8/9/2019 1232-1240 cases

1/41

PAYMENT

SPOUSES DEO AGNER and MARICON AGNER,Petitioners,

vs.

BPI FAMILY SAVINGS BANK, INC.,Respondent.

D E C I S I O N

PERALTA, J.:

This is a petition for review on certiorari assailing the April !, "!!# Decision$and %a& $', "!!(

Resol)tion"of the Co)rt of Appeals in CA*.R. C+ No. (!"$, which affir-ed the A)g)st $$,

"!! Decisionof the Regional Trial Co)rt, /ranch , %anila Cit&.

On 0e1r)ar& $, "!!$, petitioners spo)ses Deo Agner and %aricon Agner e2ec)ted a

Pro-issor& Note with Chattel %ortgage in favor of Citi-otors, Inc. The contract provides, a-ong

others, that3 for receiving the a-o)nt of Php(4, #(.!!, petitioners shall pa& Php $#,'$.!!

ever& $th da& of each s)cceeding -onth )ntil f)ll& paid5 the loan is sec)red 1& a "!!$

%its)1ishi Advent)re S)per Sport5 and an interest of 6 per -onth shall 1e i-posed for fail)re

to pa& each install-ent on or 1efore the stated d)e date. 4

On the sa-e da&, Citi-otors, Inc. assigned all its rights, title and interests in the Pro-issor&

Note with Chattel %ortgage to A/N A%RO Savings /an7, Inc. 8A/N A%RO9, which, on %a& $,

"!!", li7ewise assigned the sa-e to respondent /PI 0a-il& Savings /an7, Inc.

0or fail)re to pa& fo)r s)ccessive install-ents fro- %a& $, "!!" to A)g)st $, "!!",

respondent, thro)gh co)nsel, sent to petitioners a de-and letter dated A)g)st "', "!!",

declaring the entire o1ligation as d)e and de-anda1le and re:)iring to pa& Php#,4.!4, or

s)rrender the -ortgaged vehicle i--ediatel& )pon receiving the letter.As the de-and was left

)nheeded, respondent filed on Octo1er 4, "!!" an action for Replevin and Da-ages 1efore the

%anila Regional Trial Co)rt 8RTC9.

A writ of replevin was iss)ed.#Despite this, the s)1;ect vehicle was not sei

8/9/2019 1232-1240 cases

2/41

The contentions are )ntena1le.

>ith respect to the first iss)e, it wo)ld 1e s)fficient to state that the -atter s)rro)nding the

Deed of Assign-ent had alread& 1een considered 1& the trial co)rt and the CA. ?i7ewise, it is

an iss)e of fact that is not a proper s)1;ect of a petition for review )nder R)le 4. An iss)e is

fact)al when the do)1t or difference arises as to the tr)th or falsehood of alleged facts, or whenthe :)er& invites cali1ration of the whole evidence, considering -ainl& the credi1ilit& of

witnesses, e2istence and relevanc& of specific s)rro)nding circ)-stances, their relation to each

other and to the whole, and the pro1a1ilities of the sit)ation.$$Ti-e and again, >e stress that

this Co)rt is not a trier of facts and generall& does not weigh anew evidence which lower co)rts

have passed )pon.

As to the second iss)e, records 1ear that 1oth ver1al and written de-ands were in fact -ade 1&

respondent prior to the instit)tion of the case against petitioners. $"Even ass)-ing, for

arg)-ent=s sa7e, that no de-and letter was sent 1& respondent, there is reall& no need for it

1eca)se petitioners legall& waived the necessit& of notice or de-and in the Pro-issor& Note

with Chattel %ortgage, which the& vol)ntaril& and 7nowingl& signed in favor of respondent=s

predecessor@in@interest. Said contract e2pressl& stip)lates3

In case of -&o)r fail)re to pa& when d)e and pa&a1le, an& s)- which I>e are o1liged to pa&

)nder this note andor an& other o1ligation which I>e or an& of )s -a& now or in the f)t)re owe

to the holder of this note or to an& other part& whether as principal or g)arantor 2 2 2 then the

entire s)- o)tstanding )nder this note shall, witho)t prior notice or de-and, i--ediatel&

