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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 oneyear 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 bystray bullets. Furthermore, when lent and delivered to the deceased husband of the appellant the bulls had each an appraised bookvalue, 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 ofloss 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 notaltogether without merit. However, the claim that his civil personality having ceased to exist the trial court lost jurisdict ion over thecase 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 legalrepresentative of the deceased to appear and to be substituted for the deceased, within a period of thirty (30) days, orwithin 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 thedeceased . . . .

The notice by the probate court and its publication in the Voz de Manila that Felicidad M. Bagtas had been issue letters ofadministration 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 andexpenses of the last sickness of the said decedent, and judgment for monopoly against him, to file said claims with the Clerk of thisCourt 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 saiddeceased," is not a notice to the court and the appellee who were to be notified of the defendant's death in accordance with theabove-quoted rule, and there was no reason for such failure to notify, because the attorney who appeared for the defendant was thesame 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 administrationproceedings of his estate instituted in another court that if the attorney for the deceased defendant did not notify the plaintiff or itsattorney 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 ofP859.63, 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 on7 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 theCourt of First Instance of Rizal (Q-200), the money judgment rendered in favor of the appellee cannot be enforced by means of a writof execution but must be presented to the probate court for payment by the appellant, the administratrix appointed by the court.

CATHOLIC VICAR v. CA

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

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

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

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

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

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

... The documents and records presented reveal that the whole controversy started when the defendant Catholic VicarApostolic of the Mountain Province (VICAR for brevity) filed with the Court of First Instance of Baguio Benguet on September5, 1962 an application for registration of title over Lots 1, 2, 3, and 4 in Psu-194357, situated at Poblacion Central, La Trinidad,Benguet, docketed as LRC N-91, said Lots being the sites of the Catholic Church building, convents, high school building, schoolgymnasium, school dormitories, social hall, stonewalls, etc. On March 22, 1963 the Heirs of Juan Valdez and the Heirs ofEgmidio Octaviano filed their Answer/Opposition on Lots Nos. 2 and 3, respectively, asserting ownership and title thereto.After trial on the merits, the land registration court promulgated its Decision, dated November 17, 1965, confirming theregistrable title of VICAR to Lots 1, 2, 3, and 4.

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

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

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

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

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

On February 7, 1979, the Heirs of Octaviano filed with the Court of Appeals a petitioner for certiorari and mandamus, docketedas CA-G.R. No. 08890-R, entitled Heirs of Egmidio Octaviano vs. Hon. Salvador J. Valdez, Jr. and Vicar . In its decision dated May16, 1979, the Court of Appeals dismissed the petition.

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

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

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

In these two cases , the plaintiffs arque that the defendant Vicar is barred from setting up the defense of ownership and/orlong and continuous possession of the two lots in question since this is barred by prior judgment of the Court of Appeals inCA-G.R. No. 038830-R under the principle of res judicata . Plaintiffs contend that the question of possession and ownership

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have already been determined by the Court of Appeals (Exh. C, Decision, CA-G.R. No. 038830-R) and affirmed by the SupremeCourt (Exh. 1, Minute Resolution of the Supreme Court). On his part, defendant Vicar maintains that the principle of res judicata would not prevent them from litigating the issues of long possession and ownership because the dispositive portionof the prior judgment in CA-G.R. No. 038830-R merely dismissed their application for registration and titling of lots 2 and 3.Defendant Vicar contends that only the dispositive portion of the decision, and not its body, is the controlling pronouncementof the Court of Appeals. 2

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

1. ERROR IN APPLYING LAW OF THE CASE ANDRES JUDICATA;

2. ERROR IN FINDING THAT THE TRIAL COURT RULED THAT LOTS 2 AND 3 WERE ACQUIRED BY PURCHASE BUT WITHOUTDOCUMENTARY EVIDENCE PRESENTED;

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

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

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

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

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

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

9. ERROR IN FINDING THAT PETITIONER HAD BEEN IN POSSESSION OF LOTS 2 AND 3 MERELY AS BAILEE BOR ROWER) IN

COMMODATUM, A GRATUITOUS LOAN FOR USE;

10. ERROR IN FINDING THAT PETITIONER IS A POSSESSOR AND BUILDER IN GOOD FAITH WITHOUT RIGHTS OF RETENTION ANDREIMBURSEMENT AND IS BARRED BY THE FINALITY AND CONCLUSIVENESS OF THE DECISION IN CA G.R. NO. 038830.3

The petition is bereft of merit.

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

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

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

The Court of Appeals found that petitioner did not meet the requirement of 30 years possession for acquisitive prescription overLots 2 and 3. Neither did it satisfy the requirement of 10 years possession for ordinary acquisitive prescription because of theabsence of just title. The appellate court did not believe the findings of the trial court that Lot 2 was acquired from Juan Valdez by

purchase and Lot 3 was acquired also by purchase from Egmidio Octaviano by petitioner Vicar because there was absolutely nodocumentary evidence to support the same and the alleged purchases were never mentioned in the application for registration.

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

There is evidence that petitioner Vicar occupied Lots 1 and 4, which are not in question, but not Lots 2 and 3, because the buildingsstanding thereon were only constructed after liberation in 1945. Petitioner Vicar only declared Lots 2 and 3 for taxation purposes in1951. The improvements oil Lots 1, 2, 3, 4 were paid for by the Bishop but said Bishop was appointed only in 1947, the church was

constructed only in 1951 and the new convent only 2 years before the trial in 1963.

When petitioner Vicar was notified of the oppositor's claims, the parish priest offered to buy the lot from Fructuoso Valdez. Lots 2and 3 were surveyed by request of petitioner Vicar only in 1962.

Private respondents were able to prove that their predecessors' house was borrowed by petitioner Vicar after the church and theconvent were destroyed. They never asked for the return of the house, but when they allowed its free use, they became bailorsin commodatum and the petitioner the bailee. The bailees' failure to return the subject matter of commodatum to the bailor did notmean adverse possession on the part of the borrower. The bailee held in trust the property subject matter of commodatum. Theadverse claim of petitioner came only in 1951 when it declared the lots for taxation purposes. The action of petitioner Vicar by suchadverse claim could not ripen into title by way of ordinary acquisitive prescription because of the absence of just title.

