Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-46240 November 3, 1939
MARGARITA QUINTOS and ANGEL A. ANSALDO, plaintiffs-appellants,
vs.
BECK, defendant-appellee.
Mauricio Carlos for appellants.
Felipe Buencamino, Jr. for appellee.

IMPERIAL, J.:
The plaintiff brought this action to compel the defendant to return her certain furniture which she lent him for his use. She appealed from the
judgment of the Court of First Instance of Manila which ordered that the defendant return to her the three has heaters and the four electric lamps
found in the possession of the Sheriff of said city, that she call for the other furniture from the said sheriff of Manila at her own expense, and that the
fees which the Sheriff may charge for the deposit of the furniture be paid pro rata by both parties, without pronouncement as to the costs.

The defendant was a tenant of the plaintiff and as such occupied the latter's house on M. H. del Pilar street, No. 1175. On January 14, 1936, upon the
novation of the contract of lease between the plaintiff and the defendant, the former gratuitously granted to the latter the use of the furniture described
in the third paragraph of the stipulation of facts, subject to the condition that the defendant would return them to the plaintiff upon the latter's
demand. The plaintiff sold the property to Maria Lopez and Rosario Lopez and on September 14, 1936, these three notified the defendant of the
conveyance, giving him sixty days to vacate the premises under one of the clauses of the contract of lease. There after the plaintiff required the
defendant to return all the furniture transferred to him for them in the house where they were found. On November 5, 1936, the defendant,
through another person, wrote to the plaintiff reiterating that she may call for the furniture in the ground floor of the house. On the 7th of the same
month, the defendant wrote another letter to the plaintiff informing her that he could not give up the three gas heaters and the four electric lamps
because he would use them until the 15th of the same month when the lease in due to expire. The plaintiff refused to get the furniture in view of the
fact that the defendant had declined to make delivery of all of them. On November 15th, before vacating the house, the defendant deposited
with the Sheriff all the furniture belonging to the plaintiff and they are now on deposit in the warehouse situated at No. 1521, Rizal Avenue, in the
custody of the said sheriff.

In their seven assigned errors the plaintiffs contend that the trial court incorrectly applied the law: in holding that they violated the contract by not
calling for all the furniture on November 5, 1936, when the defendant placed them at their disposal; in not ordering the defendant to pay them the
value of the furniture in case they are not delivered; in holding that they should get all the furniture from the Sheriff at their expenses; in ordering
them to pay-half of the expenses claimed by the Sheriff for the deposit of the furniture; in ruling that both parties should pay their respective legal
expenses or the costs; and in denying pay their respective legal expenses or the costs; and in denying the motions for reconsideration and new trial.
To dispose of the case, it is only necessary to decide whether the defendant complied with his obligation to return the furniture upon the plaintiff's
demand; whether the latter is bound to bear the deposit fees thereof, and whether she is entitled to the costs of litigation.lawphi1.net

The contract entered into between the parties is one of commadatum, because under it the plaintiff gratuitously granted the use of the furniture to the
defendant, reserving for herself the ownership thereof; by this contract the defendant bound himself to return the furniture to the plaintiff, upon the
latters demand (clause 7 of the contract, Exhibit A; articles 1740, paragraph 1, and 1741 of the Civil Code). The obligation voluntarily assumed by
the defendant to return the furniture upon the plaintiff's demand, means that he should return all of them to the plaintiff at the latter's residence or
house. The defendant did not comply with this obligation when he merely placed them at the disposal of the plaintiff, retaining for his benefit the
three gas heaters and the four eletric lamps. The provisions of article 1169 of the Civil Code cited by counsel for the parties are not squarely
applicable. The trial court, therefore, erred when it came to the legal conclusion that the plaintiff failed to comply with her obligation to get the
furniture when they were offered to her.

As the defendant had voluntarily undertaken to return all the furniture to the plaintiff, upon the latter's demand, the Court could not legally compel
her to bear the expenses occasioned by the deposit of the furniture at the defendant's behest. The latter, as bailee, was not entitled to place the
furniture on deposit; nor was the plaintiff under a duty to accept the offer to return the furniture, because the defendant wanted to retain the three gas
heaters and the four electric lamps.

As to the value of the furniture, we do not believe that the plaintiff is entitled to the payment thereof by the defendant in case of his inability to return
some of the furniture because under paragraph 6 of the stipulation of facts, the defendant has neither agreed to nor admitted the correctness of the
said value. Should the defendant fail to deliver some of the furniture, the value thereof should be latter determined by the trial Court through evidence
which the parties may desire to present.

The costs in both instances should be borne by the defendant because the plaintiff is the prevailing party (section 487 of the Code of Civil Procedure).
The defendant was the one who breached the contract of commodatum, and without any reason he refused to return and deliver all the furniture upon
the plaintiff's demand. In these circumstances, it is just and equitable that he pay the legal expenses and other judicial costs which the plaintiff would
not have otherwise defrayed.

The appealed judgment is modified and the defendant is ordered to return and deliver to the plaintiff, in the residence to return and deliver to the
plaintiff, in the residence or house of the latter, all the furniture described in paragraph 3 of the stipulation of facts Exhibit A. The expenses which
may be occasioned by the delivery to and deposit of the furniture with the Sheriff shall be for the account of the defendant. the defendant shall pay
the costs in both instances. So ordered.

Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 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.
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.
Cotabato Law Office for the Heirs of Juan Valdez.

GANCAYCO, J.:
The principal issue in this case is whether or not a decision of the Court of Appeals promulgated a long time ago can properly be considered res
judicata by respondent Court of Appeals in the present two cases between petitioner and two private respondents.

Petitioner questions as allegedly erroneous the Decision dated August 31, 1987 of the Ninth Division of Respondent Court of Appeals 1 in CA-G.R.
No. 05148 [Civil Case No. 3607 (419)] and CA-G.R. No. 05149 [Civil Case No. 3655 (429)], both for Recovery of Possession, which affirmed the
Decision of the Honorable Nicodemo T. Ferrer, Judge of the Regional Trial Court of Baguio and Benguet in Civil Case No. 3607 (419) and Civil
Case No. 3655 (429), with the dispositive portion as follows:

WHEREFORE, Judgment is hereby rendered ordering the defendant, Catholic Vicar Apostolic of the Mountain Province to return
and surrender Lot 2 of Plan Psu-194357 to the plaintiffs. Heirs of Juan Valdez, and Lot 3 of the same Plan to the other set of
plaintiffs, the Heirs of Egmidio Octaviano (Leonardo Valdez, et al.). For lack or insufficiency of evidence, the plaintiffs' claim or
damages is hereby denied. Said defendant is ordered to pay costs. (p. 36, Rollo)

Respondent Court of Appeals, in affirming the trial court's decision, sustained the trial court's conclusions that the Decision of the Court of Appeals,
dated May 4,1977 in CA-G.R. No. 38830-R, in the two cases affirmed by the Supreme Court, touched on the ownership of lots 2 and 3 in question;
that the two lots were possessed by the predecessors-in-interest of private respondents under claim of ownership in good faith from 1906 to 1951;
that petitioner had been in possession of the same lots as bailee in commodatum up to 1951, when petitioner repudiated the trust and when it applied
for registration in 1962; that petitioner had just been in possession as owner for eleven years, hence there is no possibility of acquisitive prescription
which requires 10 years possession with just title and 30 years of possession without; that the principle of res judicata on these findings by the Court
of Appeals will bar a reopening of these questions of facts; and that those facts may no longer be altered.

Petitioner's motion for reconsideation of the respondent appellate court's Decision in the two aforementioned cases (CA G.R. No. CV-05418 and
05419) was denied.

The facts and background of these cases as narrated by the trail court are as follows —

... The documents and records presented reveal that the whole controversy started when the defendant
Catholic Vicar Apostolic of the Mountain Province (VICAR for brevity) filed with the Court of First Instance
of Baguio Benguet on September 5, 1962 an application for registration of title over Lots 1, 2, 3, and 4 in
Psu-194357, situated at Poblacion Central, La Trinidad, Benguet, docketed as LRC N-91, said Lots being the
sites of the Catholic Church building, convents, high school building, school gymnasium, school dormitories,
social hall, stonewalls, etc. On March 22, 1963 the Heirs of Juan Valdez and the Heirs of Egmidio Octaviano
filed their Answer/Opposition on Lots Nos. 2 and 3, respectively, asserting ownership and title thereto. After
trial on the merits, the land registration court promulgated its Decision, dated November 17, 1965,
confirming the registrable title of VICAR to Lots 1, 2, 3, and 4.

The Heirs of Juan Valdez (plaintiffs in the herein Civil Case No. 3655) and the Heirs of Egmidio Octaviano
(plaintiffs in the herein Civil Case No. 3607) appealed the decision of the land registration court to the then
Court of Appeals, docketed as CA-G.R. No. 38830-R. The Court of Appeals rendered its decision, dated May
9, 1977, reversing the decision of the land registration court and dismissing the VICAR's application as to
Lots 2 and 3, the lots claimed by the two sets of oppositors in the land registration case (and two sets of
plaintiffs in the two cases now at bar), the first lot being presently occupied by the convent and the second by
the women's dormitory and the sister's convent.

On May 9, 1977, the Heirs of Octaviano filed a motion for reconsideration praying the Court of Appeals to
order the registration of Lot 3 in the names of the Heirs of Egmidio Octaviano, and on May 17, 1977, the
Heirs of Juan Valdez and Pacita Valdez filed their motion for reconsideration praying that both Lots 2 and 3
be ordered registered in the names of the Heirs of Juan Valdez and Pacita Valdez. On August 12,1977, the
Court of Appeals denied the motion for reconsideration filed by the Heirs of Juan Valdez on the ground that
there was "no sufficient merit to justify reconsideration one way or the other ...," and likewise denied that of
the Heirs of Egmidio Octaviano.

Thereupon, the VICAR filed with the Supreme Court a petition for review on certiorari of the decision of the
Court of Appeals dismissing his (its) application for registration of Lots 2 and 3, docketed as G.R. No. L-
46832, entitled 'Catholic Vicar Apostolic of the Mountain Province vs. Court of Appeals and Heirs of
Egmidio Octaviano.'

From the denial by the Court of Appeals of their motion for reconsideration the Heirs of Juan Valdez and
Pacita Valdez, on September 8, 1977, filed with the Supreme Court a petition for review, docketed as G.R.
No. L-46872, entitled, Heirs of Juan Valdez and Pacita Valdez vs. Court of Appeals, Vicar, Heirs of Egmidio
Octaviano and Annable O. Valdez.

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

On February 7, 1979, the Heirs of Octaviano filed with the Court of Appeals a petitioner for certiorari and
mandamus, docketed as CA-G.R. No. 08890-R, entitled Heirs of Egmidio Octaviano vs. Hon. Salvador J.
Valdez, Jr. and Vicar. In its decision dated May 16, 1979, the Court of Appeals dismissed the petition.

It was at that stage that the instant cases were filed. The Heirs of Egmidio Octaviano filed Civil Case No.
3607 (419) on July 24, 1979, for recovery of possession of Lot 3; and the Heirs of Juan Valdez filed Civil
Case No. 3655 (429) on September 24, 1979, likewise for recovery of possession of Lot 2 (Decision, pp. 199-
201, Orig. Rec.).

In Civil Case No. 3607 (419) trial was held. The plaintiffs Heirs of Egmidio Octaviano presented one (1) witness, Fructuoso
Valdez, who testified on the alleged ownership of the land in question (Lot 3) by their predecessor-in-interest, Egmidio Octaviano
(Exh. C ); his written demand (Exh. B—B-4 ) to defendant Vicar for the return of the land to them; and the reasonable rentals for
the use of the land at P10,000.00 per month. On the other hand, defendant Vicar presented the Register of Deeds for the Province
of Benguet, Atty. Nicanor Sison, who testified that the land in question is not covered by any title in the name of Egmidio
Octaviano or any of the plaintiffs (Exh. 8). The defendant dispensed with the testimony of Mons.William Brasseur when the
plaintiffs admitted that the witness if called to the witness stand, would testify that defendant Vicar has been in possession of Lot
3, for seventy-five (75) years continuously and peacefully and has constructed permanent structures thereon.

In Civil Case No. 3655, the parties admitting that the material facts are not in dispute, submitted the case on the sole issue of
whether or not the decisions of the Court of Appeals and the Supreme Court touching on the ownership of Lot 2, which in effect
declared the plaintiffs the owners of the land constitute res judicata.

In these two cases , the plaintiffs arque that the defendant Vicar is barred from setting up the defense of ownership and/or long
and continuous possession of the two lots in question since this is barred by prior judgment of the Court of Appeals in CA-G.R.
No. 038830-R under the principle of res judicata. Plaintiffs contend that the question of possession and ownership have already
been determined by the Court of Appeals (Exh. C, Decision, CA-G.R. No. 038830-R) and affirmed by the Supreme Court (Exh.
1, Minute Resolution of the Supreme Court). On his part, defendant Vicar maintains that the principle of res judicata would not
prevent them from litigating the issues of long possession and ownership because the dispositive portion of the prior judgment in
CA-G.R. No. 038830-R merely dismissed their application for registration and titling of lots 2 and 3. Defendant Vicar contends
that only the dispositive portion of the decision, and not its body, is the controlling pronouncement of the Court of Appeals. 2

The alleged errors committed by respondent Court of Appeals according to petitioner are as follows:

1. ERROR IN APPLYING LAW OF THE CASE AND RES JUDICATA;

2. ERROR IN FINDING THAT THE TRIAL COURT RULED THAT LOTS 2 AND 3 WERE ACQUIRED BY PURCHASE BUT WITHOUT
DOCUMENTARY EVIDENCE PRESENTED;

3. ERROR IN FINDING THAT PETITIONERS' CLAIM IT PURCHASED LOTS 2 AND 3 FROM VALDEZ AND OCTAVIANO WAS AN
IMPLIED ADMISSION THAT THE FORMER OWNERS WERE VALDEZ AND OCTAVIANO;

4. ERROR IN FINDING THAT IT WAS PREDECESSORS OF PRIVATE RESPONDENTS WHO WERE IN POSSESSION OF LOTS 2 AND 3 AT
LEAST FROM 1906, AND NOT PETITIONER;

5. ERROR IN FINDING THAT VALDEZ AND OCTAVIANO HAD FREE PATENT APPLICATIONS AND THE PREDECESSORS OF PRIVATE
RESPONDENTS ALREADY HAD FREE PATENT APPLICATIONS SINCE 1906;

6. ERROR IN FINDING THAT PETITIONER DECLARED LOTS 2 AND 3 ONLY IN 1951 AND JUST TITLE IS A PRIME NECESSITY UNDER
ARTICLE 1134 IN RELATION TO ART. 1129 OF THE CIVIL CODE FOR ORDINARY ACQUISITIVE PRESCRIPTION OF 10 YEARS;

7. ERROR IN FINDING THAT THE DECISION OF THE COURT OF APPEALS IN CA G.R. NO. 038830 WAS AFFIRMED BY THE SUPREME
COURT;

8. ERROR IN FINDING THAT THE DECISION IN CA G.R. NO. 038830 TOUCHED ON OWNERSHIP OF LOTS 2 AND 3 AND THAT
PRIVATE RESPONDENTS AND THEIR PREDECESSORS WERE IN POSSESSION OF LOTS 2 AND 3 UNDER A CLAIM OF OWNERSHIP
IN GOOD FAITH FROM 1906 TO 1951;

9. ERROR IN FINDING THAT PETITIONER HAD BEEN IN POSSESSION OF LOTS 2 AND 3 MERELY AS BAILEE BOR ROWER) IN
COMMODATUM, A GRATUITOUS LOAN FOR USE;

10. ERROR IN FINDING THAT PETITIONER IS A POSSESSOR AND BUILDER IN GOOD FAITH WITHOUT RIGHTS OF RETENTION
AND REIMBURSEMENT AND IS BARRED BY THE FINALITY AND CONCLUSIVENESS OF THE DECISION IN CA G.R. NO. 038830. 3

The petition is bereft of merit.

Petitioner questions the ruling of respondent Court of Appeals in CA-G.R. Nos. 05148 and 05149, when it clearly held that it was in agreement with
the findings of the trial court that the Decision of the Court of Appeals dated May 4,1977 in CA-G.R. No. 38830-R, on the question of ownership of
Lots 2 and 3, declared that the said Court of Appeals Decision CA-G.R. No. 38830-R) did not positively declare private respondents as owners of the
land, neither was it declared that they were not owners of the land, but it held that the predecessors of private respondents were possessors of Lots 2
and 3, with claim of ownership in good faith from 1906 to 1951. Petitioner was in possession as borrower in commodatum up to 1951, when it
repudiated the trust by declaring the properties in its name for taxation purposes. When petitioner applied for registration of Lots 2 and 3 in 1962, it
had been in possession in concept of owner only for eleven years. Ordinary acquisitive prescription requires possession for ten years, but always with
just title. Extraordinary acquisitive prescription requires 30 years. 4

On the above findings of facts supported by evidence and evaluated by the Court of Appeals in CA-G.R. No. 38830-R, affirmed by this Court, We see
no error in respondent appellate court's ruling that said findings are res judicata between the parties. They can no longer be altered by presentation of
evidence because those issues were resolved with finality a long time ago. To ignore the principle of res judicata would be to open the door to endless
litigations by continuous determination of issues without end.

An examination of the Court of Appeals Decision dated May 4, 1977, First Division 5 in CA-G.R. No. 38830-R, shows that it reversed the trial court's
Decision 6 finding petitioner to be entitled to register the lands in question under its ownership, on its evaluation of evidence and conclusion of facts.

The Court of Appeals found that petitioner did not meet the requirement of 30 years possession for acquisitive prescription over Lots 2 and 3. Neither
did it satisfy the requirement of 10 years possession for ordinary acquisitive prescription because of the absence of just title. The appellate court did
not believe the findings of the trial court that Lot 2 was acquired from Juan Valdez by purchase and Lot 3 was acquired also by purchase from
Egmidio Octaviano by petitioner Vicar because there was absolutely no documentary evidence to support the same and the alleged purchases were
never mentioned in the application for registration.

By the very admission of petitioner Vicar, Lots 2 and 3 were owned by Valdez and Octaviano. Both Valdez and Octaviano had Free Patent
Application for those lots since 1906. The predecessors of private respondents, not petitioner Vicar, were in possession of the questioned lots since
1906.

There is evidence that petitioner Vicar occupied Lots 1 and 4, which are not in question, but not Lots 2 and 3, because the buildings standing thereon
were only constructed after liberation in 1945. Petitioner Vicar only declared Lots 2 and 3 for taxation purposes in 1951. The improvements oil Lots
1, 2, 3, 4 were paid for by the Bishop but said Bishop was appointed only in 1947, the church was constructed only in 1951 and the new convent only
2 years before the trial in 1963.

It has become final and executory a long time ago. 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. Republic of the Philippines SUPREME COURT Manila EN BANC G. and costs. they became bailors in commodatum and the petitioner the bailee. 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. the Decision dated Aug. when it held that the Decision of the Court of Appeals in CA-G. vs. We find no reason to disregard or reverse the ruling of the Court of Appeals in CA-G. The bailees' failure to return the subject matter of commodatum to the bailor did not mean adverse possession on the part of the borrower. J. through counsel Navarro. Liaison and Associates for petitioner-appellant. WHEREFORE AND BY REASON OF THE FOREGOING. Bagtas wrote to the Director of Animal Industry that he would pay the value of the three bulls. Upon the expiration on 7 May 1949 of the contract. 38830-R is governing. No. BAGTAS. 1962 REPUBLIC OF THE PHILIPPINES. Administratrix of the Intestate Estate left by the late Jose V. They never asked for the return of the house.241.R.09 the total value of the three bulls plus the breeding fees in the amount of P626.When petitioner Vicar was notified of the oppositor's claims.320. On 8 May 1948 Jose V. On 25 March 1950 Jose V. However.46. 1987 in CA-G. The facts as supported by evidence established in that decision may no longer be altered. 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. Rosete and Manalo. this petition is DENIED for lack of merit. . of P744. D. No. he could not return the animals nor pay their value and prayed for the dismissal of the complaint. by respondent Court of Appeals is AFFIRMED. Jose V. the borrower asked for a renewal for another period of one year. Bagtas.R. The bailee held in trust the property subject matter of commodatum. Lots 2 and 3 were surveyed by request of petitioner Vicar only in 1962. The Court of Appeals found that the predecessors-in-interest and private respondents were possessors under claim of ownership in good faith from 1906. 05148 and 05149.R. answered that because of the bad peace and order situation in Cagayan Valley.R. Private respondents were able to prove that their predecessors' house was borrowed by petitioner Vicar after the church and the convent were destroyed. 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. PADILLA. .62. defendant. No. FELICIDAD M. and that the adverse claim and repudiation of trust came only in 1951. Office of the Solicitor General for plaintiff-appellee. 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. Its findings of fact have become incontestible. plaintiff-appellee. thereby in effect. This Court declined to review said decision.R. 38830-R. No. to which depreciation the Auditor General did not object. So. under the principle of res judicata. both with interests.45 and the unpaid breeding fee in the sum of P199. with costs against petitioner. Reyes. affirming it.17 with interest on both sums of (at) the legal rate from the filing of this complaint and costs. 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. The adverse claim of petitioner came only in 1951 when it declared the lots for taxation purposes. on 30 July 1956 the trial court render judgment — . 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. hence the rule. After hearing. sentencing the latter (defendant) to pay the sum of P3.: The Court of Appeals certified this case to this Court because only questions of law are raised. 12818). 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. JOSE V.625. a Bhagnari. No. . and that other just and equitable relief be granted in (civil No. Nos.R. petitioner-appellant. T. Bagtas failed to pay the book value of the three bulls or to return them. in the present cases CA-G.46. the parish priest offered to buy the lot from Fructuoso Valdez. but when they allowed its free use. Bagtas. 05149. that petitioner Vicar was only a bailee in commodatum. 05148 and CA- G. of P1. 31.176.56 and a Sahiniwal. L-17474 October 25. On 5 July 1951 Jose V. SO ORDERED. much less grave abuse of discretion. Respondent appellate court did not commit any reversible error. BAGTAS. particularly in the barrio of Baggao.

