Manzano v. Perez, Jr.
G.R. No. 112485. August 9, 2011
Panganiban, J.
DOCTRINE: If the real agreement between two parties is to lend a property to be used as
collateral in a loan, the physical possession by the borrower thereof is unnecessary.
FACTS:
Nieves Manzano allegedly borrowed from her sister, petitioner Emilia Manzano, the
residential house and lot the latter owned to serve as a collateral for a projected
PHP 30,000 loan. Pursuant to Nieves’ promise to return the property immediately
after paying for the loan, Emilia executed two (2) deeds of conveyance for the sale of
the residential lot and the sale of the house built thereon for a consideration of PHP
1.00 plus other valuables she received from Nieves. Subsequently, Nieves died
without having returned the subject property and her heirs, respondents herein,
allegedly refused to return the same to Emilia despite having already paid for the
loan they obtained from the Rural Bank.
Petitioner Emilia then sought for the annulment of the deeds of sale and execution
of a deed of transfer or reconveyance of the subject property in her favor. In seeking
for the complaint’s dismissal, respondents, as legal heirs of Nieves, claimed
ownership over the property on the ground that their predecessor-in-interest had
purchased the property from Emilia for value and in good faith, as evidenced by the
deeds of sale. According to them, they had politely informed Emilia of their refusal
to resell the subject property, as what has been allegedly agreed upon during the
sale, because it was the only memory they had of Nieves, their predecessor-ininterest
The RTC ruled in favor of the petitioner. The CA reversed the RTC’s decision as it was
not convinced by the petitioner's claim that there was a supposed oral argument of
commodatum over the disputed house and lot.
ISSUE:
Did the agreement between the Manzano sisters relating to the subject house and
lot used as a collateral for a loan constitute a commodatum?
HELD:
No. The Manzano sisters entered into a contract absolute sale rather than an
agreement of commodatum over the subject property.
The Supreme Court finds no reason to disturb the findings and conclusions of the
appellate court. It has already been well-established in existing jurisprudence
that there is always the presumption that a written contract is for a valuable
consideration. The execution of a deed purporting to convey ownership of a realty
is in itself prima faci evidence of the existence of a valuable consideration and
the party alleging lack of consideration has the burden of proving such allegation
In this case, Emilia was no longer in possession of the property. If the agreement
was truly to lend Emilia’s property as a collateral in a mortgage loan, it would be
unnecessary for Nieves and her heirs to be in the actual possession thereof, let
alone, build a pigpen on the lot. Moreover, the Certificate of Tax Declaration
named Nieves as the owner and possessor of the subject property by virtue of an
absolute sale executed in the latter’s favor. Lastly, the insufficiency of the PHP
1.00 consideration cannot invalidate the sale as the vendor’s liability may already
be a sufficient cause for a valid contract.
Given the foregoing, Emilia failed to overcome the evidence of the existence of a
sale, and not a commodatum over the subject house and lot.
Felix De Los Santos v. Jarra
G.R. No. L-4150 ; February 10, 1910
Torres, J.
DOCTRINE: The bailee has an imperative duty to return the the thing loaned or pay the
value thereof at the expiration of the contract.
ART. 1740 (Old Civil Code). By the contract of loan, one of the parties delivers to the
other, either anything not perishable, in order that the latter may use it during a
certain period and return it to the former, in which case it is called commodatum, or
money or any other perishable thing, under the condition to return an equal amount of
the same kind and quality, in which case it is merely called a loan.
FACTS:
Plaintiff-appellee Felix de los Santos filed a suit against defendant-appellant Jarra
who is the administratix of the estate of Magdaleno Jimenea. Jimenea allegedly
borrowed 10 first-class carabaos from Felix in the latter part of 1901 for its use in
the animal-power mill of Jimenea without any remuneration but under the sole
condition that it should be returned once the work in the mill is terminated to which
Jimenea failed to comply with despite demands for its return. Jimenea died on Oct.
1904 so Jarra was appointed as the administratix of the former’s estate. Felix then
presented his claim for the return of the carabaos to the commissioners of Jimenea’s
estate but it was rejected which prompted him to file a suit against Jarra ordering
her to return the ten first-class carabaos loaned to the late Jimenea, or their present
value, and to pay the costs.
