Credit Transactions LOANS

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EN BANC

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

REPUBLIC OF THE PHILIPPINES, plaintiff-appellee,vs.JOSE V. BAGTAS, defendant,FELICIDAD M. BAGTAS, Administratrix of the Intestate Estate left by the late Jose V. Bagtas, petitioner-appellant.

D. T. Reyes, Liaison and Associates for petitioner-appellant.

Office of the Solicitor General for plaintiff-appellee.

PADILLA, J.:

The Court of Appeals certified this case to this Court because only questions of law are raised.

On 8 May 1948 Jose V. Bagtas borrowed from the Republic of the Philippines through the Bureau of Animal Industry three bulls: a Red Sindhi with abook value of P1,176.46, a Bhagnari, of P1,320.56 and a Sahiniwal, of P744.46, for a period of one year from 8 May 1948 to 7 May 1949 for breedingpurposes subject to a government charge of breeding fee of 10% of the book value of the bulls. Upon the expiration on 7 May 1949 of the contract, theborrower asked for a renewal for another period of one year. However, the Secretary of Agriculture and Natural Resources approved a renewal thereofof only one bull for another year from 8 May 1949 to 7 May 1950 and requested the return of the other two. On 25 March 1950 Jose V. Bagtas wrote tothe Director of Animal Industry that he would pay the value of the three bulls. On 17 October 1950 he reiterated his desire to buy them at a value with adeduction of yearly depreciation to be approved by the Auditor General. On 19 October 1950 the Director of Animal Industry advised him that the bookvalue of the three bulls could not be reduced and that they either be returned or their book value paid not later than 31 October 1950. Jose V. Bagtasfailed to pay the book value of the three bulls or to return them. So, on 20 December 1950 in the Court of First Instance of Manila the Republic of the

Philippines commenced an action against him praying that he be ordered to return the three bulls loaned to him or to pay their book value in the totalsum of P3,241.45 and the unpaid breeding fee in the sum of P199.62, both with interests, and costs; and that other just and equitable relief be grantedin (civil No. 12818).

On 5 July 1951 Jose V. Bagtas, through counsel Navarro, Rosete and Manalo, answered that because of the bad peace and order situation inCagayan Valley, particularly in the barrio of Baggao, and of the pending appeal he had taken to the Secretary of Agriculture and Natural Resourcesand the President of the Philippines from the refusal by the Director of Animal Industry to deduct from the book value of the bulls corresponding yearlydepreciation of 8% from the date of acquisition, to which depreciation the Auditor General did not object, he could not return the animals nor pay theirvalue and prayed for the dismissal of the complaint.

After hearing, on 30 July 1956 the trial court render judgment

. . . sentencing the latter (defendant) to pay the sum of P3,625.09 the total value of the three bulls plus the breeding fees in the amount ofP626.17 with interest on both sums of (at) the legal rate from the filing of this complaint and costs.

On 9 October 1958 the plaintiff moved ex parte for a writ of execution which the court granted on 18 October and issued on 11 November 1958. On 2December 1958 granted an ex-parte motion filed by the plaintiff on November 1958 for the appointment of a special sheriff to serve the writ outsideManila. Of this order appointing a special sheriff, on 6 December 1958, Felicidad M. Bagtas, the surviving spouse of the defendant Jose Bagtas whodied on 23 October 1951 and as administratrix of his estate, was notified. On 7 January 1959 she f ile a motion alleging that on 26 June 1952 the twobull Sindhi and Bhagnari were returned to the Bureau Animal of Industry and that sometime in November 1958 the third bull, the Sahiniwal, died fromgunshot wound inflicted during a Huk raid on Hacienda Felicidad Intal, and praying that the writ of execution be quashed and that a writ of preliminaryinjunction be issued. On 31 January 1959 the plaintiff objected to her motion. On 6 February 1959 she filed a reply thereto. On the same day, 6February, the Court denied her motion. Hence, this appeal certified by the Court of Appeals to this Court as stated at the beginning of this opinion.

It is true that on 26 June 1952 Jose M. Bagtas, Jr., son of the appellant by the late defendant, returned the Sindhi and Bhagnari bulls to RomanRemorin, Superintendent of the NVB Station, Bureau of Animal Industry, Bayombong, Nueva Vizcaya, as evidenced by a memorandum receipt signedby the latter (Exhibit 2). That is why in its objection of 31 January 1959 to the appellant's motion to quash the writ of execution the appellee prays "thatanother writ of execution in the sum of P859.53 be issued against the estate of defendant deceased Jose V. Bagtas." She cannot be held liable for thetwo bulls which already had been returned to and received by the appellee.

The appellant contends that the Sahiniwal bull was accidentally killed during a raid by the Huk in November 1953 upon the surrounding barrios ofHacienda Felicidad Intal, Baggao, Cagayan, where the animal was kept, and that as such death was due to force majeureshe is relieved from the dutyof returning the bull or paying its value to the appellee. The contention is without merit. The loan by the appellee to the late defendant Jose V. Bagtasof the three bulls for breeding purposes for a period of one year from 8 May 1948 to 7 May 1949, later on renewed for another year as regards one bull,was subject to the payment by the borrower of breeding fee of 10% of the book value of the bulls. The appellant contends that the contract wascommodatumand that, for that reason, as the appellee retained ownership or title to the bull it should suffer its loss due to force majeure. A contract ofcommodatum is essentially gratuitous.

1 If the breeding fee be considered a compensation, then the contract would be a lease of the bull. Under article1671 of the Civil Code the lessee would be subject to the responsibilities of a possessor in bad faith, because she had continued possession of the bullafter the expiry of the contract. And even if the contract be commodatum, still the appellant is liable, because article 1942 of the Civil Code providesthat a bailee in a contract ofcommodatum

. . . is liable for loss of the things, even if it should be through a fortuitous event:

(2) If he keeps it longer than the period stipulated . . .


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(3) If the thing loaned has been delivered with appraisal of its value, unless there is a stipulation exempting the bailee from responsibility incase of a fortuitous event;

The original period of the loan was from 8 May 1948 to 7 May 1949. The loan of one bull was renewed for another period of one year to end on 8 May1950. But the appellant kept and used the bull until November 1953 when during a Huk raid it was killed by stray bullets. Furthermore, when lent anddelivered to the deceased husband of the appellant the bulls had each an appraised book value, to with: the Sindhi, at P1,176.46, the Bhagnari atP1,320.56 and the Sahiniwal at P744.46. It was not stipulated that in case of loss of the bull due to fortuitous event the late husband of the appellantwould 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 shouldbe presented or filed in the intestate proceedings of the defendant who died on 23 October 1951, is not altogether without merit. However, the claim

that his civil personality having ceased to exist the trial court lost jurisdiction over the case against him, is untenable, because section 17 of Rule 3 ofthe Rules of Court provides that

After a party dies and the claim is not thereby extinguished, the court shall order, upon proper notice, the legal representative of thedeceased to appear and to be substituted for the deceased, within a period of thirty (30) days, or within such time as may be granted. . . .

and after the defendant's death on 23 October 1951 his counsel failed to comply with section 16 of Rule 3 which provides that

Whenever a party to a pending case dies . . . it shall be the duty of his attorney to inform the court promptly of such death . . . and to give thename and residence of the executory administrator, guardian, or other legal representative of the deceased . . . .