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. where the animal was kept. . 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. is liable for loss of the things. A contract of commodatum is essentially gratuitous.46. was notified. later on renewed for another year as regards one bull. the Court denied her motion. And even if the contract be commodatum. 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 loan of one bull was renewed for another period of one year to end on 8 May 1950. The appellee or its attorney or . . the Sahiniwal. . It is true that on 26 June 1952 Jose M.176. . Bagtas. on 6 December 1958. Under article 1671 of the Civil Code the lessee would be subject to the responsibilities of a possessor in bad faith. Quezon City. for that reason. arising from contract express or implied. the appointed administratrix of the estate of the said deceased. On 31 January 1959 the plaintiff objected to her motion. because article 1942 of the Civil Code provides that a bailee in a contract of commodatum — . and to give the name and residence of the executory administrator. 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. Hence. 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. then the contract would be a lease of the bull. Jr. . (3) If the thing loaned has been delivered with appraisal of its value. Bagtas. 6 February. Highway 54. to with: the Sindhi.. Nueva Vizcaya. is untenable. the surviving spouse of the defendant Jose Bagtas who died on 23 October 1951 and as administratrix of his estate. when lent and delivered to the deceased husband of the appellant the bulls had each an appraised book value. it shall be the duty of his attorney to inform the court promptly of such death . for funeral expenses and expenses of the last sickness of the said decedent. Cagayan. guardian. or within such time as may be granted. . as evidenced by a memorandum receipt signed by the latter (Exhibit 2).46. and praying that the writ of execution be quashed and that a writ of preliminary injunction be issued. The loan by the appellee to the late defendant Jose V. son of the appellant by the late defendant. Bagtas of the three bulls for breeding purposes for a period of one year from 8 May 1948 to 7 May 1949. Furthermore. within six (6) months from the date of the first publication of this order. returned the Sindhi and Bhagnari bulls to Roman Remorin. . Bagtas. was subject to the payment by the borrower of breeding fee of 10% of the book value of the bulls. The original period of the loan was from 8 May 1948 to 7 May 1949. . not due. . 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. this appeal certified by the Court of Appeals to this Court as stated at the beginning of this opinion. . 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 . Superintendent of the NVB Station. at P1. . Felicidad M. Of this order appointing a special sheriff. the Bhagnari at P1. Bureau of Animal Industry. 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. died from gunshot wound inflicted during a Huk raid on Hacienda Felicidad Intal. Bagtas. the court shall order." She cannot be held liable for the two bulls which already had been returned to and received by the appellee. the claim that his civil personality having ceased to exist the trial court lost jurisdiction over the case against him. and judgment for monopoly against him." 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. Bagtas. because she had continued possession of the bull after the expiry of the contract. or other legal representative of the deceased . On the same day. within a period of thirty (30) days.53 be issued against the estate of defendant deceased Jose V. as the appellee retained ownership or title to the bull it should suffer its loss due to force majeure.1 If the breeding fee be considered a compensation. 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.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. But the appellant kept and used the bull until November 1953 when during a Huk raid it was killed by stray bullets. serving a copy thereof upon the aforementioned Felicidad M. and there was no reason for such failure to notify. to file said claims with the Clerk of this Court at the City Hall Bldg. the legal representative of the deceased to appear and to be substituted for the deceased.. The contention is without merit. The notice by the probate court and its publication in the Voz de Manila that Felicidad M. The appellant contends that the contract was commodatum and that. 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. even if it should be through a fortuitous event: (2) If he keeps it longer than the period stipulated . Bayombong. because section 17 of Rule 3 of the Rules of Court provides that — After a party dies and the claim is not thereby extinguished. However. . . still the appellant is liable. .56 and the Sahiniwal at P744. Baggao. is not altogether without merit.320. or contingent. upon proper notice. unless there is a stipulation exempting the bailee from responsibility in case of a fortuitous event. On 6 February 1959 she filed a reply thereto. whether the same be due.

for value received. Bengzon. Concepcion. the writ of execution appealed from is set aside. ACCORDINGLY. 1 A parcel of land covered by Transfer Certificate of Title No.B. . L-40824 February 23. the administratrix appointed by the court..000. particularly the payment of the amortizations due. private respondents alleged that they signed the mortgage contracts not as sureties or guarantors for the Lagasca spouses but they merely gave their common property to the said co-owners who were solely benefited by the loans from the GSIS. respectively. and Mrs Flaviano Lagasca. Labrador.. RACHO. . promise to pay the GOVERNMENT SERVICE INSURANCE SYSTEM the sum of . No. dated April 14. Bautista Angelo.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.00 and P 3.. . Sales for private respondents. they asked for actual and moral damages and attorney's fees.500. respondents. Reyes.500. COURT OF APPEALS and MR. 1958. another deed of mortgage. executed a deed of mortgage.L. In their aforesaid complaint. Mr. (P 11.. 8 The trial court rendered judgment on February 25. their property and all other documents executed in relation thereto in favor of the Government Service Insurance System" be declared null and void. GSIS extrajudicially foreclosed the mortgage and caused the mortgaged property to be sold at public auction on December 3. J.65) each. we the undersigned . & MRS.. was given as security under the aforesaid two deeds. SEVERALLY and SOLIDARILY. Additionally. J. As the appellant already had returned the two bulls to the appellee. C.00. Barrera. because it was killed while in the custody of the administratrix of his estate. the estate of the late defendant is only liable for the sum of P859. JOINTLY. Said decision was reversed by the respondent Court of Appeals 9 which held that: . petitioner. concurs in the result. J. 1962. ISABELO R. herein private respondents filed a complaint against the petitioner and the Lagasca spouses in the former Court of First Instance of Quezon City. dated November 13. Special proceedings for the administration and settlement of the estate of the deceased Jose V.63..R. (P 127. REGALADO . 4 This undertaking was not fulfilled. It was further prayed that they be allowed to recover said property. . 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. 7 praying that the extrajudicial foreclosure "made on. 1957. and Mrs.: Private respondents. . vs. and/or they be allowed to repurchase the land. 38989 of the Register of Deed of Quezon City. the value of the bull which has not been returned to the appellee. 1968 dismissing the complaint for failure to establish a cause of action. 1961. Isabelo R.00) Philippine Currency. 6 More than two years thereafter. 1965. in connection with two loans granted by the latter in the sums of P 11. the Lagasca spouses executed an instrument denominated "Assumption of Mortgage" under which they obligated themselves to assume the aforesaid obligation to the GSIS and to secure the release of the mortgage covering that portion of the land belonging to herein private respondents and which was mortgaged to the GSIS. Racho. 3 On July 11. together with the spouses Mr. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.. Dizon. co-owned by said mortgagor spouses. with interest at the rate of six (6%) per centum compounded monthly payable in .. Regala and Makalintal. 2 They also executed a 'promissory note" which states in part: . JJ. and/or the GSIS be ordered to pay them the value thereof. 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. or on August 23. Bagtas having been instituted in the Court of First Instance of Rizal (Q-200). without pronouncement as to costs. (120)equal monthly installments of . in favor of petitioner Government Service Insurance System (hereinafter referred to as GSIS) and subsequently. concur.J. The Government Corporate Counsel for petitioner. Lorenzo A. 1989 GOVERNMENT SERVICE INSURANCE SYSTEM. . Paredes. 5 Upon failure of the mortgagors to comply with the conditions of the mortgage.

The note is payable to a specified party. xxxx 'It is. and costs. . These documents do not comply with the fourth requisite to be considered as such under Section 1 of Act No. Then there is also the undisputed fact. clear that as against the GSIS. (2) directing the GSIS to reconvey to appellants their share of the mortgaged property.00. the GSIS. or the value thereof if already sold to third party. even assuming that private respondents may not be assuming personal liability for the debt. in the sum of P 35.. their share in the property shall nevertheless secure and respond for the performance of the principal obligation. the Lagasca spouses. acceptor of indorser without receiving value therefor. otherwise the consent of the private respondents would not have been required. 11 The case is now before us in this petition for review. 12) and posted pursuant to Sec 3 of Act 3135 is not the notice to which the mortgagor is entitled upon the application being made for an extrajudicial foreclosure.. both parties relied on the provisions of Section 29 of Act No. The supposed requirement of prior demand on the private respondents would not be in point here since the mortgage contracts created obligations with specific terms for the compliance thereof.00. it would be unusual for the GSIS to arrange for and deduct the monthly amortizations on the loans from the salary as an army officer of Flaviano Lagasca without likewise affecting deductions from the salary of Isabelo Racho who was also an army sergeant. contrary to the holding of the respondent court.00 as attorney's fees. and another one entered (1) declaring the foreclosure of the mortgage void insofar as it affects the share of the appellants. thus confirming that they did so pursuant to their original agreement. The factual context of this case is precisely what is contemplated in the last paragraph of Article 2085 of the Civil Code to the effect that third persons who are not parties to the principal obligation may secure the latter by pledging or mortgaging their own property So long as valid consent was given. drawer. instead. 10 On the foregoing findings. are clearly not negotiable instruments. Indeed. There is no intimation that the former executed such instrument for a consideration. which provide that an accommodation party is one who has signed an instrument as maker. . but is held liable on the instrument to a holder for value although the latter knew him to be only an accommodation party. The promissory note hereinbefore quoted. As earlier indicated. appellants have a valid cause for having foreclosed the mortgage without having given sufficient notice to them as required either as to their delinquency in the payment of amortization or as to the subsequent foreclosure of the mortgage by reason of any default in such payment. In submitting their case to this Court. it cannot be said that private respondents are without liability under the aforesaid mortgage contracts. . 2031 would not apply. the provisions of Act No. the introduction of such evidence falls under the exception to said rule. the judgment appealed from is hereby reversed. and (3) ordering the appellees Flaviano Lagasca and Esther Lagasca to pay the appellants the sum of P 10.000. This approach of both parties appears to be misdirected and their reliance misplaced. therefore. although formally they are co-mortgagors. governance shall be afforded. the fact that the loans were solely for the benefit of the Lagasca spouses would not invalidate the mortgage with respect to private respondents' share in the property. they are so only for accomodation (sic) in that the GSIS required their consent to the mortgage of the entire parcel of land which was covered with only one certificate of title. 14 However... the factual findings of respondent court are that private respondents signed the documents "only to give their consent to the mortgage as required by GSIS". with full knowledge that the loans secured thereby were solely for the benefit of the appellant (sic) spouses who alone applied for the loan. 12 This appears to be duly supported by sufficient evidence on record. that the Lagasca spouses executed a so-called "Assumption of Mortgage" promising to exclude private respondents and their share of the mortgaged property from liability to the mortgagee. otherwise known as the Negotiable Instruments Law. 2031. In consenting thereto. The parties to the mortgage could not have intended that the same would apply only to the aliquot portion of the Lagasca spouses in the property. by the provisions of the Civil Code and special laws on mortgages. the respondent court consequently decreed that- In view of all the foregoing. 2031 because they are neither payable to order nor to bearer. P 5.00 as moral damages. The parol evidence rule 13 cannot be used by petitioner as a shield in this case for it is clear that there was no objection in the court below regarding the admissibility of the testimony and documents that were presented to prove that the private respondents signed the mortgage papers just to accommodate their co-owners. as already stated. The facts further show that the private respondents expressly bound themselves as solidary debtors in the promissory note hereinbefore quoted. Besides. 'Daily Record (Exh. as well as the mortgage deeds subject of this case. The notice published in the newspaper. Absent the aforesaid requisite. with the latter having full knowledge that the loans secured thereby were solely for the benefit of the Lagasca spouses.000. there being allegations in the complaint of private respondents in the court below regarding the failure of the mortgage contracts to express the true agreement of the parties.

The respondent court. 4 The antecedent facts are as follows: Petitioner Yong Chan Kim was employed as a Researcher at the Aquaculture Department of the Southeast Asian Fisheries Development Center (SEAFDEC) with head station at Tigbauan. 6th Judicial Region.O. RTC. for petitioner. For this travel order. 15 the Court ruled that Act No. HON. There is no showing that the foregoing requirement on notice was not complied with in the foreclosure sale complained of . Remedios C. Notice shall be given by posting notices of sale for not less than twenty days in at least three public places of the municipality where the property is situated.R. As Head of the Economics Unit of the Research Division. Iloilo to Roxas City from 30 June to 4 July 1982. denying petitioner's motion for reconsideration. and the resolution. in Criminal Case No. and if such property is worth more than four hundred pesos. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G. et al. 628. dated 29 April 1988. Balbin and Manuel C. PEOPLE OF THE PHILIPPINES. Province of Iloilo.. No. We cannot agree with the ruling of respondent court that lack of notice to the private respondents of the extrajudicial foreclosure sale impairs the validity thereof. he conducted prawn surveys which required him to travel to various selected provinces in the country where there are potentials for prawn culture. Iloilo City.: This petition seeks the review on certiorari of the following: 1. Teodosio for private respondent. petitioner. Cases. petitioner received a cash advance of P495.00. dated 19 August 1988.Coming now to the extrajudicial foreclosure effected by GSIS. 2222 which covered his travels to different places in Luzon from 16 June to 21 July 1982. a period of five (5) days. 3 dismissing petitioner's appeal/petition for review for having been filed out of time. In Bonnevie. Court of appeals. requiring him to travel from the Head Station at Tigbauan. T. Hector P. the mortgage and the extrajudicial foreclosure proceedings were valid. he received P6. quoting the requirement on notice in such cases as follows: Section 3.438. 2268. Within the same period. in Criminal Case No. On 15 June 1982. vs. Branch XXVIII. does not require personal notice on the mortgagor. SO ORDERED. . a period of thirty five (35) days. WHEREFORE. erred in annulling the mortgage insofar as it affected the share of private respondents or in directing reconveyance of their property or the payment of the value thereof Indubitably. Branch 28 Iloilo City and Court of Appeals (13th Division) respondents. GUSTILO. Under this travel order. Jr. such notice shall also be published once a week for at least three consecutive weeks in a newspaper of general circulation in the municipality or city. 1991 YONG CHAN KIM. petitioner was issued Travel Order No. vs. 1 and the affirming decision of the Regional Trial Court. The decision dated 3 September 1986 of the 15th Municipal Circuit Trial Court (Guimbal-Igbaras-Tigbauan-Tubungan) in Guimbal. PADILLA. promulgated on 30 July 1987.2 2. EDGAR D. petitioner was issued another travel order. Q-9418 thereof.00 as cash advance to defray his travel expenses. therefore. J. judgment is hereby rendered REVERSING the decision of the respondent Court of Appeals and REINSTATING the decision of the court a quo in Civil Case No. Presiding Judge. whether or not private respondents herein benefited from the loan. The decision of the Court of Appeals. Iloilo. 3135. et al. as amended. 84719 January 25. 20958.

Revised Penal Code. petitioner. we stated: . we resolved to set aside our resolution dismissing this case and gave due course to the petition. In sum. we resolved to deny the petition for failure of petitioner to sufficiently show that the Court of Appeals had committed any reversible error in its questioned judgment which had dismissed petitioner's petition for review for having been filed out of time. Petitioner was required to comment on the internal auditor's report regarding the alleged anomalous claim for per diems. In our Resolution of 29 May 1989. Records disclose there is no aggravating circumstance proven by the prosecution. The records of the case were received by the Intermediate Appellate Court on 8 October 1987. and the appeal was docketed as CA-G. On 30 July 1987. petitioner presented both travel orders for liquidation.O. 2222. the Court of Appeals dismissed the petition for having been filed out of time. since the RTC judge was rendered in the exercise of its appellate jurisdiction over municipal trial courts. docketed as Criminal Case Nos. and Section 3.00. 631 was subsequently dismissed for failure to prosecute. 05035. 12 August 1987. On 19 October 1988. As earlier stated. Consonantly. it was discovered that there was an overlap of four (4) days (30 June to 3 July 1982) in the two (2) travel orders for which petitioner collected per diems twice.00 to SEAFDEC. the dispositive part of which reads as follows: IN VIEW OF THE FOREGOING CONSIDERATIONS. submitting Travel Expense Reports to the Accounting Section. Iloilo. Hence. thru counsel. 9 On 10 August 1990.5 Criminal Case No. the Court resolved to require the respondents to comment on the petition for review. 628. In the said resolution. 20958 affirmed in toto the trial court's decision. No. the Regional Trial Court in Iloilo City in Criminal Case No. petitioner denied the alleged anomaly. The Solicitor General filed his Comment on 20 January 1989. No. the total amount in the form of per diems and allowances charged and collected by petitioner under Travel Order No. On 11 August 1987. as provided for under Section 22. Batas Pambansa 129. claiming that he made make-up trips to compensate for the trips he failed to undertake under T. The failure of petitioner to file the proper petition rendered the decision of the Regional Trial Court final and executory. 628 and 631. such as this. When the Travel Expense Reports were audited. In September 1983. but rather it delved into the substance and merits of the case. Considering the amount subject of the present complaint. the Municipal Circuit Trial Court rendered a decision. 8 Petitioner filed a motion for reconsideration maintaining that his petition for review did not limit itself to the issue upon which the appellate court's decision of 29 April 1988 was based. the petitioner should have filed a petition for review with the then Intermediate Appellate Court instead of a notice of appeal with the Regional Trial Court. Petitioner's counsel submitted a Reply (erroneously termed Comment) 7 wherein she contended that the peculiar circumstances of a case. In his reply. In his Comment. 3. the imposable penalty should be in the medium period of arresto mayor in its maximum period toprision correccional in its minimum period in accordance with Article 315.R. on 29 April 1988. petitioner filed with the appellate court a petition for review.230. after several grants of extensions of time to file the same. the Solicitor General prayed for the dismissal of the instant petition on the ground that. according to the Solicitor General. the present recourse. when he did not actually and physically travel as represented by his liquidation papers. in perfecting his appeal from the RTC to the Intermediate Appellate Court. Neither there is any mitigating circumstance proven by the accused. should be considered in order that the principle barring a petitioner's right of review can be made flexible in the interest of justice and equity. Petitioner appealed from the decision of the Municipal Circuit Trial Court in Criminal Case No. two (2) complaints for Estafa were filed against the petitioner before the Municipal Circuit Trial Court at Guimbal. Section 22 of the Interim Rules and Guidelines.6 The decision of the Regional Trial Court was received by petitioner on 10 August 1987. Revised Penal Code. Costs against the accused. the Court hereby sentences the accused to suffer an imprisonment ranging from four (4) months as the minimum to one (1) year and six (6) months as the maximum in accordance with the Indeterminate Sentence Law and to reimburse the amount of P1. the court finds the accused. 2222 because he was recalled to the head office and given another assignment. 628. was P1.On 14 January 1983. The surety bond of the accused shall remain valid until final judgment in accordance herewith.230. Rule 123 of the 1985 Rules of Criminal Procedure. After trial in Criminal Case No. guilty beyond reasonable doubt for the crime of Estafa penalized under paragraph l(b) of Article 315. On 30 October 1987. Yong Chan Kim. Petitioner's motion for reconsideration was denied for lack of merit. filed a notice of appeal with the Regional Trial Court which ordered the elevation of the records of the case to the then Intermediate Appellate Court on the following day.

