CredTrans P1

Credit Transactions | Sylver Jan Baluno Prior
EN BANC G.R. No. L-19190 November 29, 1922 &nla f&l acts took place, b&t !#2!. ere repealed by Act No. 2#+-, approved on 0an&ary +",
THE PEOPLE OF THE PHILIPPINE ISLANDS, plaintiff-appellee, vs. VENANCIO CONCEPCION, defendant-appellant. Recaredo Ma. Calvo for appellant. Attorney-General Villa-Real for appellee.
Co&nsel for the defense assign ten errors as having been committed by the trial co&rt. ,hese errors they have arg&ed adroitly and e(ha&stively in their printed brief, and again in oral arg&ment. Attorney-4eneral Villa-3eal, in an e(ceptionally acc&rate and comprehensive brief, ans ers the proposition of appellant one by one. ,he /&estion presented are red&ced to their simplest elements in the opinion follo s; hich
MALCOLM, J.: By telegrams and a letter of confirmation to the manager of the Aparri branch of the Philippine National Bank, Venancio Concepcion, President of the Philippine National Bank, bet een April !", !#!#, and $ay %, !#!#, a&thori'ed an e(tension of credit in favor of )P&no y Concepcion, *. en C.) in the amo&nt of P+"",""". ,his special a&thori'ation as essential in vie of the memorand&m order of President Concepcion dated $ay !%, !#!-, limiting the discretional po er of the local manager at Aparri, Cagayan, to grant loans and disco&nt negotiable doc&ments to P.,""", hich, in certain cases, co&ld be increased to P!",""". P&rs&ant to this a&thori'ation, credit aggregating P+"",""", as granted the firm of )P&no y Concepcion, *. en C.,) the only sec&rity re/&ired consisting of si( demand notes. ,he notes, together ith the interest, ere taken &p and paid by 0&ly !%, !#!#. )P&no y Concepcion, *. en C.) as a copartnership capitali'ed at P!"",""". Anacleto Concepcion contrib&ted P.,"""1 Clara Vda. de Concepcion, P.,"""1 $ig&el *. Concepcion, P2","""1 Clemente P&no, P2","""1 and 3osario *an Ag&stin, )casada con 4ral. Venancio Concepcion,) P.",""". $ember $ig&el *. Concepcion as the administrator of the company. 5n the facts reco&nted, Venancio Concepcion, as President of the Philippine National Bank and as member of the board of directors of this bank, as charged in the Co&rt of 6irst 7nstance of Cagayan ith a violation of section +. of Act No. 2%8%. 9e as fo&nd g&ilty by the 9onorable Enri/&e V. 6ilamor, 0&dge of 6irst 7nstance, and as sentenced to imprisonment for one year and si( months, to pay a fine of P+,""", ith s&bsidiary imprisonment in case of insolvency, and the costs. *ection +. of Act No. 2%8%, effective on 6ebr&ary 2", !#!-, :&st mentioned, to hich reference m&st hereafter repeatedly be made, reads as follo s; ),he National Bank shall not, directly or indirectly, grant loans to any of the members of the board of directors of the bank nor to agents of the branch banks.) *ection 8# of the same Act provides; )Any person ho shall violate any of the provisions of this Act shall be p&nished by a fine not to e(ceed ten tho&sand pesos, or by imprisonment not to e(ceed five years, or by both s&ch fine and imprisonment.) ,hese t o sections ere in effect in !#!# hen the alleged
7. <as the granting of a credit of P+"",""" to the copartnership )P&no y Concepcion, *. en C.) by Venancio Concepcion, President of the Philippine National Bank, a )loan) ithin the meaning of section +. of Act No. 2%8%= Co&nsel arg&e that the doc&ments of record do not prove that a&thority to make a loan as given, b&t only sho the concession of a credit. 7n this statement of fact, co&nsel is correct, for the e(hibits in /&estion speak of a ) credito) >credit? and not of a ) prestamo) >loan?. ,he )credit) of an individ&al means his ability to borro money by virt&e of the confidence or tr&st reposed by a lender that he ill pay hat he may promise. >@onnell vs. 0ones A!-8-B, !+ Ala., 8#"1 Bo&vierCs Da @ictionary.? A )loan) means the delivery by one party and the receipt by the other party of a given s&m of money, &pon an agreement, e(press or implied, to repay the s&m loaned, ith or itho&t interest. >Payne vs. 4ardiner A!-E8B, 2# N. F., !8E, !E%.? ,he concession of a )credit) necessarily involves the granting of )loans) &p to the limit of the amo&nt fi(ed in the )credit,) 77. <as the granting of a credit of P+"",""" to the copartnership )P&no y Concepcion, *. en C.,) by Venancio Concepcion, President of the Philippine National Bank, a )loan) or a )disco&nt)= Co&nsel arg&e that hile section +. of Act No. 2%8% prohibits the granting of a )loan,) it does not prohibit hat is commonly kno n as a )disco&nt.) 7n a letter dated A&g&st %, !#!E, 9. Parker <illis, then President of the National Bank, in/&ired of the 7ns&lar A&ditor hether section +% of Act No. 2E!2 as intended to apply to disco&nts as ell as to loans. ,he r&ling of the Acting 7ns&lar A&ditor, dated A&g&st !!, !#!E, as to the effect that said section referred to loans alone, and placed no restriction &pon disco&nt transactions. 7t becomes material, therefore, to discover the distinction bet een a )loan) and a )disco&nt,) and to ascertain if the instant transaction comes &nder the first or the latter denomination. @isco&nts are favored by bankers beca&se of their li/&id nat&re, gro ing, as they do, o&t of an act&al, live, transaction. B&t in its last analysis, to disco&nt a paper is only a mode of loaning money, ith, ho ever, these distinctions; >!? 7n a disco&nt, interest is ded&cted in advance, hile in a loan, interest is taken at the e(piration of a credit1 >2? a disco&nt is al ays on do&ble-name paper1 a loan is generally on single-name paper.
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Conceding, itho&t deciding, that, as r&led by the 7ns&lar A&ditor, the la covers loans and not disco&nts, yet the concl&sion is inevitable that the demand notes signed by the firm )P&no y Concepcion, *. en C.) ere not disco&nt paper b&t ere mere evidences of indebtedness, beca&se >!? interest as not ded&cted from the face of the notes, b&t as paid hen the notes fell d&e1 and >2? they ere single-name and not do&ble-name paper. ,he facts of the instant case having relation to this phase of the arg&ment are not essentially different from the facts in the Binalbagan Estate case. 0&st as there it as declared that the operations constit&ted a loan and not a disco&nt, so sho&ld e here lay do n the same r&ling. 777. <as the granting of a credit of P+"",""" to the copartnership, )P&no y Concepcion, *. en C.) by Venancio Concepcion, President of the Philippine National Bank, an )indirect loan) ithin the meaning of section +. of Act No. 2%8%= Co&nsel arg&e that a loan to the partnership )P&no y Concepcion, *. en C.) as not an )indirect loan.) 7n this connection, it sho&ld be recalled that the ife of the defendant held one-half of the capital of this partnership. 7n the interpretation and constr&ction of stat&tes, the primary r&le is to ascertain and give effect to the intention of the Degislat&re. 7n this instance, the p&rpose of the Degislat&re is plainly to erect a all of safety against temptation for a director of the bank. ,he prohibition against indirect loans is a recognition of the familiar ma(im that no man may serve t o masters G that here personal interest clashes ith fidelity to d&ty the latter almost al ays s&ffers. 7f, therefore, it is sho n that the h&sband is financially interested in the s&ccess or fail&re of his ifeCs b&siness vent&re, a loan to partnership of hich the ife of a director is a member, falls ithin the prohibition. Vario&s provisions of the Civil serve to establish the familiar relationship called a con:&gal partnership. >Articles !+!., !+#+, !8"!, !8"%, !8"-, and !8!2 can be specially noted.? A loan, therefore, to a partnership of hich the ife of a director of a bank is a member, is an indirect loan to s&ch director. ,hat it as the intention of the Degislat&re to prohibit e(actly s&ch an occ&rrence is sho n by the ackno ledged fact that in this instance the defendant as tempted to mingle his personal and family affairs ith his official d&ties, and to permit the loan P+"",""" to a partnership of no established rep&tation and itho&t asking for collateral sec&rity. 7n the case of Dester and <ife vs. 9o ard Bank >A!-%"B, ++ $d., ..-1 + Am. 3ep., 2!!?, the *&preme Co&rt of $aryland said; <hat then as the p&rpose of the la hen it declared that no director or officer sho&ld borro of the bank, and )if any director,) etc., )shall be convicted,) etc., )of directly or indirectly violating this section he shall be p&nished by fine and imprisonment=) <e say to protect the stockholders, depositors and creditors of the bank, against the temptation to hich the directors and officers might be e(posed, and the po er hich as s&ch they m&st necessarily possess in the control and management of the bank, and the legislat&re &n illing to rely &pon the implied &nderstanding that in ass&ming this relation they o&ld not ac/&ire any interest hostile or adverse to the most e(act and faithf&l discharge of d&ty, declared in e(press terms that they sho&ld not borro , etc., of the bank. 7n the case of People vs. Hnapp >A!#!2B, 2"E N. F., +%+?, relied &pon in the Binalbagan Estate decision, it as said; <e are of opinion the stat&te forbade the loan to his copartnership firm as himself directly. ,he loan as made indirectly to him thro&gh his firm. ell as to
7V. Co&ld Venancio Concepcion, President of the Philippine National Bank, be convicted of a violation of section +. of Act No. 2%8% in relation ith section 8# of the same Act, hen these portions of Act No. 2%8% ere repealed by Act No. 2#+-, prior to the finding of the information and the rendition of the :&dgment= As noted along to ard the beginning of this opinion, section 8# of Act No. 2%8%, in relation to section +. of the same Act, provides a p&nishment for any person ho shall violate any of the provisions of the Act. 7t is contended, ho ever, by the appellant, that the repeal of these sections of Act No. 2%8% by Act No. 2#+- has served to take a ay the basis for criminal prosec&tion. ,his same /&estion has been previo&sly s&bmitted and has received an ans er adverse to s&ch contention in the cases of United Stated vs. Cuna >A!#"-B, !2 Phil., 28!?1 People vs. Concepcion >A!#22B, 8+ Phil., E.+?1 and 5ng Chang <ing and H ong 6ok vs. Inited *tates >A!#!"B, 2!- I. *., 2%21 8" Phil., !"8E?. 7n other ords, it has been the holding, and it m&st again be the holding, that here an Act of the Degislat&re hich penali'es an offense, s&ch repeals a former Act hich penali'ed the same offense, s&ch repeal does not have the effect of thereafter depriving the co&rts of :&risdiction to try, convict, and sentenced offenders charged ith violations of the old la . V. <as the granting of a credit of P+"",""" to the copartnership )P&no y Concepcion, *. en C.) by Venancio Concepcion, President of the Philippine National Bank, in violation of section +. of Act No. 2%8%, penali'ed by this la = Co&nsel arg&e that since the prohibition contained in section +. of Act No. 2%8% is on the bank, and since section 8# of said Act provides a p&nishment not on the bank hen it violates any provisions of the la , b&t on a personviolating any provisions of the same, and imposing imprisonment as a part of the penalty, the prohibition contained in said section +. is itho&t penal sanction.lawph l.net ,he ans er is that hen the corporation itself is forbidden to do an act, the prohibition e(tends to the board of directors, and to each director separately and individ&ally. >People vs. Concepcion, supra.? V7. @oes the alleged good faith of Venancio Concepcion, President of the Philippine National Bank, in e(tending the credit of P+"",""" to the copartnership )P&no y Concepcion, *. en C.) constit&te a legal defense= Co&nsel arg&e that if defendant committed the acts of hich he as convicted, it as beca&se he as misled by r&lings coming from the 7ns&lar A&ditor. 7t is f&rthermore stated
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that since the loans made to the copartnership )P&no y Concepcion, *. en C.) have been paid, no loss has been s&ffered by the Philippine National Bank. Neither arg&ment, even if conceded to be tr&e, is concl&sive. Inder the stat&te hich the defendant has violated, criminal intent is not necessarily material. ,he doing of the inhibited act, inhibited on acco&nt of p&blic policy and p&blic interest, constit&tes the crime. And, in this instance, as previo&sly demonstrated, the acts of the President of the Philippine National Bank do not fall ithin the p&rvie of the r&lings of the 7ns&lar A&ditor, even conceding that s&ch r&lings have controlling effect. $orse, in his ork, Banks and Banking, section !2., says; 7t is fra&d for directors to sec&re by means of their tr&st, and advantage not common to the other stockholders. ,he la ill not allo private profit from a tr&st, and ill not listen to any proof of honest intent. 0I@4$EN, 5n a revie of the evidence of record, ith reference to the decision of the trial co&rt, and the errors assigned by the appellant, and ith reference to previo&s decisions of this co&rt on the same s&b:ect, e are irresistibly led to the concl&sion that no reversible error as committed in the trial of this case, and that the defendant has been proved g&ilty beyond a reasonable do&bt of the crime charged in the information. ,he penalty imposed by the trial :&dge falls ithin the limits of the p&nitive provisions of the la . 0&dgment is affirmed, ith the costs of this instance against the appellant. *o ordered. FACTS Venancio Concepcion, President of the Philippine National Bank and a member of theBoard thereof, a&thori'ed an e(tension of credit in favor of )P&no y Concepcion, *. en C.J to themanager of the Aparri branch of the Philippine National Bank. )P&no y Concepcion, *. en C.) as a co-partnership here Concepcion is a partner. *&bse/&ently, Concepcion as charged andfo&nd g&ilty in the Co&rt of 6irst 7nstance of Cagayan ith violation of section +. of Act No.2%8%. *ection +. of Act No. 2%8% provides that the National Bank shall not, directly or indirectly, grant loans to any of the members of the board of directors of the bank nor to agentsof the branch banks. Co&nsel for the defense arg&e that the doc&ments of record do not provethat a&thority to make a loan as given, b&t only sho the concession of a credit. ,hey averredthat the granting of a credit to the co-partnership )P&no y Concepcion, *. en C.) by VenancioConcepcion, President of the Philippine National Bank, is not a )loan) ithin the meaning of section +. of Act No. 2%8%. ISS!E <hether or not the granting of a credit of P+"",""" to the co-partnership )P&no yConcepcion, *. en C.) by Venancio Concepcion, President of the Philippine National Bank, a)loan) ithin the meaning of section +. of Act No. 2%8%. HELD ,he *&preme Co&rt r&led in the affirmative. ,he )credit) of an individ&al means hisability to borro money by virt&e of the confidence or tr&st reposed by a lender that he ill pay hat he may promise. A )loan) means the delivery by one party and the receipt by the other party of a given s&m of money, &pon an agreement, e(press or implied, to repay the s&m loaned, ith or itho&t interest. ,he concession of a )credit) necessarily involves the granting of )loans) &p to the limit of the amo&nt fi(ed in the )creditJ. EN BANC G.R. No. L-1"#"# O$%ober 2&, 19'2
