of the decision of
the Court of Appeals dismissing his (its) application for
registration of Lots 2 and 3. From the denial by the Court
of Appeals of their motion for reconsideration the Heirs
of Juan Valdez and Pacita Valdez filed with the Supreme
Court a petition for review.
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 on
December 7, 1978, denied the motion on the ground that
the Court of Appeals decision in CA-G.R. No. 38870 did
not grant the Heirs of Octaviano any affirmative relief.
On February 7, 1979, the Heirs of Octaviano filed
with the Court of Appeals a petitioner for certiorari and
mandamus. In its decision, the Court of Appeals
dismissed the petition.
It was at that stage that the instant cases were filed.
In these two cases , the plaintiffs arque that the
defendant Vicar is barred from setting up the defense of
ownership and/or long and continuous possession of the
two lots in question since this is barred by prior judgment
of the Court of Appeals in CA-G.R. No. 038830-R under
the principle of res judicata. Plaintiffs contend that the
question of possession and ownership have already been
determined by the Court and affirmed by the Supreme
Court. On his part, defendant Vicar maintains that the
principle of res judicata would not prevent them from
litigating the issues of long possession and ownership
because the dispositive portion of the prior judgment in
CA-G.R. No. 038830-R merely dismissed their
application for registration and titling of lots 2 and 3.
Defendant Vicar contends that only the dispositive
portion of the decision, and not its body, is the controlling
pronouncement of the Court of Appeals.
RULING:
The petition is bereft of merit.
Petitioner questions the ruling of respondent
Court of Appeals in CA-G.R. Nos. 05148 and 05149,
when it clearly held that it was in agreement with the
findings of the trial court that the Decision of the Court of
Appeals dated May 4,1977 in CA-G.R. No. 38830-R, on
the question of ownership of Lots 2 and 3, declared that
the said Court of Appeals Decision CA-G.R. No. 38830-
R) did not positively declare private respondents as
owners of the land, neither was it declared that they were
not owners of the land, but it held that the predecessors of declared Lots 2 and 3 for taxation purposes in 1951. The
private respondents were possessors of Lots 2 and 3, with improvements oil Lots 1, 2, 3, 4 were paid for by the
claim of ownership in good faith from 1906 to 1951. Bishop but said Bishop was appointed only in 1947, the
Petitioner was in possession as borrower in commodatum church was constructed only in 1951 and the new convent
up to 1951, when it repudiated the trust by declaring the only 2 years before the trial in 1963.
properties in its name for taxation purposes. When
When petitioner Vicar was notified of the
petitioner applied for registration of Lots 2 and 3 in 1962,
oppositor's claims, the parish priest offered to buy the lot
it had been in possession in concept of owner only for
from Fructuoso Valdez. Lots 2 and 3 were surveyed by
eleven years. Ordinary acquisitive prescription requires
request of petitioner Vicar only in 1962.
possession for ten years, but always with just title.
Extraordinary acquisitive prescription requires 30 years. 4 Private respondents were able to prove that their
predecessors' house was borrowed by petitioner Vicar
On the above findings of facts supported by
after the church and the convent were destroyed. They
evidence and evaluated by the Court of Appeals in CA-
never asked for the return of the house, but when they
G.R. No. 38830-R, affirmed by this Court, We see no
allowed its free use, they became bailors
error in respondent appellate court's ruling that said
in commodatum and the petitioner the bailee. The bailees'
findings are res judicatabetween the parties. They can no
failure to return the subject matter of commodatum to the
longer be altered by presentation of evidence because
bailor did not mean adverse possession on the part of the
those issues were resolved with finality a long time ago.
borrower. The bailee held in trust the property subject
To ignore the principle of res judicata would be to open
matter of commodatum. The adverse claim of petitioner
the door to endless litigations by continuous
came only in 1951 when it declared the lots for taxation
determination of issues without end.
purposes. The action of petitioner Vicar by such adverse
An examination of the Court of Appeals Decision claim could not ripen into title by way of ordinary
dated May 4, 1977, First Division 5 in CA-G.R. No. acquisitive prescription because of the absence of just
38830-R, shows that it reversed the trial court's title.
Decision 6 finding petitioner to be entitled to register the
The Court of Appeals found that the
lands in question under its ownership, on its evaluation of
predecessors-in-interest and private respondents were
evidence and conclusion of facts.
possessors under claim of ownership in good faith from
The Court of Appeals found that petitioner did 1906; that petitioner Vicar was only a bailee
not meet the requirement of 30 years possession for in commodatum; and that the adverse claim and
acquisitive prescription over Lots 2 and 3. Neither did it repudiation of trust came only in 1951.
satisfy the requirement of 10 years possession for
We find no reason to disregard or reverse the
ordinary acquisitive prescription because of the absence
ruling of the Court of Appeals in CA-G.R. No. 38830-R.