Jarra alleged that late Jimeneo only obtained three second-class animals, which were
afterwards transferred by sale to him by Felix.
The lower court ruled that the alleged purchase of three carabaos by Jimenea from
his son-in-law Santos is not evidenced by any trustworthy documents such as those
of transfer, nor were the declarations of the witnesses presented by the defendant
affirming it satisfactory; for said reasonit can not be considered that Jimenea only
received three carabaos on loan from his son-in-law, and that he afterwards kept
them definitely by virtue of the purchase.
ISSUE:
Is Jimenea, as the bailee, liable to return the 10 first-class carabaos or pay the
present value thereof?
HELD:
Yes, Jimenea is liable to return or pay the value of the carabaos loaned to him
under a contract of commodatum. Art. 1740 of the Old Civil Code states the
imperative duty of the bailee to return the thing loaned after the expiration of
the period of the loan.
The obligation of the bailee or of his successors to return either the thing loaned
or its value, is sustained by the supreme tribunal of Spain. In its decision of
March 21, 1895, it sets out with precision the legal doctrine touching
commodatum as follows:
Although it is true that in a contract of commodatum the bailor retains the
ownership of the thing loaned, and at the expiration of the period, or after the
use for which it was loaned has been accomplished, it is the imperative duty of
the bailee to return the thing itself to its owner, or to pay him damages if
through the fault of the bailee the thing should have been lost or injured, it is
clear that where public securities are involved, the trial court, in deferring to the
claim of the bailor that the amount loaned be returned him by the bailee in bonds
of the same class as those which constituted the contract, thereby properly
applies law 9 of title 11 of partida 5.
Therefore, in this case, the carabaos delivered to be used not being returned by
the defendant upon demand, there is no doubt that Jarra is under obligation to
indemnify the owner thereof by paying him their value.
Republic v. Court of Appeals
G.R. No. L-46145. November 26, 1986
PARAS, J.
DOCTRINE: One's ownership of a thing may be lost by prescription by reason of another's
possession if such possession be under claim of ownership, not where the possession is
only intended to be transient, as in the case of the U.S. Navy's occupation of the land
concerned, in which case the owner is not divested of his title, although it cannot be
exercised in the meantime.
FACTS:
The heirs of Domingo Baloy, represented by Ricardo Baloy, sought the registration of
land by virtue of their possessory information title which was acquired under the
provisions of Spanish Mortgage Law. The Court of First Instance denied the
application, hence, Ricardo Baloy interposed on appeal to the Court of Appeals. The
Republic through the Bureau of Lands opposed the application.
The Director of Lands alleged that the land became public land by virtue of Act 627
of Philippine Commission. The Act as amended provided for a period which the
person affected thereby can file their application, otherwise "the said lands or
interests therein will be conclusively adjudged to be public lands and all claims on
the part of private individuals for such lands or interests therein not to presented
will be forever barred." Petitioner argued that since Domingo failed to file his claim,
the land became irrevocably public.
The Court of Appeals ruled in favor of respondents. It states that the communication
of the Department of Foreign Affairs to the US Embassy seeks to justify the title of
herein applicant; what this Court has taken from the occupation by the U.S. Navy is
that during the interim, the title of applicants was is a state of suspended animation;
and since immediately after U.S. Navy had abandoned the area, applicant came in
and asserted title once again.
ISSUE:
Is the occupancy of the of the US Navy over the subject matter in the concept of an
owner?
HELD:
No. During the interim of 57 years (when the U.S. Navy possessed the area) the
possessory rights of Baloy or heirs were merely suspended and not lost by
prescription.
The communication which contains an official statement, recognizes the fact that
Domingo Baloy and/or his heirs have been in continuous possession of the said
land since 1894, as attested by an “Informacion Possessoria” Title, which was
granted by the Spanish Government. Possession was interrupted only by the
occupation of the land by the US Navy in 1945. Clearly, the occupancy of the U.S.
Navy was not in the concept of owner. It partakes of the character of a
commodatum. It cannot therefore militate against the title of Domingo Baloy and
his successors-in-interest.