REP!(LIC OF THE PHILIPPINES, plaintiff-appellee, vs. )OSE V. (AGTAS, defendant, FELICIDAD M. (AGTAS, A*m+,+-%r.%r+/ o0 %1e I,%e-%.%e E-%.%e 2e0% b3 %1e 2.%e )o-e V. (.4%.-, petitioner-appellant. !. ". Reyes# $iaison and Associates for petitioner-appellant. %ffice of the Solicitor General for plaintiff-appellee. PADILLA, J.: ,he Co&rt of Appeals certified this case to this Co&rt beca&se only /&estions of la raised. are
5n - $ay !#8- 0ose V. Bagtas borro ed from the 3ep&blic of the Philippines thro&gh the B&rea& of Animal 7nd&stry three b&lls; a 3ed *indhi ith a book val&e of P!,!%E.8E, a Bhagnari, of P!,+2"..E and a *ahini al, of P%88.8E, for a period of one year from - $ay !#8- to % $ay !#8# for breeding p&rposes s&b:ect to a government charge of breeding fee of !"K of the book val&e of the b&lls. Ipon the e(piration on % $ay !#8# of the contract, the borro er asked for a rene al for another period of one year. 9o ever, the *ecretary of Agric&lt&re and Nat&ral 3eso&rces approved a rene al thereof of only one b&ll for another year from - $ay !#8# to % $ay !#." and re/&ested the ret&rn of the other t o. 5n 2. $arch !#." 0ose V. Bagtas rote to the @irector of Animal 7nd&stry that he o&ld pay the val&e of the three b&lls. 5n !% 5ctober !#." he reiterated his desire to b&y them at a val&e ith a ded&ction of yearly depreciation to be approved by the A&ditor 4eneral. 5n !# 5ctober !#." the @irector of Animal 7nd&stry advised him that the book val&e of the three b&lls co&ld not be red&ced and that they either be ret&rned or their book val&e paid not later than +! 5ctober !#.". 0ose V. Bagtas failed to pay the book val&e of the three b&lls or to ret&rn them. *o, on 2" @ecember !#." in the Co&rt of 6irst 7nstance of $anila the 3ep&blic of the Philippines commenced an action against him praying that he be ordered to ret&rn the three b&lls loaned to him or to pay their book val&e in the total s&m of P+,28!.8. and the &npaid breeding fee in the s&m of P!##.E2, both ith interests, and costs1 and that other :&st and e/&itable relief be granted in >civil No. !2-!-?. 5n . 0&ly !#.! 0ose V. Bagtas, thro&gh co&nsel Navarro, 3osete and $analo, ans ered that beca&se of the bad peace and order sit&ation in Cagayan Valley, partic&larly in the barrio of Baggao, and of the pending appeal he had taken to the *ecretary of Agric&lt&re
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and Nat&ral 3eso&rces and the President of the Philippines from the ref&sal by the @irector of Animal 7nd&stry to ded&ct from the book val&e of the b&lls corresponding yearly depreciation of -K from the date of ac/&isition, to hich depreciation the A&ditor 4eneral did not ob:ect, he co&ld not ret&rn the animals nor pay their val&e and prayed for the dismissal of the complaint. After hearing, on +" 0&ly !#.E the trial co&rt render :&dgment G . . . sentencing the latter >defendant? to pay the s&m of P+,E2.."# the total val&e of the three b&lls pl&s the breeding fees in the amo&nt of PE2E.!% ith interest on both s&ms of >at? the legal rate from the filing of this complaint and costs. 5n # 5ctober !#.- the plaintiff moved e( parte for a rit of e(ec&tion hich the co&rt granted on !- 5ctober and iss&ed on !! November !#.-. 5n 2 @ecember !#.- granted an e(-parte motion filed by the plaintiff on November !#.- for the appointment of a special sheriff to serve the rit o&tside $anila. 5f this order appointing a special sheriff, on E @ecember !#.-, 6elicidad $. Bagtas, the s&rviving spo&se of the defendant 0ose Bagtas ho died on 2+ 5ctober !#.! and as administratri( of his estate, as notified. 5n % 0an&ary !#.# she file a motion alleging that on 2E 0&ne !#.2 the t o b&ll *indhi and Bhagnari ere ret&rned to the B&rea& Animal of 7nd&stry and that sometime in November !#.- the third b&ll, the *ahini al, died from g&nshot o&nd inflicted d&ring a 9&k raid on 9acienda 6elicidad 7ntal, and praying that the rit of e(ec&tion be /&ashed and that a rit of preliminary in:&nction be iss&ed. 5n +! 0an&ary !#.# the plaintiff ob:ected to her motion. 5n E 6ebr&ary !#.# she filed a reply thereto. 5n the same day, E 6ebr&ary, the Co&rt denied her motion. 9ence, this appeal certified by the Co&rt of Appeals to this Co&rt as stated at the beginning of this opinion. 7t is tr&e that on 2E 0&ne !#.2 0ose $. Bagtas, 0r., son of the appellant by the late defendant, ret&rned the *indhi and Bhagnari b&lls to 3oman 3emorin, *&perintendent of the NVB *tation, B&rea& of Animal 7nd&stry, Bayombong, N&eva Vi'caya, as evidenced by a memorand&m receipt signed by the latter >E(hibit 2?. ,hat is hy in its ob:ection of +! 0an&ary !#.# to the appellantCs motion to /&ash the rit of e(ec&tion the appellee prays )that another rit of e(ec&tion in the s&m of P-.#..+ be iss&ed against the estate of defendant deceased 0ose V. Bagtas.) *he cannot be held liable for the t o b&lls hich already had been ret&rned to and received by the appellee. ,he appellant contends that the *ahini al b&ll as accidentally killed d&ring a raid by the 9&k in November !#.+ &pon the s&rro&nding barrios of 9acienda 6elicidad 7ntal, Baggao, Cagayan, here the animal as kept, and that as s&ch death as d&e to force ma&eure she is relieved from the d&ty of ret&rning the b&ll or paying its val&e to the appellee. ,he contention is itho&t merit. ,he loan by the appellee to the late defendant 0ose V. Bagtas of the three b&lls for breeding p&rposes for a period of one year from $ay !#8- to % $ay !#8#, later on rene ed for another year as regards one b&ll, as s&b:ect to the payment by the borro er of breeding fee of !"K of the book val&e of the b&lls. ,he appellant contends that the contract as commodatum and that, for that reason, as the appellee retained o nership or title to the b&ll it sho&ld s&ffer its loss d&e to force ma&eure. A contract ofcommodatum is essentially grat&ito&s.! 7f the breeding fee be considered a compensation, then the contract o&ld be a lease of the b&ll. Inder article !E%! of the Civil Code the lessee o&ld be s&b:ect to the responsibilities of a possessor in bad faith, beca&se she had contin&ed possession of the b&ll after the e(piry of the contract. And even if the contract be commodatum, still the appellant is liable, beca&se article !#82 of the Civil Code provides that a bailee in a contract of commodatum G . . . is liable for loss of the things, even if it sho&ld be thro&gh a fort&ito&s event; >2? 7f he keeps it longer than the period stip&lated . . . >+? 7f the thing loaned has been delivered ith appraisal of its val&e, &nless there is a stip&lation e(empting the bailee from responsibility in case of a fort&ito&s event1 ,he original period of the loan as from - $ay !#8- to % $ay !#8#. ,he loan of one b&ll as rene ed for another period of one year to end on - $ay !#.". B&t the appellant kept and &sed the b&ll &ntil November !#.+ hen d&ring a 9&k raid it as killed by stray b&llets. 6&rthermore, hen lent and delivered to the deceased h&sband of the appellant the b&lls had each an appraised book val&e, to ith; the *indhi, at P!,!%E.8E, the Bhagnari at P!,+2"..E and the *ahini al at P%88.8E. 7t as not stip&lated that in case of loss of the b&ll d&e to fort&ito&s event the late h&sband of the appellant o&ld be e(empt from liability. ,he appellantCs contention that the demand or prayer by the appellee for the ret&rn of the b&ll or the payment of its val&e being a money claim sho&ld be presented or filed in the intestate proceedings of the defendant ho died on 2+ 5ctober !#.!, is not altogether itho&t merit. 9o ever, the claim that his civil personality having ceased to e(ist the trial co&rt lost :&risdiction over the case against him, is &ntenable, beca&se section !% of 3&le + of the 3&les of Co&rt provides that G After a party dies and the claim is not thereby e(ting&ished, the co&rt shall order, &pon proper notice, the legal representative of the deceased to appear and to be s&bstit&ted for the deceased, ithin a period of thirty >+"? days, or ithin s&ch time as may be granted. . . . and after the defendantCs death on 2+ 5ctober !#.! his co&nsel failed to comply section !E of 3&le + hich provides that G ith
<henever a party to a pending case dies . . . it shall be the d&ty of his attorney to inform the co&rt promptly of s&ch death . . . and to give the name and residence of the e(ec&tory administrator, g&ardian, or other legal representative of the deceased . . . . ,he notice by the probate co&rt and its p&blication in the Vo' de Manila that 6elicidad $. Bagtas had been iss&e letters of administration of the estate of the late 0ose Bagtas and that )all persons having claims for monopoly against the deceased 0ose V. Bagtas, arising from contract e(press or implied, hether the same be d&e, not d&e, or contingent, for f&neral e(penses and e(penses of the last sickness of the said decedent, and :&dgment for monopoly against him, to file said claims ith the Clerk of this Co&rt at the City 9all Bldg., 9igh ay .8, L&e'on City, ithin si( >E? months from the date of the first p&blication of this order, serving a copy thereof &pon the aforementioned 6elicidad $. Bagtas, the appointed administratri( of the estate of the said deceased,) is not a notice to the co&rt
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and the appellee ho ere to be notified of the defendantCs death in accordance ith the above-/&oted r&le, and there as no reason for s&ch fail&re to notify, beca&se the attorney ho appeared for the defendant as the same ho represented the administratri( in the special proceedings instit&ted for the administration and settlement of his estate. ,he appellee or its attorney or representative co&ld not be e(pected to kno of the death of the defendant or of the administration proceedings of his estate instit&ted in another co&rt that if the attorney for the deceased defendant did not notify the plaintiff or its attorney of s&ch death as re/&ired by the r&le. As the appellant already had ret&rned the t o b&lls to the appellee, the estate of the late defendant is only liable for the s&m of P-.#.E+, the val&e of the b&ll hich has not been ret&rned to the appellee, beca&se it as killed hile in the c&stody of the administratri( of his estate. ,his is the amo&nt prayed for by the appellee in its ob:ection on +! 0an&ary !#.# to the motion filed on % 0an&ary !#.# by the appellant for the /&ashing of the rit of e(ec&tion. *pecial proceedings for the administration and settlement of the estate of the deceased 0ose V. Bagtas having been instit&ted in the Co&rt of 6irst 7nstance of 3i'al >L-2""?, the money :&dgment rendered in favor of the appellee cannot be enforced by means of a rit of e(ec&tion b&t m&st be presented to the probate co&rt for payment by the appellant, the administratri( appointed by the co&rt. ACC53@7N4DF, the as to costs. FACTS; rit of e(ec&tion appealed from is set aside, itho&t prono&ncement
6elicidad Bagtas, the s&rviving spo&se and administrator of BagtasM estate, ret&rned the t o b&lls and filed a motion to /&ash the rit of e(ec&tion since one b&ll cannot be ret&rned for it as killed by g&nshot d&ring a 9&k raid. ,he Co&rt denied her motion hence, this appeal certified by the Co&rt of Appeals beca&se only /&estions of la are raised.
ISS!E; <5N the contract force ma:e&re.
as commodat&m1th&s, Bagtas be held liable for its loss d&e to
R!LING;
A contract of commodat&m is essentially grat&ito&s. *&preme Co&rt held that Bagtas as liable for the loss of the b&ll even tho&gh it as ca&sed by a fort&ito&s event. 7f the contract as one of lease, then the !"K breeding charge is compensation >rent? for the &se of the b&ll and Bagtas, as lessee, is s&b:ect to the responsibilities of a possessor. 9e is also in bad faith beca&se he contin&ed to possess the b&ll even tho&gh the term of the contract has already e(pired. 7f the contract as one of commodat&m, he is still liable beca&se; >!? he kept the b&ll longer than the period stip&lated1 and >2? the thing loaned has been delivered ith appraisal of its val&e >!"K?. No stip&lation that in case of loss of the b&ll d&e to fort&ito&s event the late h&sband of the appellant o&ld be e(empt from liability. ,he original period of the loan as from - $ay !#8- to % $ay !#8#. ,he loan of one b&ll as rene ed for another period of one year to end on - $ay !#.". B&t the appellant kept and &sed the b&ll &ntil November !#.+ hen d&ring a 9&k raid it as killed by stray b&llets. 6&rthermore, hen lent and delivered to the deceased h&sband of the appellant the b&lls had each an appraised book val&e, to ith; the *indhi, at P!,!%E.8E, the Bhagnari at P!,+2"..E and the *ahini al at P%88.8E. 7t as not stip&lated that in case of loss of the b&ll d&e to fort&ito&s event the late h&sband of the appellant o&ld be e(empt from liability.
0ose Bagtas borro ed from the B&rea& of Animal 7nd&stry three b&lls for a period of one year for breeding p&rposes s&b:ect to a government charge of breeding fee of !"K of the book val&e of the books. Ipon the e(piration of the contract, Bagtas asked for a rene al for another one year, ho ever, the *ecretary of Agric&lt&re and Nat&ral 3eso&rces approved only the rene al for one b&ll and other t o b&lls be ret&rned. Bagtas then rote a letter to the @irector of Animal 7nd&stry that he o&ld pay the val&e of the three b&lls ith a ded&ction of yearly depreciation. ,he @irector advised him that the val&e cannot be depreciated and asked Bagtas to either ret&rn the b&lls or pay their book val&e. Bagtas neither paid nor ret&rned the b&lls. ,he 3ep&blic then commenced an action against Bagtas ordering him to ret&rn the b&lls or pay their book val&e. After hearing, the trial Co&rt r&led in favor of the 3ep&blic, as s&ch, the 3ep&blic moved e( parte for a rit of e(ec&tion hich the co&rt granted.