The notice by the probate court and its publication in the Voz de Manilathat Felicidad M. Bagtas had been issue letters of administration of the estateof the late Jose Bagtas and that "all persons having claims for monopoly against the deceased Jose V. Bagtas, arising from contract express orimplied, whether the same be due, not due, or contingent, for funeral expenses and expenses of the last sickness of the said decedent, and judgment

for monopoly against him, to file said claims with the Clerk of this Court at the City Hall Bldg., Highway 54, Quezon City, within six (6) months from thedate of the first publication of this order, serving a copy thereof upon the aforementioned Felicidad M. Bagtas, the appointed administratrix of the estateof the said deceased," is not a notice to the court and the appellee who were to be notified of the defendant's death in accordance with the above-quoted rule, and there was no reason for such failure to notify, because the attorney who appeared for the defendant was the same who representedthe administratrix in the special proceedings instituted for the administration and settlement of his estate. The appellee or its attorney or representativecould not be expected to know of the death of the defendant or of the administration proceedings of his estate instituted in another court that if theattorney for the deceased defendant did not notify the plaintiff or its attorney of such death as required by the rule.

As the appellant already had returned the two bulls to the appellee, the estate of the late defendant is only liable for the sum of P859.63, the value ofthe 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 amountprayed for by the appellee in its objection on 31 January 1959 to the motion f iled on 7 January 1959 by the appellant for the quashing of the writ ofexecution.

Special proceedings for the administration and settlement of the estate of the deceased Jose V. Bagtas having been instituted in the Court of FirstInstance of Rizal (Q-200), the money judgment rendered in favor of the appellee cannot be enforced by means of a writ of execution but must bepresented to the probate court for payment by the appellant, the administratrix appointed by the court.

ACCORDINGLY, the writ of execution appealed from is set aside, without pronouncement as to costs.

Bengzon, C.J., Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Paredes, Dizon, Regala and Makalintal, JJ., concur.Barrera, J., concurs in the result.

FIRST DIVISION

G.R. No. 154878 March 16, 2007

CAROLYN M. GARCIA, Petitioner,vs.RICA MARIE S. THIO, Respondent.

D E C I S I O N

CORONA, J.:

Assailed in this petition for review on certiorari1are the June 19, 2002 decision2and August 20, 2002 resolution3of the Court of Appeals (CA) in CA-G.R. CV No. 56577 which set aside the February 28, 1997 decision of the Regional Trial Court (RTC) of Makati City, Branch 58.

Sometime in February 1995, respondent Rica Marie S. Thio received from petitioner Carolyn M. Garcia a crossed check4dated February 24, 1995 inthe amount of US$100,000 payable to the order of a certain Marilou Santiago.5Thereafter, petitioner received from respondent every month(specifically, on March 24, April 26, June 26 and July 26, all in 1995) the amount of US$3,0006and P76,5007on July 26,8August 26, September 26and October 26, 1995.
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In June 1995, respondent received from petitioner another crossed check9dated June 29, 1995 in the amount of P500,000, also payable to the order ofMarilou Santiago.10Consequently, petitioner received from respondent the amount of P20,000 every month on August 5, September 5, October 5 andNovember 5, 1995.11

According to petitioner, respondent failed to pay the principal amounts of the loans (US$100,000 and P500,000) when they fell due. Thus, on February22, 1996, petitioner filed a complaint for sum of money and damages in the RTC of Makati City, Branch 58 against respondent, seeking to collect thesums of US$100,000, with interest thereon at 3% a month from October 26, 1995 and P500,000, with interest thereon at 4% a month from November5, 1995, plus attorneys fees and actual damages.12

Petitioner alleged that on February 24, 1995, respondent borrowed from her the amount of US$100,000 with interest thereon at the rate of 3% permonth, which loan would mature on October 26, 1995.13The amount of this loan was covered by the first check. On June 29, 1995, respondent again

borrowed the amount of P500,000 at an agreed monthly interest of 4%, the maturity date of which was on November 5, 1995.14The amount of this loanwas covered by the second check. For both loans, no promissory note was executed since petitioner and respondent were close f riends at the time.15Respondent paid the stipulated monthly interest for both loans but on their maturity dates, she failed to pay the principal amounts despite repeateddemands.161awphi1.nt

Respondent denied that she contracted the two loans with petitioner and countered that it was Marilou Santiago to whom petitioner lent the money.She claimed she was merely asked by petitioner to give the crossed checks to Santiago.17She issued the checks for P76,000 and P20,000 not aspayment of interest but to accommodate petitioners request that respondent use her own checks instead of Santiagos.18

In a decision dated February 28, 1997, the RTC ruled in favor of petitioner.19It found that respondent borrowed from petitioner the amounts ofUS$100,000 with monthly interest of 3% and P500,000 at a monthly interest of 4%:20

WHEREFORE, finding preponderance of evidence to sustain the instant complaint, judgment is hereby rendered in favor of [petitioner], sentencing[respondent] to pay the former the amount of:

1. [US$100,000.00] or its peso equivalent with interest thereon at 3% per month from October 26, 1995 until fully paid;

2. P500,000.00 with interest thereon at 4% per month from November 5, 1995 until fully paid.

3. P100,000.00 as and for attorneys fees; and

4. P50,000.00 as and for actual damages.

For lack of merit, [respondents] counterclaim is perforce dismissed.

With costs against [respondent].

IT IS SO ORDERED.21

On appeal, the CA reversed the decision of the RTC and ruled that there was no contract of loan between the parties:

A perusal of the record of the case shows that [petitioner] failed to substantiate her claim that [respondent] indeed borrowed money from her. There isnothing in the record that shows that [respondent] received money from [petitioner]. What is evident is the fact that [respondent] received aMetroBank [crossed] check dated February 24, 1995 in the sum of US$100,000.00, payable to the order of Marilou Santiago and a CityTrust [crossed]check dated June 29, 1995 in the amount of P500,000.00, again payable to the order of Marilou Santiago, both of which were issued by [petitioner].The checks received by [respondent], being crossed, may not be encashed but only deposited in the bank by the payee thereof, that is, byMarilou Santiago herself.

It must be noted that crossing a check has the following effects: (a) the check may not be encashed but only deposited in the bank; (b) the check maybe negotiated only onceto one who has an account with the bank; (c) and the act of crossing the check serves as warning to the holder that thecheck has been issued for a definite purpose so that he must inquire if he has received the check pursuant to that purpose, otherwise, he is not aholder in due course.

Consequently, the receipt of the [crossed] check by [respondent] is not the issuance and delivery to the payee in contemplation of law since the latter isnot the person who could take the checks as a holder, i.e., as a payee or indorsee thereof, with intent to transfer title thereto. Neither could she bedeemed as an agent of Marilou Santiago with respect to the checks because she was merely facilitating the transactions between the former and[petitioner].