of just title. The appellate court did not believe the
Its findings of fact have become incontestible. This Court
findings of the trial court that Lot 2 was acquired from
declined to review said decision, thereby in effect,
Juan Valdez by purchase and Lot 3 was acquired also by
affirming it. It has become final and executory a long time
purchase from Egmidio Octaviano by petitioner Vicar
ago.
because there was absolutely no documentary evidence to
support the same and the alleged purchases were never Respondent appellate court did not commit any
mentioned in the application for registration. reversible error, much less grave abuse of discretion,
when it held that the Decision of the Court of Appeals in
By the very admission of petitioner Vicar, Lots 2
CA-G.R. No. 38830-R is governing, under the principle
and 3 were owned by Valdez and Octaviano. Both Valdez
of res judicata, hence the rule, in the present cases CA-
and Octaviano had Free Patent Application for those lots
G.R. No. 05148 and CA-G.R. No. 05149. The facts as
since 1906. The predecessors of private respondents, not
supported by evidence established in that decision may no
petitioner Vicar, were in possession of the questioned lots
longer be altered.
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
COLITO T. PAJUYO, petitioner, vs. COURT OF
APPEALS and EDDIE GUEVARRA, respondents.
G.R. No. 146364. June 3, 2004
FACTS:
In June 1979, petitioner Colito T. Pajuyo (Pajuyo)
paid P400 to a certain Pedro Perez for the rights over a
250-square meter lot in Barrio Payatas, Quezon
City. Pajuyo then constructed a house made of light
materials on the lot. Pajuyo and his family lived in the
house from 1979 to 7 December 1985.
On 8 December 1985, Pajuyo and private respondent
Eddie Guevarra (Guevarra) executed a Kasunduan or
agreement. Pajuyo, as owner of the house, allowed
Guevarra to live in the house for free provided Guevarra
would maintain the cleanliness and orderliness of the
house. Guevarra promised that he would voluntarily
vacate the premises on Pajuyos demand.
In September 1994, Pajuyo informed Guevarra of his
need of the house and demanded that Guevarra vacate the
house. Guevarra refused.
Pajuyo filed an ejectment case against Guevarra with the
Metropolitan Trial Court of Quezon City.
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.
The MTC rendered its decision in favor of Pajuyo. The
MTC ruled that the subject of the agreement between
Pajuyo and Guevarra is the house and not the lot. Pajuyo
is the owner of the house, and he allowed Guevarra to use
the house only by tolerance. Thus, Guevarras refusal to
vacate the house on Pajuyos demand made Guevarras
continued possession of the house illegal.
Aggrieved, Guevarra appealed to the Regional Trial Court
of Quezon City. The RTC affirmed the MTC decision.
The Court of Appeals issued its decision reversing the
RTC decision. 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.
ISSUE: W/N 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.
RULING: NO.
Guevarra does not dispute Pajuyos prior possession of the
lot and ownership of the house built on it. Guevarra
expressly admitted the existence and due execution of
the Kasunduan.
Based on the Kasunduan, Pajuyo permitted Guevarra to
reside in the house and lot free of rent, but Guevarra was
under obligation to maintain the premises in good
condition. Guevarra promised to vacate the premises on
Pajuyos demand but Guevarra broke his promise and
refused to heed Pajuyos demand to vacate.
These facts make out a case for unlawful detainer.
Unlawful detainer involves the withholding by a person
from another of the possession of real property to which
the latter is entitled after the expiration or termination of
the formers right to hold possession under a contract,
express or implied.
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 defendants 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.
This principle should apply with greater force in cases Guevarra turned his back on the Kasunduan on the sole
where a contract embodies the permission or tolerance to ground that like him, Pajuyo is also a squatter. Squatters,
use the property. The Kasunduan expressly articulated Guevarra pointed out, cannot enter into a contract
Pajuyos forbearance. Pajuyo did not require Guevarra to involving the land they illegally occupy. Guevarra insists
pay any rent but only to maintain the house and lot in good that the contract is void.
condition. Guevarra expressly vowed in
Guevarra should know that there must be honor even
the Kasunduan that he would vacate the property on
between squatters. Guevarra freely entered into
demand. Guevarras refusal to comply with Pajuyos
the Kasunduan. Guevarra cannot now impugn
demand to vacate made Guevarras continued possession
the Kasunduan after he had benefited from
of the property unlawful.
it. The Kasunduan binds Guevarra.
We do not subscribe to the Court of Appeals theory that
The Kasunduan is not void for purposes of determining
the Kasunduan is one of commodatum.
who between Pajuyo and Guevarra has a right to physical
In a contract of commodatum, one of the parties delivers possession of the contested property. The Kasunduan is
to another something not consumable so that the latter the undeniable evidence of Guevarras recognition of
may use the same for a certain time and return it. An Pajuyos better right of physical possession. Guevarra is
essential feature of commodatum is that it is gratuitous. clearly a possessor in bad faith. The absence of a contract
Another feature of commodatum is that the use of the would not yield a different result, as there would still be
thing belonging to another is for a certain period. Thus, an implied promise to vacate.
