Libi Vs IAC
Libi Vs IAC
Libi Vs IAC
In
PRODUCERS BANK OF THE PHILIPPINES (now
opening said current account, Sterela, through Doronilla,
FIRST INTERNATIONAL BANK), petitioner, vs. HON.
obtained a loan of P175,000.00 from the Bank. To cover
COURT OF APPEALS AND FRANKLIN
payment thereof, Doronilla issued three postdated
VIVES, respondents.
checks, all of which were dishonored. Atienza also said
that Doronilla could assign or withdraw the money in
DECISION Savings Account No. 10-1567 because he was the sole
CALLEJO, SR., J.: proprietor of Sterela.[5]
Subsequently, private respondent learned that (c) the amount of P40,000.00 for attorneys fees; and
Sterela was no longer holding office in the address
previously given to him. Alarmed, he and his wife went to (d) the costs of the suit.
the Bank to verify if their money was still intact. The bank
manager referred them to Mr. Rufo Atienza, the assistant SO ORDERED.[8]
manager, who informed them that part of the money in
Savings Account No. 10-1567 had been withdrawn by Petitioner appealed the trial courts decision to the
Doronilla, and that only P90,000.00 remained therein. He Court of Appeals. In its Decision dated June 25, 1991, the
likewise told them that Mrs. Vives could not withdraw said appellate court affirmed in toto the decision of the
remaining amount because it had to answer for some RTC.[9]It likewise denied with finality petitioners motion for
postdated checks issued by Doronilla. According to reconsideration in its Resolution dated May 5, 1994.[10]
Atienza, after Mrs. Vives and Sanchez opened Savings
Account No. 10-1567, Doronilla opened Current Account On June 30, 1994, petitioner filed the present
No. 10-0320 for Sterela and authorized the Bank to debit petition, arguing that
Savings Account No. 10-1567 for the amounts necessary I.
THE HONORABLE COURT OF APPEALS ERRED IN first, what was delivered by private respondent to
UPHOLDING THAT THE TRANSACTION BETWEEN Doronilla was money, a consumable thing; and second,
THE DEFENDANT DORONILLA AND RESPONDENT the transaction was onerous as Doronilla was obliged to
VIVES WAS ONE OF SIMPLE LOAN AND NOT pay interest, as evidenced by the check issued by
ACCOMMODATION; Doronilla in the amount of P212,000.00, or P12,000 more
than what private respondent deposited in Sterelas bank
II. account.[15]Moreover, the fact that private respondent
sued his good friend Sanchez for his failure to recover his
THE HONORABLE COURT OF APPEALS ERRED IN money from Doronilla shows that the transaction was not
UPHOLDING THAT PETITIONERS BANK MANAGER, merely gratuitous but had a business angle to it. Hence,
MR. RUFO ATIENZA, CONNIVED WITH THE OTHER petitioner argues that it cannot be held liable for the return
DEFENDANTS IN DEFRAUDING PETITIONER (Sic. of private respondents P200,000.00 because it is not
Should be PRIVATE RESPONDENT) AND AS A privy to the transaction between the latter and
CONSEQUENCE, THE PETITIONER SHOULD BE Doronilla.[16]
HELD LIABLE UNDER THE PRINCIPLE OF NATURAL
It argues further that petitioners Assistant Manager,
JUSTICE;
Mr. Rufo Atienza, could not be faulted for allowing
Doronilla to withdraw from the savings account of Sterela
III. since the latter was the sole proprietor of said
company. Petitioner asserts that Doronillas May 8, 1979
THE HONORABLE COURT OF APPEALS ERRED IN letter addressed to the bank, authorizing Mrs. Vives and
ADOPTING THE ENTIRE RECORDS OF THE Sanchez to open a savings account for Sterela, did not
REGIONAL TRIAL COURT AND AFFIRMING THE contain any authorization for these two to withdraw from
JUDGMENT APPEALED FROM, AS THE FINDINGS said account. Hence, the authority to withdraw therefrom
OF THE REGIONAL TRIAL COURT WERE BASED ON remained exclusively with Doronilla, who was the sole
A MISAPPREHENSION OF FACTS; proprietor of Sterela, and who alone had legal title to the
savings account.[17] Petitioner points out that no evidence
IV. other than the testimonies of private respondent and Mrs.
Vives was presented during trial to prove that private
THE HONORABLE COURT OF APPEALS ERRED IN respondent deposited his P200,000.00 in Sterelas
DECLARING THAT THE CITED DECISION IN account for purposes of its incorporation.[18] Hence,
SALUDARES VS. MARTINEZ, 29 SCRA 745, petitioner should not be held liable for allowing Doronilla
UPHOLDING THE LIABILITY OF AN EMPLOYER FOR to withdraw from Sterelas savings account.
ACTS COMMITTED BY AN EMPLOYEE IS
APPLICABLE; Petitioner also asserts that the Court of Appeals
erred in affirming the trial courts decision since the
V. findings of fact therein were not accord with the evidence
presented by petitioner during trial to prove that the
THE HONORABLE COURT OF APPEALS ERRED IN transaction between private respondent and Doronilla
was a mutuum, and that it committed no wrong in allowing
UPHOLDING THE DECISION OF THE LOWER COURT
Doronilla to withdraw from Sterelas savings account.[19]
THAT HEREIN PETITIONER BANK IS JOINTLY AND
SEVERALLY LIABLE WITH THE OTHER Finally, petitioner claims that since there is no
DEFENDANTS FOR THE AMOUNT OF P200,000.00 wrongful act or omission on its part, it is not liable for the
REPRESENTING THE SAVINGS actual damages suffered by private respondent, and
ACCOUNT DEPOSIT, P50,000.00 FOR MORAL neither may it be held liable for moral and exemplary
DAMAGES, P50,000.00 FOR EXEMPLARY DAMAGES, damages as well as attorneys fees.[20]
P40,000.00 FOR ATTORNEYS FEES AND THE COSTS
OF SUIT.[11] Private respondent, on the other hand, argues that
the transaction between him and Doronilla is not
Private respondent filed his Comment on September a mutuum but an accommodation,[21] since he did not
23, 1994. Petitioner filed its Reply thereto on September actually part with the ownership of his P200,000.00 and in
25, 1995. The Court then required private respondent to fact asked his wife to deposit said amount in the account
submit a rejoinder to the reply. However, said rejoinder of Sterela so that a certification can be issued to the effect
was filed only on April 21, 1997, due to petitioners delay that Sterela had sufficient funds for purposes of its
in furnishing private respondent with copy of the incorporation but at the same time, he retained some
reply[12]and several substitutions of counsel on the part of degree of control over his money through his wife who
private respondent.[13] On January 17, 2001, the Court was made a signatory to the savings account and in
resolved to give due course to the petition and required whose possession the savings account passbook was
the parties to submit their respective given.[22]
memoranda.[14] Petitioner filed its memorandum on April He likewise asserts that the trial court did not err in
16, 2001 while private respondent submitted his finding that petitioner, Atienzas employer, is liable for the
memorandum on March 22, 2001. return of his money. He insists that Atienza, petitioners
Petitioner contends that the transaction between assistant manager, connived with Doronilla in defrauding
private respondent and Doronilla is a simple loan private respondent since it was Atienza who facilitated the
(mutuum) since all the elements of a mutuum are present: opening of Sterelas current account three days after Mrs.
Vives and Sanchez opened a savings account with goods returned at the end of the period agreed upon, the
petitioner for said company, as well as the approval of the loan is a commodatum and not a mutuum.
authority to debit Sterelas savings account to cover any
The rule is that the intention of the parties thereto
overdrawings in its current account.[23]
shall be accorded primordial consideration in determining
There is no merit in the petition. the actual character of a contract.[27] In case of doubt, the
contemporaneous and subsequent acts of the parties
At the outset, it must be emphasized that only
shall be considered in such determination.[28]
questions of law may be raised in a petition for review filed
with this Court. The Court has repeatedly held that it is not As correctly pointed out by both the Court of Appeals
its function to analyze and weigh all over again the and the trial court, the evidence shows that private
evidence presented by the parties during trial.[24] The respondent agreed to deposit his money in the savings
Courts jurisdiction is in principle limited to reviewing errors account of Sterela specifically for the purpose of making
of law that might have been committed by the Court of it appear that said firm had sufficient capitalization for
Appeals.[25] Moreover, factual findings of courts, when incorporation, with the promise that the amount shall be
adopted and confirmed by the Court of Appeals, are final returned within thirty (30) days.[29] Private respondent
and conclusive on this Court unless these findings are not merely accommodated Doronilla by lending his money
supported by the evidence on record.[26] There is no without consideration, as a favor to his good friend
showing of any misapprehension of facts on the part of Sanchez.It was however clear to the parties to the
the Court of Appeals in the case at bar that would require transaction that the money would not be removed from
this Court to review and overturn the factual findings of Sterelas savings account and would be returned to private
that court, especially since the conclusions of fact of the respondent after thirty (30) days.
