PRODUCERS BANK OF THE PHILIPPINES (now FIRST INTERNATIONAL BANK), 

petitioner,
vs.
HON. COURT OF APPEALS AND FRANKLIN VIVES, respondents.

 Franklin Vives was asked by his neighbor and friend Angeles Sanchez to help her friend and townmate, Col.
Arturo Doronilla, in incorporating his business,
o the Sterela Marketing and Services ("Sterela" for brevity).
 opening a savings account in the name of Sterela in the Buendia, Makati branch of Producers Bank of the
Philippines.
 However, only Sanchez, Mrs. Vives and Dumagpi went to the bank to deposit the check
 Subsequently, private respondent learned that Sterela was no longer holding office in the address previously
given to him.
o the money in Savings Account No. 10-1567 had been withdrawn by Doronilla, and that only ₱90,000.00
remained therein.
o He likewise told them that Mrs. Vives could not withdraw said remaining amount because it had to answer
for some postdated checks issued by Doronilla.
 TRIAL COURT IN FAVOR OF VIVES AND AFFIRM BY C.A.

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, what was delivered by private respondent to Doronilla was money, a
consumable thing; and second, the transaction was onerous as Doronilla was obliged to pay interest, as evidenced by
the check issued by Doronilla

Private respondent, on the other hand, argues that the transaction between him and Doronilla is not a mutuum but an
accommodation,21 since he did not actually part with the ownership of his ₱200,000.00 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, 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.22

He likewise asserts that the trial court did not err in finding that petitioner, Atienza’s employer, is liable for the return of
his money.

He insists that Atienza, petitioner’s assistant manager, connived with Doronilla in defrauding private respondent since
it was Atienza who facilitated the opening of Sterela’s current account

There is no merit in the petition.

At the outset, it must be emphasized that only questions of law may be raised in a petition for review filed with this
Court. 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.24 The Court’s jurisdiction is in principle limited to reviewing errors of law that might
have been committed by the Court of Appeals.25 Moreover, factual findings of courts, when adopted and confirmed by
the Court of Appeals, are final and conclusive on this Court unless these findings are not supported by the evidence
on record.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, 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.

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. A circumspect examination of the records reveals that the
transaction between them was a commodatum. Article 1933 of the Civil Code distinguishes between the two kinds of
loans in this wise:

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.

The loan 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:

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.27 In case of doubt, the contemporaneous and subsequent acts of the parties shall be
considered in such determination.28

As correctly pointed out by both the Court of Appeals and the trial court, 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, with the promise that the amount shall be returned within thirty
(30) days."29 Private respondent merely "accommodated" Doronilla by lending his money without consideration, as a
favor to his good friend Sanchez. 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.

Doronilla’s attempts to return to private respondent the amount of ₱200,000.00 which the latter deposited in Sterela’s
account together with an additional ₱12,000.00, allegedly representing interest on the mutuum, did not convert the
transaction from a commodatum into a mutuum because such was not the intent of the parties and because the
additional ₱12,000.00 corresponds to the fruits of the lending of the ₱200,000.00. 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." Hence, it was
only proper for Doronilla to remit to private respondent the interest accruing to the latter’s money deposited with
petitioner.

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. The nature
of said transaction, that is, whether it is a mutuum or a commodatum, 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, through its employee Mr. Atienza, was partly responsible for the loss of private respondent’s money and is
liable for its restitution.

Petitioner’s rules for savings deposits written on the passbook it issued Mrs. Vives on behalf of Sterela for Savings
Account No. 10-1567 expressly states that—

"2. Deposits and withdrawals must be made by the depositor personally or upon his written authority duly
authenticated, 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."30

Said rule notwithstanding, Doronilla was permitted by petitioner, through Atienza, the Assistant Branch Manager for
the Buendia Branch of petitioner, to withdraw therefrom even without presenting the passbook (which Atienza very
well knew was in the possession of Mrs. Vives), not just once, but several times. 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, help and cooperation of Rufo
Atienza, assistant manager and cashier of the Makati (Buendia) branch of the defendant bank. Indeed, 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.

To begin with, the deposit was made in defendant’s Buendia branch precisely because Atienza was a key officer
therein. The records show that plaintiff had suggested that the ₱200,000.00 be deposited in his bank, the Manila
Banking Corporation, 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". In fact before he was introduced to plaintiff, Doronilla had already prepared a
letter addressed to the Buendia branch manager authorizing Angeles B. Sanchez and company to open a savings
account for Sterela in the amount of ₱200,000.00, as "per coordination with Mr. Rufo Atienza, Assistant Manager of
the Bank x x x" (Exh. 1). This is a clear manifestation that the other defendants had been in consultation with Atienza
from the inception of the scheme. Significantly, there were testimonies and admission that Atienza is the brother-in-
law of a certain Romeo Mirasol, a friend and business associate of Doronilla.1awphi1.net

Then there is the matter of the ownership of the fund. Because of the "coordination" between Doronilla and Atienza,
the latter knew before hand that the money deposited did not belong to Doronilla nor to Sterela. Aside from such
foreknowledge, he was explicitly told by Inocencia Vives that the money belonged to her and her husband and the
deposit was merely to accommodate Doronilla. Atienza even declared that the money came from Mrs. Vives.

Although the savings account was in the name of Sterela, the bank records disclose that the only ones empowered to
withdraw the same were Inocencia Vives and Angeles B. Sanchez. In the signature card pertaining to this account
(Exh. J), the authorized signatories were Inocencia Vives &/or Angeles B. Sanchez. 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. He, however, said that this procedure was not followed here because
Sterela was owned by Doronilla. He explained that Doronilla had the full authority to withdraw by virtue of such
ownership. The Court is not inclined to agree with Atienza. In the first place, he was all the time aware that the money
came from Vives and did not belong to Sterela. He was also told by Mrs. 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. In the second place, 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. In the third place, neither Mrs. Vives nor Sanchez had given Doronilla the authority to withdraw.

Moreover, the transfer of fund was done without the passbook having been presented. It is an accepted practice that
whenever a withdrawal is made in a savings deposit, the bank requires the presentation of the passbook. In this case,
such recognized practice was dispensed with. The transfer from the savings account to the current account was
without the submission of the passbook which Atienza had given to Mrs. Vives. Instead, 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. C). Atienza, who undoubtedly had a hand in the execution of this certification, was aware that the contents of the
same are not true. He knew that the passbook was in the hands of Mrs. Vives for he was the one who gave it to her.
Besides, as assistant manager of the branch and the bank official servicing the savings and current accounts in
question, he also was aware that the original passbook was never surrendered. He was also cognizant that Estrella
Dumagpi was not among those authorized to withdraw so her certification had no effect whatsoever.

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. The records indicate that this account was opened
three days later after the ₱200,000.00 was deposited. In spite of his disclaimer, 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. 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. 2) is not hard to comprehend.

Clearly Atienza had committed wrongful acts that had resulted to the loss subject of this case. x x x.31

Under Article 2180 of the Civil Code, employers shall be held primarily and solidarily liable for damages caused by
their employees acting within the scope of their assigned tasks. To hold the employer liable under this provision, it
must be shown that an employer-employee relationship exists, and that the employee was acting within the scope of
his assigned task when the act complained of was committed.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, even though in doing such act, the employee
may have failed in its duty to the employer and disobeyed the latter’s instructions.33

There is no dispute that Atienza was an employee of petitioner. Furthermore, 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. 10-1567, in which account private respondent’s money was deposited, and in
transferring the money withdrawn to Sterela’s Current Account with petitioner. Atienza’s acts of helping Doronilla, a
customer of the petitioner, were obviously done in furtherance of petitioner’s interests34 even though in the process,
Atienza violated some of petitioner’s rules such as those stipulated in its savings account passbook.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, and that it was their connivance which was
the cause of private respondent’s loss.

The foregoing shows that the Court of Appeals correctly held that under Article 2180 of the Civil Code, petitioner is
liable for private respondent’s loss and is solidarily liable with Doronilla and Dumagpi for the return of the ₱200,000.00
since it is clear that petitioner failed to prove that it exercised due diligence to prevent the unauthorized withdrawals
from Sterela’s savings account, and that it was not negligent in the selection and supervision of Atienza. Accordingly,
no error was committed by the appellate court in the award of actual, moral and exemplary damages, attorney’s fees
and costs of suit to private respondent.
WHEREFORE, the petition is hereby DENIED. The assailed Decision and Resolution of the Court of Appeals are
AFFIRMED.

SO ORDERED.