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.
The Kasunduan reveals that the accommodation accorded
by Pajuyo to Guevarra was not essentially gratuitous.
While the Kasunduan did not require Guevarra to pay
rent, it obligated him to maintain the property in good
condition. The imposition of this obligation makes
the Kasunduan a contract different from
a commodatum. The effects of the Kasunduan are also
different from that of a commodatum. Case law on
ejectment has treated relationship based on tolerance as
one that is akin to a landlord-tenant relationship where the
withdrawal of permission would result in the termination
of the lease. The tenants withholding of the property
would then be unlawful. This is settled jurisprudence.
Even assuming that the relationship between Pajuyo and
Guevarra is one of commodatum, Guevarra as bailee
would still have the duty to turn over possession of the
property to Pajuyo, the bailor. The obligation to deliver or
to return the thing received attaches to contracts for
safekeeping, or contracts of commission, administration
and commodatum. These contracts certainly involve the
obligation to deliver or return the thing received.
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.
G.R. No. L-17474 October 25, 1962
FACTS:
Jose V. Bagtas borrowed from the Republic of the
Philippines through the Bureau of Animal Industry three
bulls 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 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 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. 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 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).
Bagtas died and he was substituted by his wife. 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.
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.
RULING:
The contention is without merit. The loan by the appellee
to the late defendant Jose V. Bagtas of the three bulls for
breeding purposes for a period of one year from 8 May
1948 to 7 May 1949, later on renewed for another year as
regards one bull, was subject to the payment by the
borrower of breeding fee of 10% of the book value of the
bulls. The appellant contends that the contract
was commodatum and that, for that reason, as the appellee
retained ownership or title to the bull it should suffer its
loss due to force majeure. A contract of commodatum is
essentially gratuitous.1 If the breeding fee be considered a
compensation, then the contract would be a lease of the
bull. Under article 1671 of the Civil Code the lessee
would be subject to the responsibilities of a possessor in
bad faith, because she had continued possession of the
bull after the expiry of the contract. And even if the
contract be commodatum, still the appellant is liable,
because article 1942 of the Civil Code provides that a
bailee in a contract of commodatum —
. . . is liable for loss of the things, even if it should be
through a fortuitous event:
(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.
MARGARITA QUINTOS and ANGEL A. article 1169 of the Civil Code cited by counsel for the
ANSALDO, plaintiffs-appellants, parties are not squarely applicable. The trial court,
vs. therefore, erred when it came to the legal conclusion that
BECK, defendant-appellee. the plaintiff failed to comply with her obligation to get the
furniture when they were offered to her.
G.R. No. L-46240 November 3, 1939
As the defendant had voluntarily undertaken to return all
FACTS: the furniture to the plaintiff, upon the latter's demand, the
The defendant was a tenant of the plaintiff and as such Court could not legally compel her to bear the expenses
occupied the latter's house. Upon the novation of the occasioned by the deposit of the furniture at the
contract of lease between the plaintiff and the defendant, defendant's behest. The latter, as bailee, was not entitled
the former gratuitously granted to the latter the use of the to place the furniture on deposit; nor was the plaintiff
furniture described in the third paragraph of the under a duty to accept the offer to return the furniture,
stipulation of facts, subject to the condition that the because the defendant wanted to retain the three gas
defendant would return them to the plaintiff upon the heaters and the four electric lamps.
latter's demand. The plaintiff sold the property to Maria
As to the value of the furniture, we do not believe that the
Lopez and Rosario Lopez and notified the defendant of
plaintiff is entitled to the payment thereof by the
the conveyance, giving him sixty days to vacate the
defendant in case of his inability to return some of the
premises under one of the clauses of the contract of lease.
furniture because under paragraph 6 of the stipulation of
There after the plaintiff required the defendant to return facts, the defendant has neither agreed to nor admitted the
all the furniture transferred to him for them in the house correctness of the said value. Should the defendant fail to
where they were found. On November 5, 1936, the deliver some of the furniture, the value thereof should be
defendant, through another person, wrote to the plaintiff latter determined by the trial Court through evidence
reiterating that she may call for the furniture in the ground which the parties may desire to present.
floor of the house. On the 7th of the same month, the
The costs in both instances should be borne by the
defendant wrote another letter to the plaintiff informing
defendant because the plaintiff is the prevailing party
her that he could not give up the three gas heaters and the
(section 487 of the Code of Civil Procedure). The
four electric lamps because he would use them until the
defendant was the one who breached the contract
15th of the same month when the lease in due to expire.
of commodatum, and without any reason he refused to
The plaintiff refused to get the furniture in view of the fact
return and deliver all the furniture upon the plaintiff's
that the defendant had declined to make delivery of all of
demand. In these circumstances, it is just and equitable
them. On November 15th, before vacating the
that he pay the legal expenses and other judicial costs
house, the defendant deposited with the Sheriff all the
which the plaintiff would not have otherwise defrayed.