Court of Appeals and the trial court are not only consistent
Doronillas attempts to return to private respondent
but are also amply supported by the evidence on record.
the amount of P200,000.00 which the latter deposited in
No error was committed by the Court of Appeals Sterelas account together with an additional P12,000.00,
when it ruled that the transaction between private allegedly representing interest on the mutuum, did not
respondent and Doronilla was a commodatum and not convert the transaction from a commodatum into
a mutuum. A circumspect examination of the records a mutuum because such was not the intent of the parties
reveals that the transaction between them was and because the additional P12,000.00 corresponds to
a commodatum. Article 1933 of the Civil Code the fruits of the lending of the P200,000.00. Article 1935
distinguishes between the two kinds of loans in this wise: of the Civil Code expressly states that [t]he bailee
in commodatum acquires the use of the thing loaned but
By the contract of loan, one of the parties delivers to not its fruits. Hence, it was only proper for Doronilla to
another, either something not consumable so that the remit to private respondent the interest accruing to the
latter may use the same for a certain time and return it, latters money deposited with petitioner.
in which case the contract is called a commodatum; or
Neither does the Court agree with petitioners
money or other consumable thing, upon the condition
contention that it is not solidarily liable for the return of
that the same amount of the same kind and quality shall
private respondents money because it was not privy to the
be paid, in which case the contract is simply called a
transaction between Doronilla and private
loan or mutuum.
respondent. The nature of said transaction, that is,
whether it is a mutuum or a commodatum, has no bearing
Commodatum is essentially gratuitous.
on the question of petitioners liability for the return of
private respondents money because the factual
Simple loan may be gratuitous or with a stipulation to circumstances of the case clearly show that petitioner,
pay interest. through its employee Mr. Atienza, was partly responsible
for the loss of private respondents money and is liable for
In commodatum, the bailor retains the ownership of the its restitution.
thing loaned, while in simple loan, ownership passes to
the borrower. Petitioners rules for savings deposits written on the
passbook it issued Mrs. Vives on behalf of Sterela for
The foregoing provision seems to imply that if the Savings Account No. 10-1567 expressly states that
subject of the contract is a consumable thing, such as
money, the contract would be a mutuum. However, there 2. Deposits and withdrawals must be made by the
are some instances where a commodatum may have for depositor personally or upon his written authority duly
its object a consumable thing. Article 1936 of the Civil authenticated, and neither a deposit nor a withdrawal
Code provides: will be permitted except upon the production of the
depositor savings bank book in which will be entered
Consumable goods may be the subject of commodatum by the Bank the amount deposited or withdrawn.[30]
if the purpose of the contract is not the consumption of
the object, as when it is merely for exhibition. Said rule notwithstanding, Doronilla was permitted
by petitioner, through Atienza, the Assistant Branch
Thus, if consumable goods are loaned only for Manager for the Buendia Branch of petitioner, to withdraw
purposes of exhibition, or when the intention of the parties therefrom even without presenting the passbook (which
is to lend consumable goods and to have the very same Atienza very well knew was in the possession of Mrs.
Vives), not just once, but several times. Both the Court of
Appeals and the trial court found that Atienza allowed said much amount to be sued in the incorporation of the
withdrawals because he was party to Doronillas scheme firm. In the second place, the signature of Doronilla was
of defrauding private respondent: not authorized in so far as that account is concerned
inasmuch as he had not signed the signature card
XXX provided by the bank whenever a deposit is opened. In
the third place, neither Mrs. Vives nor Sanchez had
But the scheme could not have been executed given Doronilla the authority to withdraw.
successfully without the knowledge, help and
cooperation of Rufo Atienza, assistant manager and Moreover, the transfer of fund was done without the
cashier of the Makati (Buendia) branch of the defendant passbook having been presented. It is an accepted
bank. Indeed, the evidence indicates that Atienza had practice that whenever a withdrawal is made in a
not only facilitated the commission of the fraud but he savings deposit, the bank requires the presentation of
likewise helped in devising the means by which it can be the passbook. In this case, such recognized practice
done in such manner as to make it appear that the was dispensed with. The transfer from the savings
transaction was in accordance with banking procedure. account to the current account was without the
submission of the passbook which Atienza had given to
To begin with, the deposit was made in defendants Mrs. Vives. Instead, it was made to appear in a
Buendia branch precisely because Atienza was a key certification signed by Estrella Dumagpi that a duplicate
officer therein. The records show that plaintiff had passbook was issued to Sterela because the original
suggested that the P200,000.00 be deposited in his passbook had been surrendered to the Makati branch in
bank, the Manila Banking Corporation, but Doronilla and view of a loan accommodation assigning the savings
Dumagpi insisted that it must be in defendants branch in account (Exh. C). Atienza, who undoubtedly had a hand
Makati for it will be easier for them to get a in the execution of this certification, was aware that the
certification. In fact before he was introduced to plaintiff, contents of the same are not true. He knew that the
Doronilla had already prepared a letter addressed to the passbook was in the hands of Mrs. Vives for he was the
Buendia branch manager authorizing Angeles B. one who gave it to her. Besides, as assistant manager of
Sanchez and company to open a savings account for the branch and the bank official servicing the savings
Sterela in the amount of P200,000.00, as per and current accounts in question, he also was aware
coordination with Mr. Rufo Atienza, Assistant Manager of that the original passbook was never surrendered. He
the Bank x x x (Exh. 1). This is a clear manifestation that was also cognizant that Estrella Dumagpi was not
the other defendants had been in consultation with among those authorized to withdraw so her certification
Atienza from the inception of the scheme. Significantly, had no effect whatsoever.
there were testimonies and admission that Atienza is the
brother-in-law of a certain Romeo Mirasol, a friend and The circumstance surrounding the opening of the current
business associate of Doronilla. account also demonstrate that Atienzas active
participation in the perpetration of the fraud and
Then there is the matter of the ownership of the deception that caused the loss. The records indicate that
fund. Because of the coordination between Doronilla and this account was opened three days later after
Atienza, the latter knew before hand that the money the P200,000.00 was deposited. In spite of his
deposited did not belong to Doronilla nor to disclaimer, the Court believes that Atienza was mindful
Sterela. Aside from such foreknowledge, he was and posted regarding the opening of the current account
explicitly told by Inocencia Vives that the money considering that Doronilla was all the while in
belonged to her and her husband and the deposit was coordination with him. That it was he who facilitated the
merely to accommodate Doronilla. Atienza even approval of the authority to debit the savings account to
declared that the money came from Mrs. Vives. cover any overdrawings in the current account (Exh. 2)
is not hard to comprehend.
Although the savings account was in the name of
Sterela, the bank records disclose that the only ones Clearly Atienza had committed wrongful acts that had
empowered to withdraw the same were Inocencia Vives resulted to the loss subject of this case. x x x.[31]
and Angeles B. Sanchez. In the signature card
pertaining to this account (Exh. J), the authorized Under Article 2180 of the Civil Code, employers shall
signatories were Inocencia Vives &/or Angeles B. be held primarily and solidarily liable for damages caused
Sanchez. Atienza stated that it is the usual banking by their employees acting within the scope of their
procedure that withdrawals of savings deposits could assigned tasks. To hold the employer liable under this
only be made by persons whose authorized signatures provision, it must be shown that an employer-employee
are in the signature cards on file with the bank. He, relationship exists, and that the employee was acting
however, said that this procedure was not followed here within the scope of his assigned task when the act
because Sterela was owned by Doronilla. He explained complained of was committed.[32] Case law in the United
that Doronilla had the full authority to withdraw by virtue States of America has it that a corporation that entrusts a
of such ownership. The Court is not inclined to agree general duty to its employee is responsible to the injured
with Atienza. In the first place, he was all the time aware party for damages flowing from the employees wrongful
that the money came from Vives and did not belong to act done in the course of his general authority, even
Sterela. He was also told by Mrs. Vives that they were though in doing such act, the employee may have failed
only accommodating Doronilla so that a certification can in its duty to the employer and disobeyed the latters
be issued to the effect that Sterela had a deposit of so instructions.[33]
There is no dispute that Atienza was an employee of City. Pajuyo then constructed a house made of light
petitioner. Furthermore, petitioner did not deny that materials on the lot. Pajuyo and his family lived in the
Atienza was acting within the scope of his authority as house from 1979 to 7 December 1985.
Assistant Branch Manager when he assisted Doronilla in
On 8 December 1985, Pajuyo and private
withdrawing funds from Sterelas Savings Account No. 10-
respondent Eddie Guevarra (Guevarra) executed
1567, in which account private respondents money was
a Kasunduan or agreement. Pajuyo, as owner of the
deposited, and in transferring the money withdrawn to
house, allowed Guevarra to live in the house for free
Sterelas Current Account with petitioner. Atienzas acts of
provided Guevarra would maintain the cleanliness and
helping Doronilla, a customer of the petitioner, were
orderliness of the house. Guevarra promised that he
obviously done in furtherance of petitioners
would voluntarily vacate the premises on Pajuyos
interests[34] even though in the process, Atienza violated
demand.
some of petitioners rules such as those stipulated in its
savings account passbook.[35] It was established that the In September 1994, Pajuyo informed Guevarra of his
transfer of funds from Sterelas savings account to its need of the house and demanded that Guevarra vacate
current account could not have been accomplished by the house. Guevarra refused.
