1.

CATHOLIC VICAR APOSTOLIC VS. CA

G.R. NO. 80294-95
September 21, 1988/J. Gancayco

Facts:
The whole controversy started when the herein
petitioner filed an application for registration of
lands 1, 2, 3 and 4 in La Trinidad, Benguet on
September 5, 1962.
The heirs of Juan Valdez and the heirs of Egmidio
Octaviano filed an opposition on lots 2 and 3,
respectively.
On November 17, 1965, the land registration court
confirmed the registrable title of the petitioner.
On appeal by the private respondent heirs, the Court
of Appeals reversed the decision and cancelled
Vicars title for lots 2 and 3.
The heirs filed a motion for reconsideration, praying
that the lots be ordered registered under their
names. The Court of Appeals denied the motion for
lack of sufficient merit. Both parties then came
before the Supreme Court, however, the SC, in a
minute resolution, denied both petitions. The heirs
then filed cases for the recovery and possession of
the lots.
During trial, Vicar contended that it has been in
possession of the subject lots for 75 years
continuously and peacefully and has constructed
permanent structures thereon.
On the other hand, respondents argue that the
petitioner is barred from setting up the defense of
ownership or long and continuous possession by the
prior judgment of the Court of Appeals under the
principle of res judicata.

Issues:
1. Wether Vicar had been in possession of the subject
lots merely as bailee-borrower in commodatum, a
gratuitous loan for use.
2. Whether the case violated the principle of res
judicata.
3. Who is entitled to the possession and ownership of
the land?
Held:
1. 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.
2. 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. On the above findings of facts supported by
evidence and evaluated by the Court of Appeals,
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.
3. Pursuant to the said decision in CA-G.R. No. 38830R, the two lots in question remained part of the
public lands. This is the only logical conclusion when
the appellate court found that neither the petitioner
nor private respondents are entitled to confirmation
of imperfect title over said lots. Hence, the Court
finds the contention of petitioner to be well taken in
that the trial court and the appellate court have no
lawful basis in ordering petitioner to return and
surrender possession of said lots to private
respondents. Said property being a public land its
disposition is subject to the provision of the Public
Land Act, as amended.
________________________________________________________
2.

REPUBLIC VS. JOSE V. BAGTAS

G.R. NO. L-17474
October 25, 1962/J. Padilla

Facts:
On May 8, 1948, Jose Bagtas borrowed from the
Bureau of Animal Industry 3 bulls for 1 year for
breeding purposes, subject to breeding fee for 10%
of the book value of the bulls.
Upon the expiration of the contract, Bagtas asked for
a renewal for another year. The renewal granted was
only for 1 bull. Bagtas offered to buy the bulls at its
book value less depreciation, but the Bureau told
him that he should either return the bulls or buy it at
book value.

Bagtas failed to pay the book value, and so the

Republic commenced an action with the CFI Manila
to order the return of the bulls or the payment of its
book value.
During trial, Jose Bagtas died and his wife, Feliciana
Bagtas, having succeeded and appointed as the
administratix of his estate, proved that two of the
bulls have already been returned in 1952, and that
the remaining one died of gunshot during a Huk raid,
thus,
their
obligation
have
already
been
extinguished since the contract is a commodatum,
hence, the loss through fortuitous event should be
borne by the owner.

Issue:
Whether, depending on the nature of the contract, the
respondent is liable for the death of the bull.
Held:
Yes. Commodatum is essentially gratuitous. However,
in this case, there is a 10% charge. If this is considered
compensation, then the contract would be a lease
contract. Under Article 1671 of the Civil Code, the
lessee is liable as possessor in bad faith because he
had continuous possession of the bull even after the
expiry of the contract. And even if the contract be a
commodatum, Bagtas is still liable because Art. 1942
of the Civil Code provides that a bailee in a contract of
commodatum is liable for loss of the thing even if it
should be through a fortuitous event; if he keeps it
longer than the period stipulated; and if the thing
loaned has been delivered with appraisal value, unless
there is a stipulation exempting the bailee from
responsibility in case of a fortuitous event.

_______________________________________________________
3. SAURA IMPORT & EXPORT CO. VS. DBP
G.R. NO. L-24968
April 27, 1972/J. Makalintal
Facts:
Saura Inc. applied for an industrial loan in the
amount of P500,000.00 from the Rehabilitation
Finance Corp. (DBP) to finance for the construction
of a jute mill factory and to pay the balance of the
purchase price of the machineries and equipments
to be used therein and as additional working capital.
RFC accepted and approved the loan application to
be secured by a first mortgage on the factory
building to be constructed, the land site thereof, and
the machinery and equipments to be installed
therein.
However, despite the formal execution of the loan
agreement and upon re-examination, RFC decided to
reduce the loan from P500,000.00 to P300,000.00.
On December 17, 1954, RFC passed another
resolution restoring the loan to the original amount
of P500,000.00, however subject to a certification
from the Dept. of Agriculture and Natural Resources
as to the availability of local raw materials to provide
adequately for the requirements of the factory.
Without having received the amount being loaned,
and sensing that it could not, in any way obtain the
full amount of loan, Saura then asked for the
cancellation of the mortgage which RFC also
approved.
Nine years after the cancellation of the mortgage,
Saura sued RFC for damages alleging failure of RFC
to comply with its obligations to release the
proceeds of the loan applied for and approved,
thereby preventing the plaintiff from completing or