With the foregoing circumstances, it may be fairly inferred that there were really no contracts of loan that existed between the parties. x x x (emphasissupplied)22

Hence this petition.23

As a rule, only questions of law may be raised in a petition for review on certiorari under Rule 45 of the Rules of Court. However, this case falls underone of the exceptions, i.e., when the factual findings of the CA (which held that there werenocontracts of loan between petitioner and respondent) andthe RTC (which held that there werecontracts of loan) are contradictory.

24
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The petition is impressed with merit.

A loan is a real contract, not consensual, and as such is perfected only upon the delivery of the object of the contract.25This is evident in Art. 1934 ofthe Civil Code which provides:

An accepted promise to deliver something by way of commodatum or simple loan is binding upon the parties, but the commodatum or simple loanitself shall not be perfected until the delivery of the object of the contract. (Emphasis supplied)

Upon delivery of the object of the contract of loan (in this case the money received by the debtor when the checks were encashed) the debtor acquiresownership of such money or loan proceeds and is bound to pay the creditor an equal amount.26

It is undisputed that the checks were delivered to respondent. However, these checks were crossed and payable not to the order of respondent but tothe order of a certain Marilou Santiago. Thus the main question to be answered is: who borrowed money from petitioner respondent or Santiago?

Petitioner insists that it was upon respondents instruction that both checks were made payable to Santiago.27She maintains that it was also uponrespondents instruction that both checks were delivered to her (respondent) so that she could, in turn, deliver the same to Santiago.28Furthermore,she argues that once respondent received the checks, the latter had possession and control of them such that she had the choice to either forwardthem to Santiago (who was already her debtor), to retain them or to return them to petitioner.29

We agree with petitioner. Delivery is the act by which the resor substance thereof is placed within the actual or constructive possession or control ofanother.30Although respondent did not physically receive the proceeds of the checks, these instruments were placed in her control and possessionunder an arrangement whereby she actually re-lent the amounts to Santiago.

Several factors support this conclusion.

First, respondent admitted that petitioner did not personally know Santiago.31It was highly improbable that petitioner would grant two loans to acomplete stranger without requiring as much as promissory notes or any written acknowledgment of the debt considering that the amounts involvedwere quite big. Respondent, on the other hand, already had transactions with Santiago at that time.32

Second, Leticia Ruiz, a friend of both petitioner and respondent (and whose name appeared in both parties list of witnesses) testified that respondentsplan was for petitioner to lend her money at a monthly interest rate of 3%, after which respondent would lend the same amount t o Santiago at a higherrate of 5% and realize a profit of 2%.33This explained why respondent instructed petitioner to make the checks payable to Santiago. Respondent hasnot shown any reason why Ruiz testimony should not be believed.

Third, for the US$100,000 loan, respondent admitted issuing her own checks in the amount of P76,000 each (peso equivalent of US$3,000) for eightmonths to cover the monthly interest. For the P500,000 loan, she also issued her own checks in the amount of P20,000 each for four months.34According to respondent, she merely accommodated petitioners request for her to issue her own checks to cover the interest payments sincepetitioner was not personally acquainted with Santiago.35She claimed, however, that Santiago would replace the checks with cash.36Her explanationis simply incredible. It is diff icult to believe that respondent would put herself in a position where she would be compelled to pay interest, from her ownfunds, for loans she allegedly did not contract. We declared in one case that:

In the assessment of the testimonies of witnesses, this Court is guided by the rule that for evidence to be believed, it must not only proceed from themouth of a credible witness, but must be credible in itself such as the common experience of mankind can approve as probable under thecircumstances. We have no test of the truth of human testimony except its conformity to our knowledge, observation, and exper ience. Whatever isrepugnant to these belongs to the miraculous, and is outside of juridical cognizance.37

Fourth, in the petition for insolvency sworn to and filed by Santiago, it was respondent, not petitioner, who was listed as one of her (Santiagos)creditors.38

Last, respondent inexplicably never presented Santiago as a witness to corroborate her story.39The presumption is that "evidence willfully suppressedwould be adverse if produced."40Respondent was not able to overturn this presumption.

We hold that the CA committed reversible error when it ruled that respondent did not borrow the amounts of US$100,000 and P500,000 from petitioner.We instead agree with the ruling of the RTC making respondent liable for the principal amounts of the loans.

We do not, however, agree that respondent is liable for the 3% and 4% monthly interest for the US$100,000 and P500,000 loans respectively. Therewas no written proof of the interest payable except for the verbalagreement that the loans would earn 3% and 4% interest per month. Article 1956 ofthe Civil Code provides that "[n]o interest shall be due unless it has been expressly stipulated in writing."

Be that as it may, while there can be no stipulated interest, there can be legal interest pursuant to Article 2209 of the Civil Code. It is well-settled that:

When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should bethat which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In theabsence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from judicial or extrajudicial demand under andsubject to the provisions of Article 1169 of the Civil Code.41
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Hence, respondent is liable for the payment of legal interest perannumto be computed from November 21, 1995, the date when she receivedpetitioners demand letter.42From the finality of the decision until it is fully paid, the amount due shall earn interest at 12% perannum, the interim periodbeing deemed equivalent to a forbearance of credit.43

The award of actual damages in the amount of P50,000 and P100,000 attorneys fees is deleted since the RTC decision did not explain the factualbases for these damages.

WHEREFORE, the petition is hereby GRANTED and the June 19, 2002 decision and August 20, 2002 resolution of the Court of Appeals in CA-G.R.CV No. 56577 are REVERSED and SET ASIDE. The February 28, 1997 decision of the Regional Trial Court in Civil Case No. 96-266 is AFFIRMEDwith the MODIFICATION that respondent is directed to pay petitioner the amounts of US$100,000 and P500,000 at 12% perannuminterest fromNovember 21, 1995 until the finality of the decision. The total amount due as of the date of finality will earn interest of 12% perannumuntil fully paid.

The award of actual damages and attorneys fees is deleted.

SO ORDERED.

RENATO C. CORONAAssociate Justice

SECOND DIVISION

G.R. No. L-46145 November 26, 1986

REPUBLIC OF THE PHILIPPINES (BUREAU OF LANDS), petitioner,vs.THE HON. COURT OF APPEALS, HEIRS OF DOMINGO P. BALOY, represented by RICARDO BALOY, ET AL., respondents.

Pelaez, Jalondoni, Adriano and Associates for respondents.

PARAS, J.:p

This case originally emanated from a decision of the then Court of First Instance of Zambales in LRC Case No. 11-0, LRC Record No. N-29355,denying respondents' application for registration. From said order of denial the applicants, heirs of Domingo Baloy, represented by Ricardo P. Baloy,(herein private respondents) interposed on appeal to the Court of Appeals which was docketed as CA-G.R. No. 52039-R. The appellate court, thru itsFifth Division with the Hon. Justice Magno Gatmaitan as ponente, rendered a decision dated February 3, 1977 reversing the decision appealed fromand thus approving the application for registration. Oppositors (petitioners herein) filed their Motion for Reconsideration alleging among other thingsthat applicants' possessory information title can no longer be invoked and that they were not able to prove a registerable title over the land. Said Motionfor Reconsideration was denied, hence this petition for review on certiorari.