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from !#"E to !#.!1 that petitioner had been in possession of the same lots as bailee in commodat&m &p to !#.!, hen petitioner rep&diated the tr&st and hen it applied for registration in !#E21 that petitioner had :&st been in possession as o ner for eleven years, hence there is no possibility of ac/&isitive prescription hich re/&ires !" years possession ith :&st title and +" years of possession itho&t1 that the principle of res &udicata on these findings by the Co&rt of Appeals ill bar a reopening of these /&estions of facts1 and that those facts may no longer be altered. PetitionerCs motion for reconsideation of the respondent appellate co&rtCs @ecision in the t o aforementioned cases >CA 4.3. No. CV-".8!- and ".8!#? as denied. ,he facts and backgro&nd of these cases as narrated by the trail co&rt are as follo s G ... ,he doc&ments and records presented reveal that the hole controversy started hen the defendant Catholic Vicar Apostolic of the $o&ntain Province >V7CA3 for brevity? filed ith the Co&rt of 6irst 7nstance of Bag&io Beng&et on *eptember ., !#E2 an application for registration of title over Dots !, 2, +, and 8 in Ps&-!#8+.%, sit&ated at Poblacion Central, Da ,rinidad, Beng&et, docketed as D3C N-#!, said Dots being the sites of the Catholic Ch&rch b&ilding, convents, high school b&ilding, school gymnasi&m, school dormitories, social hall, stone alls, etc. 5n $arch 22, !#E+ the 9eirs of 0&an Valde' and the 9eirs of Egmidio 5ctaviano filed their Ans erN5pposition on Dots Nos. 2 and +, respectively, asserting o nership and title thereto. After trial on the merits, the land registration co&rt prom&lgated its @ecision, dated November !%, !#E., confirming the registrable title of V7CA3 to Dots !, 2, +, and 8. ,he 9eirs of 0&an Valde' >plaintiffs in the herein Civil Case No. +E..? and the 9eirs of Egmidio 5ctaviano >plaintiffs in the herein Civil Case No. +E"%? appealed the decision of the land registration co&rt to the then Co&rt of Appeals, docketed as CA-4.3. No. +--+"3. ,he Co&rt of Appeals rendered its decision, dated $ay #, !#%%, reversing the decision of the land registration co&rt and dismissing the V7CA3Cs application as to Dots 2 and +, the lots claimed by the t o sets of oppositors in the land registration case >and t o sets of plaintiffs in the t o cases no at bar?, the first lot being presently occ&pied by the convent and the second by the omenCs dormitory and the sisterCs convent. 5n $ay #, !#%%, the 9eirs of 5ctaviano filed a motion for reconsideration praying the Co&rt of Appeals to order the registration of Dot + in the names of the 9eirs of Egmidio 5ctaviano, and on $ay !%, !#%%, the 9eirs of 0&an Valde' and Pacita Valde' filed their motion for reconsideration praying that both Dots 2 and + be ordered registered in the names of the 9eirs of 0&an Valde' and Pacita Valde'. 5n A&g&st !2,!#%%, the Co&rt of Appeals denied the motion for reconsideration filed by the 9eirs of 0&an Valde' on the gro&nd that there as )no s&fficient merit to :&stify reconsideration one ay or the other ...,) and like ise denied that of the 9eirs of Egmidio 5ctaviano. ,here&pon, the V7CA3 filed ith the *&preme Co&rt a petition for revie on certiorari of the decision of the Co&rt of Appeals dismissing his >its? application for registration of Dots 2 and +, docketed as 4.3. No. D-8E-+2, entitled CCatholic Vicar Apostolic of the $o&ntain Province vs. Co&rt of Appeals and 9eirs of Egmidio 5ctaviano.C
673*, @7V7*75N G.R. No. 5029#-9& Se6%ember 21, 1955 CATHOLIC VICAR APOSTOLIC OF THE MO!NTAIN PROVINCE, petitioner, vs. CO!RT OF APPEALS, HEIRS OF EGMIDIO OCTAVIANO AND )!AN VALDE7, respondents. Valde'# (reso# Polido ) Associates for petitioner. Claustro# Claustro# Claustro $aw %ffice colla*oratin+ counsel for petitioner. ,aime G. de $eon for the -eirs of (+midio %ctaviano. Cota*ato $aw %ffice for the -eirs of ,uan Valde'.
GANCA8CO, J.: ,he principal iss&e in this case is hether or not a decision of the Co&rt of Appeals prom&lgated a long time ago can properly be considered res &udicata by respondent Co&rt of Appeals in the present t o cases bet een petitioner and t o private respondents. Petitioner /&estions as allegedly erroneo&s the @ecision dated A&g&st +!, !#-% of the Ninth @ivision of 3espondent Co&rt of Appeals 1 in CA-4.3. No. ".!8- ACivil Case No. +E"% >8!#?B and CA-4.3. No. ".!8# ACivil Case No. +E.. >82#?B, both for 3ecovery of Possession, hich affirmed the @ecision of the 9onorable Nicodemo ,. 6errer, 0&dge of the 3egional ,rial Co&rt of Bag&io and Beng&et in Civil Case No. +E"% >8!#? and Civil Case No. +E.. >82#?, ith the dispositive portion as follo s; <9E3E653E, 0&dgment is hereby rendered ordering the defendant, Catholic Vicar Apostolic of the $o&ntain Province to ret&rn and s&rrender Dot 2 of Plan Ps&-!#8+.% to the plaintiffs. 9eirs of 0&an Valde', and Dot + of the same Plan to the other set of plaintiffs, the 9eirs of Egmidio 5ctaviano >Deonardo Valde', et al.?. 6or lack or ins&fficiency of evidence, the plaintiffsC claim or damages is hereby denied. *aid defendant is ordered to pay costs. >p. +E, 3ollo? 3espondent Co&rt of Appeals, in affirming the trial co&rtCs decision, s&stained the trial co&rtCs concl&sions that the @ecision of the Co&rt of Appeals, dated $ay 8,!#%% in CA4.3. No. +--+"-3, in the t o cases affirmed by the *&preme Co&rt, to&ched on the o nership of lots 2 and + in /&estion1 that the t o lots ere possessed by the predecessors-in-interest of private respondents &nder claim of o nership in good faith
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6rom the denial by the Co&rt of Appeals of their motion for reconsideration the 9eirs of 0&an Valde' and Pacita Valde', on *eptember -, !#%%, filed ith the *&preme Co&rt a petition for revie , docketed as 4.3. No. D-8E-%2, entitled, -eirs of ,uan Valde' and Pacita Valde' vs. Court of Appeals, Vicar, 9eirs of Egmidio 5ctaviano and Annable 5. Valde'. 5n 0an&ary !+, !#%-, the *&preme Co&rt denied in a min&te resol&tion both petitions >of V7CA3 on the one hand and the 9eirs of 0&an Valde' and Pacita Valde' on the other? for lack of merit. Ipon the finality of both *&preme Co&rt resol&tions in 4.3. No. D-8E-+2 and 4.3. No. D- 8E-%2, the 9eirs of 5ctaviano filed ith the then Co&rt of 6irst 7nstance of Bag&io, Branch 77, a $otion 6or E(ec&tion of 0&dgment praying that the 9eirs of 5ctaviano be placed in possession of Dot +. ,he Co&rt, presided over by 9on. *alvador 0. Valde', on @ecember %, !#%-, denied the motion on the gro&nd that the Co&rt of Appeals decision in CA-4.3. No. +--%" did not grant the 9eirs of 5ctaviano any affirmative relief. 5n 6ebr&ary %, !#%#, the 9eirs of 5ctaviano filed ith the Co&rt of Appeals a petitioner for certiorari and mandam&s, docketed as CA-4.3. No. "--#"-3, entitled -eirs of (+midio %ctaviano vs. -on. Salvador ,. Valde'# ,r. and Vicar . 7n its decision dated $ay !E, !#%#, the Co&rt of Appeals dismissed the petition. 7t as at that stage that the instant cases ere filed. ,he 9eirs of Egmidio 5ctaviano filed Civil Case No. +E"% >8!#? on 0&ly 28, !#%#, for recovery of possession of Dot +1 and the 9eirs of 0&an Valde' filed Civil Case No. +E.. >82#? on *eptember 28, !#%#, like ise for recovery of possession of Dot 2 >@ecision, pp. !##-2"!, 5rig. 3ec.?. 7n Civil Case No. +E"% >8!#? trial as held. ,he plaintiffs 9eirs of Egmidio 5ctaviano presented one >!? itness, 6r&ct&oso Valde', ho testified on the alleged o nership of the land in /&estion >Dot +? by their predecessor-in-interest, Egmidio 5ctaviano >E(h. C ?1 his ritten demand >E(h. BGB-8 ? to defendant Vicar for the ret&rn of the land to them1 and the reasonable rentals for the &se of the land at P!","""."" per month. 5n the other hand, defendant Vicar presented the 3egister of @eeds for the Province of Beng&et, Atty. Nicanor *ison, ho testified that the land in /&estion is not covered by any title in the name of Egmidio 5ctaviano or any of the plaintiffs >E(h. -?. ,he defendant dispensed ith the testimony of $ons.<illiam Brasse&r hen the plaintiffs admitted that the itness if called to the itness stand, o&ld testify that defendant Vicar has been in possession of Dot +, for seventy-five >%.? years contin&o&sly and peacef&lly and has constr&cted permanent str&ct&res thereon. 7n Civil Case No. +E.., the parties admitting that the material facts are not in disp&te, s&bmitted the case on the sole iss&e of hether or not the decisions of the Co&rt of Appeals and the *&preme Co&rt to&ching on the o nership of Dot 2, hich in effect declared the plaintiffs the o ners of the land constit&te res &udicata. 7n these t o cases , the plaintiffs ar/&e that the defendant Vicar is barred from setting &p the defense of o nership andNor long and contin&o&s possession of the t o lots in /&estion since this is barred by prior :&dgment of the Co&rt of Appeals in CA-4.3. No. "+--+"-3 &nder the principle of res &udicata. Plaintiffs contend that the /&estion of possession and o nership have already been determined by the Co&rt of Appeals >E(h. C, @ecision, CA-4.3. No. "+--+"-3? and affirmed by the *&preme Co&rt >E(h. !, $in&te 3esol&tion of the *&preme Co&rt?. 5n his part, defendant Vicar maintains that the principle of res &udicata o&ld not prevent them from litigating the iss&es of long possession and o nership beca&se the dispositive portion of the prior :&dgment in CA4.3. No. "+--+"-3 merely dismissed their application for registration and titling of lots 2 and +. @efendant Vicar contends that only the dispositive portion of the decision, and not its body, is the controlling prono&ncement of the Co&rt of Appeals. 2 ,he alleged errors committed by respondent Co&rt of Appeals according to petitioner are as follo s; !. E3353 7N APPDF7N4 DA< 56 ,9E CA*E AN@ R(S ,U!.CA"A1 2. E3353 7N 67N@7N4 ,9A, ,9E ,37AD C5I3, 3IDE@ ,9A, D5,* 2 AN@ + <E3E ACLI73E@ BF PI3C9A*E BI, <7,95I, @5CI$EN,A3F EV7@ENCE P3E*EN,E@1 +. E3353 7N 67N@7N4 ,9A, PE,7,75NE3*C CDA7$ 7, PI3C9A*E@ D5,* 2 AN@ + 635$ VAD@EO AN@ 5C,AV7AN5 <A* AN 7$PD7E@ A@$7**75N ,9A, ,9E 653$E3 5<NE3* <E3E VAD@EO AN@ 5C,AV7AN51 8. E3353 7N 67N@7N4 ,9A, 7, <A* P3E@ECE**53* 56 P37VA,E 3E*P5N@EN,* <95 <E3E 7N P5**E**75N 56 D5,* 2 AN@ + A, DEA*, 635$ !#"E, AN@ N5, PE,7,75NE31 .. E3353 7N 67N@7N4 ,9A, VAD@EO AN@ 5C,AV7AN5 9A@ 63EE PA,EN, APPD7CA,75N* AN@ ,9E P3E@ECE**53* 56 P37VA,E 3E*P5N@EN,* AD3EA@F 9A@ 63EE PA,EN, APPD7CA,75N* *7NCE !#"E1 E. E3353 7N 67N@7N4 ,9A, PE,7,75NE3 @ECDA3E@ D5,* 2 AN@ + 5NDF 7N !#.! AN@ 0I*, ,7,DE 7* A P37$E NECE**7,F IN@E3 A3,7CDE !!+8 7N 3EDA,75N ,5 A3,. !!2# 56 ,9E C7V7D C5@E 653 53@7NA3F ACLI7*7,7VE P3E*C37P,75N 56 !" FEA3*1 %. E3353 7N 67N@7N4 ,9A, ,9E @EC7*75N 56 ,9E C5I3, 56 APPEAD* 7N CA 4.3. N5. "+--+" <A* A6673$E@ BF ,9E *IP3E$E C5I3,1 -. E3353 7N 67N@7N4 ,9A, ,9E @EC7*75N 7N CA 4.3. N5. "+--+" ,5IC9E@ 5N 5<NE3*97P 56 D5,* 2 AN@ + AN@ ,9A, P37VA,E 3E*P5N@EN,* AN@ ,9E73 P3E@ECE**53* <E3E 7N P5**E**75N 56 D5,* 2 AN@ + IN@E3 A CDA7$ 56 5<NE3*97P 7N 455@ 6A7,9 635$ !#"E ,5 !#.!1 #. E3353 7N 67N@7N4 ,9A, PE,7,75NE3 9A@ BEEN 7N P5**E**75N 56 D5,* 2 AN@ + $E3EDF A* BA7DEE B53 35<E3? 7N C5$$5@A,I$, A 43A,I7,5I* D5AN 653 I*E1 !". E3353 7N 67N@7N4 ,9A, PE,7,75NE3 7* A P5**E**53 AN@ BI7D@E3 7N 455@ 6A7,9 <7,95I, 3749,* 56 3E,EN,75N AN@ 3E7$BI3*E$EN, AN@ 7*
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BA33E@ BF ,9E 67NAD7,F AN@ C5NCDI*7VENE** 56 ,9E @EC7*75N 7N CA 4.3. N5. "+--+". 9 ,he petition is bereft of merit. Petitioner /&estions the r&ling of respondent Co&rt of Appeals in CA-4.3. Nos. ".!8- and ".!8#, hen it clearly held that it as in agreement ith the findings of the trial co&rt that the @ecision of the Co&rt of Appeals dated $ay 8,!#%% in CA-4.3. No. +--+"-3, on the /&estion of o nership of Dots 2 and +, declared that the said Co&rt of Appeals @ecision CA-4.3. No. +--+"-3? did not positively declare private respondents as o ners of the land, neither as it declared that they ere not o ners of the land, b&t it held that the predecessors of private respondents ere possessors of Dots 2 and +, ith claim of o nership in good faith from !#"E to !#.!. Petitioner as in possession as borro er in commodat&m &p to !#.!, hen it rep&diated the tr&st by declaring the properties in its name for ta(ation p&rposes. <hen petitioner applied for registration of Dots 2 and + in !#E2, it had been in possession in concept of o ner only for eleven years. 5rdinary ac/&isitive prescription re/&ires possession for ten years, b&t al ays ith :&st title. E(traordinary ac/&isitive prescription re/&ires +" years. # 5n the above findings of facts s&pported by evidence and eval&ated by the Co&rt of Appeals in CA-4.3. No. +--+"-3, affirmed by this Co&rt, <e see no error in respondent appellate co&rtCs r&ling that said findings are res &udicata bet een the parties. ,hey can no longer be altered by presentation of evidence beca&se those iss&es ere resolved ith finality a long time ago. ,o ignore the principle of res &udicata o&ld be to open the door to endless litigations by contin&o&s determination of iss&es itho&t end. An e(amination of the Co&rt of Appeals @ecision dated $ay 8, !#%%, 6irst @ivision & in CA4.3. No. +--+"-3, sho s that it reversed the trial co&rtCs @ecision ' finding petitioner to be entitled to register the lands in /&estion &nder its o nership, on its eval&ation of evidence and concl&sion of facts. ,he Co&rt of Appeals fo&nd that petitioner did not meet the re/&irement of +" years possession for ac/&isitive prescription over Dots 2 and +. Neither did it satisfy the re/&irement of !" years possession for ordinary ac/&isitive prescription beca&se of the absence of :&st title. ,he appellate co&rt did not believe the findings of the trial co&rt that Dot 2 as ac/&ired from 0&an Valde' by p&rchase and Dot + as ac/&ired also by p&rchase from Egmidio 5ctaviano by petitioner Vicar beca&se there as absol&tely no doc&mentary evidence to s&pport the same and the alleged p&rchases ere never mentioned in the application for registration. By the very admission of petitioner Vicar, Dots 2 and + ere o ned by Valde' and 5ctaviano. Both Valde' and 5ctaviano had 6ree Patent Application for those lots since !