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.
RULING:
The contract entered into between the parties is one
of commadatum, because under it the plaintiff
gratuitously granted the use of the furniture to the
defendant, reserving for herself the ownership thereof; by
this contract the defendant bound himself to return the
furniture to the plaintiff, upon the latters demand.
The obligation voluntarily assumed by the defendant to
return the furniture upon the plaintiff's demand, means
that he should return all of them to the plaintiff at the
latter's residence or house. The defendant did not comply
with this obligation when he merely placed them at the
disposal of the plaintiff, retaining for his benefit the three
gas heaters and the four eletric lamps. The provisions of
PEOPLE OF THE PHILIPPINES, petitioner,
vs.
TERESITA PUIG and ROMEO
PORRAS, respondents.
G.R. Nos. 173654-765 August 28, 2008
FACTS:
On 7 November 2005, the Iloilo Provincial Prosecutor’s
Office filed before Branch 68 of the RTC in Dumangas,
Iloilo, 112 cases of Qualified Theft against respondents
Teresita Puig (Puig) and Romeo Porras (Porras) who were
the Cashier and Bookkeeper, respectively, of private
complainant Rural Bank of Pototan,
After perusing the Informations in these cases, the trial
court did not find the existence of probable cause that
would have necessitated the issuance of a warrant of arrest
based on the following grounds:
(1) the element of ‘taking without the consent of the
owners’ was missing on the ground that it is the
depositors-clients, and not the Bank, which filed the
complaint in these cases, who are the owners of the money
allegedly taken by respondents and hence, are the real
parties-in-interest; and
(2) the Informations are bereft of the phrase alleging
"dependence, guardianship or vigilance between the
respondents and the offended party that would have
created a high degree of confidence between them
which the respondents could have abused."
Petitioner explains that under Article 1980 of the New
Civil Code, "fixed, savings, and current deposits of
money in banks and similar institutions shall be governed
by the provisions concerning simple loans." Corollary
thereto, Article 1953 of the same Code provides that "a
person who receives a loan of money or any other
fungible thing acquires the ownership thereof, and is
bound to pay to the creditor an equal amount of the same
kind and quality." Thus, it posits that the depositors who
place their money with the bank are considered creditors
of the bank. The bank acquires ownership of the money
deposited by its clients, making the money taken by
respondents as belonging to the bank.
RULING:
We find merit in the petition. It is beyond doubt that
tellers, Cashiers, Bookkeepers and other employees of a
Bank who come into possession of the monies deposited
therein enjoy the confidence reposed in them by their
employer. Banks, on the other hand, where monies are
deposited, are considered the owners thereof. This is very
clear not only from the express provisions of the law, but
from established jurisprudence. The relationship between
banks and depositors has been held to be that of creditor
and debtor. Articles 1953 and 1980 of the New Civil
Code, as appropriately pointed out by petitioner, provide
as follows:
Article 1953. A person who receives a loan of money or
any other fungible thing acquires the ownership thereof,
and is bound to pay to the creditor an equal amount of the
same kind and quality.
Article 1980. Fixed, savings, and current deposits of
money in banks and similar institutions shall be governed
by the provisions concerning loan.
In a long line of cases involving Qualified Theft, this
Court has firmly established the nature of possession by
the Bank of the money deposits therein, and the duties
being performed by its employees who have custody of
the money or have come into possession of it. The Court
has consistently considered the allegations in the
Information that such employees acted with grave abuse
of confidence, to the damage and prejudice of the Bank,
without particularly referring to it as owner of the money
deposits, as sufficient to make out a case of Qualified
Theft.
In summary, the Bank acquires ownership of the money
deposited by its clients; and the employees of the Bank,
who are entrusted with the possession of money of the
Bank due to the confidence reposed in them, occupy
positions of confidence. The Informations, therefore,
sufficiently allege all the essential elements constituting
the crime of Qualified Theft.
BPI FAMILY BANK VS. FRANCO
G.R. No. 123498
FACTS:
Tevesteco Arrastre-Stevedoring Co., Inc. (Tevesteco)
opened a savings and current account with BPI-FB. Soon
thereafter, First Metro Investment Corporation (FMIC)
also opened a time deposit account with the same branch
of BPI-FB with a deposit of P100,000,000.00, to mature
one year thence.