Applicants' claim is anchored on their possessory information title (Exhibit F which had been translated in Exhibit F-1) coupled with their continuous,

adverse and public possession over the land in question. An examination of the possessory information title shows that the description and the area ofthe land stated therein substantially coincides with the land applied for and that said possessory information title had been regularly issued having beenacquired by applicants' predecessor, Domingo Baloy, under the provisions of the Spanish Mortgage Law. Applicants presented their tax declaration onsaid lands on April 8, 1965.

The Director of Lands opposed the registration alleging that this land had become public land thru the operation of Act 627 of the PhilippineCommission. On November 26, 1902 pursuant to the executive order of the President of the U.S., the area was declared within the U.S. NavalReservation. Under Act 627 as amended by Act 1138, a period was fixed within which persons affected thereby could file their application, (that iswithin 6 months from July 8, 1905) otherwise "the said lands or interest therein will be conclusively adjudged to be public lands and all claims on thepart of private individuals for such lands or interests therein not to presented will be forever barred." Petitioner argues that since Domingo Baloy failedto file his claim within the prescribed period, the land had become irrevocably public and could not be the subject of a valid registration for privateownership.

Considering the foregoing facts respondents Court of Appeals ruled as follows:

... perhaps, the consequence was that upon failure of Domingo Baloy to have filed his application within that period the land hadbecome irrevocably public; but perhaps also, for the reason that warning was from the Clerk of the Court of Land Registration,named J.R. Wilson and there has not been presented a formal order or decision of the said Court of Land Registration so declaringthe land public because of that failure, it can with plausibility be said that after all, there was no judicial declaration to that effect, itis true that the U.S. Navy did occupy it apparently for some time, as a recreation area, as this Court understands from thecommunication of the Department of Foreign Affairs to the U.S. Embassy exhibited in the record, but the very tenor of thecommunication apparently seeks to justify the title of herein applicants, in other words, what this Court has taken from theoccupation by the U.S. Navy is that during the interim, the title of applicants was in a state of suspended animation so to speak butit had not died either; and the fact being that this land was really originally private from and after the issuance and inscription of thepossessory information Exh. F during the Spanish times, it would be most difficult to sustain position of Director of Lands that itwas land of no private owner; open to public disposition, and over which he has control; and since immediately after U.S. Navy hadabandoned the area, applicant came in and asserted title once again, only to be troubled by first Crispiniano Blanco who howeverin due time, quitclaimed in favor of applicants, and then by private oppositors now, apparently originally tenants of Blanco, but thatentry of private oppositors sought to be given color of ownership when they sought to and did f ile tax declaration in 1965, shouldnot prejudice the original rights of applicants thru their possessory information secured regularly so long ago, the conclusion must
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have to be that after all, applicants had succeeded in bringing themselves within the provisions of Sec. 19 of Act 496, the landshould be registered in their favor;

IN VIEW WHEREOF, this Court is constrained to reverse, as it now reverses, judgment appealed from the application is approved,and once this decision shall have become final, if ever it would be, let decree issue in favor of applicants with the personalcircumstances outlined in the application, costs against private oppositors.

Petitioner now comes to Us with the following:

ASSIGNMENT OF ERRORS:

1. Respondent court erred in holding that to bar private respondents from asserting any right under their possessory informationtitle there is need for a court order to that effect.

2. Respondent court erred in not holding that private respondents' rights by virtue of their possessory information title was lost byprescription.

3. Respondent court erred in concluding that applicants have registerable title.

A cursory reading of Sec. 3, Act 627 reveals that several steps are to be followed before any affected land can "be conclusively adjudged to be publicland." Sec. 3, Act 627 reads as follows:

SEC. 3. Immediately upon receipt of the notice from the civil Governor in the preceeding section mentioned it shall be the duty ofthe judge of the Court of Land Registration to issue a notice, stating that the lands within the limits aforesaid have been reserved

for military purposes, and announced and declared to be military reservations, and that claims for all private lands, buildings, andinterests therein, within the limits aforesaid, must be presented for registration under the Land Registration Act within six calendarmonths from the date of issuing the notice, and that all lands, buildings, and interests therein within the limits aforesaid not sopresented within the time therein limited will be conclusively adjudged to be public lands and all claims on the part of privateindividuals for such lands, buildings, or an interest therein not so presented will be forever barred. The clerk of the Court of LandRegistration shall immediately upon the issuing of such notice by the judge cause the same to be published once a week for threesuccessive weeks in two newspapers, one of which newspapers shall be in the English Language, and one in the Spanishlanguage in the city or province where the land lies, if there be no such Spanish or English newspapers having a generalcirculation in the city or province wherein the land lies, then it shall be a sufficient compliance with this section if the notice bepublished as herein provided, in a daily newspaper in the Spanish language and one in the English language, in the City of Manila,having a general circulation. The clerk shall also cause a duly attested copy of the notice in the Spanish language to be pos ted inconspicuous place at each angle formed by the lines of the limits of the land reserved. The clerk shall also issue and cause to bepersonally served the notice in the Spanish language upon every person living upon or in visible possession of any part of themilitary reservation. If the person in possession is the head of the family living upon the hand, it shall be sufficient to serve thenotice upon him, and if he is absent it shall be sufficient to leave a copy at his usual place of residence. The clerk shall certify themanner in which the notices have been published, posted, and served, and his certificate shall be conclusive proof of suchpublication, posting, and service, but the court shall have the power to cause such further notice to be given as in its opinion may

be necessary.

Clearly under said provisions, private land could be deemed to have become public land only by virtue of a judicial declaration after due notice andhearing. It runs contrary therefore to the contention of petitioners that failure to present claims set forth under Sec. 2 of Act 627 made the land ipsofactopublic without any deed of judicial pronouncement. Petitioner in making such declaration relied on Sec. 4 of Act 627 alone. But in construing astatute the entire provisions of the law must be considered in order to establish the correct interpretation as intended by the law-making body. Act 627by its terms is not self-executory and requires implementation by the Court of Land Registration. Act 627, to the extent that it creates a forfeiture, is apenal statute in derogation of private rights, so it must be strictly construed so as to safeguard private respondents' rights. Significantly, petitioner doesnot even allege the existence of any judgment of the Land Registration court with respect to the land in question. Without a judgment or order declaringthe land to be public, its private character and the possessory information title over it must be respected. Since no such order has been rendered bythe Land Registration Court it necessarily follows that it never became public land thru the operation of Act 627. To assume otherwise is to depriveprivate respondents of their property without due process of law. In fact it can be presumed that the notice required by law to be given by publicationand by personal service did not include the name of Domingo Baloy and the subject land, and hence he and his lane were never brought within theoperation of Act 627 as amended. The procedure laid down in Sec. 3 is a requirement of due process. "Due process requires that the statutes whichunder it is attempted to deprive a citizen of private property without or against his consent must, as in expropriation cases, be strictly complied with,because such statutes are in derogation of general rights." (Arriete vs. Director of Public Works, 58 Phil. 507, 508, 511).