Doronilla without the invaluable assistance of Atienza,
and that it was their connivance which was the cause of Pajuyo filed an ejectment case against Guevarra
private respondents loss. with the Metropolitan Trial Court of Quezon City, Branch
31 (MTC).
The foregoing shows that the Court of Appeals
correctly held that under Article 2180 of the Civil Code, In his Answer, Guevarra claimed that Pajuyo had no
petitioner is liable for private respondents loss and is valid title or right of possession over the lot where the
solidarily liable with Doronilla and Dumagpi for the return house stands because the lot is within the 150 hectares
of the P200,000.00 since it is clear that petitioner failed to set aside by Proclamation No. 137 for socialized housing.
prove that it exercised due diligence to prevent the Guevarra pointed out that from December 1985 to
unauthorized withdrawals from Sterelas savings account, September 1994, Pajuyo did not show up or communicate
and that it was not negligent in the selection and with him. Guevarra insisted that neither he nor Pajuyo has
supervision of Atienza. Accordingly, no error was valid title to the lot.
committed by the appellate court in the award of actual, On 15 December 1995, the MTC rendered its
moral and exemplary damages, attorneys fees and costs decision in favor of Pajuyo. The dispositive portion of the
of suit to private respondent. MTC decision reads:
WHEREFORE, the petition is hereby DENIED. The
assailed Decision and Resolution of the Court of Appeals WHEREFORE, premises considered, judgment is
are AFFIRMED. hereby rendered for the plaintiff and against defendant,
ordering the latter to:
SO ORDERED.
A) vacate the house and lot occupied by the
defendant or any other person or persons
claiming any right under him;
COLITO T. PAJUYO, petitioner, vs. COURT OF B) pay unto plaintiff the sum of THREE
APPEALS and EDDIE GUEVARRA, respondents. HUNDRED PESOS (P300.00) monthly as
reasonable compensation for the use of the
DECISION premises starting from the last demand;
On 3 January 1997, Guevarra filed his petition for The RTC rejected Guevarras claim of a better right
review with the Supreme Court. under Proclamation No. 137, the Revised National
Government Center Housing Project Code of Policies and
On 8 January 1997, the First Division of the Supreme other pertinent laws. In an ejectment suit, the RTC has no
Court issued a Resolution[9] referring the motion for power to decide Guevarras rights under these laws. The
extension to the Court of Appeals which has concurrent RTC declared that in an ejectment case, the only issue for
jurisdiction over the case. The case presented no special resolution is material or physical possession, not
and important matter for the Supreme Court to take ownership.
cognizance of at the first instance.
The Issues Pajuyo insists that the Court of Appeals should have
dismissed outright Guevarras petition for review because
the RTC decision had already become final and executory
Pajuyo raises the following issues for resolution: when the appellate court acted on Guevarras motion for
extension to file the petition. Pajuyo points out that
WHETHER THE COURT OF APPEALS ERRED OR Guevarra had only one day before the expiry of his period
ABUSED ITS AUTHORITY AND DISCRETION to appeal the RTC decision. Instead of filing the petition
TANTAMOUNT TO LACK OF JURISDICTION: for review with the Court of Appeals, Guevarra filed with
this Court an undated motion for extension of 30 days to
1) in GRANTING, instead of denying, file a petition for review. This Court merely referred the
Private Respondents Motion for motion to the Court of Appeals. Pajuyo believes that the
an Extension of thirty days to file filing of the motion for extension with this Court did not toll
petition for review at the time the running of the period to perfect the appeal. Hence,
when there was no more period to when the Court of Appeals received the motion, the period
extend as the decision of the to appeal had already expired.
Regional Trial Court had already
become final and executory. We are not persuaded.
2) in giving due course, instead Decisions of the regional trial courts in the exercise
of dismissing, private of their appellate jurisdiction are appealable to the Court
respondents Petition for Review of Appeals by petition for review in cases involving
even though the certification questions of fact or mixed questions of fact and
against forum-shopping was law.[14] Decisions of the regional trial courts involving pure
signed only by counsel instead of questions of law are appealable directly to this Court by
by petitioner himself. petition for review.[15] These modes of appeal are now
embodied in Section 2, Rule 41 of the 1997 Rules of Civil
3) in ruling that the Kasunduan Procedure.
voluntarily entered into by the
parties was in fact a Guevarra believed that his appeal of the RTC
commodatum, instead of a decision involved only questions of law. Guevarra thus
Contract of Lease as found by the filed his motion for extension to file petition for review
Metropolitan Trial Court and in before this Court on 14 December 1996. On 3 January
holding that the ejectment case 1997, Guevarra then filed his petition for review with this
filed against defendant-appellant Court. A perusal of Guevarras petition for review gives the
is without legal and factual basis. impression that the issues he raised were pure questions
of law. There is a question of law when the doubt or
4) in reversing and setting aside the difference is on what the law is on a certain state of
Decision of the Regional Trial facts.[16] There is a question of fact when the doubt or
Court in Civil Case No. Q-96- difference is on the truth or falsity of the facts alleged.[17]
26943 and in holding that the
parties are in pari delicto being In his petition for review before this Court, Guevarra
both squatters, therefore, illegal no longer disputed the facts. Guevarras petition for review
occupants of the contested parcel raised these questions: (1) Do ejectment cases pertain
of land. only to possession of a structure, and not the lot on which
the structure stands? (2) Does a suit by a squatter against determines the timeliness of the filing of that motion or
a fellow squatter constitute a valid case for ejectment? (3) pleading. Thus, even if the motion for extension bears no
Should a Presidential Proclamation governing the lot on date, the date of filing stamped on it is the reckoning point
which a squatters structure stands be considered in an for determining the timeliness of its filing.
ejectment suit filed by the owner of the structure?
Guevarra had until 14 December 1996 to file an
These questions call for the evaluation of the rights appeal from the RTC decision. Guevarra filed his motion
of the parties under the law on ejectment and the for extension before this Court on 13 December 1996, the
Presidential Proclamation. At first glance, the questions date stamped by this Courts Receiving Clerk on the
Guevarra raised appeared purely legal. However, some motion for extension. Clearly, Guevarra filed the motion
factual questions still have to be resolved because they for extension exactly one day before the lapse of the
have a bearing on the legal questions raised in the petition reglementary period to appeal.
for review. These factual matters refer to the metes and
Assuming that the Court of Appeals should have
bounds of the disputed property and the application of
dismissed Guevarras appeal on technical grounds,
Guevarra as beneficiary of Proclamation No. 137.
Pajuyo did not ask the appellate court to deny the motion
The Court of Appeals has the power to grant an for extension and dismiss the petition for review at the
extension of time to file a petition for earliest opportunity. Instead, Pajuyo vigorously discussed
review. In Lacsamana v. Second Special Cases the merits of the case. It was only when the Court of
Division of the Intermediate Appellate Court,[18] we Appeals ruled in Guevarras favor that Pajuyo raised the
declared that the Court of Appeals could grant extension procedural issues against Guevarras petition for review.
of time in appeals by petition for review. In Liboro v.
A party who, after voluntarily submitting a dispute for
Court of Appeals,[19] we clarified that the prohibition
resolution, receives an adverse decision on the merits, is
against granting an extension of time applies only in a
estopped from attacking the jurisdiction of the
case where ordinary appeal is perfected by a mere notice
court.[25]Estoppel sets in not because the judgment of the
of appeal. The prohibition does not apply in a petition for
court is a valid and conclusive adjudication, but because
review where the pleading needs verification. A petition
the practice of attacking the courts jurisdiction after
for review, unlike an ordinary appeal, requires preparation
voluntarily submitting to it is against public policy.[26]
and research to present a persuasive position.[20] The
drafting of the petition for review entails more time and In his Comment before the Court of Appeals, Pajuyo
effort than filing a notice of appeal.[21] Hence, the Court of also failed to discuss Guevarras failure to sign the
Appeals may allow an extension of time to file a petition certification against forum shopping. Instead, Pajuyo
for review. harped on Guevarras counsel signing the verification,
claiming that the counsels verification is insufficient since
In the more recent case of Commissioner of
it is based only on mere information.