#"E. ,he predecessors of private respondents, not petitioner Vicar, ere in possession of the /&estioned lots since !#"E. ,here is evidence that petitioner Vicar occ&pied Dots ! and 8, hich are not in /&estion, b&t not Dots 2 and +, beca&se the b&ildings standing thereon ere only constr&cted after liberation in !#8.. Petitioner Vicar only declared Dots 2 and + for ta(ation p&rposes in !#.!. ,he improvements oil Dots !, 2, +, 8 ere paid for by the Bishop b&t said Bishop as appointed only in !#8%, the ch&rch as constr&cted only in !#.! and the ne convent only 2 years before the trial in !#E+. <hen petitioner Vicar as notified of the oppositorCs claims, the parish priest offered to b&y the lot from 6r&ct&oso Valde'. Dots 2 and + ere s&rveyed by re/&est of petitioner Vicar only in !#E2. Private respondents ere able to prove that their predecessorsC ho&se as borro ed by petitioner Vicar after the ch&rch and the convent ere destroyed. ,hey never asked for the ret&rn of the ho&se, b&t hen they allo ed its free &se, they became bailors in commodatum and the petitioner the bailee. ,he baileesC fail&re to ret&rn the s&b:ect matter of commodatum to the bailor did not mean adverse possession on the part of the borro er. ,he bailee held in tr&st the property s&b:ect matter of commodat&m. ,he adverse claim of petitioner came only in !#.! hen it declared the lots for ta(ation p&rposes. ,he action of petitioner Vicar by s&ch adverse claim co&ld not ripen into title by ay of ordinary ac/&isitive prescription beca&se of the absence of :&st title. ,he Co&rt of Appeals fo&nd that the predecessors-in-interest and private respondents ere possessors &nder claim of o nership in good faith from !#"E1 that petitioner Vicar as only a bailee in commodatum1 and that the adverse claim and rep&diation of tr&st came only in !#.!. <e find no reason to disregard or reverse the r&ling of the Co&rt of Appeals in CA-4.3. No. +--+"-3. 7ts findings of fact have become incontestible. ,his Co&rt declined to revie said decision, thereby in effect, affirming it. 7t has become final and e(ec&tory a long time ago. 3espondent appellate co&rt did not commit any reversible error, m&ch less grave ab&se of discretion, hen it held that the @ecision of the Co&rt of Appeals in CA-4.3. No. +--+"-3 is governing, &nder the principle of res :&dicata, hence the r&le, in the present cases CA4.3. No. ".!8- and CA-4.3. No. ".!8#. ,he facts as s&pported by evidence established in that decision may no longer be altered. <9E3E653E AN@ BF 3EA*5N 56 ,9E 653E457N4, this petition is @EN7E@ for lack of merit, the @ecision dated A&g. +!, !#-% in CA-4.3. Nos. ".!8- and ".!8#, by respondent Co&rt of Appeals is A6673$E@, ith costs against petitioner. *5 53@E3E@. F.$%,he hole controversy started hen the herein petitioner filed an application for registration of lands !, 2, + and 8 in Da ,rinidad, Beng&et on *eptember ., !#E2. ,he heirs of 0&an Valde' and the heirs of Egmidio 5ctaviano filed an opposition on lots 2 and +, respectively. 5n November !%, !#E., the land registration co&rt confirmed the registrable title of the petitioner. 5n $ay #, !#%%, the Co&rt of Appeals reversed the decision and dismissed the VicarMs application. ,he heirs filed a motion for reconsideration, praying that the lots be ordered registered &nder their names. ,he Co&rt
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of Appeals denied the motion for lack of s&fficient merit. Both parties then came before the *&preme Co&rt. ,he *&preme Co&rt, in a min&te resol&tion, denied both petitions. ,he heirs filed the instant cases for the recovery and possession of the lots. 3espondents arg&e that the petitioner is barred from setting &p the defense of o nership or long and contin&o&s possession by the prior :&dgment of the Co&rt of Appeals &nder the principle of res :&dicata. Petitioner contends that the principle is not applicable beca&se the dispositive portion of the :&dgment merely dismissed the application for registration. I--:e>!? <hether the decision of the Co&rt of Appeals constit&te res :&dicata and therefore bars the petitioner from alleging o nership over the lots >2? <hether the petitioner has ac/&ired the lots thro&gh ac/&isitive prescription He2* >!? ,he Co&rt of Appeals did not positively declare private respondents as o ners of the land, neither as it declared that they ere not o ners of the land, b&t it held that the predecessors of private respondents ere possessors of Dots 2 and +, ith claim of o nership in good faith from !#"E to !#.!. Petitioner as in possession as borro er in commodat&m &p to !#.!, hen it rep&diated the tr&st by declaring the properties in its name for ta(ation p&rposes. <hen petitioner applied for registration of Dots 2 and + in !#E2, it had been in possession in concept of o ner only for eleven years. 5rdinary ac/&isitive prescription re/&ires possession for ten years, b&t al ays ith :&st title. E(traordinary ac/&isitive prescription re/&ires +" years. 5n the above findings of facts s&pported by evidence and eval&ated by the Co&rt of Appeals, affirmed by this Co&rt, <e see no error in respondent appellate co&rtCs r&ling that said findings are res :&dicata bet een the parties. ,hey can no longer be altered by presentation of evidence beca&se those iss&es ere resolved ith finality a long time ago. ,o ignore the principle of res :&dicata o&ld be to open the door to endless litigations by contin&o&s determination of iss&es itho&t end. >2? Private respondents ere able to prove that their predecessorsC ho&se as borro ed by petitioner Vicar after the ch&rch and the convent ere destroyed. ,hey never asked for the ret&rn of the ho&se, b&t hen they allo ed its free &se, they became bailors in commodat&m and the petitioner the bailee. ,he baileesC fail&re to ret&rn the s&b:ect matter of commodat&m to the bailor did not mean adverse possession on the part of the borro er. ,he bailee held in tr&st the property s&b:ect matter of commodat&m. ,he adverse claim of petitioner came only in !#.! hen it declared the lots for ta(ation p&rposes. ,he action of petitioner Vicar by s&ch adverse claim co&ld not ripen into title by ay of ordinary ac/&isitive prescription beca&se of the absence of :&st title. Motion for Reconsideration I--:e <ho is entitled to the possession and o nership of the land= He2* P&rs&ant to the said decision in CA-4.3. No. +--+"-3, the t o lots in /&estion remained part of the p&blic lands. ,his is the only logical concl&sion hen the appellate co&rt fo&nd that neither the petitioner nor private respondents are entitled to confirmation of imperfect title over said lots. 9ence, the Co&rt finds the contention of petitioner to be ell taken in that the trial co&rt and the appellate co&rt have no la f&l basis in ordering petitioner to ret&rn and s&rrender possession of said lots to private respondents. *aid property being a p&blic land its disposition is s&b:ect to the provision of the P&blic Dand Act, as amended. Article ... of the Civil Code provides as follo s; Art. .... A possessor may lose his possession; >8? By the possession of another, s&b:ect to the provisions of Article .+%, if the ne possession has lasted longer than one year. /ut the real ri+ht of possession is not lost till after the lapse of ten years. 7t is clear that the real right of possession of private respondents over the property as lost or no longer e(ists after the lapse of !" years that petitioner had been in adverse possession thereof. ,h&s, the action for recover of possession of said property filed by private respondents against petitioner m&st fail. ,he Co&rt, therefore, finds that the trial co&rt and the Co&rt of Appeals erred in declaring the private respondents to be entitled to the possession thereof. $&ch less can they pretend to be o ners thereof. *aid lots are part of the p&blic domain. EN BANC A&g&st !2, !#2% 4.3. No. 2E"-. SEVERINO TOLENTINO .,* POTENCIANA MANIO, plaintiffs-appellants, vs. (ENITO GON7ALE7 S8 CHIAM, defendants-appellee. Araneta and 0ara+o'a for appellants. (use*io %rense for appelle. )OHNSON, J.: P37NC7PAD LIE*,75N* P3E*EN,E@ BF ,9E APPEAD ,he principal /&estions presented by this appeal are; >a? 7s the contract in /&estion a pacto de retro or a mortgage= >*? Inder a pacto de retro, hen the vendor becomes a tenant of the p&rchaser and agrees to pay a certain amo&nt per month as rent, may s&ch rent render s&ch a contract
9|SMC Law

&s&rio&s hen the amo&nt paid as rent, comp&ted &pon the p&rchase price, amo&nts to a higher rate of interest &pon said amo&nt than that allo ed by la = >c? $ay the contract in the present case may be modified by parol evidence= AN,ECE@EN, 6AC,* *ometime prior to the 2-th day of November, !#22, the appellants p&rchased of the D&'on 3ice $ills, 7nc., a piece or parcel of land ith the camarin located thereon, sit&ated in the m&nicipality of ,arlac of the Province of ,arlac for the price of P2.,""", promising to pay therefor in three installments. ,he first installment of P2,""" as d&e on or before the 2d day of $ay, !#2!1 the second installment of P-,""" as d&e on or before +!st day of $ay, !#2!1 the balance of P!.,""" at !2 per cent interest as d&e and payable on or abo&t the +"th day of November, !#22. 5ne of the conditions of that contract of p&rchase as that on fail&re of the p&rchaser >plaintiffs and appellants? to pay the balance of said p&rchase price or any of the installments on the date agreed &pon, the property bo&ght o&ld revert to the original o ner. ,he payments d&e on the 2d and +!st of $ay, !#2!, amo&nting to P!",""" ere paid so far as the record sho s &pon the d&e dates. ,he balance of P!.,""" d&e on said contract of p&rchase as paid on or abo&t the !st day of @ecember, !#22, in the manner hich ill be e(plained belo . 5n the date hen the balance of P!.,""" ith interest as paid, the vendor of said property had iss&ed to the p&rchasers transfer certificate of title to said property, No. .2-. *aid transfer certificate of title >No. .2-? as transfer certificate of title from No. 8", hich sho s that said land as originally registered in the name of the vendor on the %th day of November, !#!+. P3E*EN, 6AC,* 5n the %th day of November, !#22 the representative of the vendor of the property in /&estion rote a letter to the appellant Potenciana $anio >E(hibit A, p. ."?, notifying the latter that if the balance of said indebtedness as not paid, an action o&ld be bro&ght for the p&rpose of recovering the property, together ith damages for non compliance ith the condition of the contract of p&rchase. ,he pertinent parts of said letter read as follo s; *irvase notar /&e de no estar li/&idada esta c&enta el dia +" del corriente, procederemos :&dicialmente contra Vd. para reclamar la devol&cion del camarin y los daPos y per:&icios ocasionados a la compaPia por s& inc&mplimiento al contrato. *omos de Vd. atentos y *. *. *$7,9, BEDD Q C5., D,@. By >*gd.? 6. 7. 9749A$ ,reas&rer. 4eneral $anagers DIO5N 37CE $7DD* 7NC. According to E(hibits B and @, hich represent the acco&nt rendered by the vendor, there as d&e and payable &pon said contract of p&rchase on the +"th day of November, !#22, the s&m P!E,#E.."#. Ipon receiving the letter of the vendor of said property of November %, !#22, the p&rchasers, the appellants herein, reali'ing that they o&ld be &nable to pay the balance d&e, began to make an effort to borro money ith hich to pay the balance d&e, began to make an effort to borro money ith hich to pay the balance of their indebtedness on the p&rchase price of the property involved. 6inally an application as made to the defendant for a loan for the p&rpose of satisfying their indebtedness to the vendor of said property. After some negotiations the defendants agreed to loan the plaintiffs to loan the plaintiffs the s&m of P!%,."" &pon condition that the plaintiffs e(ec&te and deliver to him a pacto de retro of said property. 7n accordance ith that agreement the defendant paid to the plaintiffs by means of a check the s&m of P!E,#E.."#. ,he defendant, in addition to said amo&nt paid by check, delivered to the plaintiffs the s&m of P+.8.#! together ith the s&m of P!-" hich the plaintiffs paid to the attorneys for drafting said contract of pacto de retro, making a total paid by the defendant to the plaintiffs and for the plaintiffs of P!%,."" &pon the e(ec&tion and delivery of said contract. *aid contracts as dated the 2-th day of November, !#22, and is in the ords and fig&res follo ing; Sepan todos por la presente1 L&e nosotros, los cony&ges Severino "olentino y Potenciana Manio , ambos mayores de edad, residentes en el $&nicipio de Cal&mpit, Provincia de B&lacan, propietarios y transe&ntes en esta Ci&dad de $anila, de una parte# y de otra# /enito Gon'ale' Sy Chiam, mayor de edad, casado con $aria *antiago, comerciante y vecinos de esta Ci&dad de $anila. $AN76E*,A$5* F 9ACE$5* C5N*,A3; Primero. L&e nosotros, *everino ,olentino y Potenciano $anio, por y en consideracion a la cantidad de diecisiete mil /&inientos pesos >P!%,.""? moneda filipina, /&e en este acto hemos recibido a n&estra entera satisfaccion de @on Benito 4on'ale' *y Chiam, cedemos, vendemos y traspasamos a favor de dicho @on Benito 4on'ale' *y Chiam, s&s herederos y ca&sahabientes, &na finca /&e, seg&n el Certificado de ,ransferencia de ,it&lo No. 8" e(pedido por el 3egistrador de ,it&los de la Provincia de ,arlac a favor de )$u'on Rice Mills Company $imited ) /&e al incorporarse se donomino y se denomina )$u'on Rice Mills .nc.,) y /&e esta corporacion nos ha transferido en venta absol&ta, se describe como sig&e; Un terreno >lote No. !? con las me:oras e(istentes en el mismo, sit&ado en el $&nicipio de ,arlac. Dinda por el 5. y N. con propiedad de $an&el Ir/&ico1 por el E. con propiedad de la $anila 3ailroad Co.1 y por el *. con &n camino. Partiendo de &n p&nto marcado ! en el plano, c&yo p&nto se halla al N. 8! gds. !%C E.-.#.82 m. del mo:on de locali'acion No. 2 de la 5ficina de ,errenos en ,arlac1 y desde dicho p&nto ! N. -! gds. +!C 5., %% m. al p&nto 21 desde este p&nto N. 8 gds. 22C E.1 .8.%" m. al p&nto +1 desde este p&nto *. -E gds. !%C E.1 E#.2. m. al p&nto 81 desde este p&nto *. 2 gds. 82C E., E!.8- m. al p&nto de partida1 midiendo &na e(tension s&perficcial de c&atro mil doscientos die' y seis metros