The Court of Appeals found that the predecessors-in-interest and private respondents were possessors under claim of ownership ingood faith from 1906; that petitioner Vicar was only a bailee in commodatum ; and that the adverse claim and repudiation of trustcame only in 1951.

We find no reason to disregard or reverse the ruling of the Court of Appeals in CA-G.R. No. 38830-R. Its findings of fact have becomeincontestible. This Court declined to review said decision, thereby in effect, affirming it. It has become final and executory a longtime ago.

Respondent appellate court did not commit any reversible error, much less grave abuse of discretion, when it held that the Decisionof the Court of Appeals in CA-G.R. No. 38830-R is governing, under the principle of res judicata, hence the rule, in the present casesCA-G.R. No. 05148 and CA-G.R. No. 05149. The facts as supported by evidence established in that decision may no longer be altered.

WHEREFORE AND BY REASON OF THE FOREGOING, this petition is DENIED for lack of merit, the Decision dated Aug. 31, 1987 inCA-G.R. Nos. 05148 and 05149, by respondent Court of Appeals is AFFIRMED, with costs against petitioner.

REPUBLIC v. CA

QUINTOS v. BECK

The plaintiff brought this action to compel the defendant to return her certain furniture which she lent him for his use. She appealedfrom the judgment of the Court of First Instance of Manila which ordered that the defendant return to her the three has heaters andthe four electric lamps found in the possession of the Sheriff of said city, that she call for the other furniture from the said sheriff ofManila at her own expense, and that the fees which the Sheriff may charge for the deposit of the furniture be paid pro rata by bothparties, 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 thelatter the use of the furniture described in the third paragraph of the stipulation of facts, subject to the condition that the defendantwould return them to the plaintiff upon the latter's demand. The plaintiff sold the property to Maria Lopez and Rosario Lopez andon September 14, 1936, these three notified the defendant of the conveyance, giving him sixty days to vacate the premises underone of the clauses of the contract of lease. There after the plaintiff required the defendant to return all the furniture transferred tohim for them in the house where they were found. On November 5, 1936, the defendant, through another person, wrote to theplaintiff reiterating that she may call for the furniture in the ground floor of the house. On the 7th of the same month, the defendantwrote another letter to the plaintiff informing her that he could not give up the three gas heaters and the four electric lamps becausehe would use them until the 15th of the same month when the lease in due to expire. The plaintiff refused to get the furniture inview 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 warehousesituated 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 thecontract by not calling for all the furniture on November 5, 1936, when the defendant placed them at their disposal; in not orderingthe defendant to pay them the value of the furniture in case they are not delivered; in holding that they should get all the furniturefrom the Sheriff at their expenses; in ordering them to pay-half of the expenses claimed by the Sheriff for the deposit of thefurniture; in ruling that both parties should pay their respective legal expenses or the costs; and in denying pay their respective legalexpenses or the costs; and in denying the motions for reconsideration and new trial. To dispose of the case, it is only necessary todecide whether the defendant complied with his obligation to return the furniture upon the plaintiff's demand; whether the la tter isbound to bear the deposit fees thereof, and whether she is entitled to the costs of litigation. lawphi1.net

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The contract entered into between the parties is one of commadatum , because under it the plaintiff gratuitously granted the use ofthe furniture to the defendant, reserving for herself the ownership thereof; by this contract the defendant bound himself to returnthe furniture to the plaintiff, upon the latters demand (clause 7 of the contract, Exhibit A; articles 1740, paragraph 1, and 1741 of theCivil Code). The obligation voluntarily assumed by the defendant to return the furniture upon the plaintiff's demand, means that heshould return all of them to the plaintiff at the latter's residence or house. The defendant did not comply with this obligation whenhe merely placed them at the disposal of the plaintiff, retaining for his benefit the three gas heaters and the four eletric lamps. Theprovisions 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 wereoffered to her.

As the defendant had voluntarily undertaken to return all the furniture to the plaintiff, upon the latter's demand, the Court could notlegally 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 furn iture,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 hisinability to return some of the furniture because under paragraph 6 of the stipulation of facts, the defendant has neither agreed tonor admitted the correctness of the said value. Should the defendant fail to deliver some of the furniture, the value thereof should belatter 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 ofCivil 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 legalexpenses 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 anddeliver to the plaintiff, in the residence or house of the latter, all the furniture described in paragraph 3 of the stipulation of factsExhibit A. The expenses which may be occasioned by the delivery to and deposit of the furniture with the Sheriff shall be for theaccount of the defendant. the defendant shall pay the costs in both instances. So ordered.

DE LOS SANTOS v. JARRA

On the 1st of September, 1906, Felix de los Santos brought suit against Agustina Jarra, the administratrix of the estate of MagdalenoJimenea, alleging that in the latter part of 1901 Jimenea borrowed and obtained from the plaintiff ten first-class carabaos, to be used

at the animal-power mill of his hacienda during the season of 1901-2, without recompense or remuneration whatever for the usethereof, under the sole condition that they should be returned to the owner as soon as the work at the mill was terminated; thatMagdaleno Jimenea, however, did not return the carabaos, notwithstanding the fact that the plaintiff claimed their return after thework at the mill was finished; that Magdaleno Jimenea died on the 28th of October, 1904, and the defendant herein was appointedby the Court of First Instance of Occidental Negros administratrix of his estate and she took over the administration of the same andis still performing her duties as such administratrix; that the plaintiff presented his c laim to the commissioners of the estate ofJimenea, within the legal term, for the return of the said ten carabaos, but the said commissioners rejected his claim as appears intheir report; therefore, the plaintiff prayed that judgment be entered against the defendant as administratrix of the estate of thedeceased, ordering her to return the ten first-class carabaos loaned to the late Jimenea, or their present value, and to pay the costs.