paying contractual commitments it had entered into,

in connection with its jute mill project.
The trial court ruled in favor of the petitioner holding
that there was a perfected contract between the
parties and that the defendant was guilty of breach
thereof.

Issue:
Whether there was a perfected contract between the
parties?
Held:
There was indeed a perfected consensual contract, as
recognized in Article 1934 of the Civil Code, which
provides, An accepted promise to deliver something,
by way of commodatum or simple loan is binding upon
the parties, but the commodatum or simple loan itself
shall not be perfected until the delivery of the object of
the contract.
There was undoubtedly offer and acceptance in this
case: the application of Saura, Inc. for a loan of
P500,000.00 was approved by resolution of the
defendant, and the corresponding mortgage was
executed and registered. But this fact alone falls short
of resolving the second issue and the basic claim that
the defendant failed to fulfill its obligation and the
plaintiff is therefore entitled to recover damages.
The action thus taken by both partiesSaura's request
for cancellation and RFC's subsequent approval of such
cancellationwas in the nature of mutual desistance
what Manresa terms "mutuo disenso" which is a
mode of extinguishing obligations. It is a concept
derived from the principle that since mutual agreement
can create a contract, mutual disagreement by the
parties can cause its extinguishment. In view of such

extinguishment, said perfected consensual contract to

deliver did not constitute a real contract of loan.
________________________________________________________
4.

FRANCISCO HERRERA VS. PETROPHIL

G.R. NO. L-48349
December 29, 1986/J. Cruz

Facts:
On December 5, 1969, Herrera and Petrophil entered
into a lease agreement whereby the former leased
to the latter a portion of his property for a period of
20 years, subject to the condition that monthly
rentals of P2,930.20 should be paid and there should
be an advance payment of rentals for the first eight
(8) years of the contract based on P2,930.70 per
month discounted at 12% interest per annum before
registration of lease.
Petrophil paid the advance rentals for the first 8
years, subtracting the amount of P101,010.73, the
amount it computed as constituting the interest or
discount for the first 8 years, in the total sum of
P180,288.47.
On August 20, 1970, Petrophil informed Herrera that
there had been a mistake in the computation of the
interest, and thereby reduced the amount to
P98,828.03.
Herrera sued Petrophil for the sum of P98,828.03,
with interest, claiming this had been illegally
deducted from him in violation of the Usury Law.
Petrophil argued that the amount deducted was not
usurious interest but was given for paying the
rentals in advance for 8 years.

The trial court ruled in favor of Petrophil. On appeal,

Herrera insisted that such interest is violative of the
Usury Law, and that he had neither agreed to nor
accepted Petrophils computation of the total
amount to be deducted for the 8 years advance
rentals.

Issue:
Whether the contract between the parties of one of
loan or lease.
Held:
The contract between the parties is one of lease, and
not of loan.
It is clearly denominated a Lease
Agreement. Nowhere in the contract is there any
showing that the parties intended a loan rather than a
lease. The provision for the payment of rentals in
advance cannot be construed as a repayment of a loan
because there was no grant or forbearance of money as
to constitute an indebtedness on the part of the lessor.
On the contrary, the defendant was discharging is
obligation in advance by paying the eight years rentals,
and it was for this advance payment that it was getting
a rebate or discount.
The provision for a discount is not unusual in lease
contracts. As to its validity, it is settled that the parties
may establish such stipulations, clauses, terms and
conditions, as they may want to include, and as long as
such agreements are not contrary to law, morals, good
customs, public policy or public order, they shall have
the force of law between them.
_______________________________________________________

5.