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c&adrados >8,2!E? mas o menos. ,odos los p&ntos nombrados se hallan marcados en el plano y sobre el terreno los p&ntos ! y 2 estan determinados por mo:ones de P. D. *. de 2" ( 2" ( %" centimetros y los p&ntos + y 8 por mo:ones del P. D. *. B. D.; la orientacion seg&ida es la verdadera, siendo la declinacion magnetica de " gds. 8.C E. y la fecha de la medicion, !.R de febrero de !#!+. *eg&ndo. L&e es condicion de esta venta la de /&e si en el pla'o de cinco >.? aPos contados desde el dia !.R de diciembre de !#22, devolvemos al e(presado @on Benito 4on'ale' *y Chiam el referido precio de diecisiete mil /&inientos pesos >P!%,.""? /&eda obligado dicho *r. Benito 4on'ale' y Chiam a retrovendernos la finca arriba descrita1 pero si transc&rre dicho pla'o de cinco aPos sin e:ercitar el derecho de retracto /&e nos hemos reservado, entonces /&edara esta venta absol&ta e irrevocable. ,ercero. L&e d&rante el e(presado termino del retracto tendremos en arrendamiento la finca arriba descrita, s&:eto a condiciones sig&ientes; >a? El al/&iler /&e nos obligamos a pagar por mens&alidades vencidas a @on Benito 4on'ale' *y Chiam y en s& domicilio, era de trescientos setenta y cinco pesos >P+%.? moneda filipina, cada mes. >*? El amillaramiento de la finca arrendada sera por c&enta de dicho @on Benito 4on'ale' *y Chiam, asi como tambien la prima del seg&ro contra incendios, si el conviniera al referido *r. Benito 4on'ale' *y Chiam aseg&rar dicha finca. >c? Da falta de pago del al/&iler a/&i estip&lado por dos meses consec&tivos dara l&gar a la terminacion de este arrendamieno y a la perdida del derecho de retracto /&e nos hemos reservado, como si nat&ralmente h&biera e(pirado el termino para ello, p&diendo en s& virt&d dicho *r. 4on'ale' *y Chiam tomar posesion de la finca y desah&ciarnos de la misma. C&arto. L&e yo, Benito 4on'ale' *y Chiam, a mi ve' otorgo /&e acepto esta escrit&ra en los precisos terminos en /&e la de:an otorgada los cony&ges *everino ,olentino y Potenciana $anio. En testimonio de todo lo c&al, firmamos la presente de n&estra mano en $anila, por c&adr&plicado en $anila, hoy a 2- de noviembre de !#22. >6do.? *EVE37N5 ,5DEN,7N5 >6da.? P5,ENC7ANA $AN75 >6do.? BEN7,5 45NOADEO *F C97A$ 6irmado en presencia de; >6dos.? $57*E* $. BI9A7N B. *. BANAA4 An e(amination of said contract of sale ith reference to the first /&estion above, sho s clearly that it is a pacto de retro and not a mortgage. ,here is no pretension on the part of the appellant that said contract, standing alone, is a mortgage. ,he pertinent lang&age of the contract is; *eg&ndo. L&e es condicion de esta venta la de /&e si en el pla'o de cinco >.? aPos contados desde el dia !.R de diciembre de !#22, devolvemos al e(presado @on Benito 4on'ales *y Chiam el referido precio de diecisiete mil /&inientos pesos >P!%,.""? /&eda obligado dicho *r. Benito 4on'ales *y Chiam a retrovendornos la finca arriba descrita1 pero si transc&rre dicho pla'o de cinco >.? aPos sin e:ercitar al derecho de retracto /&e nos hemos reservado, entonces /&edara esta venta absol&ta e irrevocable. Dang&age cannot be clearer. ,he p&rpose of the contract is e(pressed clearly in said /&otation that there can certainly be not do&bt as to the p&rpose of the plaintiff to sell the property in /&estion, reserving the right only to rep&rchase the same. ,he intention to sell ith the right to rep&rchase cannot be more clearly e(pressed. 7t ill be noted from a reading of said sale of pacto de retro, that the vendor, recogni'ing the absol&te sale of the property, entered into a contract ith the p&rchaser by virt&e of hich she became the )tenant) of the p&rchaser. ,hat contract of rent appears in said /&oted doc&ment above as follo s; ,ercero. L&e d&rante el e(presado termino del retracto tendremos en arrendamiento la finca arriba descrita, s&:eto a condiciones sig&ientes; >a? El al/&iler /&e nos obligamos a pagar por mens&alidades vencidas a @on Benito 4on'ale' *y Chiam y en s& domicilio, sera de trescientos setenta y cinco pesos >P+%.? moneda filipina, cada mes. >*? El amillaramiento de la finca arrendada sera por c&enta de dicho @on Benito 4on'ale' *y Chiam, asi como tambien la prima del seg&ro contra incendios, si le conviniera al referido *r. Benito 4on'ale' *y Chiam aseg&rar dicha finca. 6rom the foregoing, e are driven to the follo ing concl&sions; 2irst, that the contract of pacto de retro is an absol&te sale of the property ith the right to rep&rchase and not a mortgage1 and, second, that by virt&e of the said contract the vendor became the tenant of the p&rchaser, &nder the conditions mentioned in paragraph + of said contact /&oted above. 7t has been the &niform theory of this co&rt, d&e to the severity of a contract of pacto de retro, to declare the same to be a mortgage and not a sale henever the interpretation of s&ch a contract :&stifies that concl&sion. ,here m&st be something, ho ever, in the lang&age of the contract or in the cond&ct of the parties hich sho s clearly and beyond do&bt that they intended the contract to be a )mortgage) and not a pacto de retro. >7nternational Banking Corporation vs. $artine', !" Phil., 2.21 Padilla vs.Dinsangan, !# Phil., E.1 C&mag&n vs. Alingay, !# Phil., 8!.1 5lino vs. $edina, !+ Phil., +%#1 $analo vs. 4&eco, 82 Phil., #2.1 Vela'/&e' vs. ,eodoro, 8E Phil., %.%1 Villa vs. *antiago, +- Phil., !.%.?
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<e are not &nmindf&l of the fact that sales ith pacto de retro are not favored and that the co&rt ill not constr&e an instr&ment to one of sale ith pacto de retro, ith the stringent and onero&s effect hich follo s, &nless the terms of the doc&ment and the s&rro&nding circ&mstances re/&ire it. <hile it is general r&le that parol evidence is not admissible for the p&rpose of varying the terms of a contract, b&t hen an iss&e is s/&arely presented that a contract does not e(press the intention of the parties, co&rts ill, hen a proper fo&ndation is laid therefor, hear evidence for the p&rpose of ascertaining the tr&e intention of the parties. 7n the present case the plaintiffs allege in their complaint that the contract in /&estion is a pacto de retro. ,hey admit that they signed it. ,hey admit they sold the property in /&estion ith the right to rep&rchase it. ,he terms of the contract /&oted by the plaintiffs to the defendant as a )sale) ith pacto de retro, and the plaintiffs have sho n no circ&mstance hatever hich o&ld :&stify &s in constr&ing said contract to be a mere )loan) ith g&aranty. 7n every case in hich this co&rt has constr&ed a contract to be a mortgage or a loan instead of a sale ith pacto de retro, it has done so, either beca&se the terms of s&ch contract ere incompatible or inconsistent ith the theory that said contract as one of p&rchase and sale. >5lino vs. $edina, supra1 Padillavs. Dinsangan, supra1 $anlagnit vs. @y P&ico, +8 Phil., +2.1 3odrig&e' vs. Pamint&an and @e 0es&s, +% Phil., -%E.? 7n the case of Padilla vs. Dinsangan the term employed in the contract to indicate the nat&re of the conveyance of the land as )pledged) instead of )sold). 7n the case of $anlagnit vs. @y P&ico, hile the vendor &sed to the terms )sale and transfer ith the right to rep&rchase,) yet in said contract he described himself as a )debtor) the p&rchaser as a )creditor) and the contract as a )mortgage). 7n the case of Rodri+ue' vs. Pamintuan and !e ,esus the person ho e(ec&ted the instr&ment, p&rporting on its face to be a deed of sale of certain parcels of land, had merely acted &nder a po er of attorney from the o ner of said land, )a&thori'ing him to borro money in s&ch amo&nt and &pon s&ch terms and conditions as he might deem proper, and to sec&re payment of the loan by a mortgage.) 7n the case of Villa vs. Santia+o >+- Phil., !.%?, altho&gh a contract p&rporting to be a deed of sale as e(ec&ted, the s&pposed vendor remained in possession of the land and invested the money he had obtained from the s&pposed vendee in making improvements thereon, hich fact :&stified the co&rt in holding that the transaction as a mere loan and not a sale. 7n the case of Cuyu+an vs. Santos >+# Phil., #%"?, the p&rchaser accepted partial payments from the vendor, and s&ch acceptance of partial payments is absol&tely incompatible ith the idea of irrevocability of the title of o nership of the p&rchaser at the e(piration of the term stip&lated in the original contract for the e(ercise of the right of rep&rchase.) 3eferring again to the right of the parties to vary the terms of ritten contract, e /&ote from the dissenting opinion of Chief 0&stice Cayetano *. Arellano in the case of 4overnment of the Philippine 7slands vs. Philippine *&gar Estates @evelopment Co., hich case as appealed to the *&preme Co&rt of the Inited *tates and the contention of the Chief 0&stice in his dissenting opinion as affirmed and the decision of the *&preme Co&rt of the Philippine 7slands as reversed. >*ee decision of the *&preme Co&rt of the Inited *tates, 0&ne +, !#!-.?AA!BB ,he Chief 0&stice said in disc&ssing that /&estion; According to article !2-2 of the Civil Code, in order to :&dge of the intention of the contracting parties, consideration m&st chiefly be paid to those acts e(ec&ted by said parties hich are contemporary ith and s&bse/&ent to the contract. And according to article !2-+, ho ever general the terms of a contract may be, they m&st not be held to incl&de things and cases different from those ith regard to hich the interested parties agreed to contract. ),he *&preme Co&rt of the Philippine 7slands held the parol evidence as admissible in that case to vary the terms of the contract bet een the 4overnment of the Philippine 7slands and the Philippine *&gar Estates @evelopment Co. 7n the co&rse of the opinion of the *&preme Co&rt of the Inited *tates $r. 0&stice Brandeis, speaking for the co&rt, said; 7t is ell settled that co&rts of e/&ity ill reform a ritten contract here, o ing to m&t&al mistake, the lang&age &sed therein did not f&lly or acc&rately e(press the agreement and intention of the parties. ,he fact that interpretation or constr&ction of a contract presents a /&estion of la and that, therefore, the mistake as one of la is not a bar to granting relief. . . . ,his co&rt is al ays disposed to accept the constr&ction hich the highest co&rt of a territory or possession has placed &pon a local stat&te. B&t that disposition may not be yielded to here the lo er co&rt has clearly erred. 9ere the constr&ction adopted as rested &pon a clearly erroneo&s ass&mption as to an established r&le of e/&ity. . . . ,he b&rden of proof resting &pon the appellant cannot be satisfied by mere preponderance of the evidence. 7t is settled that relief by ay of reformation ill not be granted &nless the proof of m&t&al mistake be of the clearest and most satisfactory character. ,he evidence introd&ced by the appellant in the present case does not meet ith that stringent re/&irement. ,here is not a ord, a phrase, a sentence or a paragraph in the entire record, hich :&stifies this co&rt in holding that the said contract of pacto de retro is a mortgage and not a sale ith the right to rep&rchase. Article !2-! of the Civil Code provides; )7f the terms of a contract are clear and leave no do&bt as to the intention of the contracting parties, the literal sense of its stip&lations shall be follo ed.) Article !2-2 provides; )in order to :&dge as to the intention of the contracting parties, attention m&st be paid principally to their cond&ct at the time of making the contract and s&bse/&ently thereto.) <e cannot thereto concl&de this branch of o&r disc&ssion of the /&estion involved, itho&t /&oting from that very ell reasoned decision of the late Chief 0&stice Arellano, one of the greatest :&rists of his time. 9e said, in disc&ssing the /&estion hether or not the contract, in the case of $ichauco vs. /eren+uer >2" Phil., !2?, as apacto de retro or a mortgage; ,he p&blic instr&ment, E(hibit C, in part reads as follo s; )@on $acarion Bereng&er declares and states that he is the proprietor in fee simple of t o parcels of fallo &nappropriated cro n land sit&ated ithin the district of his p&eblo. ,he first has an area of %+ 3ui4ones, - *alitas and - loanes, located in the sitio of Batasan, and its bo&ndaries are, etc., etc. ,he second is in the sitio of Panantaglay, barrio of Cal&mpang has as area of %+ hectares, 22 ares, and E centares, and is bo&nded on the north, etc., etc.) 7n the e(ec&tory part of the said instr&ment, it is stated;