PHILIPPINE NATIONAL BANK, petitioner,

vs.
THE COURT OF APPEALS and EPIFANIO DE LA CRUZ, respondents.
Santiago, Jr., Vidad, Corpus & Associates for petitioner.
Pedro R. Lazo for spouses-intervenors.
Rosendo G. Tansinsin, Jr. for private respondent.

MELO, J.:
The notices of sale under Section 3 of Act No. 3135, as amended by Act No. 4118, on extra-judicial foreclosure of real
estate mortgage are required to be posted for not less than twenty days in at least three public places of the
municipality or city where the property is situated, and if such property is worth more than four hundred pesos, such
notices shall also be published once a week for at least three consecutive weeks in a newspaper of general circulation
in the municipality or city.
Respondent court, through Justice Filemon Mendoza with whom Justices Campos, Jr. and Aldecoa, Jr. concurred,
construed the publication of the notices on March 28, April 11 and l2, 1969 as a fatal announcement and reversed the
judgment appealed from by declaring void, inter alia, the auction sale of the foreclosed pieces of realty, the final deed
of sale, and the consolidation of ownership (p. 27, Rollo).
Hence, the petition at bar, premised on the following backdrop lifted from the text of the challenged decision:
The facts of the case as related by the trial court are, as follows:
This is a verified complaint brought by the plaintiff for the reconveyance to him (and
resultant damages) of two (2) parcels of land mortgaged by him to the defendant
Philippine National Bank (Manila), which the defendant allegedly unlawfully
foreclosed. The defendant then consolidated ownership unto itself, and subsequently
sold the parcels to third parties. The amended Answer of the defendant states on the
other hand that the extrajudicial foreclosure, consolidation of ownership, and
subsequent sale to the third parties were all valid, the bank therefore counterclaims
for damages and other equitable remedies.
x x x           x x x          x x x
From the evidence and exhibits presented by both parties, the Court is of the opinion
that the following facts have been proved: Two lots, located at Bunlo, Bocaue,
Bulacan (the first covered by Torrens Certificate No. 16743 and possessed of an area
of approximately 3,109 square meters: the second covered by Torrens Certificate No.
5787, possessed of an area of around 610 square meters, and upon which stood a
residential-commercial building were mortgaged to the defendant Philippine National
Bank. The lots were under the common names of the plaintiff (Epifanio dela Cruz), his
brother (Delfin) and his sister (Maria). The mortgage was made possible because of
the grant by the latter two to the former of a special power of attorney to mortgage the
lots to the defendant. The lots were mortgaged to guarantee the following promissory
notes:
(1) a promissory note for Pl2,000.00, dated September 2, 1958, and payable within 69 days (date of
maturity — Nov. l0, 1958);
(2) a promissory note for P4,000.00, dated September 22, 1958, and payable within 49 days (date of
maturity — Nov. 10, 1958);
(3) a promissory note for P4,000.00, dated June 30, 1.9581 and payable within 120 days (date of
maturity — Nov. 10, 1958) See also  Annex C of the complaint itself).
[1 This date of June 30, 1958 is disputed by the plaintiff who claims that the correct date is June 30,
1961, which is the date actually mentioned in the promissory note. It is however difficult to believe the
plaintiff's contention since if it were true and correct, this would mean that nearly three (3) years
elapsed between the second and the third promissory note; that at the time the third note was
executed, the first two had not yet been paid by the plaintiff despite the fact that the first two were
supposed to be payable within 69 and 49 days respectively. This state of affairs would have
necessitated the renewal of said two promissory notes. No such renewal was proved, nor was the
renewal ever alleged. Finally, and this is very significant: the third mentioned promissory note states
that the maturity date is Nov. 10, 1958. Now then, how could the loan have been contracted on June
30, 1961? It will be observed that in the bank records, the third mentioned promissory note was really
executed on June 30, 1958 (See  Exhs. 9 and 9-A). The Court is therefore inclined to believe that the
date "June 30, 1961" was a mere clerical error and hat the true and correct date is June 1958.
However, even assuming that the true and correct date is June 30, 1961, the fact still remains that the
first two promissory notes had been guaranteed by the mortgage of the two lots, and therefore, it
was legal and proper to foreclose on the lots for failure to pay said two promissory notes.
On September 6, 1961, Atty. Ramon de los Reyes of the bank (PNB) presented under Act No. 3135 a
foreclosure petition of the two mortgaged lots before the Sheriff's Office at Malolos, Bulacan;
accordingly, the two lots were sold or auctioned off on October 20, 1961 with the defendant PNB as
the highest bidder for P28,908.46. On March 7, 1963, Sheriff Leopoldo Palad executed a Final Deed
of Sale, in response to a letter-request by the Manager of the PNB (Malolos Branch). On January 15,
1963 a Certificate of Sale in favor of the defendant was executed by Sheriff Palad. The final Deed of
Sale was registered in the Bulacan Registry of Property on March 19, 1963. Inasmuch as the plaintiff
did not volunteer to buy back from the PNB the two lots, the PNB sold on June 4, 1970 the same to
spouses Conrado de Vera and Marina de Vera in a "Deed of Conditional Sale". (Decision, pp.3-5;
Amended Record on Appeal, pp. 96-98).
After due consideration of the evidence, the CFI on January 22, 1978 rendered its Decision, the
dispositive portion of which reads:
WHEREFORE, PREMISES CONSIDERED, the instant complaint against the
defendant Philippine National Bank is hereby ordered DISMISSED, with costs against
the plaintiff. The Counterclaim against the plaintiff is likewise DISMISSED, for the
Court does not believe that the complaint had been made in bad faith.
SO ORDERED. (Decision, p. B.; Amended Record on Appeal, p. 100)
Not satisfied with the judgment, plaintiff interposed the present appeal assigning as errors the
following:
I.
THE LOWER COURT ERRED IN HOLDING IN FOOTNOTE I OF ITS DECISION THAT IT IS
THEREFORE INCLINED TO BELIEVE THAT THE DATE "JUNE 30, 1962" WAS A MERE CLERICAL
ERROR AND THAT THE TRUE AND CORRECT DATE IS JUNE 30, 1958. IT ALSO ERRED IN
HOLDING IN THE SAME FOOTNOTE I THAT "HOWEVER, EVEN ASSUMING THAT THE TRUE
AND CORRECT DATE IS JUNE 30, 1961, THE FACT STILL REMAINS THAT THE FIRST TWO
PROMISSORY NOTES HAD BEEN GUARANTEED BY THE MORTGAGE OF THE TWO LOTS,
AND THEREFORE, IT WAS LEGAL AND PROPER TO FORECLOSE ON THE LOTS FOR FAILURE
TO PAY SAID TWO PROMISSORY NOTES". (page 115, Amended Record on Appeal)
II.
THE LOWER COURT ERRED IN NOT HOLDING THAT THE PETITION FOR EXTRAJUDICIAL
FORECLOSURE WAS PREMATURELY FILED AND IS A MERE SCRAP OF PAPER BECAUSE IT
MERELY FORECLOSED THE ORIGINAL AND NOT THE AMENDED MORTGAGE.
III.
THE LOWER COURT ERRED IN HOLDING THAT "IT IS CLEAR THAT THE AUCTION SALE WAS
NOT PREMATURE". (page 117, Amended Record on Appeal)
IV.
THE LOWER COURT ERRED IN HOLDING THAT "SUFFICE IT TO STATE THAT ACTUALLY THE
POWER OF ATTORNEY GIVEN TO THE PNB WAS EMBODIED IN THE REAL ESTATE
MORTGAGE (EXB. 10) WHICH WAS REGISTERED IN THE REGISTRY OF PROPERTY OF
BULACAN AND WAS ANNOTATED ON THE TWO TORRENS CERTIFICATES INVOLVED" (page
118, Amended Record on Appeal).
V.
THE LOWER COURT ERRED IN HOLDING THAT "THE NOTICES REQUIRED UNDER SEC. 3 OF
ACT NO. 3135 WERE ALL COMPLIED WITH" AND "THAT THE DAILY RECORD . . . IS A
NEWSPAPER OF GENERAL CIRCULATION (pages 117-118, Amended Record on Appeal).
WE.
THE LOWER COURT ERRED IN NOT DECLARING THE CERTIFICATE OF SALE, FINAL DEED OF
SALE AND AFFIDAVIT OF CONSOLIDATION, NULL AND VOID.
VII.
THE LOWER COURT ERRED IN NOT ORDERING DEFENDANT TO RECONVEY TO PLAINTIFF
THE PARCELS OF LAND COVERED BY T.C.T. NOS. 40712 AND 40713 OF BULACAN (page 8,
Amended Record on Appeal)
VIII.
THE LOWER COURT ERRED IN NOT ORDERING DEFENDANT TO PAY TO PLAINTIFF
REASONABLE AMOUNTS OF MORAL AND EXEMPLARY DAMAGES AND ATTORNEY'S FEES
(page 8. Amended Record on Appeal).
IX.
 THE LOWER COURT ERRED IN DISMISSING THE INSTANT COMPLAINT AGAINST THE
PHILIPPINE NATIONAL BANK WITH COSTS AGAINST THE PLAINTIFF. (page 118, Amended
Record on Appeal)." (Brief for Plaintiff-Appellant, pp. 1-4) (pp. 17-21, Rollo)
With reference to the pertinent issue at hand, respondent court opined:
The Notices of Sale of appellant's foreclosed properties were published on March 228, April 11 and
April 12, 1969 issues of the newspaper "Daily Record" (Amended Record on Appeal, p. 108). The
date March 28, 1969 falls on a Friday while the dates April 11 and 12, 1969 are on a Friday and
Saturday, respectively. Section 3 of Act No. 3135 requires that the notice of auction sale shall be
"published once a week for at least three consecutive weeks". Evidently, defendant-appellee bank
failed to comly with this legal requirement. The Supreme Court has held that:
The rule is that statutory provisions governing publication of notice of mortgage
foreclosure sales must be strictly complied with, and that even slight deviations
therefrom will invalidate the notice and render the sale at least voidable (Jalandoni vs.
Ledesma, 64 Phil. l058. G.R. No. 42589, August 1937 and October 29, 1937).
Interpreting Sec. 457 of the Code of Civil Procedure (reproduced in Sec. 18(c) of Rule
39, Rules of Court and in Sec. 3 of Act No. 3135) in Campomanes vs.
Bartolome and German & Co. (38 Phil. 808, G.R. No. 1309, October 18, 1918), this
Court held that if a sheriff sells without notice prescribed by the Code of Civil
Procedure induced thereto by the judgment creditor, and the purchaser at the sale is
the judgment creditor, the sale is absolutely void and no title passes. This is regarded
as the settled doctrine in this jurisdiction whatever the rule may be elsewhere (Boria
vs. Addison, 14 Phil. 895, G.R. No. 18010, June 21, 1922).
. . . It has been held that failure to advertise a mortgage foreclosure sale in
compliance with statutory requirements constitutes a jurisdictional defect invalidating
the sale and that a substantial error or omission in a notice of sale will render the
notice insufticient and vitiate the sale (59 C.J.S. 1314). (Tambunting vs. Court of
Appeals, L-48278, November 8, 1988; 167 SCRA 16, 23-24).
In view of the admission of defendant-appellee in its pleading showing that there was no compliance
of the notice prescribed in Section 3 of Act No. 3135, as amended by Act 4118, with respect to the
notice of sale of the foreclosed real properties in this case, we have no choice but to declare the
auction sale as absolutely void in view of the fact that the highest bidder and purchaser in said auction
sale was defendant-appellee bank. Consequently, the Certificate of Sale, the Final Deed of Sale and
Affidavit of Consolidation are likewise of no legal efffect. (pp. 24-25, Rollo)
Before we focus our attention on the subject of whether or not there was valid compliance in regard to the required
publication, we shall briefly discuss the other observations of respondent court vis-a-vis herein private respondent's
ascriptions raised with the appellate court when his suit for reconveyance was dismissed by the court of origin even as
private respondent does not impugn the remarks of respondent court along this line.
Although respondent court acknowledged that there was an ambiguity on the date of execution of the third promissory
note (June 30, 1961) and the date of maturity thereof (October 28, 1958), it was nonetheless established that the bank
introduced sufficient proof to show that the discrepancy was a mere clerical error pursuant to Section 7, Rule l30 of
the Rules of Court. Anent the second disputation aired by private respondent, the appellate court observed that
inasmuch as the original as well as the subsequent mortgage were foreclosed only after private respondent's default,
the procedure pursued by herein petitioner in foreclosing the collaterals was thus appropriate albeit the petition
therefor contained only a copy of the original mortgage.
It was only on the aspect of publication of the notices of sale under Act No. 3135, as amended, and attorney's fees
where herein private respondent scored points which eliminated in the reversal of the trial court's decision.
Respondent court was of the impression that herein petitioner failed to comply with the legal requirement and the sale
effected thereafter must be adjudged invalid following the ruling of this Court in Tambunting vs. Court of Appeals (167
SCRA 16 [1988]); p. 8, Decision, p. 24, Rollo). In view of petitioner's so-called indifference to the rules set forth under
Act No. 3135, as amended, respondent court expressly authorized private respondent to recover attorney's fees
because he was compelled to incur expenses to protect his interest.
Immediately upon the submission of a supplemental petition, the spouses Conrado and Marina De Vera filed a petition
in intervention claiming that the two parcels of land involved herein were sold to them on June 4, 1970 by petitioner for
which transfer certificates of title were issued in their favor (p. 40, Rollo). On the other hand, private respondent
pressed the idea that the alleged intervenors have no more interest in the disputed lots in view of the sale effected by
them to Teresa Castillo, Aquilino and Antonio dela Cruz in 1990 (pp. 105-106, Rollo).
On March 9, 1992, the Court resolved to give due course to the petition and required the parties to submit their
respective memoranda (p. 110, Rollo).
Now, in support of the theory on adherence to the conditions spelled in the preliminary portion of this discourse, the
pronouncement of this Court in Bonnevie vs. Court of Appeals (125 SCRA [1983]; p. 135, Rollo) is sought to be
utilized to press the point that the notice need not be published for three full weeks. According to petitioner, there is no
breach of the proviso since after the first publication on March 28, 1969, the second notice was published on April 11,
1969 (the last day of the second week), while the third publication on April 12, 1969 was announced on the first day of
the third week. Petitioner thus concludes that there was no violation from the mere happenstance that the third
publication was made only a day after the second publication since it is enough that the second publication be made
on any day within the second week and the third publication, on any day within the third week. Moreover, in its bid to
rectify its admission in judicio, petitioner asseverates that said admission alluded to refers only to the dates of
publications, not that there was non-compliance with the publication requirement.
Private respondent, on the other hand, views the legal question from a different perspective. He believes that the
period between each publication must never be less than seven consecutive days (p. 4, Memorandum; p. 124, Rollo).
We are not convinced by petitioner's submissions because the disquisition in support thereof rests on the erroneous
impression that the day on which the first publication was made, or on March 28, 1969, should be excluded pursuant
to the third paragraph of Article 17 of the New Civil Code.
It must be conceded that Article 17 is completely silent as to the definition of what is a "week". In Concepcion vs.
Zandueta (36 O.G. 3139 [1938]; Moreno, Philippine Law Dictionary, Second Ed., 1972, p. 660), this term was
interpreted to mean as a period of time consisting of seven consecutive days — a definition which dovetails with the
ruling in E.M. Derby and Co. vs. City of Modesto, et al. (38 Pac. Rep. 900 [1984]; 1 Paras, Civil Code of the
Philippines Annotated, Twelfth Ed., 1989, p. 88; 1 Tolentino, Commentaries and Jurisprudence on th Civil Code, 1990,
p. 46). Following the interpretation in Derby as to the publication of an ordinance for "at least two weeks" in some
newspaper that:
. . . here there is no date or event suggesting the exclusion of the first day's publication from the
computation, and the cases above cited take this case out of the rule stated in Section 12, Code Civ.
Proc. which excludes the first day and includes the last;
the publication effected on April 11, 1969 cannot be construed as sufficient advertisement for the second
week because the period for the first week should be reckoned from March 28, 1969 until April 3, 1969 while
the second week should be counted from April 4, 1969 until April 10, 1969. It is clear that the announcement
on April 11, 1969 was both theoretically and physically accomplished during the first day of the third week and
cannot thus be equated with compliance in law. Indeed, where the word is used simply as a measure of
duration of time and without reference to the calendar, it means a period of seven consecutive days without
regard to the day of the week on which it begins (1 Tolentino, supra at p. 467 citing Derby).
Certainly, it would have been absurd to exclude March 28, 1969 as reckoning point in line with the third paragraph of
Article 13 of the New Civil Code, for the purpose of counting the first week of publication as to the last day thereof fall
on April 4, 1969 because this will have the effect of extending the first week by another day. This incongruous
repercussion could not have been the unwritten intention of the lawmakers when Act No. 3135 was enacted. Verily,
inclusion of the first day of publication is in keeping with the computation in Bonnevie vs. Court of Appeals (125 SCRA
122 [1983]) where this Court had occasion to pronounce, through Justice Guerrero, that the publication of notice on
June 30, July 7 and July 14, 1968 satisfied the publication requirement under Act No. 3135. Respondent court cannot,
therefore, be faulted for holding that there was no compliance with the strict requirements of publication independently
of the so- called admission in judicio.
WHEREFORE, the petitions for certiorari and intervention are hereby dismissed and the decision of the Court of
Appeals dated April 17, 1991 is hereby affirmed in toto.
SO ORDERED.