Franco opened three accounts, namely,
current, savings, and time deposit, with BPI-FB. The
current and savings accounts were respectively funded
with an initial deposit of P500,000.00 each, while the time
deposit account had P1,000,000.00 with a maturity date
of August 31, 1990. The total amount of P2,000,000.00
used to open these accounts is traceable to a check issued
by Tevesteco allegedly in consideration of Francos
introduction of Eladio Teves, who was looking for a
conduit bank to facilitate Tevestecos business
transactions, to Jaime Sebastian, who was then BPI-FB
SFDMs Branch Manager. In turn, the funding for
the P2,000,000.00 check was part of the P80,000,000.00
debited by BPI-FB from FMICs time deposit account and
credited to Tevestecos current account pursuant to an
Authority to Debit purportedly signed by FMICs officers.
It appears, however, that the signatures of FMICs officers
on the Authority to Debit were forged.
Unfortunately, Tevesteco had already effected several
withdrawals from its current account (to which had been
credited the P80,000,000.00 covered by the forged
Authority to Debit) amounting to P37,455,410.54,
including the P2,000,000.00 paid to Franco.
In the meantime, two checks[13] drawn by Franco against
his BPI-FB current account were dishonored upon
presentment for payment, and stamped with a notation
account under garnishment. Apparently, Francos current
account was garnished by virtue of an Order of
Attachment issued by the Regional Trial Court of Makati
(Makati RTC) in Civil Case No. 89-4996 (Makati Case),
which had been filed by BPI-FB against Franco et
al.,[14] to recover the P37,455,410.54 representing
Tevestecos total withdrawals from its account.
In fact, at the time the Notice of Garnishment
dated September 27, 1989 was served on BPI-FB, Franco
had yet to be impleaded in the Makati case where the writ
of attachment was issued.
Franco filed a Motion to Discharge Attachment which the
Makati RTC granted on May 16, 1990. The Order Lifting
the Order of Attachment was served on BPI-FB on even
date, with Franco demanding the release to him of the
funds in his savings and current accounts.
Meanwhile, BPI-FB filed separate civil and criminal
cases against those believed to be the perpetrators of the
multi-million peso scam.
Consequently, in light of BPI-FBs refusal to heed Francos
demands to unfreeze his accounts and release his deposits
a therein, the latter filed on June 4, 1990 with the Manila
RTC the subject suit.
BPI-FB traversed this complaint, insisting that it was
correct in freezing the accounts of Franco and refusing to
release his deposits, claiming that it had a better right to
the amounts which consisted of part of the money
allegedly fraudulently withdrawn from it by Tevesteco
and ending up in Francos accounts. BPI-FB asseverated
that the claimed consideration of P2,000,000.00 for the
introduction facilitated by Franco between George
Daantos and Eladio Teves, on the one hand, and Jaime
Sebastian, on the other, spoke volumes of Francos
participation in the fraudulent transaction.
RTC ruled in favor of franco. Unsatisfied with the
decision, both parties filed their respective appeals before
the CA. Franco confined his appeal to the Manila RTCs
denial of his claim for moral and exemplary damages, and
the diminutive award of attorneys fees. CA ruled in favor
of Franco as well.
RULING:
We are in full accord with the common ruling of the lower
courts that BPI-FB cannot unilaterally freeze Francos
accounts and preclude him from withdrawing his
deposits.However, contrary to the appellate courts ruling,
we hold that Franco is not entitled to unearned interest on
the time deposit as well as to moral and exemplary
damages.
There is no doubt that BPI-FB owns the deposited monies
in the accounts of Franco, but not as a legal consequence
of its unauthorized transfer of FMICs deposits to
Tevestecos account. BPI-FB conveniently forgets that the
deposit of money in banks is governed by the Civil Code
provisions on simple loan or mutuum.[36] As there is a
debtor-creditor relationship between a bank and its
depositor, BPI-FB ultimately acquired ownership of
Francos deposits, but such ownership is coupled with a
corresponding obligation to pay him an equal amount on
demand.[37] Although BPI-FB owns the deposits in
Francos accounts, it cannot prevent him from demanding
payment of BPI-FBs obligation by drawing checks
against his current account, or asking for the release of the
funds in his savings account. Thus, when Franco issued
checks drawn against his current account, he had every
right as creditor to expect that those checks would be
honored by BPI-FB as debtor.
More importantly, BPI-FB does not have a unilateral right
to freeze the accounts of Franco based on its mere
suspicion that the funds therein were proceeds of the
multi-million peso scam Franco was allegedly involved
in. To grant BPI-FB, or any bank for that matter, the right
to take whatever action it pleases on deposits which it
supposes are derived from shady transactions, would open
the floodgates of public distrust in the banking industry.
Ineluctably, BPI-FB, as the trustee in the fiduciary
relationship, is duty bound to know the signatures of its
customers. Having failed to detect the forgery in the
Authority to Debit and in the process inadvertently
facilitate the FMIC-Tevesteco transfer, BPI-FB cannot
now shift liability thereon to Franco and the other payees
of checks issued by Tevesteco, or prevent withdrawals
from their respective accounts without the appropriate
court writ or a favorable final judgment.