One's ownership of a thing may be lost by prescription by reason of another's
possession if such possession be under claim of ownership, not where the
possession is only intended to be transient, as in the case of the U.S. Navy's
occupation of the land concerned, in which case the owner is not divested of his
title, although it cannot be exercised in the meantime.
Producers Bank of the Phils. v. CA
G.R No. 115324. February 19, 2003
CALLEJO, Sr., J.
DOCTRINE: 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.
FACTS:
Sometime in 1979, private respondent Franklin Vives was asked by his neighbor and
friend Angeles Sanchez to help her friend and townmate, Col. Arturo Doronilla, in
incorporating his business, the Sterela Marketing and Services. Specifically, Sanchez
asked private respondent to deposit in a bank a certain amount of money in the bank
account of Sterela for purposes of its incorporation. She assured private respondent
that he could withdraw his money from said account within a month’s time. Private
respondent asked Sanchez to bring Doronilla to their house so that they could
discuss Sanchez’s request.
On May 9, 1979, private respondent, Sanchez, Doronilla and a certain Estrella
Dumagpi, Doronillas private secretary, met and discussed the matter. Thereafter,
relying on the assurances and representations of Sanchez and Doronilla, private
respondent issued a check in the amount of P200,000.00 in favor of Sterela. Private
respondent instructed his wife, Mrs. Inocencia Vives, to accompany Doronilla and
Sanchez in 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. They had with them an authorization
letter from Doronilla authorizing Sanchez and her companions, in coordination with
Mr. Rufo Atienza, to open an account for Sterela Marketing Services in the amount of
P200,000.00. In opening the account, the authorized signatories were Inocencia Vives
and/or Angeles Sanchez. A passbook for Savings Account No. 10-1567 was thereafter
issued to Mrs. Vives.
Subsequently, private respondent learned that Sterela was no longer holding
office in the address previously given to him. Alarmed, he and his wife went to
the Bank to verify if their money was still intact. The bank manager referred them
to Mr. Rufo Atienza, the assistant manager, who informed them that part of the
money in Savings Account No. 10-1567 had been withdrawn by Doronilla, and
that only P90,000.00 remained therein. He likewise told them that Mrs. Vives
could not withdraw said remaining amount because it had to answer for some
postdated checks issuedby Doronilla. According to Atienza, after Mrs. Vives and
Sanchez opened Savings Account No. 10-1567, Doronilla opened Current Account
No. 10-0320 for Sterela and authorized the Bank to debit Savings Account No. 10-
1567 for the amounts necessary to cover overdrawings in Current Account No. 10-
0320. In opening said current account, Sterela, through Doronilla, obtained a loan
of P175,000.00 from the Bank. To cover payment thereof, Doronilla issued three
postdated checks, all of which were dishonored. Atienza also said that Doronilla
could assign or withdraw the money in Savings Account No. 10-1567 because he
was the sole proprietor of Sterela.
Private respondent tried to get in touch with Doronilla through Sanchez. On June
29, 1979, he received a letter from Doronilla, assuring him that his money was
intact and would be returned to him. On August 13, 1979, Doronilla issued a
postdated check for P212,000.00 in favor of private respondent. However, upon
presentment thereof by private respondent to the drawee bank, the check was
dishonored. Doronilla requested private respondent to present the same check on
September 15, 1979 but when the latter presented the check, it was again
dishonored.
Private respondent referred the matter to a lawyer, who made a written demand
upon Doronilla for the return of his clients money. Doronilla issued another check
for P212,000.00 in private respondents favor but the check was again dishonored
for insufficiency of funds.
Private respondent instituted an action for recovery of sum of money in the RTC
Pasig against Doronilla, Sanchez, Dumagpi and petitioner. RTC ruled against
defendants Arturo J. Doronila, Estrella Dumagpi and Producers Bank of the
Philippines.
Petitioner appealed to the CA. The CA affirmed the decision of the RTC. It
likewise denied with finality petitioners motion for reconsideration.
ISSUE:
1. Is the transaction between Doronilla and Viveres one of simple loan, and
not a commodatum?
2. Does the P12, 000, allegedly representing the interest and the amount to
be returned to Vives, convert the transaction from a commodatum to a
mutuum?
HELD:
1. NO.
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.
Commodatum is essentially gratuitous.
Simple loan may be gratuitous or with a stipulation to pay interest.