Technicality. the same. or by denying having received such money. II. For the alleged failure of petitioner to return the amount of P1. or other property. namely: (a) x x x xxx xxx (b) By misappropriating or converting.O. As the Court declared in a recent decision. It is likewise admitted that within the period covered by T. under altered rules of procedure. we note that the petitioner.230.00 out of the cash advance which he received under T. WHETHER OR NOT THE DECISION (sic) OF THE MUNICIPAL CIRCUIT TRIAL COURT (GUIMBAL. . Hence. In several cases decided by this Court. or to return. or under any other obligation involving the duty to make delivery of. .O. to the prejudice of another.230. Any person who shall defraud another by any of the means mentioned herein below shall be punished by: xxx xxx xxx 1. [Alonzo v. good or personal property that he had received. EQUITY AND DUE PROCESS. Swindling (Estafa). the Solicitor General filed on 13 March 1990 a Recommendation for Acquittal in lieu of the required memorandum. 2222. While the Court of Appeals can not be faulted and. although the procedure taken was not correct. . 10. petitioner filed his memorandum on 25 October 1989. It is undisputed that petitioner received a cash advance from private respondent SEAFDEC to defray his travel expenses under T. In order that a person can be convicted under the abovequoted provision. which reads as follows: Art. and in compliance with said resolution. The second issue has been resolved in our Resolution dated 10 August 1990. This Court may go beyond the pleadings when the interest of justice so warrants.. or any other personal property received by the offender in trust or on commission. On the other hand.O. With unfaithfulness or abuse of confidence. 1(b) of the Revised Penal Code. et al. in filing his Notice of Appeal the very next day after receiving the decision of the court a quo lost no time in showing his intention to appeal. Executive Order No. there is nothing sacred about the procedure of pleadings. closing the door to his every entreaty for a full opportunity to be heard. The imminence of a person being deprived unjustly of his liberty due to procedural lapse of counsel is a strong and compelling reason to warrant suspension of the Rules. We shall now proceed to the first issue. WHETHER OR NOT THE DECISION OF THE HONORABLE COURT OF APPEALS IS CONTRARY TO LAW. 2222. as the ultimate bulwark of human rights and individual liberty. 10 In the same resolution. goods. deserves scant consideration from courts. while private respondent SEAFDEC filed its required memorandum on 10 April 1990. if strict compliance with the rules would mean sacrificing justice to technicality. par. simply because he had chosen an appeal route. Two (2) issues are raised by petitioner to wit: I. The Court can overlook the wrong pleading filed. Cash Advance for Travel . even as he has made a prima facie showing of a meritorious cause. '. money.O. when it deserts its proper office as an aid to justice and becomes its great hindrance and chief enemy. yet. 315. even though such obligation be fatally or partially guaranteed by a bond. 2222. Villamor.00. 11 Was petitioner under obligation to return the same money (cash advance) which he had received? We belive not. this Court. in fact. it had set aside technicalities in the Rules in order to give way to justice and equity. ILOILO) AND THE REGIONAL TRIAL COURT. BRANCH 28 (ILOILO CITY) ARE SUPPORTED BY THE FACTS AND EVIDENCE OR CONTRARY TO LAW AND THAT THE TWO COURTS A QUO HAVE ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION OR HAVE ACTED WITHOUT OR IN EXCESS OF JURISDICTION. We find merit in the petition. he was charged with the crime of Estafa under Article 315. . 16 Phil. to be sure. ESTABLISHED JURISPRUDENCE. will not allow substantial justice to be sacrified at the altar of procedural rigor. recognized by law but made inapplicable to his case. In the present case. it has to be lauded for correctly applying the rules of procedure in appeals to the Court of Appeals from decisions of the RTC rendered in the exercise of its appellate jurisdiction. the parties were required to file their respective memoranda. . The dispute arose when petitioner allegedly failed to return P1. It has the prerogative to suspend its rules for the same purpose. when we granted petitioner's second motion for reconsideration. petitioner was recalled to the head station in Iloilo and given another assignment which was covered by T. or for administration. dated 12 February 1980 provides as follows: B. goods. 315] Conscience cannot rest in allowing a man to go straight to jail. 2268. it must be proven that he had the obligation to deliver or return the same money. we shall consider the petition for review filed in the Court of Appeals as a Supplement to the Notice of Appeal.

testified thus: Q When you gave cash advance to the accused in this Travel Order No. one of the parties delivers to another. 1985). accused or SEAFDEC? How do you consider the funds in the possession of the accused at the time when there is an actual transfer of cash? . who liquidates a cash advance is in fact paying back his debt in the form of a loan of money advanced to him by his employer. Iloilo in Criminal Case No. A The one drawing cash advance already owns the money but subject to liquidation. Qxxx xxx xxx So why do you treat the itinerary of travel temporary when in fact as of that time the accused owned already the cash advance. In other words. An employee. he has the right to demand reimbursement from his employer the amount he spent coming from his personal funds. asper diems and allowances. By the contract of loan. or money or other consumable thing. it is a transfer of ownership subject to a suspensive condition that he liquidates the amount of cash advance upon return to station and completion of the travel? A Yes. be is obliged to return the amount. "if the amount of the cash advance he received is less than the amount he spent for actual travel . i. Art. Q If other words. Absent this fiduciary relationship between petitioner and private respondent. who owns the funds. no fiduciary relationship was created. 628. ownership passes to the borrower. upon the condition that the same amount of the same kind and quality shall be paid. xxx xxx xxx 4. 15 Additionally. which is an essential element of the crime of estafa by misappropriation or conversion. as stated in the assailed decision of the lower court. either something not consumable so that the latter may use the same for a certain time and return it. the decision dated 3 September 1986 of the 15th Municipal Circuit Trial Court in Guimbal. but subject for liquidation. The evidence shows that the corresponding salary deduction was made in the case of petitioner vis-a-vis the cash advance in question. tsn. 1933. . Art. All cash advances must be liquidated within 30 days after date of projected return of the person. Even the prosecution witness. in which case the contract is simply called a loan or mutuum. it has been the policy of private respondent that all cash advances not liquidated are to be deducted correspondingly from the salary of the employee concerned. In commodatum the bailor retains the ownership of the thing loaned. Simple loan may be gratuitous or with a stipulation to pay interest. which he received from the private respondent. par. Hence. (pp. He will be only entitled for that credence if he liquidates. petitioner was under no legal obligation to return the same cash or money. If he will not liquidate.. at the time you departed with the money it belongs already to the accused? A Yes.— 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. in which case the contract is called a commodatum. 13 Article 1933 and Article 1953 of the Civil Code define the nature of a simple loan. such as herein petitioner. . Similarly. 2222 subject to liquidation. Virgilio Hierro. You said the cash advance given to the accused is his own money. . sir. the bills or coins. 1953. 12 In other words. The ruling of the trial judge that ownership of the cash advanced to the petitioner by private respondent was not transferred to the latter is erroneous. May 8. . the money advanced by either party is actually a loan to the other. Commodatum is essentially gratuitous. Liquidation simply means the settling of an indebtedness. 14 Since ownership of the money (cash advance) was transferred to petitioner. 26-28. WHEREFORE. finding petitioner guilty of estafa under Article 315.e. Otherwise. corresponding salary deduction shall be made immediately following the expiration day. Branch . 1 (b) of the Revised Penal Code and the affirming decision of the Regional Trial Court. Ownership of the money was transferred to the petitioner. while in simple loan. petitioner could not have committed estafa.

Iloilo City. and the trial court resolved."2 Petitioners interposed an appeal with the Court of Appeals. granted an extension but only up until 29 December 1981. the appellate court affirmed the judgment of the trial court except on the matter of the 2% service charge which was deleted pursuant to Central Bank Circular No. on 27 March 1985. SO ORDERED. commencing on 20 May 1982 until fully paid. with the Regional Trial Court of Makati. to pay the sum borrowed with an interest of 15. 20958. the 5% per month penalty charge and 10% attorney's fees. the bank presented its evidence and. the bank filed on 3 November 1982. and "3. The sum of P114. To pay the costs of the suit. COURT OF APPEALS & SECURITY BANK & TRUST COMPANY. promulgated on 30 July 1987 are both hereby SET ASIDE. questioning the rejection by the trial court of their motion to present evidence and assailing the imposition of the 2% service charge.1 the dispositive portion of which read: "WHEREFORE.R. In addition. To pay the further sum equivalent to 10% of the total amount of indebtedness for and as attorney’s fees. The obligation matured on 8 September 1981. or on 23 October 1987. The bank.4 Petitioners prayed for the reduction of the 5% stipulated penalty for being unconscionable. Petitioners executed a promissory note binding themselves. Not fully satisfied with the decision of the appellate court. instead of introducing their own evidence.XXVIII. On 30 September 1982. "2.189% per annum upon maturity and to pay a penalty of 5% every month on the outstanding principal and interest in case of default. as of 20 May 1982. Petitioner is ACQUITTED of criminal charge filed against him.00 with interest thereon at the rate of 15. respondents. In its decision 3 of 7 March 1996. J.R. to the plaintiff. Since petitioners still defaulted on their obligation. the bank sent a final demand letter to petitioners informing them that they had five days within which to make full payment. in Criminal Case No. petitioners filed a motion for reconsideration of the order of the trial court declaring them as having waived their right to present evidence and prayed that they be allowed to prove their case.189% per annum. to consider the case submitted for decision. et al. asked that . Tolomeo Ligutan. No.00 from respondent Security Bank and Trust Company." Petitioners Tolomeo Ligutan and Leonidas dela Llana obtained on 11 May 1981 a loan in the amount of P120. the third hearing date. dated 5 September 1988. vs.: Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court. had the hearing of the case reset on two consecutive occasions. 2% service charge and 5% per month penalty charge. The court a quo denied the motion in an order. rested its case. 783. 138677 February 12. it rendered its decision. the bank. jointly and severally. assailing the decision and resolutions of the Court of Appeals in CA-G. Branch 143. In view of the absence of petitioners and their counsel on 28 August 1985. CV No. and on 20 October 1989. however. as follows: "1. vs. Two years later. Despite several demands from the bank. ordering the latter to pay. on the other hand. Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G. petitioners agreed to pay 10% of the total amount due by way of attorney’s fees if the matter were indorsed to a lawyer for collection or if a suit were instituted to enforce payment.416.10. both parties filed their respective motions for reconsideration. 2002 TOLOMEO LIGUTAN and LEONIDAS DE LA LLANA. a complaint for recovery of the due amount. amounted to P114. petitioners. DECISION VITUG. petitioners failed to settle the debt which. judgment is hereby rendered in favor of the plaintiff and against the defendants. jointly and severally. HON. After petitioners had filed a joint answer to the complaint. the bank moved. entitled "Security Bank and Trust Co. 34594.000.416. Petitioners.

the newly-discovered evidence being invoked by petitioners had actually been known to them when the case was brought on appeal and when the first motion for reconsideration was filed. demand is not necessary to render the obligor in default when the obligation or the law so provides. petitioners filed an omnibus motion for reconsideration and to admit newly discovered evidence. However. petitioners elevated their case to this Court on 9 July 1999 via a petition for review on certiorari under Rule 45 of the Rules of Court.189% interest and the penalty of three (3%) percent per month or thirty-six (36%) percent per annum imposed by private respondent bank on petitioners’ loan obligation are still manifestly exorbitant. "In the case at bar.' They also agreed to pay the interest in case of non-payment from the date of default. The appellate court denied the omnibus motion for reconsideration and to admit newly discovered evidence. ratiocinating that such a second motion for reconsideration cannot be entertained under Section 2.the payment of interest and penalty be commenced not from the date of filing of complaint but from the time of default as so stipulated in the contract of the parties. The sum equivalent to 10% of the total amount of the indebtedness as and for attorney’s fees. "Considering that defendants-appellants partially complied with their obligation under the promissory note by the reduction of the original amount of P120. the decision sought to be reconsidered is hereby MODIFIED.7 Aggrieved by the decision and resolutions of the Court of Appeals. "Default generally begins from the moment the creditor demands the performance of the obligation. petitioner Tolomeo Ligutan and his wife Bienvenida Ligutan executed a real estate mortgage on 18 January 1984 to secure the existing indebtedness of petitioners Ligutan and dela Llana with the bank. of the 1997 Rules of Civil Procedure. Furthermore. "x x x xxx xxx "While we maintain that defendants-appellants must be bound by the contract which they acknowledged and signed.00 to P114. we take cognizance of their plea for the application of the provisions of Article 1229 x x x. the Court of Appeals resolved the two motions thusly: "We find merit in plaintiff-appellee’s claim that the principal sum of P114. a penalty of 3% per month or 36% per annum would suffice.00 with interest thereon must commence not on the date of filing of the complaint as we have previously held in our decision but on the date when the obligation became due. The respondent Court of Appeals gravely erred in not admitting petitioners’ newly discovered evidence which could not have been timely produced during the trial of this case. Rule 52. Petitioners further averred that the mortgage was extrajudicially foreclosed on 26 August 1986. and the bank did not credit them with the proceeds of the sale. it is our view and we so hold that in the interest of justice and public policy. The sum of P114. On 28 October 1998."8 . "III. The respondent Court of Appeals gravely erred in not reducing to a reasonable level the ten (10%) percent award of attorney’s fees which is highly and grossly excessive. "II. 6 alleging that while the case was pending before the trial court. The respondent Court of Appeals seriously erred in not holding that there was a novation of the cause of action of private respondent’s complaint in the instant case due to the subsequent execution of the real estate mortgage during the pendency of this case and the subsequent foreclosure of the mortgage.416. Petitioners contended that the execution of the real estate mortgage had the effect of novating the contract between them and the bank. "x x x xxx xxx "WHEREFORE. "2.416. unreasonable and unconscionable. submitting thusly - "I. The respondent Court of Appeals seriously erred in not holding that the 15.00 with interest thereon at the rate of 15. The defendants-appellants Tolomeo Ligutan and Leonidas dela Llana are hereby ordered to pay the plaintiff-appellee Security Bank and Trust Company the following: "1.416." 5 On 16 November 1998. "IV.00 and in order that they will finally settle their obligation. defendants-appellants executed a promissory note where they undertook to pay the obligation on its maturity date 'without necessity of demand. the appellate court said.189% per annum and 3% per month penalty charge commencing May 20. iniquitous and unconscionable.000. that they were not informed about it. 1982 until fully paid.

the interest prescribed in loan financing arrangements is a fundamental part of the banking business and the core of a bank's existence. Extinctive novation requires.000.584. Its resolution would depend on such factors as. "Furthermore.00. the nature of the obligation. however. As the appellate court so held in its resolution of 14 May 1999 - "Under Section 2. the Court.14 just an example. the application of which. if there is an agreement to that effect. despite an express stipulation therefor in a valid agreement. on its face. in effect. deems the award of 10% attorney’s fees to be reasonable. may not equally justify the non-payment or reduction of interest. 18What may justify a court in not allowing the creditor to impose full surcharges and penalties. not to mention the repeated acts of breach by petitioners of their contractual obligation. public order or public policy. In Rizal Commercial Banking Corp. have it that the penalty sought to be deleted by petitioners was even insufficient to fully cover and compensate for the cost of money brought about by the radical devaluation and decrease in the purchasing power of the peso.189% per annum.19 Petitioners next assail the award of 10% of the total amount of indebtedness by way of attorney's fees for being grossly excessive. attainment of finality of a judgment might be stayed off indefinitely. Considering that the instant motion is already a second motion for reconsideration. grounds other than those theretofore presented and rejected. The essence or rationale for the payment of interest. a previous valid obligation. particularly vis-a-vis the U. but not necessarily confined to. The stipulated penalty might likewise be reduced when a partial or irregular performance is made by the debtor. The Bank would stress that only the amount of P5. dollar. the two being distinct concepts which may separately be demanded. second. 12 Although a court may not at liberty ignore the freedom of the parties to agree on such terms and conditions as they see fit that contravene neither law nor morals. it is .10 is an accessory undertaking to assume greater liability on the part of an obligor in case of breach of an obligation. the supervening realities. exercising its good judgment in the instant case. has reduced the penalty interest from 5% a month to 3% a month which petitioner still disputes. 16 when the penalty clause itself suffers from fatal infirmity. does not appear as being that excessive. it is quite surprising why defendants-appellants raised the alleged newly-discovered evidence only at this stage when they could have done so in the earlier pleadings filed before this court. the extinguishment of the obligation. Court of Appeals. 13 The question of whether a penalty is reasonable or iniquitous can be partly subjective and partly objective. and the like. This contention is a fresh issue that has not been raised and ventilated before the courts below. the same must therefore be denied. quite often referred to as cost of money. extent and purpose of the penalty. or when exceptional circumstances so exist as to warrant it. the validity of the new one. like the appellate court. no second motion for reconsideration of a judgment or final resolution by the same party shall be entertained. which did not take an appeal. Otherwise. question its reasonableness and prays that the Court reduce the amount. 9 A penalty clause.1âwphi1 Hence. 21 Respondent bank has correctly postulated that the mortgage is but an accessory contract to secure the loan in the promissory note. A penalty stipulation is not necessarily preclusive of interest. it would appear from the records available to this court that the newly-discovered evidence being invoked by defendants-appellants have actually been existent when the case was brought on appeal to this court as well as when the first motion for reconsideration was filed. 15 The stipulated penalty might even be deleted such as when there has been substantial performance in good faith by the obligor.17 The Court of Appeals. expressly recognized by law. nevertheless. Rule 52 of the 1997 Rules of Civil Procedure. third. the type. depending on the party’s ingenuousness or cleverness in conceiving and formulating 'additional flaws' or 'newly discovered errors' therein. the standing and relationship of the parties. the mode of breach and its consequences. may be equitably reduced by the courts if it is iniquitous or unconscionable or if the principal obligation has been partly or irregularly complied with. for the first time.e. good customs. the interest stipulation. 22 In order that an obligation may be extinguished by another which substitutes the same. In any event. Indeed. Given the circumstances. is addressed to the sound discretion of the court. the agreement of all the parties to the new contract. first. for what could be the liquidated damages resulting from such a breach.00 had been remitted out of the entire loan of P120. Petitioners acknowledge that the real estate mortgage contract does not contain any express stipulation by the parties intending it to supersede the existing loan agreement between the petitioners and the bank. It functions to strengthen the coercive force of the obligation 11 and to provide. i. petitioners. exorbitant and unconscionable vis-a-vis the time spent and the extent of services rendered by counsel for the bank and the nature of the case... vs.S. and fourth. Bearing in mind that the rate of attorney’s fees has been agreed to by the parties and intended to answer not only for litigation expenses but also for collection efforts as well. the Court has tempered the penalty charges after taking into account the debtor’s pitiful situation and its offer to settle the entire obligation with the creditor bank. the subsequent execution of the real estate mortgage as security for the existing loan would not have resulted in the extinguishment of the original contract of loan because of novation. taking into account the time frame of its occurrence.Respondent bank. The obligor would then be bound to pay the stipulated indemnity without the necessity of proof on the existence and on the measure of damages caused by the breach." 20 At any rate. by and large. is not exactly the same as that of a surcharge or a penalty. would. Neither can the appellate court be held to have erred in rejecting petitioners' call for a new trial or to admit newly discovered evidence. "The propriety or acceptability of such a second motion for reconsideration is not contingent upon the averment of 'new' grounds to assail the judgment. a stipulated penalty. the Court sees no cogent ground to modify the ruling of the appellate court. or thinking up some injury or prejudice to the rights of the movant for reconsideration. Anent the stipulated interest of 15.