Further, it boggles the mind why BPI-FB, even without
delving into the authenticity of the signature in the
Authority to Debit, effected the transfer
of P80,000,000.00 from FMICs to Tevestecos account,
when FMICs account was a time deposit and it had
already paid advance interest to FMIC. Considering that
there is as yet no indubitable evidence establishing
Francos participation in the forgery, he remains an
innocent party. As between him and BPI-FB, the latter,
which made possible the present predicament, must bear
the resulting loss or inconvenience.
BOBIE ROSE V. FRIAS, represented by her
Attorney-in-fact, MARIE F. FUJITA, Petitioner,
vs.
FLORA SAN DIEGO-SISON, Respondent.
G.R. No. 155223 April 4, 2007
FACTS:
Petitioner is the owner of a house and lot located at No.
589 Batangas East, Ayala Alabang, Muntinlupa, Metro
Manila, which she acquired from Island Masters Realty
and Development Corporation (IMRDC) by virtue of a
Deed of Sale.
On December 7, 1990, petitioner, as the FIRST PARTY,
and Dra. Flora San Diego-Sison (respondent), as the
SECOND PARTY, entered into a Memorandum of
Agreement5 over the property.
NOW, THEREFORE, for and in consideration of
the sum of THREE MILLION PESOS
(₱3,000,000.00) receipt of which is hereby
acknowledged by the FIRST PARTY from the
SECOND PARTY, the parties have agreed as
follows:
1. That the SECOND PARTY has a period of Six
(6) months from the date of the execution of this
contract within which to notify the FIRST
PARTY of her intention to purchase the
aforementioned parcel of land together within
(sic) the improvements thereon at the price of SIX
MILLION FOUR HUNDRED THOUSAND
PESOS (₱6,400,000.00). Upon notice to the
FIRST PARTY of the SECOND PARTY’s
intention to purchase the same, the latter has a
period of another six months within which to pay
the remaining balance of ₱3.4 million.
2. That prior to the six months period given to the
SECOND PARTY within which to decide
whether or not to purchase the above-mentioned
property, the FIRST PARTY may still offer the
said property to other persons who may be
interested to buy the same provided that the
amount of ₱3,000,000.00 given to the FIRST
PARTY BY THE SECOND PARTY shall be
paid to the latter including interest based on
prevailing compounded bank interest plus the
amount of the sale in excess of ₱7,000,000.00
should the property be sold at a price more than
₱7 million.
3. That in case the FIRST PARTY has no other
buyer within the first six months from the
execution of this contract, no interest shall be
charged by the SECOND PARTY on the P3
million however, in the event that on the sixth
month the SECOND PARTY would decide not to
purchase the aforementioned property, the FIRST
PARTY has a period of another six months within
which to pay the sum of ₱3 million pesos
provided that the said amount shall earn
compounded bank interest for the last six months
only. Under this circumstance, the amount of P3
million given by the SECOND PARTY shall be
treated as [a] loan and the property shall be
considered as the security for the mortgage which
can be enforced in accordance with law.
Petitioner received from respondent two million pesos in
cash and one million pesos in a post-dated check dated
February 28, 1990, instead of 1991, which rendered said
check stale.7 Petitioner then gave respondent TCT No.
168173 in the name of IMRDC and the Deed of Absolute
Sale over the property between petitioner and IMRDC.
Respondent decided not to purchase the property and
notified petitioner through a letter8 dated March 20, 1991,
which petitioner received only on June 11,
1991,9 reminding petitioner of their agreement that the
amount of two million pesos which petitioner received
from respondent should be considered as a loan payable
within six months. Petitioner subsequently failed to pay
respondent the amount of two million pesos.
On April 1, 1993, respondent filed with the Regional Trial
Court (RTC) of Manila, a complaint10 for sum of money
with preliminary attachment against petitioner.
The RTC found that petitioner was under obligation to
pay respondent the amount of two million pesos with
compounded interest pursuant to their Memorandum of
Agreement; that the fraudulent scheme employed by
petitioner to deprive respondent of her only security to her
loaned money when petitioner executed an affidavit of
loss and instituted a petition for the issuance of an owner’s
duplicate title knowing the same was in respondent’s
possession, entitled respondent to moral damages; and
that petitioner’s bare denial cannot be accorded credence
because her testimony and that of her witness did not
appear to be credible.
The CA found that: petitioner gave the one million pesos
to Atty. Lozada partly as her commission and partly as a
loan; respondent did not replace the mistakenly dated
check of one million pesos because she had decided not
to buy the property and petitioner knew of her decision as
early as April 1991; the award of moral damages was
warranted since even granting petitioner had no hand in
the filing of the petition for the issuance of an owner’s
copy, she executed an affidavit of loss of TCT No. 168173
when she knew all along that said title was in respondent’s
possession; petitioner’s claim that she thought the title
was lost when the brown envelope given to her by Atty.