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C,hat &nder condition of right to rep&rchase > pacto de retro? he sells the said properties to the aforementioned @oPa Cornelia Daochangco for P8,""" and &pon the follo ing conditions; 6irst, the sale stip&lated shall be for the period of t o years, co&nting from this date, ithin hich time the deponent shall be entitled to rep&rchase the land sold &pon payment of its price1 second, the lands sold shall, d&ring the term of the present contract, be held in lease by the &ndersigned ho shall pay, as rental therefor, the s&m of 8"" pesos per ann&m, or the e/&ivalent in s&gar at the option of the vendor1 third, all the fr&its of the said lands shall be deposited in the s&gar depository of the vendee, sit&ated in the district of L&iapo of this city, and the val&e of hich shall be applied on acco&nt of the price of this sale1 fo&rth, the deponent ackno ledges that he has received from the vendor the p&rchase price of P8,""" already paid, and in legal tender c&rrency of this co&ntry . . .1 fifth, all the ta(es hich may be assessed against the lands s&rveyed by competent a&thority, shall be payable by and constit&te a charge against the vendor1 si(th, if, thro&gh any &n&s&al event, s&ch as flood, tempest, etc., the properties hereinbefore en&merated sho&ld be destroyed, holly or in part, it shall be inc&mbent &pon the vendor to repair the damage thereto at his o n e(pense and to p&t them into a good state of c&ltivation, and sho&ld he fail to do so he binds himself to give to the vendee other lands of the same area, /&ality and val&e.C ((( ((( ((( nor other meaning than the ill to impose &pon oneself scr&p&lo&s diligence in the care of a thing belonging to another. ,he p&rchase and sale, once cons&mmated, is a contract hich by its nat&re transfers the o nership and other rights in the thing sold. A pacto de retro, or sale ith right to rep&rchase, is nothing b&t a personal right stip&lated bet een the vendee and the vendor, to the end that the latter may again ac/&ire the o nership of the thing alienated. 7t is tr&e, very tr&e indeed, that the sale ith right of rep&rchase is employed as a method of loan1 it is like ise tr&e that in practice many cases occ&r here the cons&mmation of a pacto de retro sale means the financial r&in of a person1 it is also, &n/&estionable that in pacto de retro sales very important interests often intervene, in the form of the price of the lease of the thing sold, hich is stip&lated as an additional covenant. >$anresa, Civil Code, p. 2%8.? B&t in the present case, &nlike others heard by this co&rt, there is no proof that the sale ith right of rep&rchase, made by Bereng&er in favor of Daonchangco is rather a mortgage to sec&re a loan. <e come no to a disc&ssion of the second /&estion presented above, and that is, stating the same in another form; $ay a tenant charge his landlord ith a violation of the Is&ry Da &pon the gro&nd that the amo&nt of rent he pays, based &pon the real val&e of the property, amo&nts to a &s&rio&s rate of interest= <hen the vendor of property &nder a pacto de retro rents the property and agrees to pay a rental val&e for the property d&ring the period of his right to rep&rchase, he thereby becomes a )tenant) and in all respects stands in the same relation ith the p&rchaser as a tenant &nder any other contract of lease. ,he appellant contends that the rental price paid d&ring the period of the e(istence of the right to rep&rchase, or the s&m of P+%. per month, based &pon the val&e of the property, amo&nted to &s&ry. Is&ry, generally speaking, may be defined as contracting for or receiving something in e(cess of the amo&nt allo ed by la for the loan or forbearance of moneyGthe taking of more interest for the &se of money than the la allo s. 7t seems that the taking of interest for the loan of money, at least the taking of e(cessive interest has been regarded ith abhorrence from the earliest times. >@&nham vs. 4o&ld, !E 0ohnson AN. F.B, +E%.? @&ring the middle ages the people of England, and especially the English Ch&rch, entertained the opinion, then, c&rrent in E&rope, that the taking of any interest for the loan of money as a detestable vice, hatef&l to man and contrary to the la s of 4od. >+ CokeCs 7nstit&te, !."1 ,ayler on Is&ry, 88.? Chancellor Hent, in the case of !unham vs. Gould, supra, said; )7f e look back &pon history, e shall find that there is scarcely any people, ancient or modern, that have not had &s&ry la s. . . . ,he 3omans, thro&gh the greater part of their history, had the deepest abhorrence of &s&ry. . . . 7t ill be deemed a little sing&lar, that the same voice against &s&ry sho&ld have been raised in the la s of China, in the 9ind& instit&tes of $en&, in the Horan of $ahomet, and perhaps, e may say, in the la s of all nations that e kno of, hether 4reek or Barbarian.)
,he opponent maintained, and his theory as accepted by the trial co&rt, that Bereng&erCs contract ith Daochangco as not one of sale ith right of rep&rchase, b&t merely one of loan sec&red by those properties, and, conse/&ently, that the o nership of the lands in /&estions co&ld not have been conveyed to Daochangco, inasm&ch as it contin&ed to be held by Bereng&er, as ell as their possession, hich he had not ceased to en:oy. *&ch a theory is, as arg&ed by the appellant, erroneo&s. ,he instr&ment e(ec&ted by $acario Bereng&er, the te(t of hich has been transcribed in this decision, is very clear. Bereng&erCs heirs may not go co&nter to the literal tenor of the obligation, the e(act e(pression of the consent of the contracting contained in the instr&ment, E(hibit C. Not beca&se the lands may have contin&ed in possession of the vendor, not beca&se the latter may have ass&med the payment of the ta(es on s&ch properties, nor yet beca&se the same party may have bo&nd himself to s&bstit&te by another any one of the properties hich might be destroyed, does the contract cease to be hat it is, as set forth in detail in the p&blic instr&ment. ,he vendor contin&ed in the possession of the lands, not as the o ner thereof as before their sale, b&t as the lessee hich he became after its cons&mmation, by virt&e of a contract e(ec&ted in his favor by the vendee in the deed itself, E(hibit C. 3ight of o nership is not implied by the circ&mstance of the lesseeCs ass&ming the responsibility of the payment is of the ta(es on the property leased, for their payment is not pec&liarly inc&mbent &pon the o ner, nor is s&ch right implied by the obligation to s&bstit&te the thing sold for another hile in his possession &nder lease, since that obligation came from him and he contin&es &nder another character in its possessionGa reason hy he g&arantees its integrity and obligates himself to ret&rn the thing even in a case of force ma&eure. *&ch liability, as a general r&le, is foreign to contracts of lease and, if re/&ired, is e(orbitant, b&t possible and la f&l, if vol&ntarily agreed to and s&ch agreement does not on this acco&nt involve any sign of o nership,
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,he collection of a rate of interest higher than that allo ed by la is condemned by the Philippine Degislat&re >Acts Nos. 2E.., 2EE2 and 2##2?. B&t is it &nla f&l for the o ner of a property to enter into a contract ith the tenant for the payment of a specific amo&nt of rent for the &se and occ&pation of said property, even tho&gh the amo&nt paid as )rent,) based &pon the val&e of the property, might e(ceed the rate of interest allo ed by la = ,hat /&estion has never been decided in this :&risdiction. 7t is one of first impression. No cases have been fo&nd in this :&risdiction ans ering that /&estion. Act No. 2E.. is )An Act fi(ing rates of interest &pon CloansC and declaring the effect of receiving or taking &s&rio&s rates.) 7t ill be noted that said stat&te imposes a penalty &pon a )loan) or forbearance of any money, goods, chattels or credits, etc. ,he central idea of said stat&te is to prohibit a rate of interest on )loans.) A contract of )loan,) is very different contract from that of )rent). A )loan,) as that term is &sed in the stat&te, signifies the giving of a s&m of money, goods or credits to another, ith a promise to repay, b&t not a promise to ret&rn the same thing. ,o )loan,) in general parlance, is to deliver to another for temporary &se, on condition that the thing or its e/&ivalent be ret&rned1 or to deliver for temporary &se on condition that an e/&ivalent in kind shall be ret&rned ith a compensation for its &se. ,he ord )loan,) ho ever, as &sed in the stat&te, has a technical meaning. 7t never means the ret&rn of the same thing. 7t means the ret&rn of an e/&ivalent only, b&t never the same thing loaned. A )loan) has been properly defined as an advance payment of money, goods or credits &pon a contract or stip&lation to repay, not to ret&rn, the thing loaned at some f&t&re day in accordance ith the terms of the contract. Inder the contract of )loan,) as &sed in said stat&te, the moment the contract is completed the money, goods or chattels given cease to be the property of the former o ner and becomes the property of the obligor to be &sed according to his o n ill, &nless the contract itself e(pressly provides for a special or specific &se of the same. At all events, the money, goods or chattels, the moment the contract is e(ec&ted, cease to be the property of the former o ner and becomes the absol&te property of the obligor. A contract of )loan) differs materially from a contract of )rent.) 7n a contract of )rent) the o ner of the property does not lose his o nership. 9e simply loses his control over the property rented d&ring the period of the contract. 7n a contract of )loan) the thing loaned becomes the property of the obligor. 7n a contract of )rent) the thing still remains the property of the lessor. 9e simply loses control of the same in a limited ay d&ring the period of the contract of )rent) or lease. 7n a contract of )rent) the relation bet een the contractors is that of landlord and tenant. 7n a contract of )loan) of money, goods, chattels or credits, the relation bet een the parties is that of obligor and obligee. )3ent) may be defined as the compensation either in money, provisions, chattels, or labor, received by the o ner of the soil from the occ&pant thereof. 7t is defined as the ret&rn or compensation for the possession of some corporeal inheritance, and is a profit iss&ing o&t of lands or tenements, in ret&rn for their &se. 7t is that, hich is to paid for the &se of land, hether in money, labor or other thing agreed &pon. A contract of )rent) is a contract by hich one of the parties delivers to the other some noncons&mable thing, in order that the latter may &se it d&ring a certain period and ret&rn it to the former1 hereas a contract of )loan), as that ord is &sed in the stat&te, signifies the delivery of money or other cons&mable things &pon condition of ret&rning an e/&ivalent amo&nt of the same kind or /&antity, in hich cases it is called merely a )loan.) 7n the case of a contract of )rent,) &nder the civil la , it is called a )commodat&m.) 6rom the foregoing it ill be seen that there is a hile distinction bet een a contract of )loan,) as that ord is &sed in the stat&te, and a contract of )rent) even tho&gh those ords are &sed in ordinary parlance as interchangeable terms. ,he val&e of money, goods or credits is easily ascertained hile the amo&nt of rent to be paid for the &se and occ&pation of the property may depend &pon a tho&sand different conditions1 as for e(ample, farm lands of e(actly e/&al prod&ctive capacity and of the same physical val&e may have a different rental val&e, depending &pon location, prices of commodities, pro(imity to the market, etc. 9o&ses may have a different rental val&e d&e to location, conditions of b&siness, general prosperity or depression, adaptability to partic&lar p&rposes, even tho&gh they have e(actly the same original cost. A store on the Escolta, in the center of b&siness, constr&cted e(actly like a store located o&tside of the b&siness center, ill have a m&ch higher rental val&e than the other. , o places of b&siness located in different sections of the city may be constr&cted e(actly on the same architect&ral plan and yet one, d&e to partic&lar location or adaptability to a partic&lar b&siness hich the lessor desires to cond&ct, may have a very m&ch higher rental val&e than one not so located and not so ell adapted to the partic&lar b&siness. A very cheap b&ilding on the carnival gro&nd may rent for more money, d&e to the partic&lar circ&mstances and s&rro&ndings, than a m&ch more val&able property located else here. 7t ill th&s be seen that the rent to be paid for the &se and occ&pation of property is not necessarily fi(ed &pon the val&e of the property. ,he amo&nt of rent is fi(ed, based &pon a tho&sand different conditions and may or may not have any direct reference to the val&e of the property rented. ,o hold that )&s&ry) can be based &pon the comparative act&al rental val&e and the act&al val&e of the property, is to s&b:ect every landlord to an annoyance not contemplated by the la , and o&ld create a very great dist&rbance in every b&siness or r&ral comm&nity. <e cannot bring o&rselves to believe that the Degislat&re contemplated any s&ch dist&rbance in the e/&ilibri&m of the b&siness of the co&ntry. 7n the present case the property in /&estion as sold. 7t as an absol&te sale ith the right only to rep&rchase. @&ring the period of redemption the p&rchaser as the absol&te o ner of the property. @&ring the period of redemption the vendor as not the o ner of the property. @&ring the period of redemption the vendor as a tenant of the p&rchaser. @&ring the period of redemption the relation hich e(isted bet een the vendor and the vendee as that of landlord and tenant. ,hat relation can only be terminated by a rep&rchase of the property by the vendor in accordance ith the terms of the said contract. ,he contract as one of rent. ,he contract as not a loan, as that ord is &sed in Act No. 2E... As obno(io&s as contracts of pacto de retro are, yet nevertheless, the co&rts have no right to make contracts for parties. ,hey made their o n contract in the present case. ,here is not a ord, a phrase, a sentence or paragraph, hich in the slightest ay indicates that the parties to the contract in /&estion did not intend to sell the property in /&estion absol&tely, simply ith the right to rep&rchase. People ho make their o n beds m&st lie thereon.