The defendant was duly summoned, and on the 25th of September, 1906, she demurred in writing to the complaint on the groundthat it was vague; but on the 2d of October of the same year, in answer to the complaint, she said that it was true that the lateMagdaleno Jimenea asked the plaintiff to loan him ten carabaos, but that he only obtained three second-class animals, which wereafterwards transferred by sale by the plaintiff to the said Jimenea; that she denied the allegations contained in paragraph 3 of thecomplaint; for all of which she asked the court to absolve her of the complaint with the cost against the plaintiff.

By a writing dated the 11th of December, 1906, Attorney Jose Felix Martinez notified the defendant and her counsel, Matias Hilado,that he had made an agreement with the plaintiff to the effect that the latter would not compromise the controversy without hisconsent, and that as fees for his professional services he was to receive one half of the amount allowed in the judgment if the samewere entered in favor of the plaintiff.

The case came up for trial, evidence was adduced by both parties, and either exhibits were made of record. On the 10th of January,1907, the court below entered judgment sentencing Agustina Jarra, as administratrix of the estate of Magdaleno Jimenea, to returnto the plaintiff, Felix de los Santos, the remaining six second and third class carabaos, or the value thereof at the rate of P120 each, ora total of P720 with the costs.

Counsel for the defendant excepted to the foregoing judgment, and, by a writing dated January 19, moved for anew trial on theground that the findings of fact were openly and manifestly contrary to the weight of the evidence. The motion was overruled, thedefendant duly excepted, and in due course submitted the corresponding bill of exceptions, which was approved and submitted tothis court.

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The defendant has admitted that Magdaleno Jimenea asked the plaintiff for the loan of ten carabaos which are now claimed by thelatter, as shown by two letters addressed by the said Jimenea to Felix de los Santos; but in her answer the said defendant allegedthat the late Jimenea only obtained three second-class carabaos, which were subsequently sold to him by the owner, Santos;therefore, in order to decide this litigation it is indispensable that proof be forthcoming that Jimenea only received three carabaosfrom his son-in-law Santos, and that they were sold by the latter to him.

The record discloses that it has been fully proven from the testimony of a sufficient number of witnesses that the plaintiff, Santos,

sent in charge of various persons the ten carabaos requested by his father-in-law, Magdaleno Jimenea, in the two letters produced atthe trial by the plaintiff, and that Jimenea received them in the presence of some of said persons, one being a brother of said Jimenea,who saw the animals arrive at the hacienda where it was proposed to employ them. Four died of rinderpest, and it is for this reasonthat the judgment appealed from only deals with six surviving carabaos.

The alleged purchase of three carabaos by Jimenea from his son-in-law Santos is not evidenced by any trustworthy documents suchas those of transfer, nor were the declarations of the witnesses presented by the defendant affirming it satisfactory; for sa id reasonit can not be considered that Jimenea only received three carabaos on loan from his son-in-law, and that he afterwards kept themdefinitely by virtue of the purchase.

By the laws in force the transfer of large cattle was and is still made by means of official documents issued by the local authorities;these documents constitute the title of ownership of the carabao or horse so acquired. Furthermore, not only should the purchaserbe provided with a new certificate or credential, a document which has not been produced in evidence by the defendant, nor has theloss of the same been shown in the case, but the old documents ought to be on file in the municipality, or they should have beendelivered to the new purchaser, and in the case at bar neither did the defendant present the old credential on which should be

stated the name of the previous owner of each of the three carabaos said to have been sold by the plaintiff.

From the foregoing it may be logically inferred that the carabaos loaned or given on commodatum to the now deceased MagdalenoJimenea were ten in number; that they, or at any rate the six surviving ones, have not been returned to the owner thereof, Felix delos Santos, and that it is not true that the latter sold to the former three carabaos that the purchaser was already using; therefore, asthe said six carabaos were not the property of the deceased nor of any of his descendants, it is the duty of the administratrix of theestate to return them or indemnify the owner for their value.

The Civil Code, in dealing with loans in general, from which generic denomination the specific one of commodatum is derived,establishes prescriptions in relation to the last -mentioned contract by the following articles:

ART. 1740. By the contract of loan, one of the parties delivers to the other, either anything not perishable, in order thatthe latter may use it during a certain period and return it to the former, in which case it is called commodatum, or moneyor 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.

Commodatum is essentially gratuitous.

A simple loan may be gratuitous, or made under a stipulation to pay interest.

ART. 1741. The bailee acquires retains the ownership of the thing loaned. The bailee acquires the use thereof, but not itsfruits; if any compensation is involved, to be paid by the person requiring the use, the agreement ceases to be acommodatum.

ART. 1742. The obligations and rights which arise from the commodatum pass to the heirs of both contracting parties,unless the loan has been in consideration for the person of the bailee, in which case his heirs shall not have the right tocontinue using the thing loaned.

The carabaos delivered to be used not being returned by the defendant upon demand, there is no doubt that she is under obligationto indemnify the owner thereof by paying him their value.

Article 1101 of said code reads:

Those who in fulfilling their obligations are guilty of fraud, negligence, or delay, and those who in any manner whatsoeveract in contravention of the stipulations of the same, shall be subjected to indemnify for the losses and damages causedthereby.

The obligation of the bailee or of his successors to return either the thing loaned or its value, is sustained by the supreme tribunal ofSapin. 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 theexpiration of the period, or after the use for which it was loaned has been accomplished, it is the imperative duty of thebailee to return the thing itself to its owner, or to pay him damages if through the fault of the bailee the thing should havebeen lost or injured, it is clear that where public securities are involved, the trial court, in deferring to the claim of the

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bailor that the amount loaned be returned him by the bailee in bonds of the same class as those which constituted thecontract, thereby properly applies law 9 of title 11 of partida 5.

With regard to the third assignment of error, based on the fact that the plaintiff Santos had not appealed from the decision of thecommissioners rejecting his claim for the recovery of his carabaos, it is sufficient to estate that we are not dealing with a claim forthe payment of a certain sum, the collection of a debt from the estate, or payment for losses and damages (sec. 119, Code of CivilProcedure), but with the exclusion from the inventory of the property of the late Jimenea, or from his capital, of six carabaos which

did not belong to him, and which formed no part of the inheritance.