Lozada was stolen from her car was hollow; that such
deceitful conduct caused respondent serious anxiety and
emotional distress.
The CA concluded that there was no basis for petitioner
to say that the interest should be charged for six months
only and no more; that a loan always bears interest
otherwise it is not a loan; that interest should commence
on June 7, 199120 with compounded bank interest
prevailing at the time the two million was considered as a
loan which was in June 1991; that the bank interest rate
for loans secured by a real estate mortgage in 1991 ranged
from 25% to 32% per annum as certified to by Prudential
Bank,21 that in fairness to petitioner, the rate to be charged
should be 25% only.
Petitioner contends that the interest, whether at 32% per
annum awarded by the trial court or at 25% per annum as
modified by the CA which should run from June 7, 1991
until fully paid, is contrary to the parties’ Memorandum
of Agreement; that the agreement provides that if
respondent would decide not to purchase the property,
petitioner has the period of another six months to pay the
loan with compounded bank interest for the last six
months only; that the CA’s ruling that a loan always bears
interest otherwise it is not a loan is contrary to Art. 1956
of the New Civil Code which provides that no interest
shall be due unless it has been expressly stipulated in
writing.
ISSUE: WHETHER OR NOT THE COMPOUNDED
BANK INTEREST SHOULD BE LIMITED TO SIX (6)
MONTHS AS CONTAINED IN THE MEMORANDUM
OF AGREEMENT.
RULING:
We are not persuaded.
While the CA’s conclusion, that a loan always bears
interest otherwise it is not a loan, is flawed since a simple
loan may be gratuitous or with a stipulation to pay
interest,23 we find no error committed by the CA in
awarding a 25% interest per annum on the two-million
peso loan even beyond the second six months stipulated
period.
In this case, the phrase "for the last six months only"
should be taken in the context of the entire agreement. We
agree with and adopt the CA’s interpretation of the phrase
in this wise:
Their agreement speaks of two (2) periods of six months
each. The first six-month period was given to plaintiff-
appellee (respondent) to make up her mind whether or not
to purchase defendant-appellant’s (petitioner's) property.
The second six-month period was given to defendant-
appellant to pay the P2 million loan in the event that
plaintiff-appellee decided not to buy the subject property
in which case interest will be charged "for the last six
months only", referring to the second six-month period.
This means that no interest will be charged for the first
six-month period while appellee was making up her mind
whether to buy the property, but only for the second
period of six months after appellee had decided not to buy
the property. This is the meaning of the phrase "for the
last six months only". Certainly, there is nothing in their
agreement that suggests that interest will be charged for
six months only even if it takes defendant-appellant an
eternity to pay the loan.
The agreement that the amount given shall bear
compounded bank interest for the last six months
only, i.e., referring to the second six-month period, does
not mean that interest will no longer be charged after the
second six-month period since such stipulation was made
on the logical and reasonable expectation that such
amount would be paid within the date stipulated.
Considering that petitioner failed to pay the amount given
which under the Memorandum of Agreement shall be
considered as a loan, the monetary interest for the last six
months continued to accrue until actual payment of the
loaned amount.
The payment of regular interest constitutes the price or
cost of the use of money and thus, until the principal sum
due is returned to the creditor, regular interest continues
to accrue since the debtor continues to use such principal
amount. It has been held that for a debtor to continue in
possession of the principal of the loan and to continue to
use the same after maturity of the loan without payment
of the monetary interest, would constitute unjust
enrichment on the part of the debtor at the expense of the
creditor.
Petitioner and respondent stipulated that the loaned
amount shall earn compounded bank interests, and per the
certification issued by Prudential Bank, the interest rate
for loans in 1991 ranged from 25% to 32% per annum.
The CA reduced the interest rate to 25% instead of the
32% awarded by the trial court which petitioner no longer
assailed.
SIGA-AN VS. VILLANUEVA
FACTS:
Respondent claimed that sometime in 1992, petitioner
approached her inside the PNO and offered to loan her the
amount of P540,000.00. Since she needed capital for her
business transactions with the PNO, she accepted
petitioners proposal. The loan agreement was not reduced
in writing. Also, there was no stipulation as to the
payment of interest for the loan.
On 31 August 1993, respondent issued a check
worth P500,000.00 to petitioner as partial payment of the
loan. On 31 October 1993, she issued another check in the
amount of P200,000.00 to petitioner as payment of the
remaining balance of the loan. Petitioner told her that
since she paid a total amount of P700,000.00 for
the P540,000.00 worth of loan, the excess amount
of P160,000.00 would be applied as interest for the
loan. Not satisfied with the amount applied as interest,
petitioner pestered her to pay additional interest.