We also find with favor private respondents' views that court judgments are not to be presumed. It would be absurd to speak of a judgment bypresumption. If it could be contended that such a judgment may be presumed, it could equally be contended that applicants' predecessor DomingoBaloy presumably seasonably filed a claim, in accordance with the legal presumption that a person takes ordinary care of his concerns, and that ajudgment in his favor was rendered.

The finding of respondent court that during the interim of 57 years from November 26, 1902 to December 17, 1959 (when the U.S. Navy possessed thearea) the possessory rights of Baloy or heirs were merely suspended and not lost by prescription, is supported by Exhibit "U," a communication or letterNo. 1108-63, dated June 24, 1963, which contains an official statement of the position of the Republic of the Philippines with regard to the status of theland in question. Said letter recognizes the fact that Domingo Baloy and/or his heirs have been in continuous possession of said land since 1894 asattested by an "Informacion Possessoria" Title, which was granted by the Spanish Government. Hence, the disputed property is private land and thispossession was interrupted only by the occupation of the land by the U.S. Navy in 1945 for recreational purposes. The U.S. Navy eventuallyabandoned the premises. The heirs of the late Domingo P. Baloy, are now in actual possession, and this has been so s ince the abandonment by theU.S. Navy. A new recreation area is now being used by the U.S. Navy personnel and this place is remote from the land in question.


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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 militateagainst 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'spossession 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.

WHEREFORE, premises considered, finding no merit in the petition the appealed decision is hereby AFFIRMED.

SO ORDERED.

Feria (Chairman), Alampay and Feliciano, * JJ., concur.

Gutierrez, Jr., J., concurs in the results.

Fernan J., took no part.

EN BANC

G.R. No. L-46240 November 3, 1939

MARGARITA QUINTOS and ANGEL A. ANSALDO, plaintiffs-appellants,vs.BECK, defendant-appellee.

Mauricio Carlos for appellants.Felipe Buencamino, Jr. for appellee.

IMPERIAL, J.:

The plaintiff brought this action to compel the defendant to return her certain furniture which she lent him for his use. She appealed from the judgmentof the Court of First Instance of Manila which ordered that the defendant return to her the three has heaters and the four electric lamps found in thepossession of the Sheriff of said city, that she call for the other furniture from the said sheriff of Manila at her own expense, and that the fees which theSheriff may charge for the deposit of the furniture be paid pro rataby both parties, without pronouncement as to the costs.

The defendant was a tenant of the plaintiff and as such occupied the latter's house on M. H. del Pilar street, No. 1175. On January 14, 1936, upon thenovation of the contract of lease between the plaintiff and the defendant, the former gratuitously granted to the latter the use of the furniture describedin the third paragraph of the stipulation of facts, subject to the condition that the defendant would return them to the plaintiff upon the latter's demand.The plaintiff sold the property to Maria Lopez and Rosario Lopez and on September 14, 1936, these three notified the defendant of the conveyance,giving him sixty days to vacate the premises under one of the clauses of the contract of lease. There after the plaintiff required the defendant to returnall the furniture transferred to him for them in the house where they were found. On November 5, 1936, the defendant, through another person, wrote

to the plaintiff reiterating that she may call for the furniture in the ground floor of the house. On the 7th of the same month, the defendant wrote anotherletter to the plaintiff informing her that he could not give up the three gas heaters and the four electric lamps because he would use them until the 15thof the same month when the lease in due to expire. The plaintiff refused to get the furniture in view of the fact that the defendant had declined to makedelivery of all of them. On November 15th, before vacating the house, the defendant deposited with the Sheriff all the furniture belonging to the plaintiffand they are now on deposit in the warehouse situated at No. 1521, Rizal Avenue, in the custody of the said sheriff.

In their seven assigned errors the plaintiffs contend that the trial court incorrectly applied the law: in holding that they violated the contract by not callingfor all the furniture on November 5, 1936, when the defendant placed them at their disposal; in not ordering the defendant to pay them the value of thefurniture in case they are not delivered; in holding that they should get all the furniture from the Sheriff at their expenses; in ordering them to pay-half ofthe expenses claimed by the Sheriff for the deposit of the furniture; in ruling that both parties should pay their respective legal expenses or the costs;and in denying pay their respective legal expenses or the costs; and in denying the motions for reconsideration and new trial. To dispose of the case, itis only necessary to decide whether the defendant complied with his obligation to return the furniture upon the plaintif f's demand; whether the latter isbound to bear the deposit fees thereof, and whether she is entitled to the costs of litigation.lawphi1.net

The contract entered into between the parties is one ofcommadatum, because under it the plaintiff gratuitously granted the use of the furniture to the

defendant, reserving for herself the ownership thereof; by this contract the defendant bound himself to return the furniture to the plaintiff, upon thelatters demand (clause 7 of the contract, Exhibit A; articles 1740, paragraph 1, and 1741 of the Civil Code). The obligation voluntarily assumed by thedefendant 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 gasheaters and the four eletric lamps. The provisions of article 1169 of the Civil Code cited by counsel for the parties are not squarely applicable. The trialcourt, 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 not legally compel her tobear 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 ondeposit; nor was the plaintiff under a duty to accept the offer to return the furniture, because the defendant wanted to reta in the three gas heaters andthe four electric lamps.

As to the value of the furniture, we do not believe that the plaintiff is entitled to the payment thereof by the defendant in case of his inability to returnsome of the furniture because under paragraph 6 of the stipulation of facts, the defendant has neither agreed to nor admitted the correctness of the


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said value. Should the defendant fail to deliver some of the furniture, the value thereof should be latter determined by the trial Court through evidencewhich the parties may desire to present.

The costs in both instances should be borne by the defendant because the plaintiff is the prevailing party (section 487 of the Code of Civil Procedure).The defendant was the one who breached the contract ofcommodatum, and without any reason he refused to return and deliver all the furniture uponthe plaintiff's demand. In these circumstances, it is just and equitable that he pay the legal expenses and other judicial costs which the plaintiff wouldnot have otherwise defrayed.

The appealed judgment is modified and the defendant is ordered to return and deliver to the plaintiff, in the residence to return and deliver to theplaintiff, in the residence or house of the latter, all the furniture described in paragraph 3 of the stipulation of facts Exhibit A. The expenses which maybe occasioned by the delivery to and deposit of the furniture with the Sheriff shall be for the account of the defendant. the defendant shall pay the costs

in both instances. So ordered.

Avancea, C.J., Villa-Real, Laurel, Concepcion and Moran, JJ., concur.

EN BANC

G.R. No. L-4150 February 10, 1910

FELIX DE LOS SANTOS, plaintiff-appelle,vs.AGUSTINA JARRA, administratrix of the estate of Magdaleno Jimenea, deceased, defendant-appellant.

Matias Hilado, for appellant.Jose Felix Martinez, for appellee.

TORRES, J.:

On the 1st of September, 1906, Felix de los Santos brought suit against Agustina Jarra, the administratrix of the estate of Magdaleno Jimenea, allegingthat 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 hishacienda during the season of 1901-2, without recompense or remuneration whatever for the use thereof, under the sole condition that they should bereturned to the owner as soon as the work at the mill was terminated; that Magdaleno Jimenea, however, did not return the carabaos, notwithstandingthe fact that the plaintiff claimed their return after the work at the mill was finished; that Magdaleno Jimenea died on the 28th of October, 1904, and thedefendant herein was appointed by the Court of First Instance of Occidental Negros administratrix of his estate and she took over the administration ofthe same and is still performing her duties as such administratrix; that the plaintiff presented his claim to the commissioners of the estate of Jimenea,within the legal term, for the return of the said ten carabaos, but the said commissioners rejected his claim as appears in their report ; therefore, theplaintiff prayed that judgment be entered against the defendant as administratrix of the estate of the deceased, ordering her to return the ten first-classcarabaos 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 ground that 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 late Magdaleno Jimenea asked the plaintiff toloan him ten carabaos, but that he only obtained three second-class animals, which were afterwards transferred by sale by the plaintiff to the saidJimenea; that she denied the allegations contained in paragraph 3 of the complaint; for all of which she asked the court to absolve her of the complaintwith 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 madean agreement with the plaintiff to the effect that the latter would not compromise the controversy without his consent, and that as fees for hisprofessional services he was to receive one half of the amount allowed in the judgment if the same were 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 courtbelow entered judgment sentencing Agustina Jarra, as administratrix of the estate of Magdaleno Jimenea, to return to the plaintiff, Felix de los Santos,the remaining six second and third class carabaos, or the value thereof at the rate of P120 each, or a 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 the ground that the findingsof fact were openly and manifestly contrary to the weight of the evidence. The motion was overruled, the defendant duly excepted, and in due course

submitted the corresponding bill of exceptions, which was approved and submitted to this court.

The defendant has admitted that Magdaleno Jimenea asked the plaintiff for the loan of ten carabaos which are now claimed by the latter, as shown bytwo letters addressed by the said Jimenea to Felix de los Santos; but in her answer the said defendant alleged that the late Jimenea only obtainedthree second-class carabaos, which were subsequently sold to him by the owner, Santos; therefore, in order to decide this litigation it is indispensablethat proof be forthcoming that Jimenea only received three carabaos from 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 ofvarious persons the ten carabaos requested by his father-in-law, Magdaleno Jimenea, in the two letters produced at the trial by the plaintiff, and thatJimenea received them in the presence of some of said persons, one being a brother of said Jimenea, who saw the animals arrive at the haciendawhere it was proposed to employ them. Four died of rinderpest, and it is for this reason that the judgment appealed from only deals with six survivingcarabaos.


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The alleged purchase of three carabaos by Jimenea from his son-in-law Santos is not evidenced by any trustworthy documents such as those oftransfer, nor were the declarations of the witnesses presented by the defendant affirming it satisfactory; for said reason it can not be considered thatJimenea only received three carabaos on loan from his son-in-law, and that he afterwards kept them definitely 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 documentsconstitute the title of ownership of the carabao or horse so acquired. Furthermore, not only should the purchaser be provided with a new certificate orcredential, a document which has not been produced in evidence by the defendant, nor has the loss of the same been shown in the case, but the olddocuments ought to be on file in the municipality, or they should have been delivered to the new purchaser, and in the case at bar neither did thedefendant 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 soldby the plaintiff.

From the foregoing it may be logically inferred that the carabaos loaned or given on commodatum to the now deceased Magdaleno Jimenea were tenin number; that they, or at any rate the six surviving ones, have not been returned to the owner thereof, Felix de los Santos, and that it is not true thatthe latter sold to the former three carabaos that the purchaser was already using; therefore, as the said six carabaos were not the property of thedeceased nor of any of his descendants, it is the duty of the administratrix of the estate 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 prescriptionsin 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 that the latter may use itduring a certain period and return it to the former, in which case it is called commodatum, or money or any other perishable thing, under thecondition 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 its fruits; if anycompensation is involved, to be paid by the person requiring the use, the agreement ceases to be a commodatum.

ART. 1742. The obligations and rights which arise from the commodatum pass to the heirs of both contracting parties, unless the loan hasbeen in consideration for the person of the bailee, in which case his heirs shall not have the right to continue 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 obligation to indemnify theowner 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 whatsoever act in

contravention of the stipulations of the same, shall be subjected to indemnify for the losses and damages caused thereby.

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 Sapin. In itsdecision 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, orto 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 areinvolved, 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 classas those which constituted the contract, thereby properly applies law 9 of t itle 11 ofpartida5.

With regard to the third assignment of error, based on the fact that the plaintiff Santos had not appealed from the decision of the commissionersrejecting his claim for the recovery of his carabaos, it is sufficient to estate that we are not dealing with a claim for the payment of a certain sum, thecollection of a debt from the estate, or payment for losses and damages (sec. 119, Code of Civil Procedure), but with the exclusion from the inventoryof 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 t he deceased, must be thesubject of a direct decision of the court in an ordinary action, wherein the right of the third party to the property which he seeks to have excluded fromthe inheritance and the right of the deceased has been discussed, and rendered in view of the result of the evidence adduced by the administrator ofthe estate and of the claimant, since it is so provided by the second part of section 699 and by section 703 of the Code of Civil Procedure; the refusalof the commissioners before whom the plaintiff unnecessarily appeared can not affect nor reduce the unquestionable right of ownership of the latter,inasmuch as there is no law nor principle of justice authorizing the successors of the late Jimenea to enrich themselves at the cost and to the prejudiceof Felix de los Santos.

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


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Arellano, C.J., Johnson, Moreland and Elliott, JJ., concur.Carson, J., reserves his vote.

THIRD DIVISION

G.R. No. 112485 August 9, 2001

EMILIA MANZANO, petitioner,vs.MIGUEL PEREZ SR., LEONCIO PEREZ, MACARIO PEREZ, FLORENCIO PEREZ, NESTOR PEREZ, MIGUEL PEREZ JR. and GLORIA PEREZ,

respondents.

PANGANIBAN, J.:

Courts decide cases on the basis of the evidence presented by the parties. In the assessment of the facts, reason and logic are used. In civil cases,the party that presents a preponderance of convincing evidence wins.

The Case

Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the March 31, 1993 Decision1of the Court of Appeals(CA)2in CA-GR CY No. 32594. The dispositive part of the Decision reads:

"WHEREFORE, the judgment appealed from is hereby REVERSED and another one is entered dismissing plaintiff's complaint."

On the other hand, the Judgment3reversed by the CA ruled in this wise:

"WHEREFORE, premises considered, judgment is hereby rendered:

1) Declaring the two 'Kasulatan ng Bilihang Tuluyan' (Exh. 'J' & 'K') over the properties in question void or simulated;

2) Declaring the two 'Kasulatan ng Bilihang Tuluyan' (Exh. 'J' & 'K') over the properties in question rescinded;

3) Ordering the defendants Miguel Perez, Sr., Macario Perez, Leoncio Perez, Florencio Perez, Miguel Perez, Jr., Nestor Perez andGloria Perez to execute an Extra Judicial Partition with transfer over the said residential lot and house, now covered and describedin Tax Declaration Nos. 1993 and 1994, respectively in the name of Nieves Manzano (Exh. 'Q' & 'P'), subject matter of this case, infavor of plaintiff Emilia Manzano;

4) Ordering the defendants to pay plaintiff:

a) P25,000.00as moral damages;

b) P10,000.00as exemplary damages;

c) P15,000.00 as and for [a]ttorney's fees; and

d) to pay the cost of the suit."4

The Motion for Reconsideration filed by petitioner before the CA was denied in a Resolution dated October 28, 1993.5

The Facts

The facts of the case are summarized by the Court of Appeals as follows:

"[Petitioner] Emilia Manzano in her Complaint alleged that she is the owner of a residential house and lot, more particularly describedhereunder:

'A parcel of residential lot (Lots 1725 and 1726 of the Cadastral Survey of Siniloan), together with all the improvements thereon,situated at General Luna Street, Siniloan, Laguna. Bounded on the North by Callejon; on the East, by [a] town river; on the Southby Constancia Adofina; and on the West by Gen. Luna Street. Containing an area of 130 square meters more or less, covered byTax Dec. No. 9583 and assessed at P1,330.00.

'A residential house of strong mixed materials and G.I. iron roofing, with a floor area of 40 square meters, more or less. Alsocovered by Tax No. 9583.'
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"In 1979, Nieves Manzano, sister of the [petitioner] and predecessor-in-interest of the herein [private respondents], allegedly borrowed theaforementioned property as collateral for a projected loan. The [pet itioner] acceded to the request of her sister upon the la tter's promise thatshe [would] return the property immediately upon payment of her loan.

"Pursuant to their understanding, the [petitioner] executed two deeds of conveyance for the sale of the residential lot on 22 January 1979(Exhibit 'J') and the sale of the house erected thereon on 2 February 1979 (Exhibit 'K'), both for a consideration of P1.00 plus other valuablesallegedly received by her from Nieves Manzano.

"On 2 April 1979, Nieves Manzano, together with her husband, [respondent] Miguel Perez, Sr., and her son, [respondent] Macario Perez,obtained a loan from the Rural Bank of Infanta, Inc. in the sum of P30,000.00.To secure payment of their indebtedness, they executed aReal Estate Mortgage (Exhibit 'A') over the subject property in favor of the bank.

"Nieves Manzano died on 18 December 1979 leaving her husband and children as heirs. These heirs, [respondents] herein, allegedlyrefused to return the subject property to the [petitioner] even after the payment of their loan with the Rural Bank (Exhibit 'B').

"The [petitioner] alleged that sincere efforts to settle the dispute amicably failed and that the unwarranted refusal of the [respondents] toreturn the property caused her sleepless nights, mental shock and social humiliation. She was, likewise, allegedly constrained to engage theservices of a counsel to protect her proprietary rights.

"The [petitioner] sought the annulment of the deeds of sale and execution of a deed of transfer or reconveyance of the subject property in herfavor, the award of moral damages of not less than P50,000.00, exemplary damages of P10,000.00, attorney's fees of P10,000.00 plusP500.00 per court appearance, and costs of suit.

"In seeking the dismissal of the complaint, the [respondents] countered that they are the owners of the property in question being the legalheirs of Nieves Manzano who purchased the same from the [petitioner] for value and in good faith, as shown by the deeds of sa le which

contain the true agreements between the parties therein; that except for the [petitioner's] bare allegations, she failed to show any proof thatthe transaction she entered into with her sister was a loan and not a sale.

"By way of special and affirmative defense, the [respondents] argued that what the parties to the [sale] agreed upon was to resell theproperty to the [petitioner] after the payment of the loan with the Rural Bank. But since the [respondents] felt that the property is the onlymemory left by their predecessor-in-interest, they politely informed the [petitioner] of their refusal to sell the same. The [respondents] alsoargued that the [petitioner] is now estopped from questioning their ownership after seven (7) years from the consummation of the sale.

"As a proximate result of the f iling of this alleged baseless and malicious suit, the [respondents] prayed as counterclaim the award of moraldamages in the amount of P10,000.00 each, exemplary damages in an amount as may be warranted by the evidence on record, attorney'sfees of P10,000.00 plus P500.00 per appearance in court and costs of suit.

"In ruling for the [petit ioner], the court a guo considered the following:

'First, the properties in question after [ they have] been transferred to Nieves Manzano, the same were mortgaged in favor of the

Rural Bank of Infante, Inc. (Exh. 'A') to secure payment of the loan extended to Macario Perez.'

'Second, the documents covering said properties which were given to the bank as collateral of said loan, upon payment and[release] to the [private respondents], were returned to [petit ioner] by Florencio Perez, one of the [private respondents].'

'[These] uncontroverted facts [are] a clear recognition [by private respondents] that [petitioner] is the owner of the properties inquestion.'

xxx xxx xxx "'

'Third, [respondents'] pretense of ownership of the properties in question is belied by their failure to present payment of real estatetaxes [for] said properties, and it is on [record] that [petitioner] has been paying the real estate taxes [on] the same (Exh. 'T', 'V', 'V-1', 'V-2' & 'V- 3')."

xxx xxx xxx

'Fourth, [respondents] confirmed the fact that [petitioner] went to the house in question and hacked the stairs. According to[petitioner] she did it for failure of the [respondents] to return and vacate the premises. [Respondents] did not file any action againsther.'

'This is a clear indication also that they (respondents) recognized [petitioner] as owner of said properties.'

xxx xxx xxx

'Fifth, the Cadastral Notice of said properties were in the name of [petitioner] and the same was sent to her (Exh. 'F' & 'G').

xxx xxx xxx


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'Sixth, upon request of the [petitioner] to return said properties to her, [respondents] did promise and prepare an Extra Jud icialPartition with Sale over said properties in question, however the same did not materialize. The other heirs of Nieves Manzano didnot sign."

xxx xxx xxx

'Seventh, uncontroverted is the fact that the consideration [for] the alleged sale of the properties in question is P1.00 and otherthings of value. [Petitioner] denies she has received any consideration for the transfer of said properties, and the [respondents]have not presented evidence to belie her testimony."6

Ruling of the Court of Appeals

The Court of Appeals was not convinced by petitioner's claim that there was a supposed oral agreement ofcommodatumover the disputed house andlot. Neither was it persuaded by her allegation that respondents' predecessor-in-interest had given no consideration for the sale of the property in thelatter's favor. It explained as follows:

"To begin with, if the plaintiff-appellee remained as the rightful owner of the subject property, she would not have agreed to reacquire one-half thereof for a consideration of P10,000.00 (Exhibit 'U-1'). This is especially true if we are to accept her assertion that Nieves Manzano didnot purchase the property for value. More importantly, if the agreement was to merely use plaintiff's property as collateral in a mortgage loan,it was not explained why physical possession of the house and lot had to be with the supposed vendee and her family who even built apigpen on the lot (p. 6, TSN, June 11, 1990). A mere execution of the document transferring title in the latter's name would suffice for thepurpose.