The demand for the exclusion of the said carabaos belonging to a third party and which did not form part of the property of thedeceased, must be the subject of a direct decision of the court in an ordinary action, wherein the right of the third party to theproperty which he seeks to have excluded from the inheritance and the right of the deceased has been discussed, and rendered inview of the result of the evidence adduced by the administrator of the estate and of the claimant, since it is so provided by thesecond part of section 699 and by section 703 of the Code of Civil Procedure; the refusal of the commissioners before whom theplaintiff unnecessarily appeared can not affect nor reduce the unquestionable right of ownership of the latter, inasmuch as there isno law nor principle of justice authorizing the successors of the late Jimenea to enrich themselves at the cost and to the prejudice ofFelix de los Santos.

For the reasons above set forth, by which the errors assigned to the judgment appealed from have been refuted, and consideringthat the same is in accordance with the law and the merits of the case, it is our opinion that it should be affirmed and we do herebyaffirm it with the costs against the appellant. So ordered.

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CHAPTER II SIMPLE LOAN OR MUTUUMCHEE KIONG YAM v MALIK

This is a petition for certiorari, prohibition, and mandamus with preliminary injunction. Petitioners alleged that respondentMunicipal Judge Nabdar J. Malik of Jolo, Sulu, acted without jurisdiction, in excess of jurisdiction and with grave abuse of discretionwhen:

(a) he held in the preliminary investigation of the charges of estafa filed by respondents Rosalinda Amin, Tan Chu Kao and AugustoSajor against petitioners that there was a prima facie case against the latter;

(b) he issued warrants of arrest against petitioners after making the above determination; and

(c) he undertook to conduct trial on the merits of the charges which were docketed in his court as Criminal Cases No. M-111, M-183and M-208.

Respondent judge is said to have acted without jurisdiction, in excess of jurisdiction and with grave abuse of discretion because thefacts recited in the complaints did not constitute the crime of estafa, and assuming they did, they were not within the jurisdiction of

the respondent judge.

In a resolution dated May 23, 1979, we required respondents to comment in the petition and issued a temporary restraining orderagainst the respondent judge from further proceeding with Criminal Cases Nos. M-111, M-183 and M-208 or from enforcing thewarrants of arrest he had issued in connection with said cases.

Comments by the respondent judge and the private respondents pray for the dismissal of the petition but the Solicitor General hasmanifested that the People of the Philippines have no objection to the grant of the reliefs prayed for, except the damages. Weconsidered the comments as answers and gave due course to the petition.

The position of the Solicitor General is well taken. We have to grant the petition in order to prevent manifest injustice and theexercise of palpable excess of authority.

In Criminal Case No. M-111, respondent Rosalinda M. Amin charges petitioners Yam Chee Kiong and Yam Yap Kieng with estafathrough misappropriation of the amount of P50,000.00. But the complaint states on its face that said petitioners received theamount from respondent Rosalinda M. Amin "as a loan." Moreover, the complaint in Civil Case No. N-5, an independent action for thecollection of the same amount filed by respondent Rosalinda M. Amin with the Court of First Instance of Sulu on September 11,1975, likewise states that the P50,000.00 was a "simple business loan" which earned interest and was originally demandable six (6)months from July 12, 1973. (Annex E of the petition.)

In Criminal Case No. M-183, respondent Tan Chu Kao charges petitioners Yam Chee Kiong, Jose Y.C. Yam, Ampang Mah and AnitaYam, alias Yong Tay, with estafa through misappropriation of the amount of P30,000.00. Likewise, the complaint states on its facethat the P30,000.00 was "a simple loan." So does the complaint in Civil Case No. N-8 filed by respondent Tan Chu Kao on April 6,1976 with the Court of First Instance of Sulu for the collection of the same amount. (Annex D of the petition.).

In Criminal Case No. M-208, respondent Augusto Sajor charges petitioners Jose Y.C. Yam, Anita Yam alias Yong Tai Mah, Chee KiongYam and Richard Yam, with estafa through misappropriation of the amount of P20,000.00. Unlike the complaints in the other twocases, the complaint in Criminal Case No. M-208 does not s tate that the amount was received as loan. However, in a sworn statementdated September 29, 1976, submitted to respondent judge to support the complaint, respondent Augusto Sajor states that theamount was a "loan." (Annex G of the petition.).

We agree with the petitioners that the facts alleged in the three criminal complaints do not constitute estafa throughmisappropriation.

Estafa through misappropriation is committed according to Article 315, paragraph 1, subparagraph (b), of the Rev ised Penal Code asfollows:

Art. 315. Swindling (Estafa). Any person who shall defraud another by any of the means mentioned herein below shall bepunished by:

xxx xxx xxx

1. With unfaithfulness or abuse of confidence namely:

xxx xxx xxx

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b) By misappropriating or converting, to the prejudice of another, money, goods, or any other personal property received bythe offender in trust or on commission, or for administration, or under any other obligation involving the duty to makedelivery of or to return the same, even though such obligation be totally or partially guaranteed by a bond; or by denyinghaving received such money, goods, or other property.

In order that a person can be convicted under the abovequoted provision, it must be proven that he has the obligation to deliver orreturn the same money, goods or personal property that he received. Petitioners had no such obligation to return the same money,

i.e., the bills or coins, which they received from private respondents. This is so because as clearly stated in criminal complaints, therelated civil complaints and the supporting sworn statements, the sums of money that petitioners received were loans.

The nature of simple loan is defined in Articles 1933 and 1953 of the Civil Code.

Art. 1933. By the contract of loan, one of the parties delivers to another, either something not consumable sothat the latter may use the same for a certain time and return it, in which case the contract is called acommodatum; or money or other consumable thing upon the condition that the same amount of the same kindand 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 loam ownership passes tothe borrower.

Art. 1953. A person who receives a loan of money or any other fungible thing acquires the ownershipthereof, and is bound to pay to the creditor an equal amount of the same kind and quality.

It can be readily noted from the above-quoted provisions that in simple loan (mutuum), as contrasted to commodatum, theborrower acquires ownership of the money, goods or personal property borrowed. Being the owner, the borrower can dispose ofthe thing borrowed (Article 248, Civil Code) and his act will not be considered misappropriation thereof.