G.R. No. 133632               February 15, 2002

BPI INVESTMENT CORPORATION, petitioner,
vs.
HON. COURT OF APPEALS and ALS MANAGEMENT & DEVELOPMENT CORPORATION, respondents.
DECISION
QUISUMBING, J.:
This petition for certiorari assails the decision dated February 28, 1997, of the Court of Appeals and its resolution
dated April 21, 1998, in CA-G.R. CV No. 38887. The appellate court affirmed the judgment of the Regional Trial Court
of Pasig City, Branch 151, in (a) Civil Case No. 11831, for foreclosure of mortgage by petitioner BPI Investment
Corporation (BPIIC for brevity) against private respondents ALS Management and Development Corporation and
Antonio K. Litonjua,1 consolidated with (b) Civil Case No. 52093, for damages with prayer for the issuance of a writ of
preliminary injunction by the private respondents against said petitioner.
The trial court had held that private respondents were not in default in the payment of their monthly amortization,
hence, the extrajudicial foreclosure conducted by BPIIC was premature and made in bad faith. It awarded private
respondents the amount of ₱300,000 for moral damages, ₱50,000 for exemplary damages, and ₱50,000 for
attorney’s fees and expenses for litigation. It likewise dismissed the foreclosure suit for being premature.
The facts are as follows:
Frank Roa obtained a loan at an interest rate of 16 1/4% per annum from Ayala Investment and Development
Corporation (AIDC), the predecessor of petitioner BPIIC, for the construction of a house on his lot in New Alabang
Village, Muntinlupa. Said house and lot were mortgaged to AIDC to secure the loan. Sometime in 1980, Roa sold the
house and lot to private respondents ALS and Antonio Litonjua for ₱850,000. They paid ₱350,000 in cash and
assumed the ₱500,000 balance of Roa’s indebtedness with AIDC. The latter, however, was not willing to extend the
old interest rate to private respondents and proposed to grant them a new loan of ₱500,000 to be applied to Roa’s
debt and secured by the same property, at an interest rate of 20% per annum and service fee of 1% per annum on the
outstanding principal balance payable within ten years in equal monthly amortization of ₱9,996.58 and penalty interest
at the rate of 21% per annum per day from the date the amortization became due and payable.
Consequently, in March 1981, private respondents executed a mortgage deed containing the above stipulations with
the provision that payment of the monthly amortization shall commence on May 1, 1981.
On August 13, 1982, ALS and Litonjua updated Roa’s arrearages by paying BPIIC the sum of ₱190,601.35. This
reduced Roa’s principal balance to ₱457,204.90 which, in turn, was liquidated when BPIIC applied thereto the
proceeds of private respondents’ loan of ₱500,000.
On September 13, 1982, BPIIC released to private respondents ₱7,146.87, purporting to be what was left of their loan
after full payment of Roa’s loan.
In June 1984, BPIIC instituted foreclosure proceedings against private respondents on the ground that they failed to
pay the mortgage indebtedness which from May 1, 1981 to June 30, 1984, amounted to Four Hundred Seventy Five
Thousand Five Hundred Eighty Five and 31/100 Pesos (₱475,585.31). A notice of sheriff’s sale was published on
August 13, 1984.
On February 28, 1985, ALS and Litonjua filed Civil Case No. 52093 against BPIIC. They alleged, among others, that
they were not in arrears in their payment, but in fact made an overpayment as of June 30, 1984. They maintained that
they should not be made to pay amortization before the actual release of the ₱500,000 loan in August and September
1982. Further, out of the ₱500,000 loan, only the total amount of ₱464,351.77 was released to private respondents.
Hence, applying the effects of legal compensation, the balance of ₱35,648.23 should be applied to the initial monthly
amortization for the loan.
On August 31, 1988, the trial court rendered its judgment in Civil Case Nos. 11831 and 52093, thus:
WHEREFORE, judgment is hereby rendered in favor of ALS Management and Development Corporation and Antonio
K. Litonjua and against BPI Investment Corporation, holding that the amount of loan granted by BPI to ALS and
Litonjua was only in the principal sum of P464,351.77, with interest at 20% plus service charge of 1% per annum,
payable on equal monthly and successive amortizations at P9,283.83 for ten (10) years or one hundred twenty (120)
months. The amortization schedule attached as Annex "A" to the "Deed of Mortgage" is correspondingly reformed as
aforestated.
The Court further finds that ALS and Litonjua suffered compensable damages when BPI caused their publication in a
newspaper of general circulation as defaulting debtors, and therefore orders BPI to pay ALS and Litonjua the following
sums:
a) P300,000.00 for and as moral damages;
b) P50,000.00 as and for exemplary damages;
c) P50,000.00 as and for attorney’s fees and expenses of litigation.
The foreclosure suit (Civil Case No. 11831) is hereby DISMISSED for being premature.
Costs against BPI.
SO ORDERED.2
Both parties appealed to the Court of Appeals. However, private respondents’ appeal was dismissed for non-payment
of docket fees.
On February 28, 1997, the Court of Appeals promulgated its decision, the dispositive portion reads:
WHEREFORE, finding no error in the appealed decision the same is hereby AFFIRMED in toto.
SO ORDERED.3
In its decision, the Court of Appeals reasoned that a simple loan is perfected only upon the delivery of the object of the
contract. The contract of loan between BPIIC and ALS & Litonjua was perfected only on September 13, 1982, the date
when BPIIC released the purported balance of the ₱500,000 loan after deducting therefrom the value of Roa’s
indebtedness. Thus, payment of the monthly amortization should commence only a month after the said date, as can
be inferred from the stipulations in the contract. This, despite the express agreement of the parties that payment shall
commence on May 1, 1981. From October 1982 to June 1984, the total amortization due was only ₱194,960.43.
Evidence showed that private respondents had an overpayment, because as of June 1984, they already paid a total
amount of ₱201,791.96. Therefore, there was no basis for BPIIC to extrajudicially foreclose the mortgage and cause
the publication in newspapers concerning private respondents’ delinquency in the payment of their loan. This fact
constituted sufficient ground for moral damages in favor of private respondents.
The motion for reconsideration filed by petitioner BPIIC was likewise denied, hence this petition, where BPIIC submits
for resolution the following issues:
I. WHETHER OR NOT A CONTRACT OF LOAN IS A CONSENSUAL CONTRACT IN THE LIGHT OF THE
RULE LAID DOWN IN BONNEVIE VS. COURT OF APPEALS, 125 SCRA 122.
II. WHETHER OR NOT BPI SHOULD BE HELD LIABLE FOR MORAL AND EXEMPLARY DAMAGES AND
ATTORNEY’S FEES IN THE FACE OF IRREGULAR PAYMENTS MADE BY ALS AND OPPOSED TO THE
RULE LAID DOWN IN SOCIAL SECURITY SYSTEM VS. COURT OF APPEALS, 120 SCRA 707.
On the first issue, petitioner contends that the Court of Appeals erred in ruling that because a simple loan is perfected
upon the delivery of the object of the contract, the loan contract in this case was perfected only on September 13,
1982. Petitioner claims that a contract of loan is a consensual contract, and a loan contract is perfected at the time the
contract of mortgage is executed conformably with our ruling in Bonnevie v. Court of Appeals, 125 SCRA 122. In the
present case, the loan contract was perfected on March 31, 1981, the date when the mortgage deed was executed,
hence, the amortization and interests on the loan should be computed from said date.
Petitioner also argues that while the documents showed that the loan was released only on August 1982, the loan was
actually released on March 31, 1981, when BPIIC issued a cancellation of mortgage of Frank Roa’s loan. This finds
support in the registration on March 31, 1981 of the Deed of Absolute Sale executed by Roa in favor of ALS,
transferring the title of the property to ALS, and ALS executing the Mortgage Deed in favor of BPIIC. Moreover,
petitioner claims, the delay in the release of the loan should be attributed to private respondents. As BPIIC only
agreed to extend a ₱500,000 loan, private respondents were required to reduce Frank Roa’s loan below said amount.