"The alleged failure of the defendants-appellants to present evidence of payment of real estate taxes cannot prejudice their cause. Realty taxpayment of property is not conclusive evidence of ownership (Director of Lands vs. Intermediate Appellate Court, 195 SCRA 38). Tax

receipts only become strong evidence of ownership when accompanied by proof of actual possession of the property (Tabuena vs. Court ofAppeals, 196 SCRA 650).

"In this case, plaintiff-appell[ee] was not in possession of the subject property. The defendant-appellants were the ones in actual occupationof the house and lot which as aforestated was unnecessary if the real agreement was merely to lend the property to be used as collateral.Moreover, the plaintiff-appellee began paying her taxes only in 1986 after the instant complaint ha[d] been instituted (Exhibits 'V', 'V-1', 'V-2','V-3' and 'T'), and are, therefore, self-serving.

"Significantly, while plaintiff-appellee was still the owner of the subject property in 1979 (Exhibit 'I'), the Certificate of Tax Declaration issuedby the Office of the Municipal Treasurer on 8 August 1990 upon the request of the plaintiff-appellee herself (Exhibit 'W') named NievesManzano as the owner and possessor of the property in question. Moreover, Tax Declaration No. 9589 in the name of Nieves Manzano(Exhibits 'D' and 'D-1 ') indicates that the transfer of the subject property was based on the Absolute Sale executed before Notary PublicAlfonso Sanvictores, duly recorded in his notarial book as Document No. 3157, Page 157, Book No. II. Tax Declaration No[s]. 9633 (Exhibit'H'), 1994 (Exhibit 'P'), 1993 (Exhibit 'Q') are all in the name of Nieves Manzano.

"There is always the presumption that a written contract [ is] for a valuable consideration (Section 5 (r), Rule 131 of the Rules of Court;Gamaitan vs. Court of Appeals, 200 SCRA 37). The execution of a deed purporting to convey ownership of a realty is in itself prima facieevidence of the existence of a valuable consideration and xxx the party alleging lack of consideration has the burden of proving suchallegation (Caballero, et al. vs. Caballero, et al., C.A. 45 O.G. 2536).

"The consideration [for] the questioned [sale] is not the One (P1.00)Peso alone but also the other valuable considerations. Assuming thatsuch consideration is suspiciously insufficient, this circumstance alone, is not sufficient to invalidate the sale. The inadequacy of themonetary consideration does not render a conveyance null and void, for the vendor's l iberality may be a sufficient cause for a valid contract(Ong vs. Ong, 139 SCRA 133)."7

Hence, this Petition.8

Issues

Petitioner submits the following grounds in support of her cause:9

"1. The Court of Appeals erred in fai ling to consider that:

A) The introduction of petitioner's evidence is proper under the parol evidence rule.

B) The rules on admission by silence apply in the case at bar.

C) Petitioner is entitled to the reliefs prayed for.

"2. The Court of Appeals erred in reversing the decision of the trial court whose factual findings are entit led to great respect since it was ableto observe and evaluate the demeanor of the witnesses."10
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In sum, the main issue is whether the agreement between the parties was a commodatumor an absolute sale.

The Court's Ruling

The Petition has no merit.

Main Issue: Sale orCommodatum

Obviously, the issue in this case is enveloped by a conflict in factual perception, which is ordinarily not reviewable in a petition under Rule 45. But theCourt is constrained to resolve it, because the factual findings of the Court of Appeals are contrary to those of the trial court.11

Preliminarily, petitioner contends that the CA erred in rejecting the introduction of her parol evidence. A reading of the assailed Decision shows,however, that an elaborate discussion of the parol evidence rule and its exceptions was merely given as a preface by the appellate court. Nowheretherein did it consider petitioner's evidence as improper under the said rule. On the contrary, it considered and weighed each and every piece thereof.Nonetheless, it was not persuaded, as explained in the multitude of reasons explicitly stated in its Decision.

This Court finds no cogent reason to disturb the f indings and conclusions of the Court of Appeals. Upon close examination of the records, we find thatpetitioner has failed to discharge her burden of proving her case by a preponderanceof evidence. This concept refers to evidence that has greaterweight or is more convincing than that which is offered in opposition; at bottom, it means probability of truth.12

In the case at bar, petit ioner has presented no convincing proof of her continued ownership of the subject property. In addit ion to her own oraltestimony, she submitted proof of payment of real property taxes. But that payment, which was made only after her Complaint had already been lodgedbefore the trial court, cannot be considered in her favor for being self-serving, as aptly explained by the CA. Neither can we give weight to herallegation that respondent's possession of the subject property was merely by virtue of her tolerance. Bare allegations, unsubstantiated by evidence,are not equivalent to proof under our Rules.13

On the other hand, respondents presented two Deeds of Sale, which petitioner executed in favor of the former's predecessor-in-interest. Both Deeds -for the residential lot and for the house erected thereon - were each in consideration of P1.00 "plus other valuables." Having been notarized, they arepresumed to have been duly executed. Also, issued in favor of respondents' predecessor-in-interest the day after the sale was Tax Declaration No.9589, which covered the property.

The facts alleged by petitioner in her favor are the following: (1) she inherited the subject house and lot from her parents, with her siblings waiving inher favor their claim over the same; (2) the property was mortgaged to secure a loan of P30,000 taken in the names of Nieves Manzano Perez andRespondent Miguel Perez; (3) upon full payment of the loan, the documents pertaining to the house and lot were returned by Respondent FlorencioPerez to petitioner; (4) three of the respondents were signatories to a document transferring one half of the property to Emilia Manzano inconsideration of the sum of ten thousand pesos, although the transfer did not materialize because of the refusal of the other respondents to sign thedocument; and (5) petitioner hacked the stairs of the subject house, yet no case was filed against her. 1wphi1.nt

These matters are not, however, convincing indicators of petitioner's ownership of the house and lot. On the contrary, they even support the claim ofrespondents. Indeed, how could one of them have obtained a mortgage over the property, without having dominion over it? Why would they execute a

reconveyance of one half of it in favor of petitioner? Why would the latter have to pay P10,000 for that portion if, as she claims, she owns the whole?

Pitted against respondents' evidence, that of petitioner awfully pales. Oral testimony cannot, as a rule, prevail over a writ ten agreement of the parties.14In order to contradict the facts contained in a notarial document, such as the two "Kasulatan ng Bilihang Tuluyan"in this case, as well as thepresumption of regularity in the execution thereof, there mus

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