and (c) whether the applicable rate of interest. On January 8 and 14.imperative that it be so declared in unequivocal terms. The incompatibility. (b) whether the payment of legal interest on an award for loss or damage is to be computed from the time the complaint is filed or from the date the decision appealed from is rendered. or (3) the subjects. or from a mortgage to antichresis. . No. such as from a mere commodatum to lease of things. such as the substitution of a debtor 27 or the subrogation of the creditor. The latter excepted to one drum which contained spillages. to be sure. incompatibility is required so as to ensure that the parties have indeed intended such novation despite their failure to express it in categorical terms. E). which damage was unknown to plaintiff. INC. it was discharged unto the custody of defendant Metro Port Service.38. filed by the insurer-subrogee who paid the consignee the value of such losses/damages. The latter excepted to one drum. on the antecedent and undisputed facts that have led to the controversy are hereunder reproduced: This is an action against defendants shipping company.e. The shipment was insured under plaintiff's Marine Insurance Policy No. (1) the juridical relation or tie. Upon arrival of the shipment in Manila on December 12. while the rest of the contents was adulterated/fake (per "Bad Order Waybill" No. 26 (2) the object or principal conditions. two fiber drums of riboflavin were shipped from Yokohama. or that the old and the new obligation be on every point incompatible with each other. the arrastre operator and the customs broker. INC. defendant Allied Brokerage Corporation made deliveries of the shipment to the consignee's warehouse.382. COURT OF APPEALS AND MERCANTILE INSURANCE COMPANY. 25 or from a sale to one of loan. Exh. is twelve percent (12%) or six percent (6%). over to the new obligation. albeit not completely novel. the petition is DENIED. 1982 defendant Allied Brokerage Corporation received the shipment from defendant Metro Port Service. adopted by the Court of Appeals. Extinctive novation does not necessarily imply that the new agreement should be complete by itself. Zapa Law Office for private respondent.466. Dala & Zaragoza for petitoner. HON. On January 7. B). WHEREFORE. 97412 July 12.: The issues. such as a change of the nature of the prestation. YMA-8 (Exh. or joint and several. should take place in any of the essential elements of the obligation. Republic of the Philippines SUPREME COURT Manila EN BANC G.. Japan for delivery vessel "SS EASTERN COMET" owned by defendant Eastern Shipping Lines under Bill of Lading No. expressly or by implication." Exh..R. Alojada & Garcia and Jimenea.. VITUG. vs. 23 An obligation to pay a sum of money is not extinctively novated by a new instrument which merely changes the terms of payment or adding compatible covenants or where the old contract is merely supplemented by the new one. The findings of the court a quo. respondents. one drum opened and without seal (per "Request for Bad Order Survey. J. 81/01177 for P36. 1981. certain terms and conditions may be carried. On December 4. 24When not expressed. Inc. D). referred to above. Inc. liability of the common carrier. arrastre operator and broker-forwarder for damages sustained by a shipment while in defendants' custody. 1981. or from negotiorum gestio to agency.. 1982. are: (a) whether or not a claim for damage sustained on a shipment of goods can be a solidary. i. 1994 EASTERN SHIPPING LINES. SO ORDERED. 10649. petitioner. said to be in bad order.

traversing the material allegations of the complaint contending that: As for defendant Eastern Shipping it alleged that the shipment was discharged in good order from the vessel unto the custody of Metro Port Service so that any damage/losses incurred after the shipment was incurred after the shipment was turned over to the latter. it is stated that when the shipment was "landed on vessel" to dock of Pier # 15. with its "Additional Survey Notes". the appellate court said: Defendants filed their respective answers. Claims were presented against defendants who failed and refused to pay the same (Exhs. and thus held: WHEREFORE. Whether or not defendant(s) should be held liable for the losses/damages (see plaintiff's pre-Trial Brief. South Harbor. Whether or not these losses/damages were sustained while in the custody of defendants (in whose respective custody. Record). H." The report further states that when defendant Allied Brokerage withdrew the shipment from defendant arrastre operator's custody on January 7. K. the consignee suffered losses totaling P19. as to the second issue. Record).. (pp. and O). cello bag partly torn but contents intact. I. Defendant Eastern Shipping's own exhibit. if determinable). Ordering defendants to pay plaintiff. to be sure. 34. covered by the vessel's Agent's Bad Order Tally Sheet No. In the latter notes. not having negligent or at fault for the shipment was already in damage and bad order condition when received by it. that these losses/damages occurred before the shipment reached the consignee while under the successive custodies of defendants. M. Under Art. one drum was found opened without seal. 38). are considered. due to the fault and negligence of defendants.032. judgment is hereby rendered: A. J. p. But when on December 12. until the consignee has been advised and has had reasonable opportunity to remove or dispose of the goods (Art. jointly and severally: . 1981 the shipment was delivered to defendant Metro Port Service. but nonetheless. As to the first issue. Manila on December 12.) There were. Allied's pre-Trial Brief. "Release" and Philbanking check. Inc. 1981 one drum was found "open". From the evidence the court found the following: The issues are: 1. 85-86. other factual issues that confronted both courts. PREMISES CONSIDERED. Records. there can be no doubt that the shipment sustained losses/damages. as clearly shown by the Bill of Lading and Commercial Invoice which do not indicate any damages drum that was shipped (Exhs. portion of the same was already in bad order (p. Exhs. Rollo. plaintiff was compelled to pay the consignee P19. Plaintiff contended that due to the losses/damage sustained by said drum.032. 17. It is obvious. therefore. it excepted to one drum in bad order. G). 1737 of the New Civil Code. The two drums were shipped in good order and condition. 1981. it follows that the losses/damages were sustained while in the respective and/or successive custody and possession of defendants carrier (Eastern). As a consequence of the losses sustained. 3-Eastern) states that on December 12. adopting plaintiff's Records. 86427. Correspondingly. N. L).95. This becomes evident when the Marine Cargo Survey Report (Exh. 2. B and C). so that it became subrogated to all the rights of action of said consignee against defendants (per "Form of Subrogation". 1738. The report went on to state that when the drums reached the consignee. arrastre operator (Metro Port) and broker (Allied Brokerage). Whether or not the shipment sustained losses/damages. 3. Here. p.95 under the aforestated marine insurance policy. it still exercised extra ordinary care and diligence in the handling/delivery of the cargo to consignee in the same condition shipment was received by it. one drum was found with adulterated/faked contents. is no longer its liability (p. NCC). Allied Brokerage alleged that plaintiff has no cause of action against it. 1982. Metroport averred that although subject shipment was discharged unto its custody. the common carrier's duty to observe extraordinary diligence in the vigilance of goods remains in full force and effect even if the goods are temporarily unloaded and stored in transit in the warehouse of the carrier at the place of destination. the "Turn-Over Survey of Bad Order Cargoes" (Exhs. 11. Net unrecovered spillages was 15 kgs. it was observed that "one (1) fiber drum (was) in damaged condition.

and 3. or until the lapse of a reasonable time for their acceptance by. Court of Appeals. Metro Port Services (182 SCRA 455). in part. In Fireman's Fund Insurance vs. In this petition.032. 1735. been passed upon by the Court. Dollar Steamship Lines. 1736-1738. 161 SCRA 646. Civil Code. P3. et al. shall not exceed US$500 per case or the CIF value of the loss. a presumption arises against the carrier of its failure to observe that diligence. Record). Indeed. Dismissing the counterclaims and crossclaim of defendant/cross-claimant Allied Brokerage Corporation. Ganzon vs. 2. with the present legal interest of 12% per annum from October 1. the common carrier.95. We find that the conclusion drawn therefrom is correct. Since it is the duty of the ARRASTRE to take good care of the goods that are in its custody and to deliver them in good condition to the consignee. 1. As there is sufficient evidence that the shipment sustained damage while in the successive possession of appellants. 107 Phil. The appeal is devoid of merit. After a careful scrutiny of the evidence on record. while the liability of defendant Metro Port Service.) The Court of Appeals thus affirmed in toto the judgment of the court a quo. Rollo. 207.00 as attorney's fees. attributes error and grave abuse of discretion on the part of the appellate court when — I. The petition is. Court of Appeals. and received by. too. Philippine National Railways vs. SO ORDERED. and therefore they are liable to the appellee. The amount of P19. until fully paid (the liability of defendant Eastern Shipping. In this decision. Inc..thus: The legal relationship between the consignee and the arrastre operator is akin to that of a depositor and warehouseman (Lua Kian v. Inc. Court of Appeals. 131 SCRA 365).000. of course. (p. . pursuant to Section 6. Inc. 139 SCRA 87. the person entitled to receive them (Arts. 87-89. Eastern Shipping Lines. (pp.. PRIVATE RESPONDENT'S CLAIM BEING INDISPUTABLY UNLIQUIDATED.. When the goods shipped either are lost or arrive in damaged condition. IT HELD PETITIONER CARRIER JOINTLY AND SEVERALLY LIABLE WITH THE ARRASTRE OPERATOR AND CUSTOMS BROKER FOR THE CLAIM OF PRIVATE RESPONDENT AS GRANTED IN THE QUESTIONED DECISION. we do have a fairly good number of previous decisions this Court can merely tack to. Costs. II. whichever is lesser. crate box or container in no case to exceed P5. Inc. granted. the carrier for transportation until delivered to. shall be to the extent of the actual invoice value of each package. exceptional cases when such presumption of fault is not observed but these cases. as subrogee for the amount it paid to the consignee.00 each.01 of the Management Contract). Metro Port Service vs. are exclusive. the date of filing of this complaints. IT HELD THAT THE GRANT OF INTEREST ON THE CLAIM OF PRIVATE RESPONDENT SHOULD COMMENCE FROM THE DATE OF THE FILING OF THE COMPLAINT AT THE RATE OF TWELVE PERCENT PER ANNUM INSTEAD OF FROM THE DATE OF THE DECISION OF THE TRIAL COURT AND ONLY AT THE RATE OF SIX PERCENT PER ANNUM. The relationship between the consignee and the common carrier is similar to that of the consignee and the arrastre operator (Northern Motors. 1982. and there need not be an express finding of negligence to hold it liable (Art. Prince Line. Manila Railroad Co.000. not one of which can be applied to this case. 863). The question of charging both the carrier and the arrastre operator with the obligation of properly delivering the goods to the consignee has. we have explained. defendant's recourse to US. 19 SCRA 5 [1967]. Dissatisfied. Kui Bai vs. in holding the carrier and the arrastre operator liable in solidum. enumerated in Article 1734 1 of the Civil Code. v. we have begun by saying that the questions raised by petitioner carrier are not all that novel. B. There are. 52 Phil. The common carrier's duty to observe the requisite diligence in the shipment of goods lasts from the time the articles are surrendered to or unconditionally placed in the possession of. 253 [1960]). Civil Code.

Such interest normally is allowable from the date of demand.000. the lower court decreed: WHEREFORE. Corporacion de P. in lieu of proof. 1974. 447. When the appellate court's decision became final.447. the sole petitioner in this case. But then upon the provisions of Article 2213 of the Civil Code. to be held liable in this particular case. however.00 which is the value of the boat F B Pacita III together with its accessories. except when the demand can be established with reasonable certainty. 5 rendered on 11 October 1985. Perez. (Emphasis found in the text) — .. We do not. 38 Phil. It is over the issue of legal interest adjudged by the appellate court that deserves more than just a passing remark. appellee Malayan Insurance (the plaintiff in the lower court) averred in its complaint that the total amount of its claim for the value of the undelivered goods amounted to P3. assessed and determined by the courts after proof (Montilla c. The trial court opted for judicial demand as the starting point.. is that "there is sufficient evidence that the shipment sustained damage while in the successive possession of appellants" (the herein petitioner among them). imply by the above pronouncement that the arrastre operator and the customs broker are themselves always and necessarily liable solidarily with the carrier. 1969 up to the time they are actually paid or already the total sum of P370. the liability imposed on Eastern Shipping Lines. fishing gear and equipment minus P80. In the stipulation of facts later entered into by the parties.20. vs. interest "should be from the date of the decision. A factual finding of both the court a quo and the appellate court.. Both the ARRASTRE and the CARRIER are therefore charged with the obligation to deliver the goods in good condition to the consignee. such responsibility also devolves upon the CARRIER. interest "cannot be recovered upon unliquidated claims or damages. Let us first see a chronological recitation of the major rulings of this Court: The early case of Malayan Insurance Co. absent a stipulation. the petitioners contended that Central Bank Circular No.000." (Emphasis supplied) The case of Reformina vs. Tomol. in any event.00 with costs against defendants and third party plaintiffs. is inevitable regardless of whether there are others solidarily liable with it.00 which is the value of the insurance recovered and the amount of P10. 1972 with legal interest from the filing of the complaint until paid and to pay attorney's fees of P5. This demand. which.084.000. This Circular shall take effect immediately. the case was remanded to the lower court for execution.51 with legal interest thereon from the date the complaint was filed on 28 December 1962 until full payment thereof. 4 L-6998. Lichauco v. nor that attendant facts in a given case may not vary the rule. judgment is hereby rendered in favor of the plaintiffs and third party defendants and against the defendants and third party plaintiffs as follows: Ordering defendants and third party plaintiffs Shell and Michael. the award of legal interest. Guzman. Accordingly. has prescribed that the rate of interest for the loan.51 was agreed upon.00 as of June 4. judicial or extrajudicial. involved a suit for recovery of money arising out of short deliveries and pilferage of goods. providing thus — By virtue of the authority granted to it under Section 1 of Act 2655. 302). 2 decided 3 on 15 May 1969. if the suit were for damages.447. we take note. February 29." And as was held by this Court in Rivera vs. "unliquidated and not known until definitely ascertained. Incorporated to pay jointly and severally the following persons: xxx xxx xxx (g) Plaintiffs Pacita F.00 a month as the estimated monthly loss suffered by them as a result of the fire of May 6. in the absence of express contract as to such rate of interest. or vice-versa. or credits and the rate allowed in judgments. The trial court rendered judgment ordering the appellants (defendants) Manila Port Service and Manila Railroad Company to pay appellee Malayan Insurance the sum of P1. Reformina and Francisco Reformina the sum of P131. shall be twelve (12%) percent per annum. Inc. the latter modified the amount of damages awarded but sustained the trial court in adjudging legal interest from the filing of the complaint until fully paid. goods." then. In this case.P. was neither established in its totality nor definitely ascertained. 25 Phil. is. as amended.000. was for "Recovery of Damages for Injury to Person and Loss of Property. Monetary Board in its Resolution No. (Emphasis supplied. In their petition for review on certiorari. inter alia. 1956. or forbearance of any money. and this was when the trial court issued its assailed resolution which applied the 6% interest per annum prescribed in Article 2209 of the Civil Code. the amount of P1. being the carrier and not having been able to rebut the presumption of fault." After trial. 1622 dated July 29. this Court ruled: Interest upon an obligation which calls for the payment of money.947. The instant petition has been brought solely by Eastern Shipping Lines. is the legal rate. Agustinos. Inc. of course. The appellants then assailed. 416. In sustaining the appellants.) On appeal to the Court of Appeals. Manila Port Service.

in an action for the recovery of damages arising from the collapse of a building. 10) indemnity in favor of the Philippine Bar Association of FIVE MILLION (P5. When taken to this Court for review. on 03 October 1986. the "defendant United Construction Co. goods or credits. v. — If the obligation consists in the payment of a sum of money. the law applicable to the said case is Article 2209 of the New Civil Code which reads — Art. thus: WHEREFORE. it explained: There should be no dispute that the imposition of 12% interest pursuant to Central Bank Circular No.000. The above rule was reiterated in Philippine Rabbit Bus Lines. vs. and the debtor incurs in delay. dated 29 April 1985. goods or credits. Tomol. p. . however. Tomol case. (2) forbearance of any money.. the decision herein sought to be executed is one rendered in an Action for Damages for injury to persons and loss of property and does not involve any loan. 139 SCRA 260 [1985]). should have. Solidary costs against the defendant and third-party defendants (Except Roman Ozaeta). The case was for damages occasioned by an injury to person and loss of property.68 with interest at the legal rate from November 29.. shall be the payment of interest agreed upon. upon the defendant and the third- party defendants (with the exception of Roman Ozaeta) a solidary (Art. restoring the amount of damages awarded by the trial court. as part of the judgment for damages. 7 promulgated on 28 July 1986. v.00.00) Pesos as and for attorney's fees." The Court 10 ruled out the applicability of the Reformina and Philippine Rabbit Bus Lines cases and. Intermediate Appellate Court 11 was a petition for review on certiorari from the decision. in other words. xxx xxx xxx Coming to the case at bar. the case. . the indemnity for damages. Supra. Inc. the Court of Appeals sustained the trial court's decision. "ordering the petitioner to pay private respondent the sum of One Hundred Thousand . 2209. dated 27 February 1985. and (3) rate allowed in judgments (judgments spoken of refer to judgments involving loans or forbearance of any money. . 143 SCRA 160-161 [1986]. .000. but then no interest is actually imposed provided the sums referred to in the judgment are paid upon the finality of the judgment .000. 1968. the date of the filing of the complaint until full payment . in its resolution of 15 April 1988. held the award. P2. to P240. goods or credit. Jr.000. It is delay in the payment of such final judgment. been applied. . twelve (12%) per cent interest per annum shall be imposed upon aforementioned amounts from finality until paid. . is applicable only in the following: (1) loans. from the filing of the complaint until paid. Cruz. (Emphasis supplied.000.00 and P100.000. Court of Appeals.335. . 1723.e.00 as moral damages and P400. as We do hereby impose.e.500. the legal interest which is six percent per annum. As correctly argued by the private respondents. Reformina v. the decision appealed from is hereby MODIFIED and considering the special and environmental circumstances of this case. 9 the trial court. of the then Intermediate Appellate Court reducing the amount of moral and exemplary damages awarded by the trial court. The trial court awarded private respondent Pedro Manabat actual and compensatory damages in the amount of P72. (one of the petitioners) . In Nakpil and Sons vs... we deem it reasonable to render a decision imposing. (Philippine Rabbit Bus Lines Inc. Clearly. this Court 8 modified the interest award from 12% to 6% interest per annum but sustained the time computation thereof. nor involving loans or forbearance of any money. they are not applicable to the instant case. Civil Code. and its resolution.) The subsequent case of American Express International. Upon failure to pay on such finality. this Court. It will be noted that in the cases already adverted to.000. . later sustained by the IAC. (Emphasis supplied) A motion for reconsideration was filed by United Construction.. ordered. respectively. goods or credits. i. i . that will cause the imposition of the interest. contending that "the interest of twelve (12%) per cent per annum imposed on the total amount of the monetary award was in contravention of law. the rate of interest is imposed on the total sum. Relying on the Reformina v. goods or credits does not fall within the coverage of the said law for it is not within the ambit of the authority granted to the Central Bank.. Inc. there being no stipulation to the contrary. In a decision of 09 November 1988. for moral damages by the trial court. inter alia. while recognizing the right of the private respondent to recover damages. It is true that in the instant case. Cruz. to pay the plaintiff.000." Save from the modification of the amount granted by the lower court. instead. The Court 12 thus set aside the decision of the appellate court and rendered a new one.00) Pesos to cover all damages (with the exception to attorney's fees) occasioned by the loss of the building (including interest charges and lost rentals) and an additional ONE HUNDRED THOUSAND (P100. This Court 6 ruled: The judgments spoken of and referred to are judgments in litigations involving loans or forbearance of any money. Any other kind of monetary judgment which has nothing to do with. .00 with legal interest thereon from the filing of the complaint until fully paid. was decided.00 as exemplary damages with interest thereon at 12% per annum from notice of judgment. to be inconceivably large. Inc. the sum of P989. much less forbearances of any money. the total sum being payable upon the finality of this decision. from the filing of the complaint until fully paid. 416 . plus costs of suit. . . and in the absence of stipulation. there is neither a loan or a forbearance.