Internal Revenue v. Court of Appeals,[22] we held
that Liboros clarification of Lacsamana is consistent A partys failure to sign the certification against forum
with the Revised Internal Rules of the Court of Appeals shopping is different from the partys failure to sign
and Supreme Court Circular No. 1-91. They all allow an personally the verification. The certificate of non-forum
extension of time for filing petitions for review with the shopping must be signed by the party, and not by
Court of Appeals. The extension, however, should be counsel.[27] The certification of counsel renders the
limited to only fifteen days save in exceptionally petition defective.[28]
meritorious cases where the Court of Appeals may grant
a longer period. On the other hand, the requirement on verification of
a pleading is a formal and not a jurisdictional
A judgment becomes final and executory by requisite.[29] It is intended simply to secure an assurance
operation of law. Finality of judgment becomes a fact on that what are alleged in the pleading are true and correct
the lapse of the reglementary period to appeal if no appeal and not the product of the imagination or a matter of
is perfected.[23] The RTC decision could not have gained speculation, and that the pleading is filed in good
finality because the Court of Appeals granted the 30-day faith.[30] The party need not sign the verification. A partys
extension to Guevarra. representative, lawyer or any person who personally
knows the truth of the facts alleged in the pleading may
The Court of Appeals did not commit grave abuse of
sign the verification.[31]
discretion when it approved Guevarras motion for
extension. The Court of Appeals gave due course to the We agree with the Court of Appeals that the issue on
motion for extension because it complied with the the certificate against forum shopping was merely an
condition set by the appellate court in its resolution dated afterthought. Pajuyo did not call the Court of Appeals
28 January 1997. The resolution stated that the Court of attention to this defect at the early stage of the
Appeals would only give due course to the motion for proceedings. Pajuyo raised this procedural issue too late
extension if filed on time. The motion for extension met in the proceedings.
this condition.
The Court of Appeals determination of Pajuyo and We do not subscribe to the Court of Appeals theory
Guevarras rights under Proclamation No. 137 was that the Kasunduan is one of commodatum.
premature. Pajuyo and Guevarra were at most merely
In a contract of commodatum, one of the parties
potential beneficiaries of the law. Courts should not
delivers to another something not consumable so that the
preempt the decision of the administrative agency
latter may use the same for a certain time and return
mandated by law to determine the qualifications of
it.[63]An essential feature of commodatum is that it is
applicants for the acquisition of public lands. Instead,
gratuitous. Another feature of commodatum is that the
courts should expeditiously resolve the issue of physical
use of the thing belonging to another is for a certain
possession in ejectment cases to prevent disorder and
period.[64] Thus, the bailor cannot demand the return of
breaches of peace.[58]
the thing loaned until after expiration of the period
stipulated, or after accomplishment of the use for which
the commodatum isconstituted.[65] If the bailor should
Pajuyo is Entitled to Physical Possession of the have urgent need of the thing, he may demand its return
Disputed Property for temporary use.[66] If the use of the thing is merely
tolerated by the bailor, he can demand the return of the
Guevarra does not dispute Pajuyos prior possession thing at will, in which case the contractual relation is called
of the lot and ownership of the house built on it. Guevarra a precarium.[67] Under the Civil Code, precarium is a kind
expressly admitted the existence and due execution of of commodatum.[68]
the Kasunduan. The Kasunduan reads: The Kasunduan reveals that the accommodation
accorded by Pajuyo to Guevarra was not essentially
Ako, si COL[I]TO PAJUYO, may-ari ng bahay at lote sa gratuitous. While the Kasunduan did not require
Bo. Payatas, Quezon City, ay nagbibigay pahintulot kay Guevarra to pay rent, it obligated him to maintain the
G. Eddie Guevarra, na pansamantalang manirahan sa property in good condition. The imposition of this
nasabing bahay at lote ng walang bayad. Kaugnay nito, obligation makes the Kasunduan a contract different from
kailangang panatilihin nila ang kalinisan at kaayusan ng a commodatum. The effects of the Kasunduan are also
bahay at lote. different from that of a commodatum. Case law on
ejectment has treated relationship based on tolerance as
Sa sandaling kailangan na namin ang bahay at lote, one that is akin to a landlord-tenant relationship where the
silay kusang aalis ng walang reklamo. withdrawal of permission would result in the termination
of the lease.[69] The tenants withholding of the property
Based on the Kasunduan, Pajuyo permitted would then be unlawful. This is settled jurisprudence.
Guevarra to reside in the house and lot free of rent, but
Guevarra was under obligation to maintain the premises Even assuming that the relationship between Pajuyo
in good condition. Guevarra promised to vacate the and Guevarra is one of commodatum, Guevarra as bailee
premises on Pajuyos demand but Guevarra broke his would still have the duty to turn over possession of the
promise and refused to heed Pajuyos demand to vacate. property to Pajuyo, the bailor. The obligation to deliver or
to return the thing received attaches to contracts for
These facts make out a case for unlawful detainer. safekeeping, or contracts of commission, administration
Unlawful detainer involves the withholding by a person and commodatum.[70] These contracts certainly involve
from another of the possession of real property to which the obligation to deliver or return the thing received.[71]
the latter is entitled after the expiration or termination of
the formers right to hold possession under a contract, Guevarra turned his back on the Kasunduan on the
express or implied.[59] sole ground that like him, Pajuyo is also a squatter.
Squatters, Guevarra pointed out, cannot enter into a
Where the plaintiff allows the defendant to use his contract involving the land they illegally occupy. Guevarra
property by tolerance without any contract, the defendant insists that the contract is void.
is necessarily bound by an implied promise that he will
vacate on demand, failing which, an action for unlawful Guevarra should know that there must be honor
detainer will lie.[60] The defendants refusal to comply with even between squatters. Guevarra freely entered into
the demand makes his continued possession of the the Kasunduan. Guevarra cannot now impugn
property unlawful.[61] The status of the defendant in such the Kasunduanafter he had benefited
a case is similar to that of a lessee or tenant whose term from it. The Kasunduan binds Guevarra.
of lease has expired but whose occupancy continues by The Kasunduan is not void for purposes of
tolerance of the owner.[62] determining who between Pajuyo and Guevarra has a
This principle should apply with greater force in right to physical possession of the contested
cases where a contract embodies the permission or property. The Kasunduan is the undeniable evidence of
tolerance to use the property. The Kasunduan expressly Guevarras recognition of Pajuyos better right of physical
articulated Pajuyos forbearance. Pajuyo did not require possession. Guevarra is clearly a possessor in bad
faith. The absence of a contract would not yield a different In this case, the owner of the land, which is the
result, as there would still be an implied promise to government, is not a party to the ejectment case. This
vacate. case is between squatters. Had the government
participated in this case, the courts could have evicted the
Guevarra contends that there is a pernicious evil that
contending squatters, Pajuyo and Guevarra.
is sought to be avoided, and that is allowing an absentee
squatter who (sic) makes (sic) a profit out of his illegal Since the party that has title or a better right over the
act.[72] Guevarra bases his argument on the preferential property is not impleaded in this case, we cannot evict on
right given to the actual occupant or caretaker under our own the parties. Such a ruling would discourage
Proclamation No. 137 on socialized housing. squatters from seeking the aid of the courts in settling the
issue of physical possession. Stripping both the plaintiff
We are not convinced.
and the defendant of possession just because they are
Pajuyo did not profit from his arrangement with squatters would have the same dangerous implications as
Guevarra because Guevarra stayed in the property the application of the principle of pari delicto. Squatters
without paying any rent. There is also no proof that Pajuyo would then rather settle the issue of physical possession
is a professional squatter who rents out usurped among themselves than seek relief from the courts if the
properties to other squatters. Moreover, it is for the proper plaintiff and defendant in the ejectment case would both
government agency to decide who between Pajuyo and stand to lose possession of the disputed property. This
Guevarra qualifies for socialized housing. The only issue would subvert the policy underlying actions for recovery
that we are addressing is physical possession. of possession.
Prior possession is not always a condition sine qua Since Pajuyo has in his favor priority in time in
non in ejectment.[73] This is one of the distinctions holding the property, he is entitled to remain on the
between forcible entry and unlawful detainer.[74] In forcible property until a person who has title or a better right
entry, the plaintiff is deprived of physical possession of his lawfully ejects him. Guevarra is certainly not that person.
land or building by means of force, intimidation, threat, The ruling in this case, however, does not preclude
strategy or stealth. Thus, he must allege and prove prior Pajuyo and Guevarra from introducing evidence and
possession.[75] But in unlawful detainer, the defendant presenting arguments before the proper administrative
unlawfully withholds possession after the expiration or agency to establish any right to which they may be entitled
termination of his right to possess under any contract, under the law.[81]
express or implied. In such a case, prior physical
In no way should our ruling in this case be interpreted
possession is not required.[76]
to condone squatting. The ruling on the issue of physical
Pajuyos withdrawal of his permission to Guevarra possession does not affect title to the property nor
terminated the Kasunduan. Guevarras transient right to constitute a binding and conclusive adjudication on the
possess the property ended as well. Moreover, it was merits on the issue of ownership.[82] The owner can still
Pajuyo who was in actual possession of the property go to court to recover lawfully the property from the
because Guevarra had to seek Pajuyos permission to person who holds the property without legal title. Our
temporarily hold the property and Guevarra had to follow ruling here does not diminish the power of government
the conditions set by Pajuyo in the Kasunduan. Control agencies, including local governments, to condemn,
over the property still rested with Pajuyo and this is abate, remove or demolish illegal or unauthorized
evidence of actual possession. structures in accordance with existing laws.