According to petitioner, private respondents were only able to do so in August 1982.
In their comment, private respondents assert that based on Article 1934 of the Civil Code,4 a simple loan is perfected
upon the delivery of the object of the contract, hence a real contract. In this case, even though the loan contract was
signed on March 31, 1981, it was perfected only on September 13, 1982, when the full loan was released to private
respondents. They submit that petitioner misread Bonnevie. To give meaning to Article 1934, according to private
respondents, Bonnevie  must be construed to mean that the contract to extend the loan was perfected on March 31,
1981 but the contract of loan itself was only perfected upon the delivery of the full loan to private respondents on
September 13, 1982.
Private respondents further maintain that even granting, arguendo,  that the loan contract was perfected on March 31,
1981, and their payment did not start a month thereafter, still no default took place. According to private respondents,
a perfected loan agreement imposes reciprocal obligations, where the obligation or promise of each party is the
consideration of the other party. In this case, the consideration for BPIIC in entering into the loan contract is the
promise of private respondents to pay the monthly amortization. For the latter, it is the promise of BPIIC to deliver the
money. In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in
a proper manner with what is incumbent upon him. Therefore, private respondents conclude, they did not incur in
delay when they did not commence paying the monthly amortization on May 1, 1981, as it was only on September 13,
1982 when petitioner fully complied with its obligation under the loan contract.
We agree with private respondents. A loan contract is not a consensual contract but a real contract. It is perfected only
upon the delivery of the object of the contract.5 Petitioner misapplied Bonnevie. The contract in Bonnevie declared by
this Court as a perfected consensual contract falls under the first clause of Article 1934, Civil Code. It is an accepted
promise to deliver something by way of simple loan.
In Saura Import and Export Co. Inc. vs. Development Bank of the Philippines, 44 SCRA 445, petitioner applied for a
loan of ₱500,000 with respondent bank. The latter approved the application through a board resolution. Thereafter,
the corresponding mortgage was executed and registered. However, because of acts attributable to petitioner, the
loan was not released. Later, petitioner instituted an action for damages. We recognized in this case, a perfected
consensual contract which under normal circumstances could have made the bank liable for not releasing the loan.
However, since the fault was attributable to petitioner therein, the court did not award it damages.
A perfected consensual contract, as shown above, can give rise to an action for damages. However, said contract
does not constitute the real contract of loan which requires the delivery of the object of the contract for its perfection
and which gives rise to obligations only on the part of the borrower.6
In the present case, the loan contract between BPI, on the one hand, and ALS and Litonjua, on the other, was
perfected only on September 13, 1982, the date of the second release of the loan. Following the intentions of the
parties on the commencement of the monthly amortization, as found by the Court of Appeals, private respondents’
obligation to pay commenced only on October 13, 1982, a month after the perfection of the contract.7
We also agree with private respondents that a contract of loan involves a reciprocal obligation, wherein the obligation
or promise of each party is the consideration for that of the other.8 As averred by private respondents, the promise of
BPIIC to extend and deliver the loan is upon the consideration that ALS and Litonjua shall pay the monthly
amortization commencing on May 1, 1981, one month after the supposed release of the loan. It is a basic principle in
reciprocal obligations that neither party incurs in delay, if the other does not comply or is not ready to comply in a
proper manner with what is incumbent upon him.9 Only when a party has performed his part of the contract can he
demand that the other party also fulfills his own obligation and if the latter fails, default sets in. Consequently,
petitioner could only demand for the payment of the monthly amortization after September 13, 1982 for it was only
then when it complied with its obligation under the loan contract. Therefore, in computing the amount due as of the
date when BPIIC extrajudicially caused the foreclosure of the mortgage, the starting date is October 13, 1982 and not
May 1, 1981.
Other points raised by petitioner in connection with the first issue, such as the date of actual release of the loan and
whether private respondents were the cause of the delay in the release of the loan, are factual. Since petitioner has
not shown that the instant case is one of the exceptions to the basic rule that only questions of law can be raised in a
petition for review under Rule 45 of the Rules of Court,10 factual matters need not tarry us now. On these points we are
bound by the findings of the appellate and trial courts.
On the second issue, petitioner claims that it should not be held liable for moral and exemplary damages for it did not
act maliciously when it initiated the foreclosure proceedings. It merely exercised its right under the mortgage contract
because private respondents were irregular in their monthly amortization.1âwphi1 It invoked our ruling in Social
Security System vs. Court of Appeals, 120 SCRA 707, where we said:
Nor can the SSS be held liable for moral and temperate damages. As concluded by the Court of Appeals "the
negligence of the appellant is not so gross as to warrant moral and temperate damages," except that, said Court
reduced those damages by only P5,000.00 instead of eliminating them. Neither can we agree with the findings of both
the Trial Court and respondent Court that the SSS had acted maliciously or in bad faith. The SSS was of the belief
that it was acting in the legitimate exercise of its right under the mortgage contract in the face of irregular payments
made by private respondents and placed reliance on the automatic acceleration clause in the contract. The filing alone
of the foreclosure application should not be a ground for an award of moral damages in the same way that a clearly
unfounded civil action is not among the grounds for moral damages.
Private respondents counter that BPIIC was guilty of bad faith and should be liable for said damages because it
insisted on the payment of amortization on the loan even before it was released. Further, it did not make the
corresponding deduction in the monthly amortization to conform to the actual amount of loan released, and it
immediately initiated foreclosure proceedings when private respondents failed to make timely payment.
But as admitted by private respondents themselves, they were irregular in their payment of monthly amortization.
Conformably with our ruling in SSS,  we can not properly declare BPIIC in bad faith. Consequently, we should rule out
the award of moral and exemplary damages.11
However, in our view, BPIIC was negligent in relying merely on the entries found in the deed of mortgage, without
checking and correspondingly adjusting its records on the amount actually released to private respondents and the
date when it was released. Such negligence resulted in damage to private respondents, for which an award of nominal
damages should be given in recognition of their rights which were violated by BPIIC.12 For this purpose, the amount of
₱25,000 is sufficient.
Lastly, as in SSS  where we awarded attorney’s fees because private respondents were compelled to litigate, we
sustain the award of ₱50,000 in favor of private respondents as attorney’s fees.
WHEREFORE, the decision dated February 28, 1997, of the Court of Appeals and its resolution dated April 21, 1998,
are AFFIRMED WITH MODIFICATION as to the award of damages. The award of moral and exemplary damages in
favor of private respondents is DELETED, but the award to them of attorney’s fees in the amount of ₱50,000 is
UPHELD. Additionally, petitioner is ORDERED to pay private respondents ₱25,000 as nominal damages. Costs
against petitioner.
SO ORDERED.