Angas (1992). The records were thereupon transmitted to the trial court. on the one hand. with six (6%) percent interest thereon computed from the finality of this decision until paid. Angas. from the time the complaint is filed until the adjudged amount is fully paid. .) The petition for review to this Court was denied. .Manila Port Service (1969).e. jointly and severally. assessed and determined by the courts after proof. the trial court ordered the petitioner to pay the private respondents certain sums of money as just compensation for their lands so expropriated "with legal interest thereon . Malayan held that the amount awarded should bear legal interest from the date of the decision of the court a quo. . In the "second group" would be Malayan Insurance Company v. the amounts stated in the dispositive portion of the decision. and American Express International v. The writ of execution issued by the trial court directed that only compensatory damages should earn interest at 6% per annum from the date of the filing of the complaint. The "second group". Ruiz 13 which arose from a breach of employment contract. the "second group" varied on the commencement of the running of the legal interest. Court of Appeals (1988). and that the 6% interest under the Civil Code governs when the transaction involves the payment of indemnities in the concept of damage arising from the breach or a delay in the performance of obligations in general. goods or credits but expropriation of certain parcels of land for a public purpose. Tomol (1985). (Emphasis supplied) Reformina came into fore again in the 21 February 1989 case of Florendo v. . This Court said: . (Emphasis supplied) The Court reiterated that the 6% interest per annum on the damages should be computed from the time the complaint was filed until the amount is fully paid. since the kind of interest involved in the joint judgment of the lower court sought to be enforced in this case is interest by way of damages. For having been illegally dismissed. In the "first group". a petition for certiorari assailed the said order.'" American Express International v. too. 416] does not apply to actions based on a breach of employment contract like the case at bar. Art. . The legal interest required to be paid on the amount of just compensation for the properties expropriated is manifestly in the form of indemnity for damages for the delay in the payment thereof. IAC.400. the petitioner was awarded by the trial court moral and exemplary damages without. are ordered to pay. Observe. did not alter the pronounced rule on the application of the 6% or 12% interest per annum. 1972 is affirmed in all respects. however. etc. and not by way of earnings from loans. i. including the sum of P1. Quite recently. and the interest adjudged by the trial court is in the nature of indemnity for damages. with interest at the legal rate from the date of the filing of the complaint until fully paid(Emphasis supplied. in applying the 6% legal interest per annum under the Civil Code. When the decision was appealed to the Court of Appeals. National Power Corporation vs.explaining that "if the suit were for damages. there have been seeming variances in the above holdings. the Court 15 declared: . interest 'should be from the date of the decision. Ascribing grave abuse of discretion on the part of the trial judge. 'unliquidated and not known until definitely ascertained. 14decided on 08 May 1992. Ruiz (1989) and National Power Corporation v.(P100." The Nakpil and Sons case ruled that 12% interest per annum should be imposed from the finality of the decision until the judgment amount is paid. the latter held: WHEREFORE.. 2209 of the Civil Code shall apply. . Said circular [Central Bank Circular No. Cruz(1986). introduced a different time frame for reckoning the 6% interest by ordering it to be "computed from the finality of (the) decision until paid. The cases can perhaps be classified into two groups according to the similarity of the issues involved and the corresponding rulings rendered by the court. Nakpil and Sons v. with the modification that defendants-appellants. Philippine Rabbit Bus Lines v.00 in concept of compensatory damages. however. involved the expropriation of certain parcels of land.000. the payment of which is without stipulation regarding interest. (T)he transaction involved is clearly not a loan or forbearance of money. 17depending on whether or not the amount involved is a loan or forbearance. as well as to judgments involving such loan or forbearance of money. on the other hand. . goods or credits. a common time frame in the computation of the 6% interest per annum has been applied. Florendo v. Unlike. the "first group" which remained consistent in holding that the running of the legal interest should be from the time of the filing of the complaint until fully paid. that in these cases. until fully paid. providing any legal interest thereon. . the basic issue focuses on the application of either the 6% (under the Civil Code) or 12% (under the Central Bank Circular) interest per annum. it is to be noted that the Court of Appeals ordered the payment of interest "at the legal rate"from the time of the filing of the complaint. the Court had another occasion to rule on the matter. except defendant-appellant Merton Munn. After conducting a hearing on the complaints for eminent domain. goods or credits.' then." Again.Intermediate Appellate Court (1988). .00) Pesos as moral damages. It is easily discernible in these cases that there has been a consistent holding that the Central Bank Circular imposing the 12% interest per annum applies only to loans or forbearance 16 of money. except as modified hereinabove the decision of the CFI of Negros Oriental dated October 31. . The "first group" would consist of the cases of Reformina v. or one of indemnity for damage. and an entry of judgment was made. Therefore. . Concededly.

vs. the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). i. Private respondent asked Sanchez to bring Doronilla to their house so that they could discuss Sanchez’s request. quasi-contracts. the rate of interest. HON. i. Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made.3 . When the obligation is breached. When the judgment of the court awarding a sum of money becomes final and executory.. on the award of interest. regardless of its source. guided by the rule that the courts are vested with discretion. to suggest the following rules of thumb for future guidance. delicts or quasi-delicts 18 is breached. in lieu of SIX PERCENT (6%). i. the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. The factual circumstances may have called for different applications.R. WHEREFORE. SO ORDERED. Col. 19 The provisions under Title XVIII on "Damages" of the Civil Code govern in determining the measure of recoverable damages. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G. respondents. the Sterela Marketing and Services ("Sterela" for brevity). Specifically. A TWELVE PERCENT (12%) interest. 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. shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. 25 No interest. When an obligation. an interest on the amount of damages awarded may be imposed at the discretion of the court 24 at the rate of 6% per annum. this interim period being deemed to be by then an equivalent to a forbearance of credit. from judicial or extrajudicial demand under and subject to the provisions of Article 1169 23 of the Civil Code. the contravenor can be held liable for damages. be on the amount finally adjudged. denying the motion for reconsideration of said decision filed by petitioner Producers Bank of the Philippines. She assured private respondent that he could withdraw his money from said account within a month’s time. and it consists in the payment of a sum of money. is imposed. law. DECISION CALLEJO. where the demand is established with reasonable certainty. Arturo Doronilla. the petition is partly GRANTED. is breached. however. CV No. in incorporating his business. 22 In the absence of stipulation.e. The actual base for the computation of legal interest shall. 1994.e.. 21 Furthermore. When an obligation. the interest due should be that which may have been stipulated in writing.e. petitioner. I. a loan or forbearance of money. 3. SR. COURT OF APPEALS AND FRANKLIN VIVES. 11791 and of its Resolution2 dated May 5. Sometime in 1979. as well as the accrual thereof. 1169. whether the case falls under paragraph 1 or paragraph 2. by way of clarification and reconciliation. the rate of legal interest.The ostensible discord is not difficult to explain. Nonetheless. No.. 20 II. 115324 February 19. contracts. of the court a quo. 2.. the interest due shall itself earn legal interest from the time it is judicially demanded. shall be imposed on such amount upon finality of this decision until the payment thereof. not constituting a loan or forbearance of money. 26 Accordingly. in any case. the rate of interest shall be 12% per annum to be computed from default. The appealed decision is AFFIRMED with the MODIFICATION that the legal interest to be paid is SIX PERCENT (6%) on the amount due computed from the decision. shall be 12% per annum from such finality until its satisfaction. private respondent Franklin Vives was asked by his neighbor and friend Angeles Sanchez to help her friend and townmate. as follows: 1. J. depending on the equities of each case. With regard particularly to an award of interest in the concept of actual and compensatory damages. it may not be unwise. above.: This is a petition for review on certiorari of the Decision1 of the Court of Appeals dated June 25. dated 03 February 1988.R. 1991 in CA-G. 2003 PRODUCERS BANK OF THE PHILIPPINES (now FIRST INTERNATIONAL BANK).

00) in favor of private respondent. petitioner filed the present petition. 10-1567 was thereafter issued to Mrs. Rufo Atienza. Makati branch of Producers Bank of the Philippines. 1994. who informed them that part of the money in Savings Account No. He also filed criminal actions against Doronilla. relying on the assurances and representations of Sanchez and Doronilla. arguing that – I. II. 1979. assuring him that his money was intact and would be returned to him. In opening the account.00 from the Bank. Doronilla’s private secretary. 10-1567 because he was the sole proprietor of Sterela.000. Sanchez. the assistant manager. Rufo Atienza. 1979 but when the latter presented the check. Doronilla issued three postdated checks. . private respondent issued a check in the amount of Two Hundred Thousand Pesos (P200. the dispositive portion of which reads: IN VIEW OF THE FOREGOING. "in coordination with Mr.000. it was again dishonored. 7 Private respondent instituted an action for recovery of sum of money in the Regional Trial Court (RTC) in Pasig.8 Petitioner appealed the trial court’s decision to the Court of Appeals. and that only P90. 10- 0320 for Sterela and authorized the Bank to debit Savings Account No. Doronila.000. 1979.00 remained therein.00 for attorney’s fees. 10-1567. 10 On June 30. upon presentment thereof by private respondent to the drawee bank. Sanchez and Dumagpi in the RTC.00. the authorized signatories were Inocencia Vives and/or Angeles Sanchez.4 Subsequently. 10-0320. Atienza also said that Doronilla could assign or withdraw the money in Savings Account No. 1991. 1985 while the case was pending before the trial court. obtained a loan of P175. 10-1567 for the amounts necessary to cover overdrawings in Current Account No. To cover payment thereof. Vives and Dumagpi went to the bank to deposit the check. private respondent learned that Sterela was no longer holding office in the address previously given to him. Sanchez passed away on March 16. Vives could not withdraw said remaining amount because it had to answer for some postdated checks issued by Doronilla. 44485. SO ORDERED. met and discussed the matter. the RTC of Pasig. He likewise told them that Mrs. 10-1567 had been withdrawn by Doronilla.00. They had with them an authorization letter from Doronilla authorizing Sanchez and her companions. he and his wife went to the Bank to verify if their money was still intact. through Doronilla. Inocencia Vives. (b) the sum of P50.6 Private respondent referred the matter to a lawyer. The case was docketed as Civil Case No. Private respondent instructed his wife. The bank manager referred them to Mr. 44485. On June 29. to accompany Doronilla and Sanchez in opening a savings account in the name of Sterela in the Buendia. promulgated its Decision in Civil Case No.000. Metro Manila against Doronilla. 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. Vives. Alarmed. Doronilla issued a postdated check for Two Hundred Twelve Thousand Pesos (P212. only Sanchez. A passbook for Savings Account No. judgment is hereby rendered sentencing defendants Arturo J. On August 13. who made a written demand upon Doronilla for the return of his client’s money. On October 3. Doronilla and a certain Estrella Dumagpi. However.000. all of which were dishonored.000. Branch 157. Doronilla opened Current Account No. Dumagpi and petitioner. with interest at the legal rate from the filing of the complaint until the same is fully paid.000. According to Atienza.9 It likewise denied with finality petitioner’s motion for reconsideration in its Resolution dated May 5." to open an account for Sterela Marketing Services in the amount of P200. Sanchez.On May 9. 1994. In its Decision dated June 25.00 in private respondent’s favor but the check was again dishonored for insufficiency of funds. representing the money deposited. the appellate court affirmed in toto the decision of the RTC. Mrs. Sterela.000. he received a letter from Doronilla. Doronilla requested private respondent to present the same check on September 15. private respondent. In opening said current account. (c) the amount of P40. 1979.000. after Mrs.00 for moral damages and a similar amount for exemplary damages. Estrella Dumagpi and Producers Bank of the Philippines to pay plaintiff Franklin Vives jointly and severally – (a) the amount of P200. the check was dishonored. Mrs. Vives and Sanchez opened Savings Account No. However. 5 Private respondent tried to get in touch with Doronilla through Sanchez. 1995. Doronilla issued another check for P212. However.00) in favor of Sterela. and (d) the costs of the suit. Thereafter.

Rufo Atienza. connived with Doronilla in defrauding private respondent since it was Atienza who facilitated the opening of Sterela’s current account three days after Mrs. 2001 while private respondent submitted his memorandum on March 22. the authority to withdraw therefrom remained exclusively with Doronilla. Vives and Sanchez to open a savings account for Sterela.00 because it is not privy to the transaction between the latter and Doronilla. and who alone had legal title to the savings account. THE HONORABLE COURT OF APPEALS ERRED IN ADOPTING THE ENTIRE RECORDS OF THE REGIONAL TRIAL COURT AND AFFIRMING THE JUDGMENT APPEALED FROM. THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THE DECISION OF THE LOWER COURT THAT HEREIN PETITIONER BANK IS JOINTLY AND SEVERALLY LIABLE WITH THE OTHER DEFENDANTS FOR THE AMOUNT OF P200. P40. and neither may it be held liable for moral and exemplary damages as well as attorney’s fees. Vives and Sanchez opened a savings account with petitioner for said company. He insists that Atienza.000 more than what private respondent deposited in Sterela’s bank account. said rejoinder was filed only on April 21. petitioner argues that it cannot be held liable for the return of private respondent’s P200. on the other hand. the transaction was onerous as Doronilla was obliged to pay interest.00 in Sterela’s account for purposes of its incorporation. 29 SCRA 745. 19 Finally. 2001.000. 13 On January 17. or P12. and that it committed no wrong in allowing Doronilla to withdraw from Sterela’s savings account. petitioner claims that since there is no wrongful act or omission on its part. is liable for the return of his money. petitioner should not be held liable for allowing Doronilla to withdraw from Sterela’s savings account.22 He likewise asserts that the trial court did not err in finding that petitioner. 1979 letter addressed to the bank.000.00 FOR ATTORNEY’S FEES AND THE COSTS OF SUIT. and second. Mr.THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THAT PETITIONER’S BANK MANAGER. 17 Petitioner points out that no evidence other than the testimonies of private respondent and Mrs. P50.000.00 FOR EXEMPLARY DAMAGES.net Petitioner also asserts that the Court of Appeals erred in affirming the trial court’s decision since the findings of fact therein were not accord with the evidence presented by petitioner during trial to prove that the transaction between private respondent and Doronilla was a mutuum.11 Private respondent filed his Comment on September 23. Hence. 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. 2001. V.000. THE HONORABLE COURT OF APPEALS ERRED IN DECLARING THAT THE CITED DECISION IN SALUDARES VS. 1995.00 FOR MORAL DAMAGES. Atienza’s employer. 20 Private respondent.000. UPHOLDING THE LIABILITY OF AN EMPLOYER FOR ACTS COMMITTED BY AN EMPLOYEE IS APPLICABLE. Petitioner asserts that Doronilla’s May 8. However. due to petitioner’s delay in furnishing private respondent with copy of the reply12 and several substitutions of counsel on the part of private respondent. CONNIVED WITH THE OTHER DEFENDANTS IN DEFRAUDING PETITIONER (Sic. it is not liable for the actual damages suffered by private respondent. authorizing Mrs. THE PETITIONER SHOULD BE HELD LIABLE UNDER THE PRINCIPLE OF NATURAL JUSTICE. Should be PRIVATE RESPONDENT) AND AS A CONSEQUENCE. RUFO ATIENZA. who was the sole proprietor of Sterela. 1997. the Court resolved to give due course to the petition and required the parties to submit their respective memoranda. MR. petitioner’s assistant manager. 18 Hence. a consumable thing. 16 It argues further that petitioner’s Assistant Manager.00 REPRESENTING THE SAVINGS ACCOUNT DEPOSIT. as evidenced by the check issued by Doronilla in the amount of P212.00 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. 23 . The Court then required private respondent to submit a rejoinder to the reply.000. he retained some degree of control over his money through his wife who was made a signatory to the savings account and in whose possession the savings account passbook was given.000. 21 since he did not actually part with the ownership of his P200.000. IV. III.00. Vives was presented during trial to prove that private respondent deposited his P200. MARTINEZ. AS THE FINDINGS OF THE REGIONAL TRIAL COURT WERE BASED ON A MISAPPREHENSION OF FACTS. Hence. P50. 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. 14 Petitioner filed its memorandum on April 16. 1994. Petitioner filed its Reply thereto on September 25. 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. argues that the transaction between him and Doronilla is not a mutuum but an accommodation.1a\^/phi1. did not contain any authorization for these two to withdraw from said account. what was delivered by private respondent to Doronilla was money. as well as the approval of the authority to debit Sterela’s savings account to cover any overdrawings in its current account. 15 Moreover.

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. 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. factual findings of courts. The rule is that the intention of the parties thereto shall be accorded primordial consideration in determining the actual character of a contract.00 corresponds to the fruits of the lending of the P200.000. there are some instances where a commodatum may have for its object a consumable thing. Atienza. 27 In case of doubt. The nature of said transaction. either something not consumable so that the latter may use the same for a certain time and return it. through its employee Mr. the loan is a commodatum and not a mutuum. Simple loan may be gratuitous or with a stipulation to pay interest. such as money.00 which the latter deposited in Sterela’s account together with an additional P12. 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. 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. the bailor retains the ownership of the thing loaned. Petitioner’s rules for savings deposits written on the passbook it issued Mrs. However. Vives on behalf of Sterela for Savings Account No. Doronilla’s attempts to return to private respondent the amount of P200. 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. the contemporaneous and subsequent acts of the parties shall be considered in such determination. as when it is merely for exhibition. or money or other consumable thing. and neither a deposit nor a withdrawal will be permitted except upon the production of the depositor savings bank book in which will be entered by the Bank the amount deposited or withdrawn. Commodatum is essentially gratuitous. ownership passes to the borrower. 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. Deposits and withdrawals must be made by the depositor personally or upon his written authority duly authenticated. A circumspect examination of the records reveals that the transaction between them was a commodatum. or when the intention of the parties is to lend consumable goods and to have the very same goods returned at the end of the period agreed upon. 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. At the outset. 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. was partly responsible for the loss of private respondent’s money and is liable for its restitution.000. while in simple loan. if consumable goods are loaned only for purposes of exhibition.26 There is no showing of any misapprehension of facts on the part of the Court of Appeals in the case at bar that would require this Court to review and overturn the factual findings of that court. 10-1567 expressly states that— "2. in which case the contract is simply called a loan or mutuum. as a favor to his good friend Sanchez.There is no merit in the petition. 24 The Court’s jurisdiction is in principle limited to reviewing errors of law that might have been committed by the Court of Appeals. 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. it was only proper for Doronilla to remit to private respondent the interest accruing to the latter’s money deposited with petitioner. when adopted and confirmed by the Court of Appeals. Article 1933 of the Civil Code distinguishes between the two kinds of loans in this wise: By the contract of loan. The foregoing provision seems to imply that if the subject of the contract is a consumable thing.000. Thus."30 .00. the contract would be a mutuum.000. that is. it must be emphasized that only questions of law may be raised in a petition for review filed with this Court. 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." 29 Private respondent merely "accommodated" Doronilla by lending his money without consideration. 28 As correctly pointed out by both the Court of Appeals and the trial court. In commodatum." Hence. 25 Moreover. with the promise that the amount shall be returned within thirty (30) days. are final and conclusive on this Court unless these findings are not supported by the evidence on record.00. whether it is a mutuum or a commodatum. one of the parties delivers to another. allegedly representing interest on the mutuum. in which case the contract is called a commodatum. upon the condition that the same amount of the same kind and quality shall be paid.

