Pajuyo vs.

CA, 430 SCRA 429

Facts:

Petitioner Colito T. Pajuyo paid ₱400 to a certain Pedro Perez for the rights over a 250-square
meter lot in Barrio Payatas, Quezon City. Pajuyo then constructed a house where his family lived from
1979 to December 7 1985.

On 8 December 1985, Pajuyo and private respondent Eddie Guevarra executed a Kasunduan or
agreement. Pajuyo allowed Guevarra to live in the house for free provided Guevarra would maintain the
cleanliness and orderliness of the house. Guevarra promised that he would voluntarily vacate the
premises on Pajuyo’s demand. When Pajuyo informed his need of the house and demanded Guevarra to
vacate it, the latter refused. Pajuyo then filed an ejectment case against Guevarra with the MTC of
Quezon.

Guevarra claimed that Pajuyo had no valid title or right of possession over the lot where the
house stands because the lot is within the 150 hectares set aside by Proclamation No. 137 for socialized
housing. Guevarra pointed out that from December 1985 to September 1994, Pajuyo did not show up or
communicate with him. Guevarra insisted that neither he nor Pajuyo has valid title to the lot.

The MTC ruled that the subject of the agreement between Pajuyo and Guevarra is the house and
not the lot. Pajuyo is the owner of the house, and he allowed Guevarra to use the house only by
tolerance. Thus, Guevarras refusal to vacate the house on Pajuyos demand made Guevarras continued
possession of the house illegal.

The RTC upheld the Kasunduan, which established the landlord and tenant relationship between
Pajuyo and Guevarra. The terms of the Kasunduan bound Guevarra to return possession of the house on
demand.

The CA held that Pajuyo and Guevarra are squatters. Pajuyo and Guevarra illegally occupied the
contested lot which the government owned.

Issue:

Whether or not the CA erred or abused its authority and discretion tantamount to lack of
jurisdiction in ruling that the Kasunduan voluntarily entered into by the parties was in fact a commodatum,
instead of a Contract of Lease

Ruling:

No. In a contract of commodatum, one of the parties delivers to another something not
consumable so that the latter may use the same for a certain time and return it. An essential feature of
commodatum is that it is gratuitous. Another feature of commodatum is that the use of the thing belonging
to another is for a certain period. Thus, the bailor cannot demand the return of the thing loaned until after
expiration of the period stipulated, or after accomplishment of the use for which the commodatum is
constituted. If the bailor should have urgent need of the thing, he may demand its return for temporary
use. If the use of the thing is merely tolerated by the bailor, he can demand the return of the thing at will,
in which case the contractual relation is called a precarium. Under the Civil Code, precarium is a kind of
commodatum.

The Kasunduan reveals that the accommodation accorded by Pajuyo to Guevarra was not
essentially gratuitous. While the Kasunduan did not require Guevarra to pay rent, it obligated him to
maintain the property in good condition. The imposition of this obligation makes the Kasunduan a contract
different from a commodatum. The effects of the Kasunduan are also different from that of a
commodatum. Case law on ejectment has treated relationship based on tolerance as one that is akin to a
landlord-tenant relationship where the withdrawal of permission would result in the termination of the
lease. The tenants withholding of the property would then be unlawful. This is settled jurisprudence.

Producers Bank of the Philippines vs CA, 397 SCRA 651

FACTS:

Sometime in 1979, private respondent Franklin Vives was asked by his neighbor and friend
Angeles Sanchez to help her friend and townmate, Col. Arturo Doronilla, in incorporating his business, the
Sterela Marketing and Services (“Sterela” for brevity). Specifically, Sanchez asked private respondent to
deposit in a bank a certain amount of money in the bank account of Sterela for purposes of its
incorporation. She assured private respondent that he could withdraw his money from said account
within a month’s time. With this, Mrs. Vivies, Sanchez and a certain Estrella Dumagpi, secretary of
Doronilla, went to the bank to open an account with Mrs. Vives and Sanchez as signatories. A passbook
was then issued to Mrs. Vives. Subsequently, private respondent learned that part of the money was
withdrawn without presentment of the passbook as it was his wife got hold of such. Mrs. Vives could not
also withdraw said remaining amount because it had to answer for some postdated checks issued by
Doronilla who opened a current account for Sterela and authorized the bank to debit savings.

Private respondent referred the matter to a lawyer, who made a written demand upon Doronilla
for the return of his client’s money. Doronilla issued another check for P212,000.00 in private
respondent’s favor but the check was again dishonored for insufficiency of funds.

Private respondent instituted an action for recovery of sum of money in the Regional Trial Court
(RTC) in Pasig, Metro Manila against Doronilla, Sanchez, Dumagpi and petitioner. The RTC ruled in
favor of the private respondent which was also affirmed in toto by the CA. Hence this petition.

ISSUE:

Whether or not the transaction between the defendant and respondent was one of simple
loan and not accommodation

RULING:

NO. Article 1933 of the Civil Code distinguishes between the two kinds of loans. By the
contract of loan, one of the parties delivers to another, either something not consumable so that the
latter may use the same for a certain time and return it, in which case the contract is called a
commodatum; or money or other consumable thing, upon the condition that the same amount of the
same kind and quality shall be paid, in which case the contract is simply called a loan or mutuum.
Commodatum is essentially gratuitous. Simple loan may be gratuitous or with a stipulation to pay
interest. In commodatum, the bailor retains the ownership of the thing loaned, while in simple loan,
ownership passes to the borrower.

The foregoing provision seems to imply that if the subject of the contract is a consumable
thing, such as money, the contract would be a mutuum. However, there are some instances where a
commodatum may have for its object a consumable thing. Article 1936 of the Civil Code provides
that consumable goods may be the subject of commodatum if the purpose of the contract is not the
consumption of the object, as when it is merely for exhibition. Thus, if consumable goods are loaned
only for purposes of exhibition, or when the intention of the parties is to lend consumable goods and
to have the very same goods returned at the end of the period agreed upon, the loan is a
commodatum and not a mutuum.

The rule is that the intention of the parties thereto shall be accorded primordial consideration
in determining the actual character of a contract. In case of doubt, the contemporaneous and
subsequent acts of the parties shall be considered in such determination.

Quintos v. Beck, 69 Phil 108 (1939)