In U.S. vs. Ibaez , 19 Phil. 559, 560 (1911), this Court held that it is not estafa for a person to refuse to nay his debt or to deny itsexistence.

We are of the opinion and so decide that when the relation is purely that of debtor and creditor, the debtor can not be heldliable for the crime of estafa, under said article, by merely refusing to pay or by denying the indebtedness.

It appears that respondent judge failed to appreciate the distinction between the two types of loan, mutuum and commodatum,when he performed the questioned acts, He mistook the transaction between petitioners and respondents Rosalinda Amin, Tan ChuKao and Augusto Sajor to be commodatum wherein the borrower does not acquire ownership over the thing borrowed and has theduty to return the same thing to the lender.

Under Sec. 87 of the Judiciary Act, the municipal court of a provincial capital, which the Municipal Court of Jolo is, has jurisdictionover criminal cases where the penalty provided by law does not exceed prision correccional or imprisonment for not more than six(6) years, or fine not exceeding P6,000.00 or both, The amounts allegedly misappropriated by petitioners range from P20,000.00 toP50,000.00. The penalty for misappropriation of this magnitude exceeds prision correccional or 6 year imprisonment. (Article 315,Revised Penal Code), Assuming then that the acts recited in the complaints constitute the crime of estafa, the Municipal Court of Jolohas no jurisdiction to try them on the merits. The alleged offenses are under the jurisdiction of the Court of First Instance.

Respondents People of the Philippines being the sovereign authority can not be sued for damages. They are immune from such typeof suit.

With respect to the other respondents, this Court is not the proper forum for the consideration of the claim for damages againstthem.

WHEREFORE, the petition is hereby granted; the temporary restraining order previously issued is hereby made permanent; thecriminal complaints against petitioners are hereby declared null and void; respondent judge is hereby ordered to dismiss saidcriminal cases and to recall the warrants of arrest he had issued in connection therewith. Moreover, respondent judge is herebyrebuked for manifest ignorance of elementary law. Let a copy of this decision be included in his personal life. Costs against privaterespondents.

PRODUCERS BANK v. CA

This is a petition for review on certiorari of the Decisio n1 of the Court of Appeals dated June 25, 1991 in CA-G.R. CV No. 11791 and ofits Resolutio n2 dated May 5, 1994, denying the motion for reconsideration of said decision filed by petitioner Producers Bank of thePhilippines.

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Sometime in 1979, private respondent Franklin Vives was asked by his neighbor and friend Angeles Sanchez to help her fr iend andtownmate, Col. Arturo Doronilla, in incorporating his business, the Sterela Marketing and Services ("Sterela" for brevity).Specifically, Sanchez asked private respondent to deposit in a bank a certain amount of money in the bank account of Sterela forpurposes of its incorporation. She assured private respondent that he could withdraw his money from said account within a mon thstime. Private respondent asked Sanchez to bring Doronilla to their house so that they could discuss Sanchezs request .3

On May 9, 1979, private respondent, Sanchez, Doronilla and a certain Es trella Dumagpi, Doronillas private secretary, met and

discussed the matter. Thereafter, relying on the assurances and representations of Sanchez and Doronilla, private respondent issueda check in the amount of Two Hundred Thousand Pesos (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 thecheck. They had with them an authorization letter from Doronilla authorizing Sanchez and her companions, "in coordination wit hMr. Rufo Atienza," to open an account for Sterela Marketing Services in the amount of P200,000.00. In opening the account, theauthorized signatories were Inocencia Vives and/or Angeles Sanchez. A passbook for Savings Account No. 10-1567 was thereafterissued to Mrs. Vives .4

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, theassistant 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 amountbecause it had to answer for some postdated checks issued by Doronilla. According to Atienza, after Mrs. Vives and Sanchez openedSavings Account No. 10-1567, Doronilla opened Current Account No. 10-0320 for Sterela and authorized the Bank to debit SavingsAccount No. 10-1567 for the amounts necessary to cover overdrawings in Current Account No. 10-0320. In opening said currentaccount, Sterela, through Doronilla, obtained a loan of P175,000.00 from the Bank. To cover payment thereof, Doronilla issued threepostdated checks, all of which were dishonored. Atienza also said that Doronilla could assign or withdraw the money in SavingsAccount No. 10-1567 because he was the sole proprietor of Sterela .5

Private respondent tried to get in touch with Doronilla through Sanchez. On June 29, 1979, he received a letter from Doronill a,assuring him that his money was intact and would be returned to him. On August 13, 1979, Doronilla issued a postdated check forTwo Hundred Twelve Thousand Pesos (P212,000.00) in favor of private respondent. However, upon presentment thereof by privaterespondent to the drawee bank, the check was dishonored. Doronilla requested private respondent to present the same check onSeptember 15, 1979 but when the latter presented the check, it was again dishonored .6

Priva te 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 P 212,000.00 in private respondents favor but the check was again dishonored for insufficiencyof funds .7

Private respondent instituted an action for recovery of sum of money in the Regional Trial Court (RTC) in Pasig, Metro Manilaagainst Doronilla, Sanchez, Dumagpi and petitioner. The case was docketed as Civil Case No. 44485. He also filed criminal actionsagainst Doronilla, Sanchez and Dumagpi in the RTC. However, Sanchez passed away on March 16, 1985 while the case was pendingbefore the trial court. On October 3, 1995, the RTC of Pasig, Branch 157, promulgated its Decision in Civil Case No. 44485, thedispositive portion of which reads:

IN VIEW OF THE FOREGOING, judgment is hereby rendered sentencing defendants Arturo J. Doronila, Estrella Dumagpi andProducers Bank of the Philippines to pay plaintiff Franklin Vives jointly and severally

(a) the amount of P200,000.00, representing the money deposited, with interest at the legal rate from the filing of thecomplaint until the same is fully paid;

(b) the sum of P50,000.00 for moral damages and a similar amount for exemplary damages;

(c) the amount of P 40,000.00 for attorneys fees; and

(d) the costs of the suit.