G.R. No. 133632               February 15, 2002

BPI INVESTMENT CORPORATION, petitioner,
vs.
HON. COURT OF APPEALS and ALS MANAGEMENT & DEVELOPMENT CORPORATION, respondents.
DECISION
QUISUMBING, J.:
This petition for certiorari assails the decision dated February 28, 1997, of the Court of Appeals and its resolution
dated April 21, 1998, in CA-G.R. CV No. 38887. The appellate court affirmed the judgment of the Regional Trial Court
of Pasig City, Branch 151, in (a) Civil Case No. 11831, for foreclosure of mortgage by petitioner BPI Investment
Corporation (BPIIC for brevity) against private respondents ALS Management and Development Corporation and
Antonio K. Litonjua,1 consolidated with (b) Civil Case No. 52093, for damages with prayer for the issuance of a writ of
preliminary injunction by the private respondents against said petitioner.
The trial court had held that private respondents were not in default in the payment of their monthly amortization,
hence, the extrajudicial foreclosure conducted by BPIIC was premature and made in bad faith. It awarded private
respondents the amount of ₱300,000 for moral damages, ₱50,000 for exemplary damages, and ₱50,000 for
attorney’s fees and expenses for litigation. It likewise dismissed the foreclosure suit for being premature.
The facts are as follows:
Frank Roa obtained a loan at an interest rate of 16 1/4% per annum from Ayala Investment and Development
Corporation (AIDC), the predecessor of petitioner BPIIC, for the construction of a house on his lot in New Alabang
Village, Muntinlupa. Said house and lot were mortgaged to AIDC to secure the loan. Sometime in 1980, Roa sold the
house and lot to private respondents ALS and Antonio Litonjua for ₱850,000. They paid ₱350,000 in cash and
assumed the ₱500,000 balance of Roa’s indebtedness with AIDC. The latter, however, was not willing to extend the
old interest rate to private respondents and proposed to grant them a new loan of ₱500,000 to be applied to Roa’s
debt and secured by the same property, at an interest rate of 20% per annum and service fee of 1% per annum on the
outstanding principal balance payable within ten years in equal monthly amortization of ₱9,996.58 and penalty interest
at the rate of 21% per annum per day from the date the amortization became due and payable.
Consequently, in March 1981, private respondents executed a mortgage deed containing the above stipulations with
the provision that payment of the monthly amortization shall commence on May 1, 1981.
On August 13, 1982, ALS and Litonjua updated Roa’s arrearages by paying BPIIC the sum of ₱190,601.35. This
reduced Roa’s principal balance to ₱457,204.90 which, in turn, was liquidated when BPIIC applied thereto the
proceeds of private respondents’ loan of ₱500,000.
On September 13, 1982, BPIIC released to private respondents ₱7,146.87, purporting to be what was left of their loan
after full payment of Roa’s loan.
In June 1984, BPIIC instituted foreclosure proceedings against private respondents on the ground that they failed to
pay the mortgage indebtedness which from May 1, 1981 to June 30, 1984, amounted to Four Hundred Seventy Five
Thousand Five Hundred Eighty Five and 31/100 Pesos (₱475,585.31). A notice of sheriff’s sale was published on
August 13, 1984.
On February 28, 1985, ALS and Litonjua filed Civil Case No. 52093 against BPIIC. They alleged, among others, that
they were not in arrears in their payment, but in fact made an overpayment as of June 30, 1984. They maintained that
they should not be made to pay amortization before the actual release of the ₱500,000 loan in August and September
1982. Further, out of the ₱500,000 loan, only the total amount of ₱464,351.77 was released to private respondents.
Hence, applying the effects of legal compensation, the balance of ₱35,648.23 should be applied to the initial monthly
amortization for the loan.
On August 31, 1988, the trial court rendered its judgment in Civil Case Nos. 11831 and 52093, thus:
WHEREFORE, judgment is hereby rendered in favor of ALS Management and Development Corporation and Antonio
K. Litonjua and against BPI Investment Corporation, holding that the amount of loan granted by BPI to ALS and
Litonjua was only in the principal sum of P464,351.77, with interest at 20% plus service charge of 1% per annum,
payable on equal monthly and successive amortizations at P9,283.83 for ten (10) years or one hundred twenty (120)
months. The amortization schedule attached as Annex "A" to the "Deed of Mortgage" is correspondingly reformed as
aforestated.
The Court further finds that ALS and Litonjua suffered compensable damages when BPI caused their publication in a
newspaper of general circulation as defaulting debtors, and therefore orders BPI to pay ALS and Litonjua the following
sums:
a) P300,000.00 for and as moral damages;
b) P50,000.00 as and for exemplary damages;
c) P50,000.00 as and for attorney’s fees and expenses of litigation.
The foreclosure suit (Civil Case No. 11831) is hereby DISMISSED for being premature.
Costs against BPI.
SO ORDERED.2
Both parties appealed to the Court of Appeals. However, private respondents’ appeal was dismissed for non-payment
of docket fees.
On February 28, 1997, the Court of Appeals promulgated its decision, the dispositive portion reads:
WHEREFORE, finding no error in the appealed decision the same is hereby AFFIRMED in toto.
SO ORDERED.3
In its decision, the Court of Appeals reasoned that a simple loan is perfected only upon the delivery of the object of the
contract. The contract of loan between BPIIC and ALS & Litonjua was perfected only on September 13, 1982, the date
when BPIIC released the purported balance of the ₱500,000 loan after deducting therefrom the value of Roa’s
indebtedness. Thus, payment of the monthly amortization should commence only a month after the said date, as can
be inferred from the stipulations in the contract. This, despite the express agreement of the parties that payment shall
commence on May 1, 1981. From October 1982 to June 1984, the total amortization due was only ₱194,960.43.
Evidence showed that private respondents had an overpayment, because as of June 1984, they already paid a total
amount of ₱201,791.96. Therefore, there was no basis for BPIIC to extrajudicially foreclose the mortgage and cause
the publication in newspapers concerning private respondents’ delinquency in the payment of their loan. This fact
constituted sufficient ground for moral damages in favor of private respondents.
The motion for reconsideration filed by petitioner BPIIC was likewise denied, hence this petition, where BPIIC submits
for resolution the following issues:
I. WHETHER OR NOT A CONTRACT OF LOAN IS A CONSENSUAL CONTRACT IN THE LIGHT OF THE
RULE LAID DOWN IN BONNEVIE VS. COURT OF APPEALS, 125 SCRA 122.
II. WHETHER OR NOT BPI SHOULD BE HELD LIABLE FOR MORAL AND EXEMPLARY DAMAGES AND
ATTORNEY’S FEES IN THE FACE OF IRREGULAR PAYMENTS MADE BY ALS AND OPPOSED TO THE
RULE LAID DOWN IN SOCIAL SECURITY SYSTEM VS. COURT OF APPEALS, 120 SCRA 707.
On the first issue, petitioner contends that the Court of Appeals erred in ruling that because a simple loan is perfected
upon the delivery of the object of the contract, the loan contract in this case was perfected only on September 13,
1982. Petitioner claims that a contract of loan is a consensual contract, and a loan contract is perfected at the time the
contract of mortgage is executed conformably with our ruling in Bonnevie v. Court of Appeals, 125 SCRA 122. In the
present case, the loan contract was perfected on March 31, 1981, the date when the mortgage deed was executed,
hence, the amortization and interests on the loan should be computed from said date.
Petitioner also argues that while the documents showed that the loan was released only on August 1982, the loan was
actually released on March 31, 1981, when BPIIC issued a cancellation of mortgage of Frank Roa’s loan. This finds
support in the registration on March 31, 1981 of the Deed of Absolute Sale executed by Roa in favor of ALS,
transferring the title of the property to ALS, and ALS executing the Mortgage Deed in favor of BPIIC. Moreover,
petitioner claims, the delay in the release of the loan should be attributed to private respondents. As BPIIC only
agreed to extend a ₱500,000 loan, private respondents were required to reduce Frank Roa’s loan below said amount.
According to petitioner, private respondents were only able to do so in August 1982.
In their comment, private respondents assert that based on Article 1934 of the Civil Code,4 a simple loan is perfected
upon the delivery of the object of the contract, hence a real contract. In this case, even though the loan contract was
signed on March 31, 1981, it was perfected only on September 13, 1982, when the full loan was released to private
respondents. They submit that petitioner misread Bonnevie. To give meaning to Article 1934, according to private
respondents, Bonnevie  must be construed to mean that the contract to extend the loan was perfected on March 31,
1981 but the contract of loan itself was only perfected upon the delivery of the full loan to private respondents on
September 13, 1982.
Private respondents further maintain that even granting, arguendo,  that the loan contract was perfected on March 31,
1981, and their payment did not start a month thereafter, still no default took place. According to private respondents,
a perfected loan agreement imposes reciprocal obligations, where the obligation or promise of each party is the
consideration of the other party. In this case, the consideration for BPIIC in entering into the loan contract is the
promise of private respondents to pay the monthly amortization. For the latter, it is the promise of BPIIC to deliver the
money. In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in
a proper manner with what is incumbent upon him. Therefore, private respondents conclude, they did not incur in
delay when they did not commence paying the monthly amortization on May 1, 1981, as it was only on September 13,
1982 when petitioner fully complied with its obligation under the loan contract.
We agree with private respondents. A loan contract is not a consensual contract but a real contract. It is perfected only
upon the delivery of the object of the contract.5 Petitioner misapplied Bonnevie. The contract in Bonnevie declared by
this Court as a perfected consensual contract falls under the first clause of Article 1934, Civil Code. It is an accepted
promise to deliver something by way of simple loan.
In Saura Import and Export Co. Inc. vs. Development Bank of the Philippines, 44 SCRA 445, petitioner applied for a
loan of ₱500,000 with respondent bank. The latter approved the application through a board resolution. Thereafter,
the corresponding mortgage was executed and registered. However, because of acts attributable to petitioner, the
loan was not released. Later, petitioner instituted an action for damages. We recognized in this case, a perfected
consensual contract which under normal circumstances could have made the bank liable for not releasing the loan.
However, since the fault was attributable to petitioner therein, the court did not award it damages.
A perfected consensual contract, as shown above, can give rise to an action for damages. However, said contract
does not constitute the real contract of loan which requires the delivery of the object of the contract for its perfection
and which gives rise to obligations only on the part of the borrower.6
In the present case, the loan contract between BPI, on the one hand, and ALS and Litonjua, on the other, was
perfected only on September 13, 1982, the date of the second release of the loan. Following the intentions of the
parties on the commencement of the monthly amortization, as found by the Court of Appeals, private respondents’
obligation to pay commenced only on October 13, 1982, a month after the perfection of the contract.7
We also agree with private respondents that a contract of loan involves a reciprocal obligation, wherein the obligation
or promise of each party is the consideration for that of the other.8 As averred by private respondents, the promise of
BPIIC to extend and deliver the loan is upon the consideration that ALS and Litonjua shall pay the monthly
amortization commencing on May 1, 1981, one month after the supposed release of the loan. It is a basic principle in
reciprocal obligations that neither party incurs in delay, if the other does not comply or is not ready to comply in a
proper manner with what is incumbent upon him.9 Only when a party has performed his part of the contract can he
demand that the other party also fulfills his own obligation and if the latter fails, default sets in. Consequently,
petitioner could only demand for the payment of the monthly amortization after September 13, 1982 for it was only
then when it complied with its obligation under the loan contract. Therefore, in computing the amount due as of the
date when BPIIC extrajudicially caused the foreclosure of the mortgage, the starting date is October 13, 1982 and not
May 1, 1981.
Other points raised by petitioner in connection with the first issue, such as the date of actual release of the loan and
whether private respondents were the cause of the delay in the release of the loan, are factual. Since petitioner has
not shown that the instant case is one of the exceptions to the basic rule that only questions of law can be raised in a
petition for review under Rule 45 of the Rules of Court,10 factual matters need not tarry us now. On these points we are
bound by the findings of the appellate and trial courts.
On the second issue, petitioner claims that it should not be held liable for moral and exemplary damages for it did not
act maliciously when it initiated the foreclosure proceedings. It merely exercised its right under the mortgage contract
because private respondents were irregular in their monthly amortization.1âwphi1 It invoked our ruling in Social
Security System vs. Court of Appeals, 120 SCRA 707, where we said:
Nor can the SSS be held liable for moral and temperate damages. As concluded by the Court of Appeals "the
negligence of the appellant is not so gross as to warrant moral and temperate damages," except that, said Court
reduced those damages by only P5,000.00 instead of eliminating them. Neither can we agree with the findings of both
the Trial Court and respondent Court that the SSS had acted maliciously or in bad faith. The SSS was of the belief
that it was acting in the legitimate exercise of its right under the mortgage contract in the face of irregular payments
made by private respondents and placed reliance on the automatic acceleration clause in the contract. The filing alone
of the foreclosure application should not be a ground for an award of moral damages in the same way that a clearly
unfounded civil action is not among the grounds for moral damages.
Private respondents counter that BPIIC was guilty of bad faith and should be liable for said damages because it
insisted on the payment of amortization on the loan even before it was released. Further, it did not make the
corresponding deduction in the monthly amortization to conform to the actual amount of loan released, and it
immediately initiated foreclosure proceedings when private respondents failed to make timely payment.
But as admitted by private respondents themselves, they were irregular in their payment of monthly amortization.
Conformably with our ruling in SSS,  we can not properly declare BPIIC in bad faith. Consequently, we should rule out
the award of moral and exemplary damages.11
However, in our view, BPIIC was negligent in relying merely on the entries found in the deed of mortgage, without
checking and correspondingly adjusting its records on the amount actually released to private respondents and the
date when it was released. Such negligence resulted in damage to private respondents, for which an award of nominal
damages should be given in recognition of their rights which were violated by BPIIC.12 For this purpose, the amount of
₱25,000 is sufficient.
Lastly, as in SSS  where we awarded attorney’s fees because private respondents were compelled to litigate, we
sustain the award of ₱50,000 in favor of private respondents as attorney’s fees.
WHEREFORE, the decision dated February 28, 1997, of the Court of Appeals and its resolution dated April 21, 1998,
are AFFIRMED WITH MODIFICATION as to the award of damages. The award of moral and exemplary damages in
favor of private respondents is DELETED, but the award to them of attorney’s fees in the amount of ₱50,000 is
UPHELD. Additionally, petitioner is ORDERED to pay private respondents ₱25,000 as nominal damages. Costs
against petitioner.
SO ORDERED.

COLITO T. PAJUYO v. CA, GR No. 146364, 2004-06-03

Facts:
Pajuyo ("Pajuyo") paid P400 to a certain Pedro Perez for the rights over a 250-square meter lot in Barrio Payatas
Pajuyo then constructed a house made of light materials on the lot. Pajuyo and his family lived in the house
Pajuyo and private respondent Eddie Guevarra ("Guevarra") executed a Kasunduan or agreement. Pajuyo, as owner
of the house, allowed Guevarra to live in the house for free provided Guevarra would maintain the cleanliness and
orderliness of the house.
Guevarra promised that he would voluntarily vacate the premises on Pajuyo's demand.
Pajuyo informed Guevarra of his need of the house and demanded that Guevarra vacate the house. Guevarra
refused.
Pajuyo filed an ejectment case against Guevarra with the Metropolitan Trial Court of Quezon City
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.
MTC rendered its decision in favor of Pajuyo
Guevarra appealed to the Regional Trial Court
RTC affirmed the MTC decision.
Instead of filing his appeal with the Court of Appeals, Guevarra filed with the Supreme Court a "Motion for Extension of
Time to File
Appeal by Certiorari Based on Rule 42
Guevarra theorized that his appeal raised pure questions of law. 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.
Guevarra filed his petition for review with the Supreme Court.
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
Court of Appeals issued its decision reversing the RTC decision.
Court of Appeals declared that Pajuyo and Guevarra are squatters. Pajuyo and Guevarra illegally occupied the
contested lot which the government owned.
Perez, the person from whom Pajuyo acquired his rights, was also a squatter. Perez had no right or title over the lot
because it is public land. The assignment of rights between Perez and Pajuyo, and the Kasunduan between Pajuyo
and Guevarra, did not have any legal... effect. Pajuyo and Guevarra are in pari delicto or in equal fault.
Court of Appeals ruled that the Kasunduan is not a lease contract but a... commodatum because the agreement is not
for a price certain.
Since Pajuyo admitted that he resurfaced only in 1994 to claim the property, the appellate court held that Guevarra
has a better right over the property under Proclamation No. 137.
At that time, Guevarra was in physical possession of the property. Under Article VI of the Code of Policies Beneficiary
Selection and Disposition of Homelots and Structures in the National Housing Project ("the Code"), the actual
occupant or caretaker of the lot shall have first... priority as beneficiary of the project. The Court of Appeals concluded
that Guevarra is first in the hierarchy of priority.
Issues:
in ruling that the Kasunduan voluntarily entered into by the parties was in fact a commodatum, instead of a Contract of
Lease as found by the Metropolitan Trial Court and in holding that "the ejectment case filed against defendant-
appellant is... without legal and factual basis"
Ruling:
In this case, 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. 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.
We do not agree with the Court of Appeals.
Ownership or the right to possess arising from ownership is not at issue in an action for recovery of 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.[36] The same is true when the defendant
asserts the absence of title over the property. 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.
The only question that the courts must resolve in ejectment proceedings is - who is entitled to the physical possession
of the premises, that is, to the possession de facto and not to the possession de jure.
Guevarra does not dispute Pajuyo's prior possession of the lot and ownership of the house built on it. Guevarra
expressly admitted the existence and due execution of the Kasunduan.
Based on the Kasunduan, Pajuyo permitted Guevarra to reside in the house and lot free of rent, but Guevarra was
under obligation to maintain the premises in good condition. Guevarra promised to vacate the premises on Pajuyo's
demand but Guevarra broke his promise and... refused to heed Pajuyo's demand to vacate.
These facts make out a case for unlawful detainer. Unlawful detainer involves the withholding by a person from
another of the possession of real property to which the latter is entitled after the expiration or termination of the
former's right to hold possession under a... contract, express or implied.
Where the plaintiff allows the defendant to use his property by tolerance without any contract, the defendant is
necessarily bound by an implied promise that he will vacate on demand, failing which, an action for unlawful detainer
will lie.[60] The... defendant's refusal to comply with the demand makes his continued possession of the property
unlawful.[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.
We do not subscribe to the Court of Appeals' theory that the Kasunduan is one of commodatum.
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.
If the bailor should have urgent need of the thing, he may demand its return for temporary use.[66] 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.[67] Under the Civil Code, precarium is a kind of commodatum
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.[69] The tenant's withholding of the property would then be unlawful. This is settled
jurisprudence.
Even assuming that the relationship between Pajuyo and Guevarra is one of commodatum, Guevarra as bailee would
still have the duty to turn over possession of the property to Pajuyo, the bailor. The obligation to deliver or to return the
thing received attaches to... contracts for safekeeping, or contracts of commission, administration and commodatum.
These contracts certainly involve the obligation to deliver or return the thing received.
Guevarra turned his back on the Kasunduan on the sole ground that like him, Pajuyo is also a squatter. Squatters,
Guevarra pointed out, cannot enter into a contract involving the land they illegally occupy. Guevarra insists that the
contract is void.
there must be honor even between squatters.
Guevarra freely entered into the Kasunduan. Guevarra cannot now impugn the Kasunduan after he had benefited
from it. The Kasunduan binds Guevarra.
The Kasunduan is the undeniable evidence of Guevarra's recognition of Pajuyo's better right of physical possession.
Guevarra is clearly a possessor in bad faith. The absence of a contract would not yield a different result, as there
would still be an implied promise to vacate.
G.R. No. L-17474            October 25, 1962
REPUBLIC OF THE PHILIPPINES, plaintiff-appellee,
vs.
JOSE V. BAGTAS, defendant,
FELICIDAD M. BAGTAS, Administratrix of the Intestate Estate left by the late Jose V. Bagtas, petitioner-
appellant.
D. T. Reyes, Liaison and Associates for petitioner-appellant.
Office of the Solicitor General for plaintiff-appellee.
PADILLA, J .:
The Court of Appeals certified this case to this Court because only questions of law are raised.
On 8 May 1948 Jose V. Bagtas borrowed from the Republic of the Philippines through the Bureau of Animal Industry
three bulls: a Red Sindhi with a book value of P1,176.46, a Bhagnari, of P1,320.56 and a Sahiniwal, of P744.46, for a
period of one year from 8 May 1948 to 7 May 1949 for breeding purposes subject to a government charge of breeding
fee of 10% of the book value of the bulls. Upon the expiration on 7 May 1949 of the contract, the borrower asked for a
renewal for another period of one year. However, the Secretary of Agriculture and Natural Resources approved a
renewal thereof of only one bull for another year from 8 May 1949 to 7 May 1950 and requested the return of the other
two. On 25 March 1950 Jose V. Bagtas wrote to the Director of Animal Industry that he would pay the value of the
three bulls. On 17 October 1950 he reiterated his desire to buy them at a value with a deduction of yearly depreciation
to be approved by the Auditor General. 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. Jose V. Bagtas failed to pay the book value of the three bulls or to return them. So, 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 P3,241.45 and
the unpaid breeding fee in the sum of P199.62, both with interests, and costs; and that other just and equitable relief
be granted in (civil No. 12818).
On 5 July 1951 Jose V. Bagtas, through counsel Navarro, Rosete and Manalo, 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 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, to which depreciation the Auditor General did not object, he could not return the animals
nor pay their value and prayed for the dismissal of the complaint.
After hearing, on 30 July 1956 the trial court render judgment —
 . . . sentencing the latter (defendant) to pay the sum of P3,625.09 the total value of the three bulls plus the
breeding fees in the amount of P626.17 with interest on both sums of (at) the legal rate from the filing of this
complaint and costs.
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. 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. Of this order appointing a special sheriff,
on 6 December 1958, Felicidad M. Bagtas, the surviving spouse of the defendant Jose Bagtas who died on 23
October 1951 and as administratrix of his estate, was notified. On 7 January 1959 she file a motion alleging that on 26
June 1952 the two bull Sindhi and Bhagnari were returned to the Bureau Animal of Industry and that sometime in
November 1958 the third bull, the Sahiniwal, died from gunshot wound inflicted during a Huk raid on Hacienda
Felicidad Intal, and praying that the writ of execution be quashed and that a writ of preliminary injunction be issued.
On 31 January 1959 the plaintiff objected to her motion. On 6 February 1959 she filed a reply thereto. On the same
day, 6 February, the Court denied her motion. Hence, this appeal certified by the Court of Appeals to this Court as
stated at the beginning of this opinion.
It is true that on 26 June 1952 Jose M. Bagtas, Jr., son of the appellant by the late defendant, returned the Sindhi and
Bhagnari bulls to Roman Remorin, Superintendent of the NVB Station, Bureau of Animal Industry, Bayombong, Nueva
Vizcaya, as evidenced by a memorandum receipt signed by the latter (Exhibit 2). 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 P859.53 be issued against the estate of defendant deceased Jose V. Bagtas." She cannot be
held liable for the two bulls which already had been returned to and received by the appellee.
The appellant contends that the Sahiniwal bull was accidentally killed during a raid by the Huk in November 1953
upon the surrounding barrios of Hacienda Felicidad Intal, Baggao, Cagayan, where the animal was kept, and that as
such death was due to  force majeure she is relieved from the duty of returning the bull or paying its value to the
appellee. The contention is without merit. The loan by the appellee to the late defendant Jose V. Bagtas of the three
bulls for breeding purposes for a period of one year from 8 May 1948 to 7 May 1949, later on renewed for another
year as regards one bull, was subject to the payment by the borrower of breeding fee of 10% of the book value of the
bulls. The appellant contends that the contract was commodatum and that, for that reason, as the appellee retained
ownership or title to the bull it should suffer its loss due to force majeure. A contract of commodatum is essentially
gratuitous.1 If the breeding fee be considered a compensation, then the contract would be a lease of the bull. Under
article 1671 of the Civil Code the lessee would be subject to the responsibilities of a possessor in bad faith, because
she had continued possession of the bull after the expiry of the contract. And even if the contract be commodatum,
still the appellant is liable, because article 1942 of the Civil Code provides that a bailee in a contract
of commodatum —
. . . is liable for loss of the things, even if it should be through a fortuitous event:
(2) If he keeps it longer than the period stipulated . . .
(3) If the thing loaned has been delivered with appraisal of its value, unless there is a stipulation exempting
the bailee from responsibility in case of a fortuitous event;
The original period of the loan was from 8 May 1948 to 7 May 1949. The loan of one bull was renewed for another
period of one year to end on 8 May 1950. But the appellant kept and used the bull until November 1953 when during a
Huk raid it was killed by stray bullets. Furthermore, when lent and delivered to the deceased husband of the appellant
the bulls had each an appraised book value, to with: the Sindhi, at P1,176.46, the Bhagnari at P1,320.56 and the
Sahiniwal at P744.46. It was not stipulated that in case of loss of the bull due to fortuitous event the late husband of
the appellant would be exempt from liability.
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, is not altogether without merit. However, the claim that his civil personality having ceased to exist the
trial court lost jurisdiction over the case against him, is untenable, because section 17 of Rule 3 of the Rules of Court
provides that —
After a party dies and the claim is not thereby extinguished, the court shall order, upon proper notice, the legal
representative of the deceased to appear and to be substituted for the deceased, within a period of thirty (30)
days, or within such time as may be granted. . . .
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 . . . it shall be the duty of his attorney to inform the court promptly of
such death . . . and to give the name and residence of the executory administrator, guardian, or other legal
representative of the deceased . . . .
The notice by the probate court and its publication in the Voz de Manila that Felicidad M. 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. Bagtas, arising from contract express or implied, whether the same be due, not due, or
contingent, for funeral expenses and expenses of the last sickness of the said decedent, and judgment for monopoly
against him, to file said claims with the Clerk of this Court at the City Hall Bldg., Highway 54, Quezon City, within six
(6) months from the date of the first publication of this order, serving a copy thereof upon the aforementioned Felicidad
M. Bagtas, the appointed administratrix of the estate of the said deceased," 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, and there was no
reason for such failure to notify, 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 appellee
or its attorney or 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.
As the appellant already had returned the two bulls to the appellee, 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 to the appellee, because it was killed while in
the custody of the administratrix of his estate. 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.
Special proceedings for the administration and settlement of the estate of the deceased Jose V. Bagtas having been
instituted in the Court of First Instance of Rizal (Q-200), 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,
the administratrix appointed by the court.
ACCORDINGLY, the writ of execution appealed from is set aside, without pronouncement as to costs.
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.