J).00. 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. the bank requires the presentation of the passbook. Sanchez. not just once. the bank records disclose that the only ones empowered to withdraw the same were Inocencia Vives and Angeles B. Atienza even declared that the money came from Mrs.000. In the first place. Atienza. assistant manager and cashier of the Makati (Buendia) branch of the defendant bank. 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. neither Mrs. It is an accepted practice that whenever a withdrawal is made in a savings deposit. Instead. the deposit was made in defendant’s Buendia branch precisely because Atienza was a key officer therein. the Manila Banking Corporation. was aware that the contents of the same are not true. Because of the "coordination" between Doronilla and Atienza. there were testimonies and admission that Atienza is the brother-in-law of a certain Romeo Mirasol. such recognized practice was dispensed with. Besides.000. said that this procedure was not followed here because Sterela was owned by Doronilla. Aside from such foreknowledge. the latter knew before hand that the money deposited did not belong to Doronilla nor to Sterela. the Assistant Branch Manager for the Buendia Branch of petitioner. In the signature card pertaining to this account (Exh. 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. Sanchez. In the second place. Vives for he was the one who gave it to her. 31 Under Article 2180 of the Civil Code. 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. to withdraw therefrom even without presenting the passbook (which Atienza very well knew was in the possession of Mrs. The records indicate that this account was opened three days later after the P200. help and cooperation of Rufo Atienza. 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.Said rule notwithstanding. 32 Case law in the United States of America has it that a corporation that entrusts a general duty to its employee is responsible to the injured party for damages flowing from the employee’s wrongful act done in the course of his general authority. Vives nor Sanchez had given Doronilla the authority to withdraw.nét Then there is the matter of the ownership of the fund. To begin with. In the third place. and that the employee was acting within the scope of his assigned task when the act complained of was committed. 2) is not hard to comprehend. who undoubtedly had a hand in the execution of this certification. the transfer of fund was done without the passbook having been presented. he was explicitly told by Inocencia Vives that the money belonged to her and her husband and the deposit was merely to accommodate Doronilla. a friend and business associate of Doronilla. Doronilla had already prepared a letter addressed to the Buendia branch manager authorizing Angeles B. 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. even though in doing such act. Rufo Atienza. He was also told by Mrs. through Atienza. employers shall be held primarily and solidarily liable for damages caused by their employees acting within the scope of their assigned tasks. Moreover. 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".33 . 1). In spite of his disclaimer. Assistant Manager of the Bank x x x" (Exh. Sanchez and company to open a savings account for Sterela in the amount of P200. This is a clear manifestation that the other defendants had been in consultation with Atienza from the inception of the scheme. Significantly. but several times. as "per coordination with Mr. He. 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. To hold the employer liable under this provision. Although the savings account was in the name of Sterela. Vives. however.00 was deposited. He knew that the passbook was in the hands of Mrs. Vives. Clearly Atienza had committed wrongful acts that had resulted to the loss subject of this case. The transfer from the savings account to the current account was without the submission of the passbook which Atienza had given to Mrs. it must be shown that an employer-employee relationship exists. The Court is not inclined to agree with Atienza. In fact before he was introduced to plaintiff. the employee may have failed in its duty to the employer and disobeyed the latter’s instructions. 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. In this case. he was all the time aware that the money came from Vives and did not belong to Sterela. as assistant manager of the branch and the bank official servicing the savings and current accounts in question. Indeed.1awphi1. He explained that Doronilla had the full authority to withdraw by virtue of such ownership. The records show that plaintiff had suggested that the P200. Doronilla was permitted by petitioner. the authorized signatories were Inocencia Vives &/or Angeles B. 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. C). x x x. he also was aware that the original passbook was never surrendered.00 be deposited in his bank. He was also cognizant that Estrella Dumagpi was not among those authorized to withdraw so her certification had no effect whatsoever. Vives).000.

she failed to pay the principal amounts despite repeated demands.000. The assailed Decision and Resolution of the Court of Appeals are AFFIRMED.000.13 The amount of this loan was covered by the first check.15 Respondent paid the stipulated monthly interest for both loans but on their maturity dates.161awphi1. 18 .000 and P20.000 and P500. Respondent. petitioner did not deny that Atienza was acting within the scope of his authority as Assistant Branch Manager when he assisted Doronilla in withdrawing funds from Sterela’s Savings Account No. WHEREFORE. June 26 and July 26. 56577 which set aside the February 28. 1995 in the amount of P500. In June 1995. Atienza violated some of petitioner’s rules such as those stipulated in its savings account passbook. on February 22. On June 29. 154878 March 16. For both loans. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.000 not as payment of interest but to accommodate petitioner’s request that respondent use her own checks instead of Santiago’s. 12 Petitioner alleged that on February 24. with interest thereon at 3% a month from October 26.000 at an agreed monthly interest of 4%.There is no dispute that Atienza was an employee of petitioner.R. THIO. RICA MARIE S. respondent failed to pay the principal amounts of the loans (US$100.5007 on July 26. SO ORDERED.000 6 and P76. Thio received from petitioner Carolyn M. and that it was their connivance which was the cause of private respondent’s loss. all in 1995) the amount of US$3. Atienza’s acts of helping Doronilla. the maturity date of which was on November 5. with interest thereon at 4% a month from November 5. Furthermore. The foregoing shows that the Court of Appeals correctly held that under Article 2180 of the Civil Code. 1996. October 5 and November 5. 2002 decision2 and August 20. plus attorney’s fees and actual damages. 1995. Accordingly. petitioner filed a complaint for sum of money and damages in the RTC of Makati City. 35 It was established that the transfer of funds from Sterela’s savings account to its current account could not have been accomplished by Doronilla without the invaluable assistance of Atienza. 1995 in the amount of US$100. 2007 CAROLYN M. petitioner is liable for private respondent’s loss and is solidarily liable with Doronilla and Dumagpi for the return of the P200. 17 She issued the checks for P76.nét Respondent denied that she contracted the two loans with petitioner and countered that it was Marilou Santiago to whom petitioner lent the money. Branch 58.10 Consequently.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. respondent borrowed from her the amount of US$100. 1995. CV No. vs. in which account private respondent’s money was deposited. attorney’s fees and costs of suit to private respondent. GARCIA. and that it was not negligent in the selection and supervision of Atienza. 1995 and P500. were obviously done in furtherance of petitioner’s interests 34 even though in the process. September 26 and October 26.R. Garcia a crossed check 4 dated February 24. 5 Thereafter. 10-1567. no error was committed by the appellate court in the award of actual. no promissory note was executed since petitioner and respondent were close friends at the time. J. April 26. which loan would mature on October 26. Sometime in February 1995.: Assailed in this petition for review on certiorari 1 are the June 19. 1995. 1997 decision of the Regional Trial Court (RTC) of Makati City. also payable to the order of Marilou Santiago. 14 The amount of this loan was covered by the second check. the petition is hereby DENIED. Branch 58 against respondent. 1995. September 5. a customer of the petitioner. 1995. No. 2002 resolution3of the Court of Appeals (CA) in CA- G. Petitioner.000 payable to the order of a certain Marilou Santiago. and in transferring the money withdrawn to Sterela’s Current Account with petitioner. She claimed she was merely asked by petitioner to give the crossed checks to Santiago. 1995. moral and exemplary damages.000) when they fell due. respondent received from petitioner another crossed check 9 dated June 29. 1995. seeking to collect the sums of US$100. Thus.000 every month on August 5. respondent again borrowed the amount of P500.11 According to petitioner.000. on March 24. petitioner received from respondent the amount of P20.000.000 with interest thereon at the rate of 3% per month. petitioner received from respondent every month (specifically. DECISION CORONA. respondent Rica Marie S.8 August 26.

payable to the order of Marilou Santiago and a CityTrust [crossed] check dated June 29.00. (Emphasis supplied) Upon delivery of the object of the contract of loan (in this case the money received by the debtor when the checks were encashed) the debtor acquires ownership of such money or loan proceeds and is bound to pay the creditor an equal amount. With costs against [respondent].000 with monthly interest of 3% and P500. 1995 in the amount of P500. when the factual findings of the CA (which held that there were no contracts of loan between petitioner and respondent) and the RTC (which held that there werecontracts of loan) are contradictory. and as such is perfected only upon the delivery of the object of the contract. by Marilou Santiago herself.00 with interest thereon at 4% per month from November 5.In a decision dated February 28. The checks received by [respondent].000.00 as and for actual damages. 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. the receipt of the [crossed] check by [respondent] is not the issuance and delivery to the payee in contemplation of law since the latter is not the person who could take the checks as a holder. this case falls under one of the exceptions..000 at a monthly interest of 4%:20 WHEREFORE. not consensual. finding preponderance of evidence to sustain the instant complaint. sentencing [respondent] to pay the former the amount of: 1. 2. 19 It found that respondent borrowed from petitioner the amounts of US$100. may not be encashed but only deposited in the bank by the payee thereof. but the commodatum or simple loan itself shall not be perfected until the delivery of the object of the contract.e.00 as and for attorney’s fees. i. as a payee or indorsee thereof. (b) the check may be negotiated only once—to one who has an account with the bank.. There is nothing in the record that shows that [respondent] received money from [petitioner].000. only questions of law may be raised in a petition for review on certiorari under Rule 45 of the Rules of Court.000. the CA reversed the decision of the RTC and ruled that there was no contract of loan between the parties: A perusal of the record of the case shows that [petitioner] failed to substantiate her claim that [respondent] indeed borrowed money from her.000. However. 26 .24 The petition is impressed with merit. 1995 until fully paid. it may be fairly inferred that there were really no contracts of loan that existed between the parties. With the foregoing circumstances. For lack of merit. It must be noted that crossing a check has the following effects: (a) the check may not be encashed but only deposited in the bank. P100. that is. 1995 until fully paid.23 As a rule.00. Consequently. 1997. Neither could she be deemed as an agent of Marilou Santiago with respect to the checks because she was merely facilitating the transactions between the former and [petitioner]. and 4.000. both of which were issued by [petitioner]. being crossed. What is evident is the fact that [respondent] received a MetroBank [crossed] check dated February 24.e. x x x (emphasis supplied)22 Hence this petition. the RTC ruled in favor of petitioner. with intent to transfer title thereto. otherwise. judgment is hereby rendered in favor of [petitioner]. 1995 in the sum of US$100. [US$100. i. again payable to the order of Marilou Santiago. he is not a holder in due course. [respondent’s] counterclaim is perforce dismissed.000. 3.21 On appeal. P50. P500. A loan is a real contract. (c) and the act of crossing the check serves as warning to the holder that the check has been issued for a definite purpose so that he must inquire if he has received the check pursuant to that purpose. 25 This is evident in Art.00] or its peso equivalent with interest thereon at 3% per month from October 26. IT IS SO ORDERED.

Thus the main question to be answered is: who borrowed money from petitioner — respondent or Santiago? Petitioner insists that it was upon respondent’s instruction that both checks were made payable to Santiago.. to retain them or to return them to petitioner. There was no written proof of the interest payable except for the verbal agreement that the loans would earn 3% and 4% interest per month. respondent is liable for the payment of legal interest per annum to be computed from November 21.000 loans respectively. a friend of both petitioner and respondent (and whose name appeared in both parties’ list of witnesses) testified that respondent’s plan was for petitioner to lend her money at a monthly interest rate of 3%. For the P500. it was respondent. on the other hand.000 from petitioner.30 Although respondent did not physically receive the proceeds of the checks. this Court is guided by the rule that for evidence to be believed. 29 We agree with petitioner.It is undisputed that the checks were delivered to respondent." Be that as it may. the interim period being deemed equivalent to a forbearance of credit. i. for loans she allegedly did not contract. after which respondent would lend the same amount to Santiago at a higher rate of 5% and realize a profit of 2%. these instruments were placed in her control and possession under an arrangement whereby she actually re-lent the amounts to Santiago. We do not. Article 1956 of the Civil Code provides that "[n]o interest shall be due unless it has been expressly stipulated in writing. It is well-settled that: When the obligation is breached. respondent admitted issuing her own checks in the amount of P76.000 loan. for the US$100. However. agree that respondent is liable for the 3% and 4% monthly interest for the US$100.38 Last. while there can be no stipulated interest. We instead agree with the ruling of the RTC making respondent liable for the principal amounts of the loans. and it consists in the payment of a sum of money. it must not only proceed from the mouth of a credible witness. 41 Hence. 37 Fourth. 39 The presumption is that "evidence willfully suppressed would be adverse if produced. respondent admitted that petitioner did not personally know Santiago. in the petition for insolvency sworn to and filed by Santiago..000 and P500. she also issued her own checks in the amount of P20. the date when she received petitioner’s demand letter. We declared in one case that: In the assessment of the testimonies of witnesses. respondent inexplicably never presented Santiago as a witness to corroborate her story.000 each (peso equivalent of US$3. but must be credible in itself such as the common experience of mankind can approve as probable under the circumstances.000 each for four months.34 According to respondent. she merely accommodated petitioner’s request for her to issue her own checks to cover the interest payments since petitioner was not personally acquainted with Santiago. Whatever is repugnant to these belongs to the miraculous. Respondent has not shown any reason why Ruiz’ testimony should not be believed. First. from her own funds. . Respondent. i. and experience. the interest due shall itself earn legal interest from the time it is judicially demanded. Delivery is the act by which the res or substance thereof is placed within the actual or constructive possession or control of another.42 From the finality of the decision until it is fully paid.e. the latter had possession and control of them such that she had the choice to either forward them to Santiago (who was already her debtor).000 and P100.000) for eight months to cover the monthly interest. however. and is outside of juridical cognizance.000 loan. not petitioner. 28 Furthermore. 33 This explained why respondent instructed petitioner to make the checks payable to Santiago. she argues that once respondent received the checks. observation. In the absence of stipulation. Several factors support this conclusion. the interest due should be that which may have been stipulated in writing. these checks were crossed and payable not to the order of respondent but to the order of a certain Marilou Santiago. 43 The award of actual damages in the amount of P50. 1995. 31 It was highly improbable that petitioner would grant two loans to a complete stranger without requiring as much as promissory notes or any written acknowledgment of the debt considering that the amounts involved were quite big.000 attorney’s fees is deleted since the RTC decision did not explain the factual bases for these damages.000 and P500. that Santiago would replace the checks with cash. We hold that the CA committed reversible error when it ruled that respondent did not borrow the amounts of US$100. deliver the same to Santiago. the amount due shall earn interest at 12% per annum. 36 Her explanation is simply incredible. 35 She claimed."40 Respondent was not able to overturn this presumption. already had transactions with Santiago at that time. Furthermore. Third. the rate of interest shall be 12% per annum to be computed from default. a loan or forbearance of money. We have no test of the truth of human testimony except its conformity to our knowledge. Leticia Ruiz. It is difficult to believe that respondent would put herself in a position where she would be compelled to pay interest. from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code. 32 Second. however. there can be legal interest pursuant to Article 2209 of the Civil Code. in turn.e. 27She maintains that it was also upon respondent’s instruction that both checks were delivered to her (respondent) so that she could. who was listed as one of her (Santiago’s) creditors.

The February 28. 4 affirming the 15 December 1995 decision5 of the Metropolitan Trial Court of Quezon City. Guevarra refused. Pajuyo ("Pajuyo") paid P400 to a certain Pedro Perez for the rights over a 250-square meter lot in Barrio Payatas. petitioner Colito T.R. 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. 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.00) monthly as reasonable compensation for the use of the premises starting from the last demand. PAJUYO. as owner of the house. The total amount due as of the date of finality will earn interest of 12% per annum until fully paid. 43129. 1995 until the finality of the decision. 2004 COLITO T.: The Case Before us is a petition for review1 of the 21 June 2000 Decision2 and 14 December 2000 Resolution of the Court of Appeals in CA-G. 2002 decision and August 20.000 and P500. C) pay plaintiff the sum of P3. the MTC rendered its decision in favor of Pajuyo. 56577 are REVERSED and SET ASIDE.000. Pajuyo did not show up or communicate with him. Pajuyo informed Guevarra of his need of the house and demanded that Guevarra vacate the house. SO ORDERED. Pajuyo and his family lived in the house from 1979 to 7 December 1985. vs. 96-266 is AFFIRMED with the MODIFICATION that respondent is directed to pay petitioner the amounts of US$100.WHEREFORE. B) pay unto plaintiff the sum of THREE HUNDRED PESOS (P300. Quezon City. respondents. On 8 December 1985.R. In September 1994. Branch 31 ("MTC"). 146364 June 3. On 15 December 1995. The Court of Appeals set aside the 11 November 1996 decision 3 of the Regional Trial Court of Quezon City. J. Guevarra pointed out that from December 1985 to September 1994. SP No. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.000 at 12% per annum interest from November 21. and . 1997 decision of the Regional Trial Court in Civil Case No. The award of actual damages and attorney’s fees is deleted. Pajuyo filed an ejectment case against Guevarra with the Metropolitan Trial Court of Quezon City. Pajuyo then constructed a house made of light materials on the lot. Guevarra insisted that neither he nor Pajuyo has valid title to the lot. CV No. Branch 31. 2002 resolution of the Court of Appeals in CA- G. 137 for socialized housing. Branch 81. Pajuyo and private respondent Eddie Guevarra ("Guevarra") executed a Kasunduan or agreement. The dispositive portion of the MTC decision reads: WHEREFORE. No. Guevarra promised that he would voluntarily vacate the premises on Pajuyo’s demand.00 as and by way of attorney’s fees. petitioner. judgment is hereby rendered for the plaintiff and against defendant. COURT OF APPEALS and EDDIE GUEVARRA. the petition is hereby GRANTED and the June 19. 6 The Antecedents In June 1979.R. Pajuyo. In his Answer. allowed Guevarra to live in the house for free provided Guevarra would maintain the cleanliness and orderliness of the house. DECISION CARPIO. premises considered.

premises considered. Pajuyo pointed out that the Court of Appeals should have dismissed outright Guevarra’s petition for review because it was filed out of time.7 Aggrieved. the First Division of the Supreme Court issued a Resolution 9 referring the motion for extension to the Court of Appeals which has concurrent jurisdiction over the case. Instead of filing his appeal with the Court of Appeals. Guevarra appealed to the Regional Trial Court of Quezon City. The Ruling of the RTC The RTC upheld the Kasunduan. SO ORDERED. Q-96-26943 is REVERSED and SET ASIDE. and the same is hereby affirmed en toto. the Court of Appeals issued its decision reversing the RTC decision. . D) pay the cost of suit. 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. the motion for reconsideration is hereby DENIED. Thus. On 27 February 1997. On 21 June 2000. the Court of Appeals issued a resolution denying Pajuyo’s motion for reconsideration. it was Guevarra’s counsel and not Guevarra who signed the certification against forum-shopping. Pajuyo filed his Comment. the RTC affirmed the MTC decision. The terms of the Kasunduan bound Guevarra to return possession of the house on demand. which established the landlord and tenant relationship between Pajuyo and Guevarra. Branch 81 ("RTC"). the Court finds no reversible error in the decision appealed from. On 14 December 2000.12 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. The dispositive portion of the resolution reads: WHEREFORE.11 Pajuyo filed a motion for reconsideration of the decision. The case presented no special and important matter for the Supreme Court to take cognizance of at the first instance. No costs. for lack of merit. On 11 November 1996. Guevarra filed with the Supreme Court a "Motion for Extension of Time to File Appeal by Certiorari Based on Rule 42" ("motion for extension"). Pajuyo is the owner of the house. SO ORDERED. Guevarra filed his petition for review with the Supreme Court. and it is hereby declared that the ejectment case filed against defendant-appellant is without factual and legal basis. Guevarra had only until 14 December 1996 to file his appeal with the Court of Appeals. On 11 April 1997. Moreover.8 Guevarra received the RTC decision on 29 November 1996. being in accord with the law and evidence presented. The dispositive portion of the RTC decision reads: WHEREFORE. SO ORDERED. and he allowed Guevarra to use the house only by tolerance. Guevarra’s refusal to vacate the house on Pajuyo’s demand made Guevarra’s continued possession of the house illegal. On 3 January 1997. premises considered. The dispositive portion of the decision reads: WHEREFORE. the assailed Decision of the court a quo in Civil Case No. the Thirteenth Division of the Court of Appeals issued a Resolution 10 granting the motion for extension conditioned on the timeliness of the filing of the motion. the Court of Appeals ordered Pajuyo to comment on Guevara’s petition for review. Guevarra theorized that his appeal raised pure questions of law. SO ORDERED. On 28 January 1997. On 8 January 1997.