In commodatum, the bailor retains the ownership of the thing loaned, while in
simple loan, ownership passes to the borrower.
The foregoing provision seems to imply that if the subject of the contract is a
consumable thing, such as money, the contract would be a mutuum. However,
there are some instances where a commodatum may have for its object a
consumable thing. Article 1936 of the Civil Code provides:
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.
2. NO.
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 latters money deposited with petitioner. Doronillas attempts
to return to private respondent the amount of P200,000.00 which the latter
deposited in Sterelas account together with an additional P12,000.00,
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 P12,000.00 corresponds to
the fruits of the lending of the P200,000.00.
Pajuyo v. Court of Appeals
G.R. No. 146364, June 03, 2004
Carpio, J.
DOCTRINE: 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.
FACTS:
In December 1985, Pajuyo and private respondent Eddie 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 filed an ejectment case against Guevarra with the Metropolitan Trial Court of
Quezon City due to the refusal of Guevarra to vacate the said house after the demand
by Pajuyo. 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. According to Gueverra neither him
nor Pajuyo has a valid title to the lot. The MTC rendered a decision ordering private
respondent to vacate the said house, pay Pajuyo reasonable compensation for use of
the premises starting from the last demand, and pay for attorney’s fees. The RTC
upheld the Kasunduan, which established the landlord and tenant relationship
between Pajuyo and Guevarra. The Court of Appeals issued its decision reversing the
RTC decision. The Court of Appeals declared that Pajuyo and Guevarra are squatters
and that Pajuyo and Guevarra illegally occupied the contested lot which the
government owned. The Court of Appeals further ruled that the Kasunduan was not a
lease contract but a commodatum because the agreement is not for a price certain.
ISSUE:
Was the contract or Kasunduan entered by the parties a commodatum?
HELD:
No, it is not a commodatum.
According to Art. 1933, 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.
In this case, the Kasunduan revealed 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.
Therefore, the Kasunduan not being essentially gratuitous, it cannot be said to be
one of a commodatum.
Catholic Vicar Apostolic of the Mt. Province v. Court of Appeals
G.R. No. 80294-95, September 21, 1988
Gancayco, J.
DOCTRINE: The bailees' failure to return the subject matter of commodatum to the bailor
does not mean adverse possession on the part of the borrower. The bailee held in trust
the property subject matter of commodatum.
FACTS:
Catholic Vicar Apostolic of the Mountain Province (Vicar) filed with the Court of First
Instance of Baguio-Benguet an application for registration of title over Lots 1-4
situated in Poblacion Central, La Trinidad, Benguet, being sites of the Catholic
Church building, convents, etc. The Heirs of Juan Valdez and the Heirs of Egmidio
Octaviano opposed their registration of Lots 2 and 3, asserting ownership and title
thereto. Despite opposition, the court confirmed the registrable title of Vicar to Lots
1-4.
The opposition appealed to the Court of Appeals, which reversed the decision and
dismissed Vicar’s application to Lots 2 and 3. Separate motions for reconsideration
were filed, with the Heirs of Octaviano praying that the registration of Lot 3 be made
in their name and the Heirs of Valdez seeking registration of Lot 2 under theirs. The
Court of Appeals denied both motions.
Thereafter, Vicar questioned in the Supreme Court the dismissal of its application.
The petition was denied in a minute resolution for lack of merit. Upon finality of the
resolution, the Heirs of Octaviano prayed that they be placed in possession of Lot 3
with the Court of First Instance of Baguio. The trial court denied the motion on the
ground that the Court of Appeals, in its previous decision, did not grant them any
affirmative relief. On appeal, the same was dismissed. This prompted the opposition
to file separate civil cases for recover of possession.
The Heirs of Octaviano presented Fructuoso Valdez, who testified that said lot was
owned by their predecessor-in-interest, Egmidio Octaviano; his written demand to
Vicar for return of the land tothem; and the reasonable rentals for the use of the
land at Php 10,000 per month. On the other hand, Vicar presented Atty. Nicanor
Sison, the Register of Deeds for Benguet, who testified that the lot is not covered
by any title in the name of Egmidio Octaviano or any of the plaintiffs. In contrast,
the Heirs of Valdez question whether the decisions of the Court of Appeals and
the Supreme Court touching ownership constitute as res judicata. Judge Nicodemo
Ferrer of the Regional Trial Court of Baguio-Benguet ruled in favor of the
plaintiffs, ordering Vicar to return and surrender Lot 2 to the Heirs of Valdez and
Lot 3 to the Heirs of Octaviano. On appeal, the decision was confirmed. The
motion for reconsideration filed by Vicar in both cases were also denied. Hence,
this petition.