INTEGRATED REALTY CORP. VS. PNB

G.R. NO. L-60705

June 28, 1989/J. Regalado
Facts:
Raul Santos made a time deposit with Overseas
Bank of Manila in the amount of P500,000.00 and he
was issued a certificate thereto. On another date,
Santos again made a time deposit with OBM in the
amount of P200,000.00, wherein he was issued
another certificate of time deposit.
The petitioner Integrated Realty Corp., thru its
president Raul Santos, applied for a loan and/or
credit line with PNB. To secure the said loan, Santos
executed a Deed of Assignment of the two (2) time
deposits in favor of PNB, which the OBM gave its
conformity thru a letter dated August 11, 1987.
However, after the due dates of the time deposit
certificates, OBM did not pay PNB, which prompted
the latter to file a complaint to collect from IRC and
Santos the loan of P700,000.00. It impleaded OBM
as a defendant to compel it to redeem and pay to it
Santos time deposit certificates with interest plus
damages.
In their Answer to the complaint, IRC and Santos
alleged that PNB has no cause of action against
them because their obligation to PNB was fully paid
or extinguished upon the irrevocable assignment of
the time deposit certificates. On the other hand,
OBM denied knowledge of the time deposit
certificates alleging that the same does not appear
in its books of account.
On January 30, 1976, the trial court rendered
judgment in favor of the plaintiff PNB.

On appeal, the Court of Appeals, modified the

decision of the lower court and deleted the portion

of the judgment ordering OBM to pay IRC and Santos

whatever amounts they will pay to PNB.
Issue:
Whether the liability of IRC and Santos with PNB should
be deemed to have been paid by virtue of the deed of
assignment made by the former in favor of PNB.
Held:
The facts and circumstances leading to the execution of
the deed of assignment, as found by the court a quo
and the respondent court, yield said conclusion that it
is in fact a pledge. The deed of assignment has
satisfied the requirements of a contract of pledge: (1)
that it be constituted to secure the fulfilment of a
principal obligation; (2) that the pledgor be the
absolute owner of the thing pledged; (3) that eh
persons constituting the pledge have the free disposal
of their property, and in the absence thereof, that they
be legally authorized for the purpose. The further
requirement that the thing pledged be placed in the
possession of the creditor, or of a third person by
common agreement was complied with by the
execution of the deed of assignment in favor of PNB.
_______________________________________________________
6.

REPUBLIC VS. CA
G.R. NO. L-46145
November 26, 1986/J. Paras

Facts:
The heirs of Domingo Baloy applied for a registration
of title for their land. Their claim is anchored on
their possessory information title acquired by
Domingo Baloy though the Spanish Mortgage Law,
coupled with their continuous, adverse and public
possession over the land in question.

The Director of Lands opposed the registration

alleging that such land became public land through
the operation of Act No. 827 of the Philippine
Commission.
On November 26, 1902, pursuant to the executive
order of the President of the U.S., the area was
declared within the U.S. Naval Reservation.
The trial court denied the application for registration,
thus the heirs elevated the case to the Court of
Appeals. The appellate court reversed the decision
of the lower court approving the application for
registration pursuant to Sec. 19 of Act 496
(possessory information secured regularly so long
ago by payment of taxes since 1965).

Held:
Clearly, the occupancy of the US Navy was not in the
concept of owner. It partakes of the character of a
commodatum. It cannot therefore militate against the
title of Domingo Baloy and his successors-in-interest.
Ones ownership of a thing may be lost by prescription
by reason of anothers possession if such possession be
under claim of ownership, not where the possession is
only intended to be transient, as in the case of the US
Navys occupation of the land concerned, in which case,
the owner is not divested of his title, although it cannot
be exercised in the meantime.
________________________________________________________

Facts:
Plaintiff Quintos and defendant Beck entered into a
contract of lease, whereby the latter occupied the
formers house in M.H. Del Pilar St., Manila.
On January 14, 1936, the contract of lease was
novated, wherein Quintos gratuitously granted to
Beck the use of furnitures, subject to the condition
that Beck would return them to the plaintiff upon
demand.
Thereafter, Quintos sold the property to Maria and
Rosario Lopez.
Beck was notified of the conveyance and given 60
days to vacate the premises. In addition, Quintos
required Beck to return all the furniture transferred
to him, but Beck wrote a letter informing plaintiff
that he could not give up the 3 gas heaters and 4
electric lamps because he would use them until the
lease is due to expire. 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 15, before vacating the house, the
defendant deposited with the Sheriff all the furniture
belonging to the plaintiff and they were deposited in
the warehouse, in the custody of the sheriff.
Thus, plaintiff brought this action to compel the
defendant to return the furniture which she lent him
for his use and to appeal from the judgment of the
CFI of Manila ordering that plaintiff call for the other
furniture from the Sheriff 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.

7.

Issue:

Issue:
Whether the occupancy of the US Navy over the subject
land is in the concept of an owner, hence, such
possession cannot be acquired by prescription.

MARGARITA QUINTOS VS. BECK

G.R. NO. L-46240
November 3, 1938/J. Imperial

Whether defendant Beck complied with his obligation of

returning the furniture to Quintos when it deposited the
furniture to the sheriff.
Held:
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 latters demand.
The obligation voluntarily assumed by the defendant to
return the furniture upon the plaintiffs demand, means
that he should return all of them to the plaintiff at the
latters 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 Art. 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 latters
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.
The costs in both instances should be borne by the
defendant because the plaintiff is the prevailing party.
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 plaintiffs
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.
________________________________________________________
8.