We are aware of our pronouncement in cases where We sustain the P300 monthly rentals the MTC and
we declared that squatters and intruders who RTC assessed against Guevarra. Guevarra did not
clandestinely enter into titled government property dispute this factual finding of the two courts. We find the
cannot, by such act, acquire any legal right to said amount reasonable compensation to Pajuyo. The P300
property.[80] We made this declaration because the monthly rental is counted from the last demand to vacate,
person who had title or who had the right to legal which was on 16 February 1995.
possession over the disputed property was a party in the
WHEREFORE, we GRANT the petition. The
ejectment suit and that party instituted the case against
Decision dated 21 June 2000 and Resolution dated 14
squatters or usurpers.
December 2000 of the Court of Appeals in CA-G.R. SP
No. 43129 are SET ASIDE. The Decision dated 11 interest-free in six (6) months; on the maturity date of the
November 1996 of the Regional Trial Court of Quezon loan or on August 6, 1992, petitioner Antonio Tan failed to
City, Branch 81 in Civil Case No. Q-96-26943, affirming settle the same, and despite repeated demands,
the Decision dated 15 December 1995 of the Metropolitan petitioners never did, drawing him to file the complaint
Trial Court of Quezon City, Branch 31 in Civil Case No. thru his counsel to whom he agreed to pay 30% of the
12432, is REINSTATED with MODIFICATION. The award loan as attorneys fees on a contingent basis
of attorneys fees is deleted. No costs. and P1,000.00 per appearance fee; and on account of the
willful refusal of petitioners to honor their obligation, he
SO ORDERED.
suffered moral damages in the amount of P50,000.00,
among other things.
It is well-nigh unlikely that the wife who was The Honorable Court failed to consider the
supposed to have delivered the wanton, reckless manner of
money on such a short notice, respondent in attempting to enforce
produced, prepared and counted the an obligation that does not even exist,
money at home from Obrero, Davao thus justifying the award for moral and
City, then delivered it to plaintiff- exemplary damages, as well as
appellant who was in the Golden attorneys fees and costs of
Harvest Store at Sta Ana Avenue, suit.[16] (Underscoring supplied)
Davao City. In contrast, PBCom
Bank where plaintiff-appellant has
his account is in the same vicinity Petitioners maintain that they did not secure a loan from
of the store of Golden Harvest. respondent, insisting that they encashed in Davao City
respondents February 6, 1992 crossed check; in the afternoon respondent returned to the Golden Harvest, he
ordinary course of business, prudence dictates that a turned over to him the P250,000.00 cash.
contract of loan must be in writing as in fact the New Civil
Code provides that to be enforceable contracts where the Petitioner Antonio Tans foregoing tale hardly inspires
amount involved exceed[s] P500.00 must appear in credence. For it is contrary to common experience. If
writing even a private one, hence, respondents self- indeed respondent, who came all the way from Malita to
serving claim does not suffice to prove the existence of a Davao City, arriving at petitioner Antonio Tans workplace
loan; respondents allegation that no memorandum in at Golden Harvest at 10:30 in the morning, needed cash
writing of the transaction was executed because he and of P250,000.00, and the drawee bank PBCom Davao
they are kumpadres does not inspire belief for City, Monteverde branch where respondent maintained a
respondent, being a businessman himself, was with more current account could even be reached by foot from the
reason expected to be more prudent; and the mere Golden Harvest in just a few minutes (albeit by petitioner
encashment of the check is not a contractual transaction Antonio Tans own information respondent brought his
such as a sale or a loan which ordinarily requires a receipt truck with him),[20] it being about 300 meters
and that explains why they did not issue a receipt when away,[21] respondent could just have gone there and drew
they encashed the check of respondent. cash from his current account via over the counter
transaction. After all, his account had sufficient funds. In
other words, he did not have to encash his check from
petitioners.
Petitioners add that they could not have gone to Malita on
February 6, 1992, as claimed by respondent, to obtain the Even assuming that, as claimed by petitioner Antonio
alleged loan represented by the check because February Tan, at the time respondent needed to have his check
6, 1992 was the opening for business in Davao City of encashed, it was already close to 3:00 oclock in the
Golden Harvest of which petitioner Antonio Tan is afternoon, why could not have PBCom Monteverde
treasurer and in-charge of the bodega, during which branch also accommodated him and allow him to encash
opening guests and well-wishers including respondent his check that same time when he, like petitioners, was
were entertained. also a client-depositor and the bank was still open for
business?
Petitioners furthermore maintain that they were financially
stable on February 6, 1992 as shown by the entries of Petitioners version was thus correctly denied credit by the
their bank passbook,[17] hence, there was no reason for appellate court.
them to go to a distant place like Malita to borrow money.
That apart from the check no written proof of the grant of
The petition fails. the loan was executed was credibly explained by
respondent when he declared that petitioners son being
By petitioner Antonio Tans account, respondent arrived at his godson, he, out of trust and respect, believed that the
the Golden Harvest place of business at Davao City on crossed check sufficed to prove their transaction.
February 6, 1992 at about 10:30 in the morning[18] and left
before noon of the same day; respondent, however, As for petitioners reliance on Art. 1358[22] of the Civil
returned to Golden Harvest shortly before 3:00 oclock in Code, the same is misplaced for the requirement that
the afternoon of the same day upon which he informed contracts where the amount involved exceeds P500.00
him (petitioner Antonio Tan) that he needed to bring cash must appear in writing is only for convenience.[23]
to Malita in the amount of P250,000.00 but time was
running out and . . . he was so busy that was why he At all events, a check, the entries of which are no doubt in
requested [him] to accommodate (sic) the said amount at writing, could prove a loan transaction.[24]
3:00 p.m.[19]
That petitioner Antonio Tan had, on February 6, 1992, an
outstanding balance of more than P950,000.00 in his
Still by petitioner Antonio Tans account, he thereupon account at PBCom Monteverde branch where he was
inquire by telephone from his wife who was at their house later to deposit respondents check did not rule out
whether she had P250,000.00 cash and as his wife petitioners securing a loan. It is pure naivete to believe
replied she had, he asked her to bring the cash, as she that if a businessman has such an outstanding balance in
did, to the Golden Harvest where she gave the amount his bank account, he would have no need to borrow a
of P250,000.00 to him (petitioner Antonio Tan); in the lesser amount.
meantime, as respondent had left for a while but not
before leaving the check, he (petitioner Antonio Tan) kept In fine, as petitioners side of the case is incredible as it is
the P250,000.00 cash and gave the check to his wife who inconsistent with the principles by which men similarly
had it deposited on the same afternoon to his account at situated are governed, whereas respondents claim that
PBCom Monteverde branch after he received clearance the proceeds of the check, which were admittedly
from the bank manager, who knows him (petitioner received by petitioners, represented a loan[25] extended to
Antonio Tan) very well, that respondents account at same petitioner Antonio Tan is credible, the preponderance of
branch of the bank was funded and the check could be evidence inclines on respondent.
deposited and credited to his (petitioner Antonio Tans)
account that same afternoon; and when later that same WHEREFORE, the present petition is DENIED.
Costs against petitioners. amount of this loan was covered by the second check. For
both loans, no promissory note was executed since
SO ORDERED. petitioner and respondent were close friends at the
time.[15] Respondent paid the stipulated monthly interest
for both loans but on their maturity dates, she failed to pay
the principal amounts despite repeated demands.[16]
CAROLYN M. GARCIA, G.R. No. 15487 Respondent denied that she contracted the two
Petitioner, loans with petitioner and countered that it was Marilou
-versus- Santiago to whom petitioner lent the money. She claimed
she was merely asked by petitioner to give the crossed
RICA MARIE S. checks to Santiago.[17] She issued the checks for P76,000
THIO, and P20,000 not as payment of interest but to
Respondent. accommodate petitioners request that respondent use
her own checks instead of Santiagos.[18]
On January 5,1966, the NIDC released another On January 31, 1969, the lower court issued ail order
P100,000.00 to petitioner and on January 12, 1966, the denying the application for preliminary injunction and
aforesaid releases totalling P200,000.00 were applied to dissolving its restraining order which had been issued on
the payment of preferred stock which NIDC subscribed July 17, 1968. Petitioner promptly filed a motion for
in petitioner corporation to partially implement its reconsideration which was denied by the lower court on
P1,000,000.00 investment scheme as per agreement. May 7, 1969.