Petitioner threatened to block or disapprove her
transactions with the PNO if she would not comply with
his demand. As all her transactions with the PNO were
subject to the approval of petitioner as comptroller of the
PNO, and fearing that petitioner might block or unduly
influence the payment of her vouchers in the PNO, she
conceded. Thus, she paid additional amounts in cash and
checks as interests for the loan. She asked petitioner for
receipt for the payments but petitioner told her that it was
not necessary as there was mutual trust and confidence
between them. According to her computation, the total
amount she paid to petitioner for the loan and interest
accumulated to P1,200,000.00.
Thereafter, respondent consulted a lawyer
regarding the propriety of paying interest on the loan
despite absence of agreement to that effect. Her lawyer
told her that petitioner could not validly collect interest on
the loan because there was no agreement between her and
petitioner regarding payment of interest. Since she paid
petitioner a total amount of P1,200,000.00 for
the P540,000.00 worth of loan, and upon being advised
by her lawyer that she made overpayment to petitioner,
she sent a demand letter to petitioner asking for the return
of the excess amount of P660,000.00. Petitioner, despite
receipt of the demand letter, ignored her claim for
reimbursement.
After trial, the RTC rendered a Decision on 26
January 2001 holding that respondent made an
overpayment of her loan obligation to petitioner and that
the latter should refund the excess amount to the former. It
ratiocinated that respondents obligation was only to pay
the loaned amount of P540,000.00, and that the alleged
interests due should not be included in the computation of
respondents total monetary debt because there was no
agreement between them regarding payment of interest. It
concluded that since respondent made an excess payment
to petitioner in the amount of P660,000.00 through
mistake, petitioner should return the said amount to
respondent pursuant to the principle of solutio indebiti.
CA also ruled in favor of Villanueva.
ISSUE:
W/N THE RTC AND THE COURT OF APPEALS
ERRED IN RULING THAT NO INTEREST WAS DUE
TO PETITIONER;
RULING:
Interest is a compensation fixed by the parties for
the use or forbearance of money. This is referred to as
monetary interest. Interest may also be imposed by law or
by courts as penalty or indemnity for damages. This is
called compensatory interest. The right to interest arises
only by virtue of a contract or by virtue of damages for
delay or failure to pay the principal loan on which interest
is demanded.
Article 1956 of the Civil Code, which refers to
monetary interest, specifically mandates that no interest
shall be due unless it has been expressly stipulated in
writing. As can be gleaned from the foregoing provision,
payment of monetary interest is allowed only if: (1) there
was an express stipulation for the payment of interest; and
(2) the agreement for the payment of interest was reduced
in writing. The concurrence of the two conditions is
required for the payment of monetary interest. Thus, we
have held that collection of interest without any
stipulation therefor in writing is prohibited by law.
It appears that petitioner and respondent did not
agree on the payment of interest for the loan. Neither was
there convincing proof of written agreement between the
two regarding the payment of interest. Respondent
testified that although she accepted petitioners offer of
loan amounting to P540,000.00, there was, nonetheless,
no verbal or written agreement for her to pay interest on
the loan.
Petitioner presented a handwritten promissory
note dated 12 September 1994 wherein respondent
purportedly admitted owing petitioner capital and
interest. Respondent, however, explained that it was
petitioner who made a promissory note and she was told
to copy it in her own handwriting; that all her transactions
with the PNO were subject to the approval of petitioner as
comptroller of the PNO; that petitioner threatened to
disapprove her transactions with the PNO if she would not
pay interest; that being unaware of the law on interest and
fearing that petitioner would make good of his threats if
she would not obey his instruction to copy the promissory
note, she copied the promissory note in her own
handwriting; and that such was the same promissory note
presented by petitioner as alleged proof of their written
agreement on interest.
We have carefully examined the RTC Decision
and found that the RTC did not make a ruling therein that
petitioner and respondent agreed on the payment of
interest at the rate of 7% for the loan. The RTC clearly
stated that although petitioner and respondent entered into
a valid oral contract of loan amounting to P540,000.00,
they, nonetheless, never intended the payment of interest
thereon.
here are instances in which an interest may be
imposed even in the absence of express stipulation, verbal
or written, regarding payment of interest. Article 2209 of
the Civil Code states that if the obligation consists in the
payment of a sum of money, and the debtor incurs delay,
a legal interest of 12% per annum may be imposed as
indemnity for damages if no stipulation on the payment
of interest was agreed upon. Likewise, Article 2212 of the
Civil Code provides that interest due shall earn legal
interest from the time it is judicially demanded, although
the obligation may be silent on this point.
All the same, the interest under these two
instances may be imposed only as a penalty or damages
for breach of contractual obligations. It cannot be charged
as a compensation for the use or forbearance of money. In
other words, the two instances apply only to
compensatory interest and not to monetary interest. The
case at bar involves petitioners claim for monetary
interest.
Further, said compensatory interest is not
chargeable in the instant case because it was not duly
proven that respondent defaulted in paying the loan. Also,
as earlier found, no interest was due on the loan because
there was no written agreement as regards payment of
interest.