REPUBLIC VS. JOSE GRIJALDO

G.R. NO. L-20240
December 31, 1965/J. Zaldivar

Facts:
In the year 1943, Jose Grijaldo obtained five loans
from the Bank of Taiwan, Ltd., in Bacolod City in the
total sum of P1,281.97 with interest at the rate of
6% per annum, compounded quarterly. These loans
are evidenced by five promissory notes executed by
the appellant in favor of the Bank of Taiwan.
To secure the payment of the loans, the appellant
executed a chattel mortgaged on the standing crops
on his land known as Hacienda Campugas in
Hinigiran, Negros Occidental.
By virtue of Vesting Order P-4 and under the
authority provided for in the Trading with the Enemy
Act, the assets in the Philippines of the Bank of
Taiwan were vested in the Government of the United
States.
These assets, including the loans in
question, were subsequently transferred to the
Republic of the Philippines by the US Government by
way of a transfer agreement.
Thereafter, the Republic of the Philippines,
represented by the Chairman of the Board of
Liquidators demanded for the payment of the
account in question. Failing to pay the obligation
despite written demand, a complaint was filed
against the appellant before the Justice of the Peace
Court in Hinigiran, Negros Occidental.

The inferior court, after hearing, dismissed the case

on the ground that the action had prescribed.
However, on appeal to the CFI of Negros Occidental,
the trial court ruled in favor of the Republic ordering
the appellant to pay the appellee the sum of
P2,377.23 plus corresponding interest.

Issue:
Whether the Republic can collect from appellant
Grijaldo.
Held:
The obligation of the appellant under the five
promissory notes was not to deliver a determinate
thing namely, the crops to be harvested from his land,
or the value of the crops that would be harvested from
his land. Rather, his obligation was to pay a generic
thing the amount of money representing the total
sum of the five loans, with interest. The transaction
between the appellant and the Bank of Taiwan was a
series of five contracts of simple loan of sums of money.
By a contact of (simple) loan, one of the parties
delivers to another...money or other consumable thing
upon the condition that the same amount of the same
kind and quality shall be paid. (Article 1933, Civil
Code) The obligation of the appellant under the five
promissory notes evidencing the loans in question is to
pay the value thereof, that is, to deliver a sum of
money a clear case of an obligation to deliver, a
generic thing. Article 1263 of the Civil Code provides:

In an obligation to deliver a generic thing,

the loss or destruction of anything of the
same kind does not extinguish the
obligation.

The chattel mortgage on the crops growing on

appellants land simply stood as a security for the
fulfilment of appellants obligation covered by the five
promissory notes, and the loss of the crops did not
extinguish his obligation to pay, because the account
could still be paid from other sources aside from the
mortgaged crops.
_______________________________________________________
9.

FELIX DELOS SANTOS VS. AGUSTINA JARRA

G.R. NO. L-4150
February 10, 1910/J. Torres

Facts:
In the latter part of 1901, Magdaleno Jimenea
borrowed and obtained from plaintiff Felix De los
Santos ten first-class carabaos to be used at the
animal-power mill of his hacienda without
recompense or remuneration but under the sole
condition that they should be returned to him as
soon as the work at the mill was terminated.
However, Jimenea did not return the carabaos
notwithstanding the fact that the plaintiff claimed
their return after the work at the mill was finished.
Subsequently, Jimenea died and Agustina jarra was
appointed by the court as administratix of Jimeneas
estate.
Plaintiff presented his claim to the commissioners of
Jimeneas estate for the return of his ten carabaos
but the commissioners rejected his claim, hence, he
was prompted to file an action against Agustina Jarra
for the return of the ten first-class carabaos loaned
to the late Jimenea, or their present value, and to
pay the costs.
In her Answer, defendant Jarra admitted that the late
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 Jimenea.
After trial on the merits, the trial court ruled in favor
of the plaintiff ordering the defendant to return the
remaining 6 second and third class carabaos, or the
value thereof at the rate of P120 each.

Issue:
Whether the contract is one of a commodatum, hence,
defendant must return the carabaos to the plaintiff or
pay for their value.
Held:
Yes.
The carabaos were loaned or given on
commodatum as these were delivered to be used by
defendant.
When defendant failed to return the
carabaos upon demand by the plaintiff, there is no
doubt that defendant is under the obligation to
indemnify the owner thereof by paying him their value.
Since the 8 carabaos were not the property of the
deceased nor of any of his descendants, it is the duty of
the administratix of the estate to return them or to
indemnify the owner for their value.
_______________________________________________________

10.

ALEJANDRA MINA VS. RUPERTA PASCUAL

G.R.
NO.
L-8321/October
14,
1913/J.
Arellano
Facts: