1.

Republic of the Philippines v Jose Bagtas

G.R. No. L-17474, 25 October 1962

Facts:

Bagtas borrowed from the Republic through the Bureau of Animal Industry three bulls: a

Red Sindhi with a book value of P1,176.46, a Bhagnari, of P1,320.56 and a Sahiniwal, of P744.46,

for a period of 1 year for breeding purposes subject to a breeding fee of 10% of the book value of

the bulls. Later, he requested for a renewal for another year for the three bulls but only one bull

was approved while the others are to be returned

Thereafter, he wrote to the Director of Animal Industry that he would pay the value of the

3 bulls, and he reiterated his desire to buy them at a value with a deduction of yearly depreciation

to be approved by the Auditor General.

The Director of Animal Industry advised him that either the 3 bulls are to be returned or

their book value without deductions should be paid not later than October 31, 1950 which he was

not able to do. Hence, an action at the CFI was commenced against Jose praying that he be ordered

to return the 3 bulls or to pay their book value of P3,241.45 and the unpaid breeding fee of

P199.62, both with interests, and costs.

He answered that because of the bad peace and order situation in Cagayan Valley,

particularly in the barrio of Baggao, and of the pending appeal he had taken to the Secretary of

Agriculture and Natural Resources and the President of the Philippines, he could not return the

animals nor pay their value and prayed for the dismissal of the complaint. RTC granted the action

and granted an ex-parte motion for the appointment of a special sheriff to serve the writ outside

Manila.

Felicidad M. Bagtas, the surviving spouse of Jose who died on October 23, 1951 and

administratrix of his estate, was notified and filed a motion that the 2 bulls where returned by his

son on June 26, 1952 evidenced by receipt and the 3rd bull died from gunshot wound inflicted

during a Huk raid and prayed that the writ of execution be quashed and that a writ of preliminary

injunction be issued.
Issue:

W/N the contract is commodatum and NOT a lease and the estate should be liable for the

loss due to force majeure (gunshot wound) due to delay.

Held:

Yes. In the case, the loan by the Bureau of Animal Industry to the defendant of three bulls

for breeding purposes for a period of one year, later on renewed for another as regards one bull,

was subject to the payment by the borrower of breeding fee of 10% of the book value of the bulls.

If the breeding fee be considered a compensation, the contract would be a lease of the bulls; it

could not be a contract of commodatum, because that contract is essentially gratuitous.

The appellant is liable if he keeps it longer than the period stipulated, but the estate of the

late defendant is only liable for the sum of P859.63, the value of the bull which has not been

returned because it was killed while in the custody of the administratrix of his estate.
 2. Republic of the Philippines v. Court of Appeals

G.R. L-46145, 26 November 1986

Facts:

The heirs of Domingo Baloy, represented by Ricardo Baloy, filed an application for land

registration with a possessory title acquired under the provisions of the Spanish Mortgage Law.

The Court of First Instance of Zambales, denied the application thus it was interposed on

appeal to the Court of Appeals. The appellate court, thru its Fifth Division reversed the decision

and approved the application for registration. The petitioner Republic filed its Motion for

reconsideration and was denied.

A communication/letter which contains an official statement, recognizes the fact that

Domingo Baloy and/or his heirs have been in continuous possession of the said land since 1894,

as attested by an “Informacion Possessoria” Title, which was granted by the Spanish Government.

And was interrupted by the occupation of the land by the US Navy in 1945.

Issue:

Whether or not the private respondents’ rights by virtue of their possessory information

title was lost by prescription.

Held:

No. Under Act 627 possessory rights over private land within a portion of a military

reservation are not lost by mere failure to file a claim within the prescribed period A judicial

declaration of forfeiture is required after due notice and hearing.

The finding of respondent court that during the interim of 57 years from November 26,1902

to December 17, 1959 (when the U.S. Navy possessed the area) the possessory rights of Baloy or

heirs were merely suspended and not lost by prescription, is supported evidence on record. The

evidence recognizes the fact that Domingo Baloy and/or his heirs have been in continuous

possession of said land since 1894 as attested by an "Informacion Possessoria" Title, which was

granted by the Spanish Government. Hence, the disputed property is private land and this

possession was interrupted only by the occupation of the land by the U.S. Navy in 1945 for
recreational purposes. The U.S. Navy eventually abandoned the premises. The heirs of the late

Domingo P. Baloy, are now in actual possession, and this has been so since the abandonment by

the U.S. Navy. A new recreation area is now being used by the U.S. Navy personnel and this

place is remote from the land in question.

Clearly, the occupancy of the U.S. Navy was not in the concept of owner. It partakes of the

character of a commodatum. It cannot therefore militate against the title of Domingo Baloy and

his successors-in-interest. One's ownership of a thing may be lost by prescription by reason of

another's possession if such possession be under claim of ownership, not where the possession is

only intended to be transient, as in the case of the U.S. Navy's occupation of the land concerned,

in which case the owner is not divested of his title, although it cannot be exercised in the

meantime.
 3. Margarita Quintos and Angel Ansaldo v. Beck

G.R. No. 46240, 3 November 1939

Facts:

Quintos and Beck entered into a contract of lease, whereby the latter occupied the former’s

house. On Jan 14, 1936, the contract of lease was novated, wherein Quintos gratuitously granted

to Beck the use of the furniture, subject to the condition that Beck should return the furniture to

Quintos upon demand.

Thereafter, Quintos sold the property to Maria and Rosario Lopez. Beck was notified of

the conveyance and given him 60 days to vacate the premises. In addition, Quintos required Beck

to return all the furniture. Beck refused to return 3 gas heaters and 4 electric lamps since he would

use them until the lease was due to expire. Quintos refused to get the furniture in view of the fact

that the defendant had declined to make delivery of all of them.

Beck deposited all the furniture belonging to Quintos to the sheriff. The lower court came

to the legal conclusion that the plaintiff failed to comply with her obligation to get the furniture

when they were offered to her. CFI ordered Beck return to the 3 heaters and 4electric lamps found

in the possession of the Sheriff at her own expense and that the fees which may be charged for

the deposit of the furniture be paid pro rata by both parties, without pronouncement as to the

costs.

Issue:

Whether or not Beck complied with his obligation to return the furniture upon the plaintiff's

demand by depositing the furniture to the sheriff.

Held:

Yes. It is just and equitable that he pays the legal expenses and other judicial costs which

the plaintiff would not have otherwise defrayed. The contract entered into between the parties is

one of commodatum, because under it the plaintiff gratuitously granted the use of the furniture to

the defendant, reserving for herself the ownership thereof.

 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 electric lamps.

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.
 7. Severino Tolentino and Potenciana Manio v. Benito Gonzales

G.R. No. 26085, 12 August 1927

Facts:

Severino Tolentino and Potenciana Manio purchased Luzon Rice Mills, Inc., parcel of land

in Tarlac for P25,000.00 to be paid in three installments.

a. First installment is P2,000 due on or before May 2, 1921

b. Second installment is P8,000 due on or before May 31, 1921

c. Third installment of P15,000 at 12% interest due on or before Nov 30,1922

One of the conditions of the contract of purchase was that if Tolentino and Manio failed to

pay the balance of any of the installments on the date agreed upon, the property bought would

revert to the original owner. The first and second installments were paid but the balance was paid

on Dec1, 1922. On Nov 7, 1922, a representative of vendor of said property wrote Manio,

notifying her that if the balance of said indebtedness was not paid, they would recover the property

with damages for noncompliance with the condition of the contract of purchase.

Tolentino and Manio borrowed money from Benito Gonzales Sy Chiam to satisfy their

indebtedness to the vendor. Gonzales agreed to loan the P17,500 upon condition that they execute

and deliver to him a pacto de retro of the property. The contract includes a contract of lease on

the property whereby the lessees as vendors apparently bind themselves to pay rent at the rate of

P375 per month and whereby "Default in the payment of the rent agreed for two consecutive

months will terminate this lease and will forfeit our right of repurchase, as though the term had

expired naturally"

Upon maturation of loan, Tolentino defaulted payment and Gonzales demanded recovery

of land. Tolentino argued that the pacto de retro sale is a mortgage and not an absolute sale and

that the rental price paid during the period of the existence of the right to repurchase, or the sum

of P375 per month, based upon the value of the property, amounted to usury.

Issue:

Whether the contract is a mortgage.

Held:

No. Upon its terms, the deed of pacto de retro sale is an absolute sale with right of

repurchase and not a mortgage. Thus, Gonzalez is the owner of the land and Tolentino is only

holding it as a tenant by virtue of a contract of lease.

The evidence introduced by the appellant in the present case does not meet with that

stringent requirement. There is not a word, a phrase, a sentence or a paragraph in the entire record,

which justifies this court in holding that the said contract of pacto de retro is a mortgage and not

a sale with the right to repurchase.

A contract for the lease of property is not a "loan." Under the Usury Law the defense of

usury cannot be based thereon. The Usury Law in this jurisdiction prohibits a certain rate of

interest on "loans." A contract of "loan" is a very different contract from that of "rent." A "loan,"

as that term is used in the statute, signifies the giving of a sum of money, goods or credit to

another, with a promise to repay, but not a promise to return the same thing. In a con-tract of

"rent' the owner of the property does not lose his ownership. He simply loses his control over the

property rented during the period of the contract. In a contract of rent the relation between the

contractors is that of landlord and tenant. In a contract of loan of money, goods, chattels or credits,

the relation between the parties is that of obligor and obligee.

Usury may be defined as contracting for or receiving something in excess of the amount

allowed by law for the loan or forbearance of money, goods or chattels. It is the taking of more

interest for the use of money, goods or chattels or credits than the law allows. Usury has been

regarded with abhorrence from the earliest times.

 8. Saura Import and Export Co., Inc. v. Development Bank of the Philippines

G.R. No. L-24968, 27 April 1972

Facts:

In July 1952, Saura, Inc., applied to Rehabilitation Finance Corp., now DBP, for an

industrial loan of P500,000 to be used for the construction of a factory building, to pay the balance

of the jute mill machinery and equipment and as additional working capital. In Resolution

No.145, the loan application was approved to be secured first by mortgage on the factory

buildings, the land site, and machinery and equipment to be installed.

The mortgage was registered and documents for the promissory note were executed. But

then, later on, was cancelled to make way for the registration of a mortgage contract over the

same property in favor of Prudential Bank and Trust Co., the latter having issued Saura letter of

credit for the release of the jute machinery. As security, Saura execute a trust receipt in favor of

the Prudential. For failure of Saura to pay said obligation, Prudential sued Saura.

After almost 9 years, Saura Inc, commenced an action against RFC, alleging failure on the

latter to comply with its obligations to release the loan applied for and approved, thereby

preventing the plaintiff from completing or paying contractual commitments it had entered into,

in connection with its jute mill project.

The trial court ruled in favor of Saura, ruling that there was a perfected contract between

the parties and that the RFC was guilty of breach thereof.

Issue:

Whether there is a perfected consensual contract.

Held:

Yes. Article 1934 provides: An accepted promise to deliver something by way of

commodatum or simple loan is binding upon the parties, but the commodatum or simple loan

itself shall not be perfected until delivery of the object of the contract.

There was undoubtedly offer and acceptance in the case. The application of Saura, Inc. for

a loan of P500,000.00 was approved by resolution of the defendant, and the corresponding
mortgage was executed and registered. The defendant failed to fulfill its obligation and the

plaintiff is therefore entitled to recover damages.

Where an application for a loan of money was approved by resolution of the defendant

corporation and the corresponding mortgage was executed and registered, there arises a perfected-

consensual contract of loan.

Where after approval of his loan, the borrower, instead of insisting for its release, asked

that the mortgage given as security be cancelled and the creditor acceded thereto, the action taken

by both parties was in the nature of mutual desistance—what Manresa terms “mutuo disenso”—

which is a mode of extinguishing obligations. It is a concept that derives from, the principle that

since mutual agreement can create a contract, mutual disagreement by the parties can cause its

extinguishment.