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<hat has been said above ith reference to the right to modify contracts by parol evidence, s&fficiently ans ers the third /&estions presented above. ,he lang&age of the contract is e(plicit, clear, &nambig&o&s and beyond /&estion. 7t e(presses the e(act intention of the parties at the time it as made. ,here is not a ord, a phrase, a sentence or paragraph fo&nd in said contract hich needs e(planation. ,he parties thereto entered into said contract ith the f&ll &nderstanding of its terms and sho&ld not no be permitted to change or modify it by parol evidence. <ith reference to the improvements made &pon said property by the plaintiffs d&ring the life of the contract, E(hibit C, there is hereby reserved to the plaintiffs the right to e(ercise in a separate action the right g&aranteed to them &nder article +E! of the Civil Code. 6or all of the foregoing reasons, e are f&lly pers&aded from the facts of the record, in relation ith the la applicable thereto, that the :&dgment appealed from sho&ld be and is hereby affirmed, ith costs. *o ordered. EN BANC G.R. No. L-15205 Febr:.r3 1#, 1922 ,he essential facts constit&ting the basis of the criminal action are not in disp&te, and may be stated as follo s; >!? ,hat on the +"th day of @ecember, !#!., the alleged offended persons Bartolome 5liveros and Engracia Dianco e(ec&ted and delivered to the defendants a contract >E(hibit B? evidencing the fact that the former had borro ed from the latter the s&m of P+"", and >2? that, by virt&e of the terms of said contract, the said Bartolome 5liveros and Engracia Dianco obligated themselves to pay to the defendants interest at the rate of five per cent >.K? per month, payable ithin the first ten days of each and every month, the first payment to be made on the !"th day of 0an&ary, !#!E. ,here ere other terms in the contract hich, ho ever, are not important for the decision in the present case. ,he lo er co&rt, in the co&rse of its opinion, stated that at the time of the e(ec&tion and delivery of said contract >E(hibit B?, there as no la in force in the Philippine 7slands p&nishing &s&ry1 b&t, inasm&ch as the defendants had collected a &s&rio&s rate of interest after the adoption of the Is&ry Da in the Philippine 7slands >Act No. 2E..?, they ere g&ilty of a violation of that la and sho&ld be p&nished in accordance ith its provisions. ,he la , e think, is ell established that hen a contract contains an obligation to pay interest &pon the principal, the interest thereby becomes part of the principal and is incl&ded ithin the promise to pay. 7n other ords, the obligation to pay interest on money d&e &nder a contract, be it e(press or implied, is a part of the obligation of the contract. Da s adopted after the e(ec&tion of a contract, changing or altering the rate of interest, cannot be made to apply to s&ch contract itho&t violating the provisions of the constit&tion hich prohibit the adoption of a la )impairing the obligation of contract.) >Cyc., ##E1 !2 Corp&s 0&ris, !".--!".#.? ,he obligation of the contract is the la hich binds the parties to perform their agreement if it is not contrary to the la of the land, morals or p&blic order. ,hat la m&st govern and control the contract in every aspect in hich it is intended to bear &pon it, hether it affect its validity, constr&ction, or discharge. Any la hich enlarges, abridges, or in any manner changes the intention of the parties, necessarily impairs the contract itself. 7f a la impairs the obligation of a contract, it is prohibited by the 0ones Da , and is n&ll and void. ,he la s in force in the Philippine 7slands prior to any legislation by the American sovereignty, prohibited the Degislat&re from giving to any penal la a retroactive effect &nless s&ch la as favorable to the person acc&sed. >Articles 2! and 22, Penal Code.? A la imposing a ne penalty, or a ne liability or disability, or giving a ne right of action, m&st not be constr&ed as having a retroactive effect. 7t is an elementary r&le of contract that the la s in force at the time the contract as made m&st govern its interpretation and application. Da s m&st be constr&ed prospectively and not retrospectively. 7f a contract is legal at its inception, it cannot be rendered illegal by any s&bse/&ent legislation. 7f that ere permitted then the obligations of a contract might be impaired, hich is prohibited by the organic la of the Philippine 7slands. >I.*. vs. Constantino ,an L&ingco Ch&a, +# Phil., ..21 Ag&ilar vs. 3&biato and 4on'ales Vila, 8" Phil., .%".? (5 post facto la s, &nless they are favorable to the defendant, are prohibited in this :&risdiction. Every la that makes an action, done before the passage of the la , and hich as innocent hen done, criminal, and p&nishes s&ch action, is an e( post facto
THE !NITED STATES, plaintiff-appellee, vs. VICENTE DIA7 CONDE .,* APOLINARIA R. DE CONDE, defendants-appellants. Araneta ) 0ara+o'a for appellants. Attorney-General Villareal for appellee. )OHNSON, J.: 7t appears from the record that on the Eth day of $ay, !#2!, a complaint as presented in the Co&rt of 6irst 7nstance of the city of $anila, charging the defendants ith a violation of the Is&ry Da >Act No. 2E..?. Ipon said complaint they ere each arrested, arraigned, and pleaded not g&ilty. ,he ca&se as finally bro&ght on for trial on the !st day of *eptember, !#2!. At the close of the trial, and after a consideration of the evidence add&ced, the 9onorable $. V. del 3osario, :&dge, fo&nd that the defendants ere g&ilty of the crime charged in the complaint and sentenced each of them to pay a fine of P!2" and, in case of insolvency, to s&ffer s&bsidiary imprisonment in accordance ith the provisions of the la . 6rom that sentence each of the defendants appealed to this co&rt. ,he appellants no contend; >a? ,hat the contract &pon hich the alleged &s&rio&s interest as collected as e(ec&ted before Act No. 2E.. as adopted1 > *? that at the time said contract as made >@ecember +", !#!.?, there as no &s&ry la in force in the Philippine 7slands1 >c? that said Act No. 2E.. did not become effective &ntil the !st day of $ay, !#!E, or fo&r months and a half after the contract in /&estion as e(ec&ted1 > d? that said la co&ld have no retroactive effect or operation, and > e? that said la impairs the obligation of a contract, and that for all of said reasons the :&dgment imposed by the lo er co&rt sho&ld be revoked1 that the complaint sho&ld be dismissed, and that they sho&ld each be discharged from the c&stody of the la .
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la . 7n the present case Act No. 2E.. made an act hich had been done before the la as adopted, a criminal act, and to make said Act applicable to the act complained of o&ld be to give it an e( post facto operation. ,he Degislat&re is prohibited from adopting a la hich ill make an act done before its adoption a crime. A la may be given a retroactive effect in civil action, providing it is c&rative in character, b&t e( post facto la s are absol&tely prohibited &nless its retroactive effect is favorable to the defendant. 6or the reason, therefore, that the acts complained of in the present case ere legal at the time of their occ&rrence, they cannot be made criminal by any s&bse/&ent or e( post facto legislation. <hat the co&rts may say, considering the provisions of article !2.. of the Civil Code, hen a civil action is bro&ght &pon said contract, cannot no be determined. A contract may be ann&lled by the co&rts hen it is sho n that it is against morals or p&blic order. 6or all of the foregoing reasons, e are of the opinion, and so decide, that the acts complained of by the defendants did not constit&te a crime at the time they ere committed, and therefore the sentence of the lo er co&rt sho&ld be, and is hereby, revoked1 and it is hereby ordered and decreed that the complaint be dismissed, and that the defendants be discharged from the c&stody of the la , ith costs de oficio. *o ordered. *EC5N@ @7V7*75N G.R. No. """9& ).,:.r3 29, 1955 ;ILFREDO VERDE)O, petitioner, vs. THE HON. CO!RT OF APPEALS, HON. SOFRONIO G. SA8O, Pre-+*+,4 ):*4e, RTC, (r. III, P.-.3 C+%3, .,* HERMINIA PATINIO, ET AL., respondents. RESOL!TION amo&nting to PE",.""."", hich said 9erminia Patinio had allegedly borro ed from him b&t failed to pay hen it became d&e, not ithstanding demands. 1 Ans ering, 9erminia Patinio admitted having obtained loans from the petitioner b&t claimed that the amo&nt borro ed by her as very m&ch less than the amo&nt demanded in the complaint, hich amo&nt she had already paid or settled, and that the petitioner had e(acted or charged interest on the loan ranging from !"K to !2K per month, hich is e(orbitant and in gross violation of the Is&ry Da . <herefore she prayed that she be reimb&rsed the &s&rio&s interests charged and paid. *he also asked for damages, attorneyCs fees and costs of s&it. 2 After trial co&rt on + *eptember !#-E, the trial co&rt rendered 0&dgment, as follo s; <9E3E653E, :&dgment is hereby rendered dismissing plaintiffCs complaint for lack of merit. 5n defendantsC co&nterclaim plaintiff is hereby ordered to ref&nd to defendants the amo&nt of P!+,-#"."" and to f&rther pay to defendants the amo&nt of P.,"""."" as attorneyCs fees and the costs of this s&it. 9 Co&nsel for the petitioner received a copy of the trial co&rtCs decision on . *eptember !#-E, and on !# *eptember !#-E, he sent a notice of appeal to the co&rt by special delivery. ,he notice of appeal as received by the co&rt on 2E *eptember !#-E. 5n that same day the co&rt also received the motion for e(ec&tion filed by the private respondent, 9erminia Patinio. # ,he petitioner opposed the motion claiming that he had already filed a notice of appeal thro&gh the mail so that the motion for e(ec&tion as improper. & ,he private respondent, ho ever, replied that the petitionerCs notice of appeal as filed beyond the reglementary period and reiterated her prayer for the iss&ance of a rit of e(ec&tion. ' 3esolving the matter, the trial co&rt iss&ed an 5rder on - 5ctober !#-E, the dispositive part of hich reads as follo s; <9E3E653E, as plaintiffCs Notice of appeal the same is hereby @EN7E@. as filed beyond the reglementary period,
PADILLA, J.: Petition for revie on certiorari of the decision < rendered by the respondent appellate co&rt, dated 2- November !#-E, in CA-4.3. No. *P-!"82# entitled; ) 6ilfredo Verde&o# petitioner, versus -on. Sofronio Sayo# etc.# et al., respondents), hich dismissed the petition to ann&l and set aside the order, dated - 5ctober !#-E, directing the iss&ance of a rit of e(ec&tion in Civil Case No. 2.8E-P of the 3egional ,rial Co&rt of Pasay City, as ell as the 3esol&tion, dated . $arch !#-%, hich denied the petitionerCs motion for reconsideration of said decision of 2- November !#-E. ,he pertinent facts of the case are as follo s; 5n 2" @ecember !#-8, the herein petitioner filed a complaint against the private respondent 9erminia Patinio and one 0ohn @oe before the 3egional ,rial Co&rt of Pasay City, docketed therein as Civil Case No. 2.8E-P, for collection of a s&m of money
As the :&dgment rendered herein has become final and e(ec&tory, let the corresponding <rit of E(ec&tion iss&e to enforce the same. " ,hereafter, the petitioner filed a petition for certiorari before the Co&rt of Appeals, docketed therein as CA-4.3. No. *P-!"82#, to ann&l said 5rder of - 5ctober !#-E. 5 ,he appellate co&rt, ho ever, as aforestated, dismissed the petition in a @ecision dated 2November !#-E. 9 ,he petitioner filed a motion for reconsideration of the decision, b&t his motion as denied in a 3esol&tion dated . $arch !#-%. 10 9ence, the petitionerCs present reco&rse.
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,he only iss&e in this petition is hether or not the Co&rt sho&ld allo an appeal here the notice of appeal as sent by special delivery mail ithin the period for perfection of appeals, b&t received in co&rt after the e(piration of said period. 6or the proper e(ercise of the right to appeal, the petitioner sho&ld have complied *ection !, 3&le !+ of the 3&les of Co&rt hich reads as follo s; ith petitioner and, thereafter, ded&cted therefrom the amo&nts given as loan to the private respondent and considered the e(cess amo&nt &s&rio&s, itho&t apparently considering the la f&l interest that may be collected on said loans. 5nly &s&rio&s interests may be reimb&rsed. ,o prevent a miscarriage of :&stice, the petitioner sho&ld be allo ed to prosec&te his appeal. ACC53@7N4DF, the petition is 43AN,E@. ,he /&estioned @ecision and 3esol&tion iss&ed by the respondent Co&rt of Appeals on 2- November !#-E and . $arch !#-%, respectively, in CA-4.3. No. *P-!"82#, as ell as the 5rder iss&ed by the 3egional ,rial Co&rt of Pasay City in Civil Case No. 2.8E-P on - 5ctober !#-E, are hereby ANNIDDE@ and *E, A*7@E and another one entered approving the notice of appeal filed by the petitioner. <itho&t costs. *5 53@E3E@. EN (ANC =G.R. No. 19"05. ).,:.r3 29, 1919. > THE !NITED STATES, P2.+,%+00-A66e22ee, v. FRANCISCO CONSTANTINO TAN ?!INGCO CH!A, De0e,*.,%-A66e22.,%. C. Le*e-m., 0or A66e22.,%. A%%or,e3-Ge,er.2 P.re*e-, 0or A66e22ee. !. I*I3F1 AC, No. 2E.. C5N*,3IE@. G ,he Philippine stat&te on the s&b:ect of &s&ry is Act No. 2E.., effective on the first day of $ay, !#!E. 7t is a drastic la follo ing in many respects the most advanced American legislation. 2. 7@.1 7@. G ,he gist of the offense of &s&ry for this :&risdiction is in act&ally taking &nla f&l interest. +. 7@.1 7@. G A corr&pt intent is like ise of the essence of &s&rio&s transactions. 8. 7@.1 7@. G 7t is a delicate line hich separates the non-&s&rio&s from the &s&rio&s contract. $ost of the ordinary contracts, hen entered into in good faith, do not come ithin the pale of &s&ry. .. 7@.1 7@. G ,he form of the contract is not concl&sive. Parol evidence is admissible to sho that a ritten doc&ment tho&gh legal in form as in fact a device to cover &s&ry. 7f from a constr&ction of the hole transaction, it becomes apparent that there e(ists a corr&pt intent to violate the Is&ry Da , the co&rt sho&ld, and ill, permit no scheme, ho ever ingenio&s, to beclo&d the crime of &s&ry. E. 7@.1 7@.1 *,A,I,53F C5N*,3IC,75N. G Is&ry la s, ordinarily, are to be constr&ed prospectively and not retrospectively. Nevertheless, the co&rts may look into prior