Thereafter, the NIDC refused to make further releases
on the approved loan of petitioner. On May 8, 1969 petitioner filed with respondent Court of
Appeals a petition for certiorari with application for a
On August 3, 1966 and October 5, 1966, respondent restraining order and preliminary injunction against the
PCIB approved additional accomodations to petitioner foreclosure sale (Rollo, p. 54).<re||an1w> On May
consisting of a P710,000.00 loan for the payment of the 13, 1969 respondent Court resolved to issue a writ of
balance of the purchase price of those lots in Pasig preliminary injunction upon filing by petitioner of a bond
required to be bought, P500,000.00 loan for operating in the amount of P60,000.00. However, petitioner moved
capital, P200,000.00 loan to be paid directly to for amendment of the Order issuing the preliminary
petitioner's creditors, while consolidating all previous injunction, on the ground that the aforementioned
accommodations at P1,597,000.00all of which were resolution of respondent Court came too late to stop the
still secured by chattel and real estate mortgages. foreclosure sale which was held on May 9, 1969, praying
However, PCIB released only P300,000.00 of the instead that the preliminary injunction should now enjoin
P710,000.00 approved loan for the payment of the Pasig respondents, particularly respondent Provincial Sheriff,
lands and some P300,000.00 for operating capital. from proceeding to give effect to the foreclosure sale of
May 9, 1969; that said sheriff should refrain from issuing legis, more specifically the 31, 447 sq.m. lot located at
a deed of certificate of sale pursuant thereto and from Sto. Domingo, Cainta, Rizal covered by TCT No. 286176
registering the certificate of deed of sale in the Registry (Rollo, p. 697). Petitioner filed its opposition to the
of Deeds; and to toll or stop the running of the period of motion on May 27, 1971 (Rollo, p. 712). The reply to the
redemption. Respondent Court resolved to deny said opposition was filed on December 6,1971 (Rollo, p. 730);
motion in its Resolution dated May 28, 1969 (Rollo, pp. the rejoinder to respondent PCIB's reply to opposition,
237-242). on November 19, 1971 (Rollo, p. 736). Meantime the
case was transferred to the Second Division, by a
On May 8, 1970, on urgent motion of petitioner, Resolution of the First Division dated January 17, 1983
respondent Court granted petitioner a period of sixty (60) (Rollo, p. 752).
days from receipt of the decision to be rendered in
CA-G.R. No. 43198 within which to redeem its properties The issues raised in this case are the following:
sold, should the said decision be one declaring the
execution sale in dispute to be valid (Rollo, p. 231). 1. WHETHER OR NOT RESPONDENT
COURT ERRED IN FINDING THAT
Meantime, on May 12, 1970, an affidavit of consolidation THE LOWER COURT DID NOT
of ownership executed by Eugenio R. Unson for and in COMMIT AN ABUSE OF DISCRETION
behalf of respondent PCIB concerning the properties IN DENYING PETITIONER'S
involved in the instant petition for certiorari, was APPLICATION FOR A PRELIMINARY
registered with the Register of Deeds of Pasig, Rizal at INJUNCTION AND DISSOLVING THE
8:00 a.m.. Consequently, the old transfer certificates of RESTRAINING ORDER PREVIOUSLY
title covering the aforementioned properties were ISSUED. (Brief for Petitioner, pp. 21-
cancelled and new ones issued in the name of 47);
respondent PCIB, the buyer at the foreclosure sale. In
view thereof, petitioner filed a motion charging 2. WHETHER OR NOT RESPONDENT
respondent PCIB and its Executive Vice-President and COURT ERRED IN DECLARING VALID
Assistant General Manager Eugenio R. Unson with THE FORECLOSURE SALE ON MAY
contempt of court. Petitioner prayed that (a) the Deed of 9,1969 OF THE MORTGAGED
Sale dated May 12, 1970 and the consolidation of PROPERTIES EN MASSE WHEN
ownership of the same date be declared null and void; THEY REFER TO SEVERAL REAL
(b) that the new transfer certificates of title TCT Nos. ESTATE MORTGAGES EXECUTED
286174, 286175, and 286176be cancelled and the old ON DIFFERENT DATES. (Brief for
ones, TCT Nos. 177019,175595, and 73620 be restored Petitioner, pp. 47-50).
or revived by the Register of Deeds of Rizal; and (c) that
the respondent PCIB be ordered to surrender and The main issue is whether or not private respondents
deposit the TCT Nos. 177019, 175595, and 73620 with have the right to the extrajudicial foreclosure sale of
respondent Court for safekeeping (Rollo. p. 243). petitioner's mortgaged properties before trial on the
merits. The answer is in the negative.
On December 16, 1970 respondent Court promulgated
the questioned decision (Rollo, pp. 237-249). On Petitioner filed Civil Case No. 11015 in the Court of First
January 12, 1971 it resolved (Rollo, p. 280) to deny Instance of Rizal, Branch II, to obtain judgment (1)
petitioner's motion for reconsideration dated January 5, enjoining defendants (respondents herein) from
1971 (Rollo, p. 250) and on January 22, 1971 it again proceeding with the foreclosure sale of the subject real
resolved (Rollo, p. 281) to deny petitioner's supplement estate mortgages, (2) fixing a new period for the
to motion for reconsideration dated January 18, 1971 payment of the obligations of plaintiff to defendant PCIB
(Rollo, p. 260). sufficiently long to enable it to recover from the effects of
defendant PCIB's inequitable acts, (3) ordering
The instant Petition for Review on certiorari (Rollo, p. 12) defendant PCIB to immediately give up management of
was filed with the Court on February 16, 1971. On plaintiffs canning industry and to pay plaintiff such
February 23, 1971, the Court resolved to give due damages as it may prove in the concept of actual,
course to the petition and ordered the issuance of compensatory and exemplary or corrective damages,
preliminary injunction enjoining respondents from aside from attorney's fees and expenses of litigation,
enforcing or implementing the appealed decision of plus costs (Rollo, p. 98). It is to be noted that petitioner
respondent Court of Appeals, upon petitioner's posting a filed the above case mainly to forestall the foreclosure
bond of P50,000.00 (Rollo, p. 584). The writ of sale of the mortgaged properties before final judgment.
preliminary injunction was issued on April 28, 1971 The issuance of a writ of preliminary injuction could have
(Rollo, p. 619). preserved the status quo of the parties in relation to the
subject matter litigated by them during the pendency of
The Brief for Petitioner was filed on June 18, 1971 the action (Lasala v. Fernandez, 5 SCRA 79 [1962]; De
(Rollo, p. 631). The Brief for the Respondents was filed Lara v. Cloribel, 14 SCRA 269 [1965]; Locsin v. Climaco,
on September 20, 1971 (Rollo, p. 655). The Reply Brief 26 SCRA 816 [1969].
was filed on December 6, 1971 (Rollo, p. 678).
When the lower court denied the issuance of the writ
On April 2, 1971 respondent PCIB filed a motion for prayed for and dissolved the restraining order it had
leave to lease real estate properties in custodia previously issued, in its order dated January 31, 1969
(Rollo, p. 138) it practically adjudicated the case before another question that had to be determined was the
trial on the merits. question of cause or consideration.
While petitioner corporation does not deny, in fact, it The loan agreements between petitioner and respondent
admits its indebtedness to respondent bank (Brief for Bank are reciprocal obligations (the obligation or
Petitioner, pp. 7-11), there were matters that needed the promise of each party is the consideration for that of the
preservation of the status quo between the parties. The other Penacio v. Ruaya, 110 SCRA 46 [1981], cited. in
foreclosure sale was premature. Central Bank of the Philippines v. Court of Appeals, 139
SCRA 46 [1985] ). A contract of loan is not a unilateral
First was the question of whether or not petitioner contract as respondent Bank thinks it is (Brief for the
corporation was already in default. In its letter dated Respondent, p. 19). The promise of petitioner to pay is
August 12,1966 to petitioner corporation, among the the consideration for the obligation of respondent bank
conditions that respondent bank set for the consolidation to furnish the loan (Ibid.).
of the outstanding obligations of petitioner was the
liquidation of the said obligations together with the Respondent bank had complete control of the financial
latter's other obligations in the financing scheme already affairs and the management of petitioner corporation. It
approved by the NIDC and PDCP. To quote: appointed its executive vice-president Roberto S.