The assignment of rights between Perez and Pajuyo. 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. 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. This technicality. The Court of Appeals reversed the MTC and RTC rulings. The Court of Appeals concluded that Guevarra is first in the hierarchy of priority. In an ejectment suit. instead of dismissing.The RTC rejected Guevarra’s claim of a better right under Proclamation No. The Court of Appeals concluded that the motion for extension bore a date. The Ruling of the Court of Appeals The Court of Appeals declared that Pajuyo and Guevarra are squatters. At that time. the appellate court debunked Pajuyo’s claim that Guevarra filed his motion for extension beyond the period to appeal. Perez had no right or title over the lot because it is public land. instead of denying. Guevarra was in physical possession of the property. 4) in reversing and setting aside the Decision of the Regional Trial Court in Civil Case No. 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. not ownership. contrary to Pajuyo’s claim that the motion for extension was undated. therefore. was clearly an afterthought. the only issue for resolution is material or physical possession. the RTC has no power to decide Guevarra’s rights under these laws. did not have any legal effect. 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. the actual occupant or caretaker of the lot shall have first priority as beneficiary of the project. 137. illegal occupants of the contested parcel of land. Pajuyo and Guevarra illegally occupied the contested lot which the government owned. Perez. the Revised National Government Center Housing Project Code of Policies and other pertinent laws. . In denying Pajuyo’s motion for reconsideration. Q-96-26943 and in holding that the parties are in pari delicto being both squatters. 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 explained that the thirty-day extension to file the petition for review was deemed granted because of such compliance. was also a squatter. Thus. the appellate court held that Guevarra has a better right over the property under Proclamation No. Since Pajuyo admitted that he resurfaced only in 1994 to claim the property. the appellate court opined. 137 on 7 September 1987. The RTC declared that in an ejectment case. 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. The Court of Appeals pointed out that Pajuyo did not raise this issue in his Comment. 3) in ruling that the Kasunduan voluntarily entered into by the parties was in fact a commodatum. Under Article VI of the Code of Policies Beneficiary Selection and Disposition of Homelots and Structures in the National Housing Project ("the Code"). 137. the person from whom Pajuyo acquired his rights. 2) in giving due course. President Corazon C. Pajuyo and Guevarra are in pari delicto or in equal fault. 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 held that Pajuyo could not now seek the dismissal of the case after he had extensively argued on the merits of the case. and the Kasunduan between Pajuyo and Guevarra. Aquino ("President Aquino") issued Proclamation No. the motion for extension properly complied with the condition imposed by the Court of Appeals in its 28 January 1997 Resolution. The court will leave them where they are. private respondent’s Petition for Review even though the certification against forum-shopping was signed only by counsel instead of by petitioner himself. 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".

we find merit in the substantive issues Pajuyo is submitting for resolution. 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.19 we clarified that the prohibition against granting an extension of time applies only in a case where ordinary appeal is perfected by a mere notice of appeal. 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. A perusal of Guevarra’s petition for review gives the impression that the issues he raised were pure questions of law. 14 Decisions of the regional trial courts involving pure questions of law are appealable directly to this Court by petition for review. Guevarra thus filed his motion for extension to file petition for review before this Court on 14 December 1996. the terms and conditions of which are the laws between themselves. Guevarra believed that his appeal of the RTC decision involved only questions of law. The motion for extension met this condition. At first glance.13 The Ruling of the Court The procedural issues Pajuyo is raising are baseless. Hence. The resolution stated that the Court of Appeals would only give due course to the motion for extension if filed on time. 15 These modes of appeal are now embodied in Section 2. On 3 January 1997. This Court merely referred the motion to the Court of Appeals. 20 The drafting of the petition for review entails more time and effort than filing a notice of appeal. 137. some factual questions still have to be resolved because they have a bearing on the legal questions raised in the petition for review. Guevarra filed with this Court an undated motion for extension of 30 days to file a petition for review. unlike an ordinary appeal. the Court of Appeals may allow an extension of time to file a petition for review. Finality of judgment becomes a fact on the lapse of the reglementary period to appeal if no appeal is perfected. Guevarra then filed his petition for review with this Court. Guevarra no longer disputed the facts.18 we declared that the Court of Appeals could grant extension of time in appeals by petition for review. Pajuyo points out that Guevarra had only one day before the expiry of his period to appeal the RTC decision. The prohibition does not apply in a petition for review where the pleading needs verification. The Court of Appeals did not commit grave abuse of discretion when it approved Guevarra’s motion for extension. Rule 41 of the 1997 Rules of Civil Procedure. 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. However. There is a question of law when the doubt or difference is on what the law is on a certain state of facts. In Lacsamana v.22 we held that Liboro’sclarification of Lacsamana is consistent with the Revised Internal Rules of the Court of Appeals and Supreme Court Circular No. 1-91. requires preparation and research to present a persuasive position. A petition for review. They all allow an extension of time for filing petitions for review with the Court of Appeals. however. 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 1997.17 In his petition for review before this Court. Guevarra’s petition for review raised these questions: (1) Do ejectment cases pertain only to possession of a structure. Second Special Cases Division of the Intermediate Appellate Court.23 The RTC decision could not have gained finality because the Court of Appeals granted the 30-day extension to Guevarra. 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.21 Hence. when the Court of Appeals received the motion. The extension. A judgment becomes "final and executory" by operation of law. 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. However. In Liboro v. Court of Appeals. the period to appeal had already expired. . Instead of filing the petition for review with the Court of Appeals. These factual matters refer to the metes and bounds of the disputed property and the application of Guevarra as beneficiary of Proclamation No. Court of Appeals. We are not persuaded. In the more recent case of Commissioner of Internal Revenue v. 16 There is a question of fact when the doubt or difference is on the truth or falsity of the facts alleged. should be limited to only fifteen days save in exceptionally meritorious cases where the Court of Appeals may grant a longer period. The Court of Appeals has the power to grant an extension of time to file a petition for review. the questions Guevarra raised appeared purely legal.

and that the pleading is filed in good faith. 29 It is intended simply to secure an assurance that what are alleged in the pleading are true and correct and not the product of the imagination or a matter of speculation. the party in peaceable quiet possession shall not be thrown out by a strong hand. Ownership or the right to possess arising from ownership is not at issue in an action for recovery of possession. the court may pass on such issue to determine only the question of possession. the only issue that the court has to settle in an ejectment suit is the right to physical possession. the date stamped by this Court’s Receiving Clerk on the motion for extension. the requirement on verification of a pleading is a formal and not a jurisdictional requisite. Pajuyo also failed to discuss Guevarra’s failure to sign the certification against forum shopping. forcible entry and unlawful detainer. violence or terror. Pajuyo raised this procedural issue too late in the proceedings.42 To repeat. 34 This doctrine is a necessary consequence of the nature of the two summary actions of ejectment. and (2) the date of filing of the motion for extension. 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. The only question that the courts must resolve in ejectment proceedings is . Thus. even if the motion for extension bears no date. Instead. what Guevarra raised before the courts was that he and Pajuyo are not the owners of the contested property and that they are mere squatters. that determines the timeliness of the filing of that motion or pleading. 35 In this case. 24 It is the date of the filing of the motion or pleading. that is. 28 On the other hand. claiming that the counsel’s verification is insufficient since it is based only on "mere information. lawyer or any person who personally knows the truth of the facts alleged in the pleading may sign the verification. Clearly. Pajuyo did not ask the appellate court to deny the motion for extension and dismiss the petition for review at the earliest opportunity. Guevarra filed the motion for extension exactly one day before the lapse of the reglementary period to appeal. 27 The certification of counsel renders the petition defective. A party’s representative. Guevarra had until 14 December 1996 to file an appeal from the RTC decision. after voluntarily submitting a dispute for resolution. .36 The same is true when the defendant asserts the absence of title over the property. Pajuyo harped on Guevarra’s counsel signing the verification. Courts will always uphold respect for prior possession. is estopped from attacking the jurisdiction of the court. 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. and not the date of execution. where the only issue for adjudication is the physical or material possession over the real property. We do not agree with the Court of Appeals. 40 Neither is the unlawful withholding of property allowed. but because the practice of attacking the court’s jurisdiction after voluntarily submitting to it is against public policy. and not by counsel. 25 Estoppel sets in not because the judgment of the court is a valid and conclusive adjudication. Pajuyo vigorously discussed the merits of the case. A party who. 39 Regardless of the actual condition of the title to the property. 33 The adjudication on the issue of ownership is only provisional and will not bar an action between the same parties involving title to the land. especially if the ownership is inseparably linked with the 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. Guevarra filed his motion for extension before this Court on 13 December 1996. Pajuyo did not call the Court of Appeals’ attention to this defect at the early stage of the proceedings. Assuming that the Court of Appeals should have dismissed Guevarra’s appeal on technical grounds. Instead.26 In his Comment before the Court of Appeals. 38 or when both parties intruded into public land and their applications to own the land have yet to be approved by the proper government agency. Absence of Title over the Disputed Property will not Divest the Courts of Jurisdiction to Resolve the Issue of Possession Settled is the rule that the defendant’s claim of ownership of the disputed property will not divest the inferior court of its jurisdiction over the ejectment case.32 Even if the pleadings raise the issue of ownership.The 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. if he has in his favor prior possession in time. 30 The party need not sign the verification.37 It does not even matter if a party’s title to the property is questionable. receives an adverse decision on the merits. 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. 41Whatever may be the character of his possession. to the possession de facto and not to the possession de jure. he has the security that entitles him to remain on the property until a person with a better right lawfully ejects him. Thus. the date of filing stamped on it is the reckoning point for determining the timeliness of its filing.who is entitled to the physical possession of the premises." 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. a party who can prove prior possession can recover such possession even against the owner himself. 31 We agree with the Court of Appeals that the issue on the certificate against forum shopping was merely an afterthought.

and while it may decide conflicts of possession in order to make proper award. such as the authority to stop disorders and quell breaches of the peace by the police. title remained with the government. irrespective of the question as to who has the title thereto. 926) the action of forcible entry was already available in the courts of the country. when it vested the power and authority to alienate and dispose of the public lands in the Lands Department. which was in force in this country before the American occupation. as there are public lands everywhere and there are thousands of settlers. or to pass promptly upon conflicts of possession. especially in newly opened regions. so that any troubles arising therefrom. and the Bureau of Public Lands had jurisdiction over the case. 286. acquired prior physical possession over the public land applied for as against other private claimants. and that until the disposition of the land has passed from the control of the Federal Government. 1093-1094. dispose. Sorilla. a summary proceeding which could be brought within one year from dispossession (Roman Catholic Bishop of Cebu vs. J. The plaintiff filed the action of forcible entry against the defendant. their entry into the disputed land was illegal. Our problem is made simple by the fact that under the Civil Code. upon the enactment of the Code of Civil Procedure (Act No. as it requires the determination of the respective authorities and functions of two coordinate branches of the Government in connection with public land conflicts. The vesting of the Lands Department with authority to administer. strictly speaking. the aim and purpose of which is the recovery of the physical possession of real property. (50 C. The plaintiff had a pending application for the land with the Bureau of Lands when the defendant ousted him from possession. or in the new. believing themselves entitled to the possession of property. alienation and disposition." (Supia and Batioco vs. The government did not authorize either the plaintiff or the defendant in the case of forcible entry case to occupy the land. or any breaches of the peace or disorders caused by rival claimants. must not be understood as depriving the other branches of the Government of the exercise of the respective functions or powers thereon. We disagreed with the defendant. 6 Phil. The plaintiff. 47 We further explained in Pitargue the greater interest that is at stake in actions for recovery of possession. 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.In Pitargue v. The plaintiff had prior possession and had already introduced improvements on the public land. therefore. As to this. 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. 190). Under the Spanish Civil Code we had the accion interdictal. 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. Title to the land remained with the government because it had not awarded to anyone ownership of the contested public land. Did the Legislature intend.) So before the enactment of the first Public Land Act (Act No. 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 protection of actual possessors and occupants with a view to the prevention of breaches of the peace. we have a possessory action. 1901. the corresponding branches of the Government must continue to exercise power and jurisdiction within the limits of their respective functions. 314. 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. neither does it have the means to prevent disorders arising therefrom. either in the old. and as early as October 1.e. by priority of his application and of his entry. So the question to be resolved is. directly or indirectly. i. Then its power is clearly limited to disposition and alienation. or all public lands for that matter. therefore. and alienate public lands. While the Court did not brand the plaintiff and the defendant in Pitargue44 as squatters. be removed from the jurisdiction of the judicial Branch of the Government. or contain breaches of the peace among settlers. 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. Both the plaintiff and the defendant were in effect squatting on government property. 46 Ejectment proceedings are summary in nature so the authorities can settle speedily actions to recover possession because of the overriding need to quell social disturbances. The government was not a party in the case of forcible entry. We ruled that courts have jurisdiction to entertain ejectment suits even before the resolution of the application. 190 of the Philippine Commission) we implanted the common law action of forcible entry (section 80 of Act No. The defendant questioned the jurisdiction of the courts to settle the issue of possession because while the application of the plaintiff was still pending. Quintero and Ayala. 45 The party deprived of possession must not take the law into his own hands.) We have no quarrel with this . resort to force to gain possession rather than to some appropriate action in the court to assert their claims. 291). It also involves a matter of policy. could be inquired into only by the Lands Department to the exclusion of the courts? The answer to this question seems to us evident. Mangaron. 312. 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. Yet. The Lands Department does not have the means to police public lands.43 the government owned the land in dispute. 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. the settlement of conflicts of possession which is recognized in the court herein has another ultimate purpose.. and before title is given any of the conflicting claimants? It is one of utmost importance. 59 Phil. Both the plaintiff and defendant entered the public land without the owner’s permission. the authority on the part of the courts to take jurisdiction over possessory actions arising therefrom not involving. and the reasonable hope such withdrawal would create that some advantage must accrue to those persons who. 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. the courts will not interfere with the administration of matters concerning the same.

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. 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. of physical possession. 49 The application of the pari delicto principle is not absolute. 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. 59 Phil. Gaurana. (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. if courts were deprived of jurisdiction of cases involving conflicts of possession. This action. not a legal possession. It leaves the parties where it finds them.) The title or right to possession is never in issue in an action of forcible entry.) The basis of the remedy is mere possession as a fact. On the other hand.’ The law will not aid either party to an illegal agreement. occupants or squatters. 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. 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. the application of the principle of pari delicto to a case of ejectment between squatters is fraught with danger. regardless of the actual condition of the title to the property. and a state of lawlessness would probably be produced between applicants. Petty warfare over possession of properties is precisely what ejectment cases or actions for recovery of possession seek to prevent. 37 Phil. believing themselves entitled to the possession of property. Quintero and Ayala. One of these exceptions is where the application of the pari delicto rule would violate well-established public policy. violence or terror. evidence thereof is expressly banned. Courts should not leave squatters to their own devices in cases involving recovery of possession. The Court of Appeals refused to rule on the issue of physical possession. both in England and the United States and in our jurisdiction. 752. (Supia and Batioco vs. (Mediran vs. the party in peaceable quiet possession shall not be turned out by strong hand. 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. and the reasonable hope such withdrawal would create that some advantage must accrue to those persons who. disposition.51 we reiterated the basic policy behind the summary actions of forcible entry and unlawful detainer. Nevertheless. resort to force to gain possession rather than to some appropriate action in the courts to assert their claims. that threat of judicial action against breaches of the peace committed on public lands would be eliminated. and control of public lands. the appellate court held that the pivotal issue in this case is who between Pajuyo and Guevarra has the "priority right as . its ultimate object being to prevent breach of the peace and criminal disorder. where force or might. Rules of Court. 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. except to prove the nature of the possession. by violence or terror. 53 Even the owner who has title over the disputed property cannot take the law into his own hands to regain possession of his property. 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. emboldened by the knowledge that the courts would leave them where they are.50 In Drilon v. as there are exceptions to its application. 312. The owner must go to court. principle. (Second 4. not right or justice. who has been deprived thereof by another through the use of force or in any other illegal manner. A squatter would oust another squatter from possession of the lot that the latter had illegally occupied. The law restrains property owners from taking the law into their own hands. it would facilitate adjudication. To do so would make squatters receive better treatment under the law. Villanueva. A judgment of the court ordering restitution of the possession of a parcel of land to the actual occupant. 52 Clearly. said question need no longer waste the time of the land officers making the adjudication or award. can never be "prejudicial interference" with the disposition or alienation of public lands. We held that: It must be stated that the purpose of an action of forcible entry and detainer is that. Nothing would then stand in the way of the ousted squatter from re-claiming his prior possession at all cost. would rule. Articles 1411 and 1412 of the Civil Code48 embody the principle of pari delicto. This is the philosophy at the foundation of all these actions of forcible entry and detainer which are designed to compel the party out of possession to respect and resort to the law alone to obtain what he claims is his. 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. The determination of priority and superiority of possession is a serious and urgent matter that cannot be left to the squatters to decide. Rule 72. To shut out relief to squatters on the ground of pari delicto would openly invite mayhem and lawlessness. for the question of priority of possession having been decided in a final manner by the courts.) With this nature of the action in mind. Courts must resolve the issue of possession even if the parties to the ejectment suit are squatters. 314. as a matter of fact.

Guevarra enjoys preferential right under Proclamation No. 137 into law on 11 March 1986. Pajuyo and Guevarra were at most merely potential beneficiaries of the law." 54 According to the Court of Appeals. President Aquino signed Proclamation No. na pansamantalang manirahan sa nasabing bahay at lote ng "walang bayad. 137. The determination of the respective rights of rival claimants to public land is. courts should expeditiously resolve the issue of physical possession in ejectment cases to prevent disorder and breaches of peace. Guevarra expressly admitted the existence and due execution of the Kasunduan. Quezon City. 137 because Article VI of the Code declares that the actual occupant or caretaker is the one qualified to apply for socialized housing. 137 allegedly segregated the disputed lot. 137. 56 The administrative disposition and alienation of public lands should be threshed out in the proper government agency.62 . First. Second. he and not Pajuyo appeared as the actual occupant of the lot. failing which. the defendant is necessarily bound by an implied promise that he will vacate on demand. 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.beneficiary of the contested land under Proclamation No. In Pitargue. courts should still assume jurisdiction and resolve the issue of possession. 137 laid down the metes and bounds of the land that it declared open for disposition to bona fide residents. 137. Based on the Kasunduan. 137. 61 The status of the defendant in such a case is similar to that of a lessee or tenant whose term of lease has expired but whose occupancy continues by tolerance of the owner. The Court of Appeals should not have given credence to Guevarra’s unsubstantiated claim that he is the beneficiary of Proclamation No. He failed to do so. 137. sila’y kusang aalis ng walang reklamo. distinct from the determination of who has the actual physical possession or who has a better right of physical possession. ay nagbibigay pahintulot kay G. However. These facts make out a case for unlawful detainer. the jurisdiction of the courts would be limited to the issue of physical possession only.59 Where the plaintiff allows the defendant to use his property by tolerance without any contract. During the time that Guevarra temporarily held the property up to the time that Proclamation No. 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 and Guevarra has a pending application over the lot. Instead. 58 Pajuyo is Entitled to Physical Possession of the Disputed Property Guevarra does not dispute Pajuyo’s prior possession of the lot and ownership of the house built on it. Guevarra did not present evidence to show that the contested lot is part of a relocation site under Proclamation No. Proclamation No. The Kasunduan reads: Ako. Pajuyo permitted Guevarra to reside in the house and lot free of rent. si COL[I]TO PAJUYO. Guevarra did not take any step to comply with the requirements of Proclamation No." Kaugnay nito. Guevarra never applied as beneficiary of Proclamation No. 137. Guevarra promised to vacate the premises on Pajuyo’s demand but Guevarra broke his promise and refused to heed Pajuyo’s demand to vacate. express or implied. Sa sandaling kailangan na namin ang bahay at lote. kailangang panatilihin nila ang kalinisan at kaayusan ng bahay at lote. Guevarra merely alleged that in the survey the project administrator conducted. but Guevarra was under obligation to maintain the premises in good condition. 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. Even assuming that the disputed lot is within the coverage of Proclamation No. Pajuyo made his earliest demand for Guevarra to vacate the property in September 1994.57 The Court of Appeals’ determination of Pajuyo and Guevarra’s rights under Proclamation No. Even when Guevarra already knew that Pajuyo was reclaiming possession of the property. 137. Payatas.55 we ruled that courts have jurisdiction over possessory actions involving public land to determine the issue of physical possession. There is no proof that Guevarra actually availed of the benefits of Proclamation No. 137 was premature. may-ari ng bahay at lote sa Bo. Eddie Guevarra. an action for unlawful detainer will lie. Pajuyo allowed Guevarra to occupy the disputed property in 1985. Third. however. 60 The defendant’s refusal to comply with the demand makes his continued possession of the property unlawful. The ruling of the Court of Appeals has no factual and legal basis.

strategy or stealth. 137 on socialized housing. administration and commodatum. While the Kasunduan did not require Guevarra to pay rent. 64 Thus. The Kasunduan expressly articulated Pajuyo’s forbearance. Guevarra’s transient right to possess the property ended as well. the defendant unlawfully withholds possession after the expiration or termination of his right to possess under any contract. he can demand the return of the thing at will. In a contract of commodatum. The only issue that we are addressing is physical possession. Even assuming that the relationship between Pajuyo and Guevarra is one of commodatum. Moreover. Control over the property still rested with Pajuyo and this is evidence of actual possession. 71 Guevarra turned his back on the Kasunduan on the sole ground that like him. express or implied. Guevarra insists that the contract is void. The effects of the Kasunduan are also different from that of a commodatum. as there would still be an implied promise to vacate. Guevarra is clearly a possessor in bad faith. 70 These contracts certainly involve the obligation to deliver or return the thing received. Another feature of commodatum is that the use of the thing belonging to another is for a certain period. Guevarra freely entered into the Kasunduan. 77 One may acquire possession not only by physical occupation. Prior possession is not always a condition sine qua non in ejectment."72 Guevarra bases his argument on the preferential right given to the actual occupant or caretaker under Proclamation No. The imposition of this obligation makes the Kasunduan a contract different from a commodatum. or after accomplishment of the use for which the commodatum is constituted. Guevarra’s refusal to comply with Pajuyo’s demand to vacate made Guevarra’s continued possession of the property unlawful. This is settled jurisprudence. The Kasunduan is the undeniable evidence of Guevarra’s recognition of Pajuyo’s better right of physical possession. it obligated him to maintain the property in good condition. Guevarra expressly vowed in the Kasunduan that he would vacate the property on demand.79 Ruling on Possession Does not Bind Title to the Land in Dispute . 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.74 In forcible entry. Guevarra should know that there must be honor even between squatters. Squatters. Thus. Pajuyo’s absence did not affect his actual possession of the disputed property. 75 But in unlawful detainer. 67 Under the Civil Code. cannot enter into a contract involving the land they illegally occupy. prior physical possession is not required. Pajuyo did not require Guevarra to pay any rent but only to maintain the house and lot in good condition. The Kasunduan binds Guevarra.69 The tenant’s withholding of the property would then be unlawful. 76 Pajuyo’s withdrawal of his permission to Guevarra terminated the Kasunduan. Guevarra pointed out. The obligation to deliver or to return the thing received attaches to contracts for safekeeping.68 The Kasunduan reveals that the accommodation accorded by Pajuyo to Guevarra was not essentially gratuitous. 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.This principle should apply with greater force in cases where a contract embodies the permission or tolerance to use the property. the bailor.63 An essential feature of commodatum is that it is gratuitous. it is for the proper government agency to decide who between Pajuyo and Guevarra qualifies for socialized housing. but also by the fact that a thing is subject to the action of one’s will. Pajuyo did not profit from his arrangement with Guevarra because Guevarra stayed in the property without paying any rent. The absence of a contract would not yield a different result. the plaintiff is deprived of physical possession of his land or building by means of force. in which case the contractual relation is called a precarium. the bailor cannot demand the return of the thing loaned until after expiration of the period stipulated. Moreover. 78 Actual or physical occupation is not always necessary. 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.65 If the bailor should have urgent need of the thing. 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. In such a case. Guevarra as bailee would still have the duty to turn over possession of the property to Pajuyo. he must allege and prove prior possession. he may demand its return for temporary use. We do not subscribe to the Court of Appeals’ theory that the Kasunduan is one of commodatum. or contracts of commission. We are not convinced. precarium is a kind of commodatum.73 This is one of the distinctions between forcible entry and unlawful detainer. Guevarra contends that there is "a pernicious evil that is sought to be avoided. and that is allowing an absentee squatter who (sic) makes (sic) a profit out of his illegal act. There is also no proof that Pajuyo is a professional squatter who rents out usurped properties to other squatters. The Kasunduan is not void for purposes of determining who between Pajuyo and Guevarra has a right to physical possession of the contested property. Pajuyo is also a squatter. Guevarra cannot now impugn the Kasunduan after he had benefited from it.66 If the use of the thing is merely tolerated by the bailor. threat. intimidation.

84 Attorney’s fees are not awarded every time a party prevails in a suit because of the policy that no premium should be placed on the right to litigate. 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. Such a ruling would discourage squatters from seeking the aid of the courts in settling the issue of physical possession. the courts could have evicted the contending squatters. The Decision dated 21 June 2000 and Resolution dated 14 December 2000 of the Court of Appeals in CA- G. SO ORDERED. J. 12432. Branch 81 in Civil Case No.R. by such act. 43129 are SET ASIDE. including local governments." 80 We made this declaration because the person who had title or who had the right to legal possession over the disputed property was a party in the ejectment suit and that party instituted the case against squatters or usurpers.R. which is the government. Q-96-26943. This would subvert the policy underlying actions for recovery of possession. Attorney’s Fees and Rentals The MTC and RTC failed to justify the award of P3. Guevarra did not dispute this factual finding of the two courts. is REINSTATED with MODIFICATION. 173654-765 August 28. Nos. We sustain the P300 monthly rentals the MTC and RTC assessed against Guevarra. The P300 monthly rental is counted from the last demand to vacate. Had the government participated in this case. respondents. 83 Thus.000 attorney’s fees to Pajuyo. The award of attorney’s fees is deleted.81 In no way should our ruling in this case be interpreted to condone squatting. The ruling on the issue of physical possession does not affect title to the property nor constitute a binding and conclusive adjudication on the merits on the issue of ownership. which was on 16 February 1995. Our ruling here does not diminish the power of government agencies. WHEREFORE. affirming the Decision dated 15 December 1995 of the Metropolitan Trial Court of Quezon City.: This is a Petition for Review under Rule 45 of the Revised Rules of Court with petitioner People of the Philippines. however. acquire any legal right to said property. Branch 31 in Civil Case No. 85 We therefore delete the attorney’s fees awarded to Pajuyo. SP No. We find the amount reasonable compensation to Pajuyo. The ruling in this case. to condemn. In this case. praying for the reversal of the Orders dated 30 January 2006 and 9 June 2006 of the Regional Trial Court (RTC) of the 6 th Judicial . The Decision dated 11 November 1996 of the Regional Trial Court of Quezon City.We are aware of our pronouncement in cases where we declared that "squatters and intruders who clandestinely enter into titled government property cannot. DECISION CHICO-NAZARIO. 2008 PEOPLE OF THE PHILIPPINES. Since the party that has title or a better right over the property is not impleaded in this case. is not a party to the ejectment case. we cannot evict on our own the parties. remove or demolish illegal or unauthorized structures in accordance with existing laws. the owner of the land. Attorney’s fees as part of damages are awarded only in the instances enumerated in Article 2208 of the Civil Code. This case is between squatters. 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. Since Pajuyo has in his favor priority in time in holding the property. the award of attorney’s fees is the exception rather than the rule. petitioner. No costs. he is entitled to remain on the property until a person who has title or a better right lawfully ejects him. TERESITA PUIG and ROMEO PORRAS. Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G. does not preclude Pajuyo and Guevarra from introducing evidence and presenting arguments before the proper administrative agency to establish any right to which they may be entitled under the law. Pajuyo and Guevarra. represented by the Office of the Solicitor General. we GRANT the petition. abate. 82 The owner can still go to court to recover lawfully the property from the person who holds the property without legal title. Guevarra is certainly not that person. vs.

steal and carry away the sum of FIFTEEN THOUSAND PESOS (P15. 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. Pototan. Following Section 6. and (2) the Informations are bereft of the phrase alleging "dependence. who are the owners of the money allegedly taken by respondents and hence. Philippine Currency. Iloilo." It added that allowing the 112 cases for Qualified Theft filed against the respondents to push through would be violative of the right of the respondents under Section 14(2). DENIED.00). the accused shall enjoy the right to be informed of the nature and cause of the accusation against him. savings. "fixed. The allegations in the Informations1 filed before the RTC were uniform and pro-forma. being the Cashier and Bookkeeper of the Rural Bank of Pototan. and that they took various amounts of money with grave abuse of confidence.000." Corollary thereto. finding as follows: Accordingly. Iloilo. Petitioner went directly to this Court via Petition for Review on Certiorari under Rule 45. respectively. 112 cases of Qualified Theft against respondents Teresita Puig (Puig) and Romeo Porras (Porras) who were the Cashier and Bookkeeper. without the knowledge and/or consent of the management of the Bank and with intent of gain. and that it be directed to proceed with Criminal Cases No. unlawfully and feloniously take. to wit: INFORMATION That on or about the 1st day of August. Petitioner prays that judgment be rendered annulling and setting aside the Orders dated 30 January 2006 and 9 June 2006 issued by the trial court." Thus. A Motion for Reconsideration2 was filed on 17 April 2006. and denying petitioner’s Motion for Reconsideration. Petitioner explains that under Article 1980 of the New Civil Code. 05-3054 to 05-3165. it posits that the depositors who place their money with the bank are considered creditors of the bank. 05-3054 to 05-3165. except for the amounts. 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. of private complainant Rural Bank of Pototan. Branch 68. The Order dated January 30. are the real parties-in-interest. the RTC dismissed the cases on 30 January 2006 and refused to issue a warrant of arrest against Puig and Porras. 2006 STANDS in all respects. AND THE QUALIFYING CIRCUMSTANCE OF GRAVE ABUSE OF CONFIDENCE. did then and there willfully. and within the jurisdiction of this Honorable Court. 05-3054 to 05-3165. an Order3 denying petitioner’s Motion for Reconsideration was issued by the RTC. raising the sole legal issue of: WHETHER OR NOT THE 112 INFORMATIONS FOR QUALIFIED THEFT SUFFICIENTLY ALLEGE THE ELEMENT OF TAKING WITHOUT THE CONSENT OF THE OWNER. After perusing the Informations in these cases. as it hereby. 2002. 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. Rule 112 of the Revised Rules of Criminal Procedure. Inc. with grave abuse of confidence. making the money taken by respondents as belonging to the bank.. Iloilo.. and is bound to pay to the creditor an equal amount of the same kind and quality. Dumangas. by the petitioner. to the damage and prejudice of the bank. dismissing the 112 cases of Qualified Theft filed against respondents Teresita Puig and Romeo Porras. the Iloilo Provincial Prosecutor’s Office filed before Branch 68 of the RTC in Dumangas. and helping one another. the prosecution’s Motion for Reconsideration should be. to the damage and prejudice of the said bank in the aforesaid amount. On 9 June 2006. Inc. date and time of commission. .Region. confederating. The following are the factual antecedents: On 7 November 2005. conspiring. Inc. The cases were docketed as Criminal Cases No. The bank acquires ownership of the money deposited by its clients. Petitioner also insists that the Informations sufficiently allege all the elements of the crime of qualified theft. in the Municipality of Pototan. in Criminal Cases No. Province of Iloilo. citing that a perusal of the Informations will show that they specifically allege that the respondents were the Cashier and Bookkeeper of the Rural Bank of Pototan. which filed the complaint in these cases. above-named [respondents]. and current deposits of money in banks and similar institutions shall be governed by the provisions concerning simple loans. and without the knowledge and consent of the bank. Article III of the 1987 Constitution which states that in all criminal prosecutions. respectively. Philippines.

there is no basis for the existence of probable cause which will justify the issuance of the warrant of arrest. Petitioner assails the dismissal contending that the Informations for Qualified Theft sufficiently state facts which constitute (a) the qualifying circumstance of grave abuse of confidence. That the said taking be done with intent to gain. – The crime of theft shall be punished by the penalties next higher by two degrees than those respectively specified in the next preceding article. The elements of the crime under this Article are: 1. Intent to gain. guardianship or vigilance. therefore. To fall under the crime of Qualified Theft. if committed by a domestic servant. At this point. mail matter or large cattle or consists of coconuts taken from the premises of a plantation. therefore. vehicular accident or civil disturbance. Qualified Theft. is committed as follows. Respondents further claim that the Department of Justice (DOJ). or any other calamity. but the depositors therein. or with grave abuse of confidence. makes the issue of sufficiency of the allegations in the Informations the focal point of discussion. 5. The dismissal by the RTC of the criminal cases was allegedly due to insufficiency of the Informations and. Koc Song. We find merit in the petition.Parenthetically. He ruled that the Information failed to state facts constituting the qualifying circumstance of grave abuse of confidence and the element of taking without the consent of the owner. viz: ART. This. 2. Qualified Theft. which the respondents abused. . and (b) the element of taking. 3. as defined in Article 308 of the Revised Penal Code. which is the Bank. which is not proper under said Rule. That it be accomplished without the use of violence or intimidation against persons. the following elements must concur: 1. In determining the existence of probable cause to issue a warrant of arrest.) Theft. He also cites People v. it needs stressing that the RTC Judge based his conclusion that there was no probable cause simply on the insufficiency of the allegations in the Informations concerning the facts constitutive of the elements of the offense charged. typhoon. respondents raise procedural issues. That it be done without the owner’s consent.4 in which this Court held: There must be allegation in the information and proof of a relation. 310. 6. considering that the incident was indorsed by the DOJ. through the Secretary of Justice. That the said property belongs to another. Personal property belonging to another. earthquake. 3. That it be done with grave abuse of confidence. Taking of personal property. (Emphasis supplied. 4. volcanic eruption. the RTC judge found the allegations in the Information inadequate. between the respondents and the offended party that has created a high degree of confidence between them. is the principal party to file a Petition for Review on Certiorari. 2. Unlawful taking. nor of force upon things. since the owner of the money is not the Bank. as defined and punished under Article 310 of the Revised Penal Code. fish taken from a fishpond or fishery or if property is taken on the occasion of fire. They challenge the petition on the ground that a Petition for Review on Certiorari via Rule 45 is the wrong mode of appeal because a finding of probable cause for the issuance of a warrant of arrest presupposes evaluation of facts and circumstances. or if the property stolen is motor vehicle. requires the physical taking of another’s property without violence or intimidation against persons or force upon things. 4. Absence of violence or intimidation against persons or force upon things. with intent to gain and without the consent of the owner. by reason of dependence. because of this defect.

Pampanga. as sufficient to make out a case of Qualified Theft. In a long line of cases involving Qualified Theft. Philippine Currency. FARGAS. It is evident that the Information need not use the exact language of the statute in alleging the acts or omissions complained of as constituting the offense. steal and carry away the amount of P10. without particularly referring to it as owner of the money deposits. the felony of qualified theft would be committed.8 the Branch Operations Officer was convicted of the crime of Qualified Theft based on the Information as herein cited: That in or about and during the period compressed between January 24. the said accused did then and there wilfully. Cause of the accusation. HELEN U. when in truth and in fact said Antonio Salazar did not withdr[a]w the said amount of P10. where monies are deposited. Inc. A person who receives a loan of money or any other fungible thing acquires the ownership thereof. 1359. that the information must state the acts or omissions complained of as constitutive of the offense.000.000. and the court to render judgment properly. The acts or omissions complained of as constituting the offense and the qualifying and aggravating circumstances must be stated in ordinary and concise language and not necessarily in the language used in the statute but in terms sufficient to enable a person of common understanding to know what offense is being charged as well as its qualifying and aggravating circumstances and for the court to pronounce judgment. Section 6.00 in different denominations belonging to the PHILIPPINE COMMERCIAL INTERNATIONAL BANK (PCIBank for brevity).000.00. Philippines.00). Banks.00 to the damage and prejudice of BABSLA in the total amount of P10. with grave abuse of confidence. Articles 1953 and 1980 of the New Civil Code. to the damage and prejudice of the Bank. and is bound to pay to the creditor an equal amount of the same kind and quality. Fixed. being the Cashier and Bookkeeper of the Rural Bank of Pototan. said accused. and current deposits of money in banks and similar institutions shall be governed by the provisions concerning loan. This is very clear not only from the express provisions of the law. did then and there willfully.6 where the accused teller was convicted for Qualified Theft based on this Information: That on or about the 16th day of November. Floridablanca. Rule 110 of the Rules of Court requires. It is beyond doubt that tellers. Luneta Branch. with intent of gain and without the knowledge and consent of the owner thereof.00. as appropriately pointed out by petitioner. Philippine currency. to the damage and prejudice of the said owner in the aforesaid amount of P6. Philippines and within the jurisdiction of his Honorable Court. provide as follows: Article 1953. Philippine currency. 7 Also in People v. (BABSLA) with office address at Basa Air Base. and having collected and received in her capacity as teller of the BABSLA the sum of TEN THOUSAND PESOS ( P10. on the other hand.000.000. both dates inclusive. Section 9. 1992. and the bank places money in the teller’s possession due to the confidence reposed on the teller. confederating. by making it appear that a certain depositor by the name of Antonio Salazar withdrew from his Savings Account No. Iloilo. Rule 110 of the Rules of Court. this Court has firmly established the nature of possession by the Bank of the money deposits therein. 5 The portion of the Information relevant to this discussion reads: A]bove-named [respondents]. On the manner of how the Information should be worded. without the knowledge and/or consent of the management of the Bank x x x. 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.00. The relationship between banks and depositors has been held to be that of creditor and debtor. but from established jurisprudence. the Court held that: [S]ince the teller occupies a position of confidence. in the municipality of Floridablanca. 1992 and February 13. being then employed as teller of the Basa Air Base Savings and Loan Association Inc. unlawfully and feloniously take. with grave abuse of confidence and without the knowledge and consent of said corporation. province of Pampanga. Sison. People. The Court has consistently considered the allegations in the Information that such employees acted with grave abuse of confidence. Cashiers. is enlightening: Section 9. with intent of gain. . unlawfully and feloniously. In convicting the therein appellant. are considered the owners thereof.000.. Pototan.000. Manila represented by its Branch Manager.On the sufficiency of the Information. and the duties being performed by its employees who have custody of the money or have come into possession of it. inter alia. conspiring. and helping one another.000. the above-named accused ASUNCION GALANG ROQUE. take. For a graphic illustration. The test is whether it enables a person of common understanding to know the charge against him. we cite Roque v. steal and carry away the following. Article 1980. 1989. and as such was authorized and reposed with the responsibility to receive and collect capital contributions from its member/contributors of said corporation. to wit: Cash money amounting to P6. in the City of Manila. savings.

there is even no reason to quibble on the allegation in the Informations that they acted with grave abuse of confidence. Iloilo. The Orders dated 30 January 2006 and 9 June 2006 of the RTC dismissing Criminal Cases No. whenever legally feasible. Soliven v. and the employees of the Bank. conversely.9 From another end. Inc. the interest of the private complainant or the offended party is limited to the civil liability arising therefrom.15 as reiterated in Allado v. Hajime Umezawa13 is instructive. or in the case of an appeal. if a criminal case is dismissed by the trial court or if there is an acquittal. therefore. Sison. between the respondents and the offended party that has created a high degree of confidence between them. in Dumangas. he being the Branch Operation Officer of the said complainant and as such he had free access to the place where the said amount of money was kept. In fact. that the crime was committed with grave abuse of confidence. Driokno. guardianship or vigilance. The judgment of conviction elaborated thus: The crime perpetuated by appellant against his employer. without necessarily stating the phrase being assiduously insisted upon by respondents. the Information which alleged grave abuse of confidence by accused herein is even more precise. the judge shall issue a warrant of arrest only upon a finding of probable cause after personally evaluating the resolution of the prosecutor and its supporting evidence. even if we go beyond the allegations of the Informations in these cases. No pronouncement as to costs. Locson. v. WHEREFORE. insofar as the criminal aspect thereof is concerned and may be made only by the public prosecutor. Appellant could not have committed the crime had he not been holding the position of Luneta Branch Operation Officer which gave him not only sole access to the bank vault xxx. is Qualified Theft. there was taking as contemplated in the crime of Qualified Theft. where the Informations merely alleged the positions of the respondents. As an aside. and it was this trust and confidence which he exploited to enrich himself to the damage and prejudice of PCIB x x x. Before closing. which respondents abused. only errors of law may be raised. SO ORDERED. 05-3054 to 05-3165. through the OSG. is directed to proceed with the trial of Criminal Cases No. by the State only. The Informations. who are entrusted with the possession of money of the Bank due to the confidence reposed in them. to relieve the respondents from the pain of going through a trial once it is ascertained that no probable cause exists to form a sufficient belief as to the guilt of the respondents. The RTC Judge of Branch 68. occupy positions of confidence."12 and without employing the word "owner" in lieu of the "Bank" were considered to have satisfied the test of sufficiency of allegations. a reconsideration of the order of dismissal or acquittal may be undertaken. it is also equally imperative upon the judge to proceed with the case upon a showing that there is a prima faciecase against the respondents. Rule 112 of the Rules of Court. with intent to gain and without the knowledge and consent of the Bank. suffice it to state that the rule is well-settled that in appeals by certiorari under Rule 45 of the Rules of Court. The Court thus enunciated: In a criminal case in which the offended party is the State. Pursuant to Section 6. sufficiently allege all the essential elements constituting the crime of Qualified Theft. the ruling in Mobilia Products.16 explained that probable cause for the issuance of a warrant of arrest is the existence of such facts and circumstances that would lead a reasonably discreet and prudent person to believe that an offense has been committed by the person sought to be arrested. as the case may be. . probable cause exists for the indictment of herein respondents. On the alleged wrong mode of appeal by petitioner. the Bank acquires ownership of the money deposited by its clients. in all of the foregoing cases. described the nature of possession by the Bank. the Philippine Commercial and Industrial Bank (PCIB). People v. 11 Conspicuously. As regards the respondents who were employed as Cashier and Bookkeeper of the Bank in this case. with reasonable dispatch. indeed. On the theory of the defense that the DOJ is the principal party who may file the instant petition. That in the commission of the said offense. Let the corresponding Warrants of Arrest issue against herein respondents TERESITA PUIG and ROMEO PORRAS. x x x. let it be stated that while it is truly imperative upon the fiscal or the judge. removed the money and appropriated it to his own use without the consent of the Bank. committed the offense charged. 17 The records reasonably indicate that the respondents may have. "of a relation by reason of dependence. inclusive. and the possession of the defendant was the possession of the Bank. premises considered. herein accused acted with grave abuse of confidence and unfaithfulness.10 in addition to People v. Makasiar. the Petition for Review on Certiorari is hereby GRANTED. indeed. a closer look at the records of the preliminary investigation conducted will show that. In summary. as this is exactly the requirement of the law in qualifying the crime of Theft. 05-3054 to 05-3165 are REVERSED and SET ASIDE. with grave abuse of confidence. The money in this case was in the possession of the defendant as receiving teller of the bank. Hence.14 and herein petitioner certainly raised a question of law. The Court held therein that when the defendant. The management of the PCIB reposed its trust and confidence in the appellant as its Luneta Branch Operation Officer.