SO ORDERED.8

Petitioner appealed the trial courts decision to the Court of Appeals. In its Decision dated June 25, 1991, the appellate co urtaffirmed in toto the decision of the RTC .9 It likewise denied with finality petitioners motion for reconsideration in its Resolutiondated May 5, 1994 .10

On June 30, 1994, petitioner filed the present petition, arguing that

I.

THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THAT THE TRANSACTION BETWEEN THE DEFENDANT DORONILLAAND RESPONDENT VIVES WAS ONE OF SIMPLE LOAN AND NOT ACCOMMODATION;

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II.

THE HONORABLE COURT OFAPPEALS ERRED IN UPHOLDING THAT PETITIONERS BANK MANAGER, MR. RUFO ATIENZA,CONNIVED WITH THE OTHER DEFENDANTS IN DEFRAUDING PETITIONER (Sic. Should be PRIVATE RESPONDENT) AND AS ACONSEQUENCE, THE PETITIONER SHOULD BE HELD LIABLE UNDER THE PRINCIPLE OF NATURAL JUSTICE;

III.

THE HONORABLE COURT OF APPEALS ERRED IN ADOPTING THE ENTIRE RECORDS OF THE REGIONAL TRIAL COURT ANDAFFIRMING THE JUDGMENT APPEALED FROM, AS THE FINDINGS OF THE REGIONAL TRIAL COURT WERE BASED ON AMISAPPREHENSION OF FACTS;

IV.

THE HONORABLE COURT OF APPEALS ERRED IN DECLARING THAT THE CITED DECISION IN SALUDARES VS. MARTINEZ, 29 SCRA745, UPHOLDING THE LIABILITY OF AN EMPLOYER FOR ACTS COMMITTED BY AN EMPLOYEE IS APPLICABLE;

V.

THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THE DECISION OF THE LOWER COURT THAT HEREIN PETITIONER

BANK IS JOINTLY AND SEVERALLY LIABLE WITH THE OTHER DEFENDANTS FOR THE AMOUNT OF P200,000.00 REPRESENTINGTHE SAVINGS ACCOUNT DEPOSIT, P50,000.00 FOR MORAL DAMAGES, P50,000.00 FOR EXEMPLARY DAMAGES, P40,000.00 FORATTORNEYS FEES AND THE COSTS OF SUIT.11

Private respondent filed his Comment on September 23, 1994. Petitioner filed its Reply thereto on September 25, 19 95. The Courtthen required private respondent to submit a rejoinder to the reply. However, said rejoinder was filed only on April 21, 1997, due topetitioners delay in furnishing private respondent with copy of the repl y12 and several substitutions of counsel on the part ofprivate respondent .13 On January 17, 2001, the Court resolved to give due course to the petition and required the parties to submittheir respective memoranda .14 Petitioner filed its memorandum on April 16, 2001 while private respondent submitted hismemorandum on March 22, 2001.

Petitioner contends that the transaction between private respondent and Doronilla is a simple loan (mutuum) since all the elementsof 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 in the amountof P212,000.00, or P12,000 more than what pr ivate respondent deposited in Sterelas bank accoun t.15 Moreover, the fact that privaterespondent sued his good friend Sanchez for his failure to recover his money from Doronilla shows that the transaction was notmerely gratuitous but "had a business angle" to it. Hence, petitioner argues that it cannot be held liable for the return of privaterespondents P200,000.00 because it is not privy to the transaction between the latter and Doronilla .16

It argues further that petitioners Assistant Manager, Mr. Rufo Atienza, could not be faulted for allowing Doronilla to with draw fromthe savings account of Sterela since the latter was the sole proprietor of said company. Petitioner asserts that Doronillas May 8,1979 letter addressed to the bank, authorizing Mrs. Vives and Sanchez to open a savings account for Sterela, did not contain anyauthorization for these two to withdraw from said account. Hence, the authority to withdraw therefrom remained exclusively withDoronilla, who was the sole proprietor of Sterela, and who alone had legal title to the savings account .17 Petitioner points out that noevidence other than the testimonies of private respondent and Mrs. Vives was presented during trial to prove that privaterespondent deposited his P 200,000.00 in Sterelas account for purposes of its incorporation .18 Hence, petitioner should not be heldliable for allowing Doronilla to withdraw from Sterelas savings account. 1a\^/phi1.net

Petitioner also asserts that the Court of Appeals erred in affirming the trial courts decision since the findings of fact th erein werenot accord with the evidence presented by petitioner during trial to prove that the transaction between private respondent andDoronilla was a mutuum, and that it committed no wrong in allowing Doronilla to withdraw from Sterelas savings account .19

Finally, petitioner claims that since there is no wrongful act or omission on its part, it is not liable for the actual damages suffered byprivate respondent, and neither may it be held liable for moral and exemplary damages as well as atto rneys fees .20

Private respondent, on the other hand, argues that the transaction between him and Doronilla is not a mutuum but anaccommodation ,21 since he did not actually part with the ownership of his P200,000.00 and in fact asked his wife to deposit saidamount in the account of Sterela so that a certification can be issued to the effect that Sterela had sufficient funds for purposes of itsincorporation but at the same time, he retained some degree of control over his money through his wife who was made a signatoryto 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, Atienzas employer, is liable for the r eturn of his money.He insists that Atienza, petitioners assistant manager, connived with Doronilla in defrauding private respondent since it wa sAtienza who facilitated the opening of Sterelas current account three days after Mrs. Vives and Sanchez open ed a savings account

with petitioner for said company, as well as the approval of the authority to debit Sterelas savings account to cover anyoverdrawings in its current account .23

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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 Courthas repeatedly held that it is not its function to analyze and weigh all over again the evidence presented by the parties duringtria l.24 The Courts jurisdiction is in principle limited to reviewing errors of law that mig ht have been committed by the Court ofAppeals .25 Moreover, factual findings of courts, when adopted and confirmed by the Court of Appeals, are final and conclusive on thisCourt 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 thatcourt, especially since the conclusions of fact of the Court of Appeals and the trial court are not only consistent but are a lso amplysupported 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 acommodatum and not a mutuum. A circumspect examination of the records reveals that the transaction between them was acommodatum. 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 samefor a certain time and return it, in which case the contract is called a commodatum; or money or other consumable thing, upon thecondition that the same amount of the same kind and quality shall be paid, in which case the contract is simply called a loan ormutuum.