Benedicto as its representative in petitioner's board of
a) These facilities shall be temporary directors, giving him the position of
and shall be fully liquidated, together vice-president in petitioner corporation (Brief for
with other obligations from a refinancing Petitioner, p. 7). Upon the resignation of Roberto S.
scheme already approved by the NIDC Benedicto as vice-president and member of the board of
and PDCP totalling Pl million in equity directors of petitioner corporation on December 29, 1965
and P2.6 million in long term financing. (Brief for Petitioner, p. 8), respondent bank designated
In this connection, the firm shall present Rafael Ledesma as its representative in petitioner
to this Bank a certified copy of the terms corporation's board of directors, due representation in
and conditions of the approval by the the board of petitioner being a condition for the loan
NIDC and PDCP. (Brief for the granted to the petitioner (Rollo, p. 166). In fact, Rafael
Respondent, p. 41). Ledesma was designated Chairman of the Board of
Directors (Rollo, p. 169). Respondent bank required
In other words, the loans of petitioner corporation from petitioner to appoint Sycip, Gorrez, Velayo & Co. as full-
respondent bank were supposed to become due only at time comptroller-treasurer of the corporation at a
the time that it receives from the NIDC and PDCP the monthly salary of P1,500.00 (Brief for Petitioner, p. 9;
proceeds of the approved financing scheme. As it is, the Brief for the Respondent, p. 41). On January 2, 1967, it
conditions did not happen. NIDC refused to make further also required petitioner to replace its then manager, the
releases after it had made two releases totalling Management & Investment Development Associates
P200,000.00 which were all applied to the payment of (MIDA) and to appoint instead Edmundo Ledesma at a
the preferred stock NIDC subscribed in petitioner monthly salary of P3,000.00 and transportation
corporation to partially implement its P1,000,000.00 allowance of P1,000.00 plus an assistant manager,
investment scheme (Brief for Petitioner, p. 9). The Venancio Concepcion at a salary of P1,000.00 a month.
efficacy or obligatory force of a conditional obligation is During the next 18 months' management by defendant's
subordinated to the happening of a future and uncertain designated manager, no meeting of the board of
event so that if the suspensive condition does not take directors of petitioner was called- Edmundo Ledesma
place, the parties would stand as if the conditional exercised full control and management (Brief for
obligation had never existed (Gaite v. Fonacier, 2 SCRA Petitioner, pp. 10-11; Rollo, p. 167). Respondent Bank
831 [1961]).<re||an1w> has not given up management of petitioner's food
canning industry and continues to hold it. Even Atty.
Petitioner corporation alleges that there had been no Juan de Ocampo has been retained by petitioner as
demand on the part of respondent bank previous to its corporate counsel, at the insistence of respondent bank
filing a complaint against petitioner and Rene Knecht (Brief for Petitioner, p. 14). This has not been denied by
personally for collection on petitioner's indebtedness respondent bank.
(Brief for Petitioner, p. 13). For an obligation to become
due there must generally be a demand. Default generally Respondent bank's designation of its own choice of
begins from the moment the creditor demands the people holding key positions in petitioner corporation tied
performance of the obligation. Without such demand, the hands of petitioner's board of directors to make
judicial or extrajudicial, the effects of default will not arise decisions for the interest of petitioner corporation, in fact,
(Namarco v. Federation of United Namarco Distributors, undermined the latter's financial stability. During the 18
Inc. 49 SCRA 238 [1973]; Borje v. CFI of Misamis months of Edmundo Ledesma's management,
Occidental, 88 SCRA 576 [1979]). Whether petitioner petitioner's factory produced some P200,000.00 worth of
corporation is already in default or not and whether canned goods which according to petitioner is only
demand had been properly made or not had to be equivalent to its normal production in three weeks (Brief
determined in the lower court. for Petitioner, pp.10-11). Respondent bank justifies the
underproduction by averring that petitioner at that time
Granting that the findings of the lower court after trial on did not have sufficient capital to operate the factory, and
the merits answer both questions in the affirmative, that said factory was only operating for the purpose of
avoiding spoilage and deterioration of the raw materials the part of the respondent DBP to deliver the
then in store at the petitioner's factory (Rollo. p. 168) and consideration for which the mortgage and the
yet respondent bank insists, that it had released the assignment of deed were executed.
entire amount of P500,000.00 loan to petitioner (Rollo, p.
167) earmarked for operating capital purposes (Brief for It cannot be determined at this point how much of the
the Respondent, p. 43) and admits having granted a total loan, most especially the P500,000.00 loan for
P40,000.00 loan at a higher interest of 14% per annum operating capital and the P40,000.00 loan of the
to petitioner at the request of the same Edmundo manager, Edmundo Ledesma, had been mismanaged or
Ledesma (Rollo, p. 167). After the Development Bank of misspent by respondent bank through its
the Philippines had approved on June 29, 1967 a loan of representatives. This matter should rightfully be litigated
P1,840,000.00 applied for by petitioner in 1961, below in the main action (Filipinas Marble Corportion v.
respondent bank informed of the availability of Intermediate Appellate Court. (supra).
P800,000.00 to pay off partially petitioner's account with
it and requested to release the titles of the Pasig parcels Furthermore, respondent bank was in default in fulfilling
for delivery to the Development Bank of the Philippines, its reciprocal obligation under their loan agreement. By
and the amount actually released by the Development its own admission it failed to release the P710,000.00
Bank, Rafael Ledesma, in his capacity as Chairman of loan (Rollo, p. 167) it approved on October 13, 1966
petitioner's board of directors wrote a letter to the (Brief for Respondent, p. 44) in which case, petitioner
Development Bank of the Philippines stating that Rene corporation, under Article 1191 of the Civil Code, may
Knecht, petitioner's president, had no authority to borrow choose between specific performance or rescission with
for petitioner, being a mere figurehead president, damages in either case (Central Bank of the Philippines
although Rene Knecht, controlled 87% of the v. Court of Appeals, 139 SCRA 46 [1985]).
stockholding of petitioner and the by-laws authorized the
president to borrow for the company (Brief for Petitioner, As a consequence, the real estate mortgage of petitioner
pp. 11-13).<re||an1w> That Rafael Ledesma wrote a corporation cannot be entirely foreclosed to satisfy its
letter to the Development Bank of the Philippines is total debt to respondent bank. (Central Bank of the
admitted by respondent bank (Rollo, p. 169). The Philippines v. Court of Appeals, supra.)
Development Bank of the Philippines refused to make
further releases on the approved loan or to issue the The issue of whether the foreclosure sale of the
dollar guaranty for the importation of can making mortgaged properties en masse was valid or not must be
machinery. It was Atty. Juan de Ocampo, the corporate answered in the negative. The rule of indivisibility of a
counsel retained by petitioner at the insistence of real estate mortgage refers to the provisions of Article
respondent bank that instituted the collection suit and 2089 of the Civil Code, which provides:
extra-judicial foreclosure for respondent bank against
petitioner (Brief for Petitioner, pp. 13-14; Rollo, p. 79). Art. 2089. A pledge or mortgage is
indivisible, even though the debt may be
It is apparent that it is respondent bank practically divided among the successors in
managing petitioner corporation through its interest of the debtor or of the creditor.
representatives occupying key positions therein. Not
even the president of petitioner corporation could escape Therefore the debtor's heir who has paid
control by respondent bank through the Comptroller a part of the debt cannot ask for the
Treasurer assigned "to countersign all checks and other proportionate extinguishment of the
disbursements and decide on all financial matters pledge or mortgage as the debt is not
regarding the operations and who shall see to it that completely satisfied.
operations are carried out" (Brief for the Respondent, p.
41). There is basis for petitioner's complaint of Neither can the creditor's heir who
interference by respondent bank with petitioner's received his share of the debt return the
financing (Brief for Petitioner, pp. 3132) and such pledge or cancel the mortgage, to the
interference is only a consequence of respondent bank's prejudice of the other heirs who have
management of petitioner corporation through the not been paid.
officers occupying key positions therein. Thus, if ever
petitioner corporation was in financial straits instead of
From these provisions is excepted the
being rehabilitated this can be attributed to the
case in which, there being several
mismanagement of respondent corporation through its
things given in mortgage or pledge,
representatives in petitioner corporation.
each one of them guarantees only a
determinate portion of the credit.
In a similar case, Filipinas Marble Corporation v.
Intermediate Appellate Court (142 SCRA 180 [1986])
The debtor, in this case, shall have a
where the lending institution took over the management
right to the extinguishment of the pledge
of the borrowing corporation and led that corporation to
or mortgage as the portion of the debt
bankcruptcy through mismanagement or
for which each thing is specially
misappropriation of the funds, defeating the very
answerable is satisfied.
purpose of the loan which is to develop the projects of
the corporation, the Court ruled that it is as if the loan
was never delivered to it and thus, there was failure on
Respondent bank cites the above-quoted article in its The trial court had held that private respondents
argument that the mortgage contract is indivisible and were not in default in the payment of their monthly
that the loan it secures cannot be divided among the amortization, hence, the extrajudicial foreclosure
different lots (Brief for Respondent, p. 27). Respondent conducted by BPIIC was premature and made in bad
Court upheld the validity of the sale en masse (Rollo, p. faith. It awarded private respondents the amount
246). of P300,000 for moral damages, P50,000 for exemplary
damages, and P50,000 for attorneys fees and expenses
The rule, however, is not applicable to the instant case for litigation. It likewise dismissed the foreclosure suit for
as it presupposes several heirs of the debtor or creditor being premature.