Vicar alleges, among others, that the Court of Appeals erred in finding that it had
been in possession of both lots merely as bailee in commodatum up to 1951,
when it repudiated the trust by declaring the properties in its name for taxation
purposes. Petitioner claims it had been in possession in the concept of an owner
for eleven years.
ISSUE:
1. Was the Vicar in possession of the lots as bailee in commodatum?;
2. If yes, whether Vicar’s failure to return the lots (the subject matter of
commodatum) to the bailor constitutes adverse possession.
HELD:
1. Yes, petitioner had been in possession of the lots as bailee in commodatum.
Art. 1935. The bailee in commodatum acquires the use of the thing loaned but not its
fruits; if any compensation is to be paid by him who acquires the use, the contract
ceases to be a commodatum.
By the very admission of Vicar, Lots 2 and 3 were owned by Valdez and Octaviano.
The predecessors of private respondents were in possession of the questioned
lots evidenced by a Free Patent Application since 1906. The buildings standing in
Lots 2 and 3 were only constructed after liberation in 1945. Vicar only declared
Lots 2 and 3 for taxation purposes in 1951. Improvements on the lots were paid
for by the Bishop, but he was appointed only in 1947. The church was constructed
only in 1951 and the new convent only 2 years before the trial in 1963. When
Vicar was notified of the oppositor's claims, the parish priest offered to buy the
lot from Fructuoso Valdez. Lots 2 and 3 were surveyed by request of Vicar only in
1962.
Private respondents were able to prove that their predecessors' house was
borrowed by petitioner Vicar after the church and the convent were destroyed.
They never asked for the return of the house, but when they allowed its free use,
they became bailors in commodatum and the petitioner the bailee.
2. No. The bailees' failure to return the subject matter of commodatum to the
bailor did not mean adverse possession on the part of the borrower. The bailee
held in trust the property subject matter of commodatum. The adverse claim of
petitioner came only in 1951 when it declared the lots for taxation purposes. The
action of Vicar by such adverse claim could not ripen into title by way of ordinary
acquisitive prescription because of the absence of just title.
Quintos v. Beck
GR No L-46240, Nov 3, 1939
Imperial, J.
DOCTRINE: 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.
FACTS:
Beck was a tenant of Quintos and as such occupied the latter’s house. Upon the
novation of the contract of lease between the two, Quintos gratuitously granted Beck
the use of the furniture subject to the condition that the defendant would return
them to Quintos upon demand. Quintos then sold the property to Maria and Rosario
Lopez and later on notified Beck of the conveyance, giving him 60 days to vacate the
premises. Thereafter, Quintos required Beck to return all the furniture transferred to
him in the house where they were found. 2 months later, Beck wrote to Quintos
reiterating that she may call for the furniture in the ground floor of the house and
then another letter informing her that he could not give up the 3 gas stoves and 4
electric lamps because he would use them for another week then the lease would
expire. When that time came, before vacating the house, Beck deposited with the
sheriff the subject furniture and in the custody of the latter.
ISSUE:
1. Was the granting the use of furniture a commodatum between Quintos and
Beck?
2. Did Beck breached his obligation under the contract of commodatum to return
the subject furniture?
HELD:
1. Yes. The contract entered into between the parties is one of commodatum,
because under it the plaintiff gratuitously granted the use of the furniture to the
defendant, reserving forherself the ownership thereof; by this contract the defendant
bound himself to return the furniture to the plaintiff, upon the latter’s demand.
2. No. The obligation voluntarily assumed by the defendant to return the furniture
upon the plaintiff's demand, means that he should return all of them to the
plaintiff at the latter's residence or house. The defendant did not comply with
this obligation when he merely placed them at the disposal of the plaintiff,
retaining for his benefit the three gas heaters and the four electric lamps.
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