*ection !. 2ilin+ with the court# defined .-,he 6iling of pleadings, appearances, motions, notice orders and other papers ith the co&rt as re/&ired by these r&les shall be made by filing them personally ith the clerk of the co&rt or by sending them by registered mail. 7n the first case, the clerk shall endorse on the pleading the date and ho&r of filing. 7n the second case, the date of mailing of motions, pleadings, or any other papers or payments or deposits, as sho n by the post office stamp on the envelope or the registry reciept shall be considered as the date of their filing, payment, or deposit in co&rt. ,he envelope shall be attached to the record of the case. 7n :&stifying his fail&re to comply strictly ith the re/&irements for perfecting an appeal, as aforestated, the petitioner alleges that his co&nsel as sick at the time, and in order to beat the deadline for the filing of the appeal, he mailed the notice of appeal by special delivery mail, not kno ing that it sho&ld be sent by registered mail. 11 <e find merit in the petition. ,he 3&les of Co&rt e(pressly provide that the r&les sho&ld be liberally constr&ed in order to promote their ob:ect and to assist the parties in obtaining :&st, speedy, and ine(pensive determination of every action and proceeding, 12 and in the absence of a clear lack of merit or intention to delay, a case sho&ld not be allo ed to go off on proced&ral points or technicality. As m&ch as possible, fail&re ofC :&stice sho&ld be avoided. 19 7n the instant case, the notice of appeal as sent by special delivery, instead of registered mail. Considering that said notice of appeal as sent ithin the period for perfection of appeals by the petitioner ho, not being a la yer, is not ell versed in the finer points of the la , and, hence, committed an honest mistake1 and that the petitioner appears to have a good and valid ca&se of action, e find that there as s&bstantial compliance ith the r&les. ,he case involves an alleged violation of the Is&ry Da , here the petitioner as fo&nd by the trial co&rt to have charged and collected &s&rio&s interests from the private respondent on loans hich ere first obtained on !. 6ebr&ary !#-2, later rene ed, and finally c&lminated ith the e(ec&tion by private respondent of the @eed of *ale ith 3ight of 3ep&rchase on !% November !#-+. ,his Co&rt has r&led in one case 1# that ith the prom&lgation of Central Bank Circ&lar No. #"., series of !#-2, &s&ry has become )legally ine(istent) as the lender and the borro er can agree on any interest that may be charged on the loan. ,his Circ&lar as also given retroactive effect. B&t, hether or not this Circ&lar sho&ld also be given retroactive effect and applied in this case is yet to be determined by the appellate co&rt at the proper time. $oreover, it appears that the comp&tation of the amo&nt considered as &s&rio&s interest is incorrect. ,he trial co&rt merely added the amo&nts paid by the private respondent to the
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occ&rrences in order to &nderstand the partic&lar fact the la , and in order to ascertain the criminal intent. hich is claimed to be a violation of by the Athenians and by the 3omans, and has been fro ned &pon by disting&ished p&blicists thro&gho&t all the ages. >*ee for a learned historical disc&ssion of &s&ry, the opinion of Chancellor Hent in @&nham v. 4o&ld A!-!#B, !E 0ohnson, +E%1 - Am. @ec., +2+.? ,he illegality of &s&ry is no holly a creat&re of legislation. ,he Philippine stat&te on the s&b:ect is Act No. 2E.., effective on the first day of $ay, !#!E. 7t is a drastic la follo ing in many respects the most advanced American legislation. 7n the absence of e(pressed contract, the legal rate of interest is made E per cent per ann&m. ,he ma(im&m rate for mortgage loans is !2 per cent per ann&m hether )directly or indirectly) taken or received. 6or loans not sec&red by mortgage, the ma(im&m rate of interest is !8 per cent per ann&m. ,he hole interest paid ith costs-and attorneyMs fees can be recovered from the &s&rer. ,he la proclaims that, )all conveyances, mortgages, bonds, bills, notes, and other contracts or evidences of debt, and all deposits of goods or other things, here&pon or hereby there shall be reserved, sec&red, taken, or received, directly or indirectly, a higher rate or greater s&m or val&e for the loan or forbearance of money, goods or credits than is hereinbefore allo ed, shall be void) >*ec. %?. ,he la closes ith p&nitive provisions, reading as follo s;:gc;chanrobles.com.ph )<itho&t pre:&dice to the proper civil action, violations of this Act shall be s&b:ect to criminal prosec&tion and the g&ilty person shall, &pon conviction, be sentenced to a fine e/&ivalent to the total interest stip&lated or to the val&e of the prod&cts or seed agreed &pon as interest, and in case of insolvency, s&bsidiary imprisonment shall be imposed; Provided, ,hat in case of corporations, associations, societies or companies the manager, administrator or gerente or the person ho has charge of the management or administration of the b&siness, shall be the one to s&ffer the s&bsidiary imprisonment provided by this Act in the case of a sentence of conviction.) >*ec. !".? ,he gist of the offense of &s&ry for this :&risdiction is in act&ally taking &nla f&l interest. A corr&pt intent is like ise of the essence of &s&rio&s transactions. ),o constit&te &s&ry, ithin the prohibition of the la , there m&st be an intention kno ingly to contract for or take &s&rio&s interest1 for if neither party intend it, b&t act bona fide and innocently, the la ill not infer a corr&pt agreement. <here, indeed, the contract, &pon its very face, imports &s&ry, as by an e(press reservation of more than legal interest, there is no room for the pres&mption1 for the intent is apparent, res ipsa lo/&it&r. B&t here the contract on its face is for legal interest only, there it m&st be proved that there as some corr&pt agreement, or devise or shift, to cover &s&ry1 and that it as in the f&ll contemplation of the parties.) >Inited *tates Bank v. <aggener A!-+.B, # Pet., +%-.? , o iss&es present themselves, namely; !. @id the trial co&rt commit an error in admitting evidence relating to facts hich occ&rred prior to the going into effect of the Is&ry Da , and has this co&rt follo ed in the same treachero&s path in its narration of the evidence= 2. @id the acc&sed violate the Is&ry Da by the accomplishment of hat p&rports to be a pacto de retro, no in evidence as E(hibit B= !. 7t is an elementary r&le of contracts that the la s, in force at the time the contract as made, enter into and govern it. ,he la s on the s&b:ect e(isting prior to the enactment of the Is&ry Da o&ld only invalidate contracts contrary to p&blic morals and p&blic order. Criminal prosec&tion o&ld then have been &nlikely. ,he same idea prevails as to &s&ry
%. 7@1 7@.1 7@. G )<hen operating on the contract or the sec&rity taken, it >the stat&te? is not, strictly speaking, p&nitive in its character, and e sho&ld so constr&e it as to repress the great evil the legislat&re has in vie in its enactment. B&t hen the p&nishment of the person ho has committed &s&ry is so&ght, according to the benignant principle hich pervades o&r :&rispr&dence, it sho&ld be constr&ed in all cases of do&bt and &ncertainty in favor of the acc&sed.) >$etcalf v. <atkins A!-+8B, ! Port. AAlaB, .%.? -. 7@.1 7@. G A doc&ment, legal in form, p&rporting to be a pacto de retro, accomplished on 5ctober 2., !#!E, fo&nd to be a sham doc&ment to cover &s&rio&s financial manip&lation. @EC7*75N $ADC5D$, 0. ; 9o a lean little debt of P!"" contracted in the year !#!! gre and gre &ntil, after the lapse of five short years, interest had made of it the fat and respectable s&m of appro(imately P%"", is the story told by this record. ,he tale opens on April 2#, !#!!, ith one, Pedro Andres, borro ing of 6rancisco Constantino ,an L&ingco Ch&a, the instant defendant, the s&m of P!"", ith interest of 28 cavanes of palay. 7n less than three months, or, to be e(act, on the #th of 0&ly of the same year, the debt as raised to P!2., ith interest of +" cavanes of palay. , o years pass, and on 0&ne 2-, !#!+, it has become P22E.%", sec&red by a pacto de retro, ith the interest at 88 cavanes of palay ann&ally. ,he day of reckoning came on 5ctober !%, !#!., hen the debt as li/&idated ith the res&lt that Andres had an obligation of P8%8.2", hich he promised to pay on the 2.th of the same month. 5ne year later, action as bro&ght to recover this s&m and the corresponding :&dgment rendered therefor. ,hen, on 5ctober 2., !#!E, Andres and ,an L&ingco Ch&a e(ec&ted a doc&ment by hich Andres sold to ,an L&ingco Ch&a &nder pacto de retro a certain parcel of land and a female carabao for the amo&nt of PE-8.2"1 the period of redemption as to be five months1 Andres as to hold the land d&ring this time as lessee and as s&ch lessee to pay a rent of #" cavanes of palay, each cavan to eigh 88 kilos, in the month of 6ebr&ary, !#!%, and all charges d&ring the e(istence of the lease. E(ec&tion on the :&dgment of 5ctober 2., !#!E, res&lted in Andres paying to the Chinaman P8%8, and t&rning over to him #- cavanes of palay. ,he o&tcome of these vario&s transactions as the filing of an information by the provincial fiscal of N&eva Eci:a, charging 6rancisco Constantino ,an L&ingco Ch&a ith the crime of &s&ry, predicated specially on the doc&ment of 5ctober 2., !#!E, above described. ,he trial co&rt, the 9onorable Vicente Nepom&ceno, in a very able and fair decision, fo&nd that the acc&sed had been proved g&ilty and sentenced him to pay a fine of P2., or to s&ffer s&bsidiary imprisonment in case of insolvency, and to pay the costs. ,he taking of e(cessive interest for the loan of money has been regarded ith abhorrence from the earliest times. Is&ry, as s&ch &nla f&l profits ere kno n, as prohibited by the ancient la s of the Chinese and the 9ind&s, by the $osaic Da of the 0e s, by the Horan,
18 | S M C L a w

stat&tes. 5rdinarily, s&ch la s are to be constr&ed prospectively and not retrospectively. ,he reason is that if the contract is legal at its inception, it cannot be rendered illegal by any s&bse/&ent legislation for this o&ld be tantamo&nt to the impairment of the obligation of the contract. 6rom one aspect, therefore, the contention of appellant is tenable. ,he g&ilt of the acc&sed m&st be proved, if at all, beca&se of the form&lation of E(hibit B on and after the passage of the Is&ry Da . 7n another aspect, ho ever, appellant is rong. ,he r&le of evidence sho&ld be to permit the co&rts to look into prior occ&rrences, :&st as they take acco&nt of other criminal acts of an acc&sed, in order to &nderstand the partic&lar fact hich is claimed to be a violation of the la , and in order to ascertain the criminal intent. ,his is after all only applied logic, for, other ise, as ill hereafter appear, a doc&ment apparently legal on its face co&ld not be proved to be illegal by other and separate acts, hich go to demonstrate that it is merely a shift to evade the stat&te of &s&ry. 2. 7t is indeed a delicate line hich separates the non-&s&rio&s from the &s&rio&s contract. Dord Bacon in one of his essays concl&des that t o things are to be reconciled. ),he one,) he says, )that the tooth of &s&ry be grinded that it bite not too m&ch1 the other, that there be left open the means to invite moneyed men to lend for the contin&ing and /&ickening of trade.) ),he stat&te of &s&ry,) Chancellor Hent says, )is constantly interposing its arning voice bet een the creditor and the debtor, even in their most secret and dangero&s negotiations, and teaches a lesson of moderation to the one, and offers its protecting arms to the other.M >@&nham v. 4o&ld, s&pra.? $ost of the ordinary contracts, hen entered into in good faith, do not come ithin the pale of &s&ry. Any person o ning property may sell it at s&ch price and at s&ch terms as to the time and mode of payment as he may see fit, and s&ch a sale, if bona fide, cannot be &s&rio&s ho ever &nconscionable it may be. Dord $ansfield characteristically says; )7 lay the fo&ndation of the hole &pon a manMs going to borro &nder colo&r of b&ying; there the contract is &s&rio&s1 b&t here it is a bona fide sale . . . it certainly is not.) >6loyer v. Ed ards, ! Co p., !!2, !!E1 #- Eng. 3eprint, ##..? 3ent charges, as in the doc&ment before &s, may be created or transferred itho&t regard to the &s&ry la s as long as s&ch forms of transaction are not &sed as mere covers for &s&rio&s loans. A hard bargain need not necessarily be a void bargain. >*ee <ebb on Is&ry, *ec. 8%.? ,he form of the contract is not concl&sive. ,he cardinal in/&iry is, @id the parties resort to the transaction for the p&rpose of disg&ising &s&ry in violation of la = ,he la ill not permit a &s&rio&s loan to hide itself behind a legal form. Parol evidence is admissible to sho that a ritten doc&ment tho&gh legal in form as in fact a device to cover &s&ry. 7f from a constr&ction of the hole transaction it becomes apparent that there e(ists a corr&pt intent to violate the Is&ry Da , the co&rts sho&ld and ill permit no scheme, ho ever ingenio&s, to beclo&d the crime of &s&ry. E(hibit B p&rports to be a pacto de retro. ,he ninety cavanes of palay mentioned are described as rent. 7f, indeed, a pacto de retro, standing alone and by itself it o&ld &ndo&btedly be valid, and o&ld res&lt in no evil conse/&ences to the parties. ,his co&rt has, ho ever, heretofore decided, ith reference to so-called pacto de retros, that parol evidence is competent and admissible in s&pport of the allegation that the instr&ment in riting p&rporting on its face to transfer absol&te title to property, or to transfer the title ith a mere right of rep&rchase &nder specified conditions, as in tr&th and in fact given merely as a sec&rity for the repayment of a loan. >C&y&gan v. *antos A!#!EB, +8 Phil., !"".? Dike ise, the *&preme Co&rt of Porto 3ico in $onagas v. Albert&cci >A!#!!B, !% Porto 3ico, E-81 2+. I.*., -!? has said of a ritten instr&ment hich as claimed to be a conditional sale; ),he real intention of the parties at the time the ritten instr&ment as made m&st govern in the interpretation given to it by the co&rts. ,his m&st be ascertained from the circ&mstances s&rro&nding the transaction and from the lang&age of the doc&ment itself.)crala virt&a!a library <ith these principles before &s, e entertain little or no do&bt that E(hibit B as not a tr&e pacto de retro, b&t as a sham doc&ment to cover &s&rio&s financial manip&lation. ,his doc&ment, framed ith legal precision, as a token of a debt originally of P!"", gro n to be P8%8.2", to hich in this doc&ment as added P2!" as interests, to make a total of PE-8.2". ,hen on top of this latter s&m as d&mped #" cavanes of palay, denominated as rent, b&t hich in reality as interest val&ed at P2. for the &se of PE-8.2" for five months. 7n moving to ard a concl&sion, e have not forgotten the canon of constr&ction hich sho&ld govern penal stat&tes of this character. ,he r&le is as stated by the *&preme Co&rt of Alabama, namely; )<hen operating on the contract or the sec&rity taken, it >the stat&te? is not, strictly speaking, p&nitive in its character, and e sho&ld so constr&e it as to repress the great evil the legislat&re had in vie in its enactment. B&t hen the p&nishment of the person ho has committed &s&ry, is so&ght, according to the benignant principle hich pervades o&r criminal :&rispr&dence, it sho&ld be constr&ed in all cases of do&bt and &ncertainty in favor of the acc&sed.) >$etcalf v. <atkins A!-+8B, ! Port., .%. *ee generally, +# Cyc., -%E and <ebb on Is&ry.? No do&bt and &ncertainty e(ists in this case. 7f the facts as fo&nd by the trial co&rt are tr&e, and e think they are, and if the la as en&nciated in this decision is correct, and e think it is, then, this s&rely is &s&ry, if there ever as &s&ry. ,he money lenders did not alone p&rs&e their calling in old 0&dea. ,he *hylocks have not merely str&tted or sk&lked on the *hakesperian stage. ,he Philippines abo&nd ith s&ch ho e(act their po&nd of flesh G and for these the la as intended and for these shall be enforced. ,he penalty imposed being in accordance ith the la , no other reco&rse e(ists b&t to affirm the :&dgment, ith costs against appellant, ) itho&t pre:&dice to the proper civil action.) *o ordered.
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