which does not obtain in this case (Central Bank of the
The facts are as follows:
Philippines v. Court of Appeals, supra.) Furthermore,
granting that there was consolidation of the entire loan of Frank Roa obtained a loan at an interest rate of 16
petitioner corporations approved by respondent bank, 1/4% per annum from Ayala Investment and Development
the rule of indivisibility of mortgage cannot apply where Corporation (AIDC), the predecessor of petitioner BPIIC,
there was failure of consideration on the part of for the construction of a house on his lot
respondent bank for the mismanagement of the affairs of in New Alabang Village, Muntinlupa. Said house and lot
petitioner corporation and where said bank is in default were mortgaged to AIDC to secure the loan. Sometime in
in complying with its obligation to release to petitioner 1980, Roa sold the house and lot to private respondents
corporation the amount of P710,000.00. In fact the real ALS and Antonio Litonjua for P850,000. They
estate mortgage itself becomes unenforceable (Central paid P350,000 in cash and assumed the P500,000
Bank of the Philippines v. Court of Appeals, supra). balance of Roas indebtedness with AIDC. The latter,
Finally, it is noted that as already stated hereinabove, however, was not willing to extend the old interest rate to
the exact amount of petitioner's total debt was private respondents and proposed to grant them a new
still unknown. loan of P500,000 to be applied to Roas debt and secured
by the same property, at an interest rate of 20% per
PREMISES CONSIDERED, (1) the decision of the Court annum and service fee of 1% per annum on the
of Appeals is REVERSED insofar as it sustained: (a) the outstanding principal balance payable within ten years in
lower court's denial of petitioner's application for equal monthly amortization of P9,996.58 and penalty
preliminary injunction and (b) the validity of the interest at the rate of 21% per annum per day from the
foreclosure sale; (2) the lower court is ordered to date the amortization became due and payable.
proceed with the trial on the merits of the main case
Consequently, in March 1981, private respondents
together with a determination of exactly how much are
executed a mortgage deed containing the above
petitioner's liabilities in favor of respondent bank PCIB
stipulations with the provision that payment of the monthly
so that proper measures may be taken for their eventual
amortization shall commence on May 1, 1981.
liquidation; (3) the preliminary injunction issued by this
Court on April 28, 1971 remains in force until the merits On August 13, 1982, ALS and Litonjua updated
of the main case are resolved; and (4) the motion of Roas arrearages by paying BPIIC the sum
respondent bank dated April 1, 1981 for leave to lease of P190,601.35. This reduced Roas principal balance
the real properties in custodia legis is DENIED. to P457,204.90 which, in turn, was liquidated when BPIIC
applied thereto the proceeds of private respondents loan
SO ORDERED. of P500,000.
BPI INVESTMENT CORPORATION, petitioner, vs. In June 1984, BPIIC instituted foreclosure
HON. COURT OF APPEALS and ALS MANAGEMENT proceedings against private respondents on the ground
& DEVELOPMENT CORPORATION, respondents. that they failed to pay the mortgage indebtedness which
from May 1, 1981 to June 30, 1984, amounted to Four
DECISION Hundred Seventy Five Thousand Five Hundred Eighty
Five and 31/100 Pesos (P475,585.31). A notice of sheriffs
QUISUMBING, J.: sale was published on August 13, 1984.
This petition for certiorari assails the decision On February 28, 1985, ALS and Litonjua filed Civil
dated February 28, 1997, of the Court of Appeals and its Case No. 52093 against BPIIC. They alleged, among
resolution dated April 21, 1998, in CA-G.R. CV No. others, that they were not in arrears in their payment, but
38887. The appellate court affirmed the judgment of the in fact made an overpayment as of June 30, 1984. They
Regional Trial Court of Pasig City, Branch 151, in (a) Civil maintained that they should not be made to pay
Case No. 11831, for foreclosure of mortgage by petitioner amortization before the actual release of the P500,000
BPI Investment Corporation (BPIIC for brevity) against loan in August and September 1982. Further, out of
private respondents ALS Management and Development the P500,000 loan, only the total amount of P464,351.77
Corporation and Antonio K. Litonjua,[1] consolidated with was released to private respondents. Hence, applying the
(b) Civil Case No. 52093, for damages with prayer for the effects of legal compensation, the balance of P35,648.23
issuance of a writ of preliminary injunction by the private should be applied to the initial monthly amortization for the
respondents against said petitioner. loan.
On August 31, 1988, the trial court rendered its respondents delinquency in the payment of their
judgment in Civil Case Nos. 11831 and 52093, thus: loan. This fact constituted sufficient ground for moral
damages in favor of private respondents.
WHEREFORE, judgment is hereby rendered in favor of
The motion for reconsideration filed by petitioner
ALS Management and Development Corporation and
BPIIC was likewise denied, hence this petition, where
Antonio K. Litonjua and against BPI Investment
BPIIC submits for resolution the following issues:
Corporation, holding that the amount of loan granted by
BPI to ALS and Litonjua was only in the principal sum of I. WHETHER OR NOT A CONTRACT OF
P464,351.77, with interest at 20% plus service charge of LOAN IS A CONSENSUAL CONTRACT IN
1% per annum, payable on equal monthly and THE LIGHT OF THE RULE LAID DOWN
successive amortizations at P9,283.83 for ten (10) years IN BONNEVIE VS. COURT OF APPEALS,
or one hundred twenty (120) months. The amortization 125 SCRA 122.
schedule attached as Annex A to the Deed of Mortgage
II. WHETHER OR NOT BPI SHOULD BE HELD
is correspondingly reformed as aforestated.
LIABLE FOR MORAL AND EXEMPLARY
DAMAGES AND ATTORNEYS FEES IN
The Court further finds that ALS and Litonjua suffered
THE FACE OF IRREGULAR PAYMENTS
compensable damages when BPI caused their
MADE BY ALS AND OPPOSED TO THE
publication in a newspaper of general circulation as
RULE LAID DOWN IN SOCIAL SECURITY
defaulting debtors, and therefore orders BPI to pay ALS
SYSTEM VS. COURT OF APPEALS, 120
and Litonjua the following sums:
SCRA 707.
a) P300,000.00 for and as moral damages; On the first issue, petitioner contends that the Court
of Appeals erred in ruling that because a simple loan is
b) P50,000.00 as and for exemplary damages; perfected upon the delivery of the object of the contract,
the loan contract in this case was perfected only
c) P50,000.00 as and for attorneys fees and expenses of on September 13, 1982. Petitioner claims that a contract
litigation. of loan is a consensual contract, and a loan contract is
perfected at the time the contract of mortgage is executed
The foreclosure suit (Civil Case No. 11831) is hereby conformably with our ruling in Bonnevie v. Court of
DISMISSED for being premature. Appeals, 125 SCRA 122. In the present case, the loan
contract was perfected on March 31, 1981, the date when
Costs against BPI. the mortgage deed was executed, hence, the
amortization and interests on the loan should be
SO ORDERED.[2] computed from said date.
When a credit card company gives the holder the We begin by identifying the two privileges that Pantaleon
privilege of charging items at establishments associated assumes he is entitled to with the issuance of his AMEX
with the issuer,[17] a necessary question in a legal analysis credit card, and on which he anchors his claims. First,
is when does this relationship begin? There are two Pantaleon presumes that since his credit card has no pre-
set spending limit, AMEX has the obligation to approve all Since AMEX has no obligation to approve the
his charge requests. Conversely, even if AMEX has no purchase requests of its credit cardholders, Pantaleon
such obligation, at the very least it is obliged to act on his cannot claim that AMEX defaulted in its obligation. Article
charge requests within a specific period of time. 1169 of the Civil Code, which provides the requisites to
hold a debtor guilty of culpable delay, states:
From the loan agreement perspective, the Apart from the lack of any demandable obligation,
contractual relationship begins to exist only upon the we also find that Pantaleon failed to make the demand
meeting of the offer[25] and acceptance of the parties required by Article 1169 of the Civil Code.
involved. In more concrete terms, when cardholders use
their credit cards to pay for their purchases, they merely
offer to enter into loan agreements with the credit card
As previously established, the use of a credit card
company. Only after the latter approves the purchase
to pay for a purchase is only an offer to the credit card
requests that the parties enter into binding loan
company to enter a loan agreement with the credit card
contracts, in keeping with Article 1319 of the Civil Code,
holder. Before the credit card issuer accepts this
which provides:
offer, no obligation relating to the loan agreement
exists between them. On the other hand, a demand is
defined as the assertion of a legal right; xxx an asking with
Article 1319. Consent is authority, claiming or challenging as due.[27] A demand
manifested by the meeting of the offer presupposes the existence of an obligation between
and the acceptance upon the thing and the parties.
the cause which are to constitute the
contract. The offer must be certain and
the acceptance absolute. A qualified
Thus, every time that Pantaleon used his AMEX
acceptance constitutes a counter-offer.
credit card to pay for his purchases, what the stores
transmitted to AMEX were his offers to execute loan
contracts. These obviously could not be classified as the
This view finds support in the reservation found in the card demand required by law to make the debtor in default,
membership agreement itself, particularly paragraph 10, given that no obligation could arise on the part of AMEX
which clearly states that AMEX reserve[s] the right to until after AMEX transmitted its acceptance of Pantaleons
deny authorization for any requested Charge. By so offers. Pantaleons act of insisting on and waiting for the
providing, AMEX made its position clear that it has no charge purchases to be approved by AMEX [28] is not the
obligation to approve any and all charge requests made demand contemplated by Article 1169 of the Civil Code.
by its card holders.
SO ORDERED.