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 wouldbe a mutuum. However, there are some instances where a commodatum may have for its object a consumable thing. Article 1936 ofthe 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 itis merely for exhibition.

Thus, if consumable goods are loaned only for purposes of exhibition, or when the intention of the parties is to lend consumablegoods 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 ofa 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 todeposit his money in the savings account of Sterela specifically for the purpose of making it appear "that said firm had suff icientcapitalization for incorporation, with the promise that the amount shall be returned within thirty (30) days. "29 Private respondentmerely "accommodated" Doronilla by lending his money without consideration, as a favor to his good friend Sanchez. It washowever clear to the parties t o the transaction that the money would not be removed from Sterelas savings account and would bereturned to private respondent after thirty (30) days.

Doronillas attempts to return to private respondent the amount of P200,000.00 which the latter deposited in Sterelas accounttogether with an additional P12,000.00, allegedly representing interest on the mutuum, did not convert the transaction from acommodatum 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. Article 1935 of the Civil Code expressly states that "[t]he bailee in commodatumacquires the use of the thing loaned but not its fruits." Hence, it was only proper for Doronilla to re mit to private respondent theinterest accruing to the latters money deposited with petitioner.

Neither does the Court agree with petitioners contention that it is not solidarily liable for the return of private respondents moneybecause 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 petitioners liability for the return of privaterespondents money because th e factual circumstances of the case clearly show that petitioner, through its employee Mr. Atienza,was partly responsible for the loss of private respondents money and is liable for its restitution.

Petitioners 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, andneither a deposit nor a withdrawal will be permitted except upon the production of the depositor savings bank book in which will beentered by the Bank the amount deposited or withdrawn. "30

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Said rule notwithstanding, Doronilla was permitted by petitioner, through Atienza, the Assistant Branch Manager for the BuendiaBranch of petitioner, to withdraw therefrom even without presenting the passbook (which Atienza very well knew was in thepossession of Mrs. Vives), not just once, but several times. Both the Court of Appeals and the trial court found that Atienza a llowedsaid withdrawals because he was party to Doronillas "scheme" of defrauding private respondent:

X X X

But the scheme could not have been executed successfully without the knowledge, help and cooperation of Rufo Atienza, assistantmanager and cashier of the Makati (Buendia) branch of the defendant bank. Indeed, the evidence indicates that Atienza had not onlyfacilitated the commission of the fraud but he likewise helped in devising the means by which it can be done in such manner as tomake it appear that the transaction was in accordance with banking procedure.

To begin with, the deposit was made in defendants Buendia branch p recisely because Atienza was a key officer therein. The recordsshow that plaintiff had suggested that the P200,000.00 be deposited in his bank, the Manila Banking Corporation, but Doronilla andDumagpi insisted that it must be in defendants branch in Mak ati for "it will be easier for them to get a certification". In fact beforehe was introduced to plaintiff, Doronilla had already prepared a letter addressed to the Buendia branch manager authorizingAngeles B. Sanchez and company to open a savings account for Sterela in the amount of P200,000.00, 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 inconsultation with Atienza from the inception of the scheme. Significantly, there were testimonies and admission that Atienza is thebrother-in-law of a certain Romeo Mirasol, a friend and business associate of Doronilla. 1awphi1.nt

Then there is the matter of the ownership of the fund. Because of the "coordination" between Doronilla and Atienza, the latter knewbefore hand that the money deposited did not belong to Doronilla nor to Sterela. Aside from such foreknowledge, he was explicitlytold 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 thesame were Inocencia Vives and Angeles B. Sanchez. In the signature card pertaining to this account (Exh. J), the authorizedsignatories were Inocencia Vives &/or Angeles B. Sanchez. Atienza stated that it is the usual banking procedure that withdrawals ofsavings 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 hadthe full authority to withdraw by virtue of such ownership. The Court is not inclined to agree with Atienza. In the first place, he wasall 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 onlyaccommodating Doronilla so that a certification can be issued to the effect that Sterela had a deposit of so much amount to be suedin the incorporation of the firm. In the second place, the signature of Doronilla was not authorized in so far as that accoun t isconcerned 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 awithdrawal is made in a savings deposit, the bank requires the presentation of the passbook. In this case, such recognized practicewas dispensed with. The transfer from the savings account to the current account was without the submission of the passbookwhich Atienza had given to Mrs. Vives. Instead, it was made to appear in a certification signed by Estrella Dumagpi that a duplicatepassbook was issued to Sterela because the original passbook had been surrendered to the Makati branch in view of a loanaccommodation 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 onewho gave it to her. Besides, as assistant manager of the branch and the bank official servicing the savings and current accounts inquestion, he also was aware that the original passbook was never surrendered. He was also cognizant that Estrella Dumagpi was notamong those authorized to withdraw so her certification had no effect whatsoever.

The circumstance surrounding the opening of the current account also demonstrate that Atienzas active participation in theperpetration of the fraud and deception that caused the loss. The records indicate that this account was opened three days la terafter the P200,000.00 was deposited. In spite of his disclaimer, the Court believes that Atienza was mindful and posted regarding theopening of the current account considering that Doronilla was all the while in "coordination" with him. That it was he whofacilitated the approval of the authority to debit the savings account to cover any overdrawings in the current account (Exh. 2) is nothard 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 employeesacting 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 ofwas committed .32 Case law in the United States of America has it that a corporation that entrusts a general duty to its employee isresponsible to the injured party for damages flowing from the employees wrongful act done in the course of his general autho rity,even though in doing such act, the employee may have failed in its duty to the employer and disobeyed the latters 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 Sterelas Savings Account No. 10-1567, in which account private respondents money was deposited, and in transferring the money withdrawn toSterelas Current Account with petitioner. Atienzas acts of helping Doronilla, a customer of the petitioner, were obviously done in

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furtherance of petitioners i nterest s34 even though in the process, Atienza violated some of petitioners rules such as those stipulatedin its savings account passbook .35 It was established that the transfer of funds from Sterelas savings account to its current accountcould not have been accomplished by Doronilla without the invaluable assistance of Atienza, and that it was their connivance whichwas the cause of private respondents loss.

The foregoing shows that the Court of Appeals correctly held that under Article 2180 of the Civil Code, petitioner is liable for privaterespondents loss and is solidarily liable with Doronilla and Dumagpi for the return of theP200,000.00 since it is clear that petitioner

failed to prove that it exercised due diligence to prevent the unauthorized withdrawals from Sterelas savings account, and t hat itwas not negligent in the selection and supervision of Atienza. Accordingly, no error was committed by the appellate court in theaward of actual, moral and exemplary damages, attorneys fees and costs of suit to private respondent.

TOLENTINO v. GONZALES SY CHIAM

The principal questions presented by this appeal are:

(a ) Is the contract in question a pacto de retro or a mortgage?

(b) Under a pacto de retro , when the vendor becomes a tenant of the purchaser and agrees to pay a certain amount permonth as rent, may such rent render such a contract usurious when the amount paid as rent, computed upon thepurchase price, amounts to a higher rate of interest upon said amount than that allowed by law?

(c) May the contract in the present case may be modified by parol evidence?

ANTECEDENT FACTS

Sometime prior to the 28th day of November, 1922, the appellants purchased of the Luzon Rice Mills, Inc., a piece or parcel of landwith the camarin located thereon, situated in the municipality of Tarlac of the Province of Tarlac for the price of P25,000, promisingto pay therefor in three installments. The first installment of P2,000 was due on or before the 2d day of May, 1921; the secondinstallment of P8,000 was due on or before 31st day of May, 1921; the balance of P15,000 at 12 per cent interest was due andpayable on or about the 30th day of November, 1922. One of the conditions of that contract of purchase was that on failure of thepurchaser (plaintiffs and appellants) to pay the balance of said purchase price or any of the installments on the date agreed upon,the property bought would revert to the original owner.

The payments due on the 2d and 31st of May, 1921, amounting to P10,000 were paid so far as the record shows upon the due dates.The balance of P15,000 due on said contract of purchase was paid on or about the 1st day of December, 1922, in the manner which

will be explained below. On the date when the balance of P15,000 with interest was paid, the vendor of said property had issued tothe purchasers transfer certificate of title to said property, No. 528. Said transfer certificate of title (No. 528) was transfer certificateof title from No. 40, which shows that said land was originally registered in the name of the vendor on the 7th day of November,1913.

PRESENT FACTS

On the 7th day of November, 1922 the representative of the vendor of the property in question wrote a letter to the appellantPotenciana Manio (Exhibit A, p. 50), notifying the latter that if the balance of said indebtedness was not paid, an action would bebrought for the purpose of recovering the property, together with damages for non compliance with the condition of the contract ofpurchase. The pertinent parts of said letter read as follows:

Sirvase notar que de no estar liquidada esta cuenta el dia 30 del corriente, procederemos judicialmente contra Vd. parareclamar la devolucion del camarin y los daos y perjuicios ocasionados a la compaia por su incumplimiento al contrato.

Somos de Vd. atentos y S. S.

SMITH, BELL & CO., LTD.

By (Sgd.) F. I. HIGHAM

Treasurer.

General Managers

LUZON RICE MILLS INC.

According to Exhibits B and D, which represent the account rendered by the vendor, there was due and payable upon said contractof purchase on the 30th day of November, 1922, the sum P16,965.09. Upon receiving the letter of the vendor of said property ofNovember 7, 1922, the purchasers, the appellants herein, realizing that they would be unable to pay the balance due, began to make

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an effort to borrow money with which to pay the balance due, began to make an effort to borrow money with which to pay thebalance of their indebtedness on the purchase price of the property involved. Finally an application was made to the defendant for aloan for the purpose of satisfying their indebtedness to the vendor of said property. After some negotiations the defendants agreedto loan the plaintiffs to loan the plaintiffs the sum of P17,500 upon condition that the plaintiffs execute and deliver to him a pacto deretro of said property.

In accordance with that agreement the defendant paid to the plaintiffs by means of a check the sum of P16,965.09. The defendant, in

addition to said amount paid by check, delivered to the plaintiffs the sum of P354.91 together with the sum of P180 which theplaintiffs paid to the attorneys for drafting said contract of pacto de retro , making a total paid by the defendant to the plaintiffs andfor the plaintiffs of P17,500 upon the execution and delivery of said contract. Said contracts was dated the 28th day of Nove mber,1922, and is in the words and figures following:

Sepan todos por la presente:

Que nosotros, los conyuges Severino Tolentino y Potenciana Manio , ambos mayores de edad, residentes en el Municipio deCalumpit, Provincia de Bulacan, propietarios y transeuntes en esta Ciudad de Manila, de una parte, y de otra, BenitoGonzalez Sy Chiam , mayor de edad, casado con Maria Santiago, comerciante y vecinos de esta Ciudad de Manila.

MANIFESTAMOS Y HACEMOS CONSTAR:

Primero. Que nosotros, Severino Tolentino y Potenciano Manio, por y en consideracion a la cantidad de diecisiete mil

quinientos pesos (P17,500) moneda filipina, que en este acto hemos recibido a nuestra entera satisfaccion de Don BenitoGonzalez Sy Chiam, cedemos, vendemos y traspasamos a favor de dicho Don Benito Gonzalez Sy Chiam, sus herederos ycausahabientes, una finca que, segun el Certificado de Transferencia de Titulo No. 40 expedido por el Registrador deTitulos de la Provincia de Tarlac a favor de " Luzon Rice Mills Company Limited " que al incorporarse se donomino y sedenomina " Luzon Rice Mills Inc .," y que esta corporacion nos ha transferido en venta absoluta, se describe como sigue:

Un terreno (lote No. 1) con las mejoras existentes en el mismo, situado en el Municipio de Tarlac. Linda por el O. y N. conpropiedad de Manuel Urquico; por el E. con propiedad de la Manila Ra