1eco-e d)e and pa&a1le. 8E-phasis and )nderscoring s)pplied9

A provision on waiver of notice or de-and has 1een recognie held3

The Civil Code in Article $$' provides that one inc)rs in dela& or is in defa)lt fro- the ti-e the

o1ligor de-ands the f)lfill-ent of the o1ligation fro- the o1ligee. Bowever, the law e2pressl&

provides that de-and is not necessar& )nder certain circ)-stances, and one of these

circ)-stances is when the parties e2pressl& waive de-and. Bence, since the co@signors

e2pressl& waived de-and in the pro-issor& notes, de-and was )nnecessar& for the- to 1e in

defa)lt.$4

0)rther, the Co)rt even r)led in Navarro v. Esco1ido$that prior de-and is not a condition

precedent to an action for a writ of replevin, since there is nothing in Section ", R)le ! of the

R)les of Co)rt that re:)ires the applicant to -a7e a de-and on the possessor of the propert&

1efore an action for a writ of replevin co)ld 1e filed.

Also, petitioners= representation that the& have not received a de-and letter is co-pletel&

inconse:)ential as the -ere act of sending it wo)ld s)ffice. Again, >e loo7 into the Pro-issor&

Note with Chattel %ortgage, which provides3

All correspondence relative to this -ortgage, incl)ding de-and letters, s)--onses,

s)1poenas, or notifications of an& ;)dicial or e2tra;)dicial action shall 1e sent to the

%ORT*A*OR at the address indicated on this pro-issor& note with chattel -ortgage or at the

http://www.lawphil.net/judjuris/juri2013/jun2013/gr_182963_2013.html#fnt11http://www.lawphil.net/judjuris/juri2013/jun2013/gr_182963_2013.html#fnt12http://www.lawphil.net/judjuris/juri2013/jun2013/gr_182963_2013.html#fnt13http://www.lawphil.net/judjuris/juri2013/jun2013/gr_182963_2013.html#fnt14http://www.lawphil.net/judjuris/juri2013/jun2013/gr_182963_2013.html#fnt15http://www.lawphil.net/judjuris/juri2013/jun2013/gr_182963_2013.html#fnt11http://www.lawphil.net/judjuris/juri2013/jun2013/gr_182963_2013.html#fnt12http://www.lawphil.net/judjuris/juri2013/jun2013/gr_182963_2013.html#fnt13http://www.lawphil.net/judjuris/juri2013/jun2013/gr_182963_2013.html#fnt14http://www.lawphil.net/judjuris/juri2013/jun2013/gr_182963_2013.html#fnt15

8/9/2019 1232-1240 cases

3/41

address that -a& hereafter 1e given in writing 1& the %ORT*A*OR to the %ORT*A*EE or

hisits assignee. The -ere act of sending an& correspondence 1& -ail or 1& personal deliver& to

the said address shall 1e valid and effective notice to the -ortgagor for all legal p)rposes and

the fact that an& co--)nication is not act)all& received 1& the %ORT*A*OR or that it has

1een ret)rned )nclai-ed to the %ORT*A*EE or that no person was fo)nd at the address

given, or that the address is fictitio)s or cannot 1e located shall not e2c)se or relieve the%ORT*A*OR fro- the effects of s)ch notice.$8E-phasis and )nderscoring s)pplied9

The Co)rt cannot &ield to petitioners= denial in receiving respondent=s de-and letter. To note,

their postal address evidentl& re-ained )nchanged fro- the ti-e the& e2ec)ted the Pro-issor&

Note with Chattel %ortgage )p to ti-e the case was filed against the-. Th)s, the pres)-ption

that a letter d)l& directed and -ailed was received in the reg)lar co)rse of the -ail$#stands in

the a1sence of satisfactor& proof to the contrar&.

Petitioners cannot find s)cco)r fro- Ting v. Co)rt of Appeals$(si-pl& 1eca)se it pertained to

violation of /atas Pa-1ansa /lg. "" or the /o)ncing Chec7s ?aw. As a higher :)ant)- of proof

that is, proof 1e&ond reasona1le do)1t is re:)ired in view of the cri-inal nat)re of the case,

>e fo)nd ins)fficient the -ere presentation of a cop& of the de-and letter allegedl& sent

thro)gh registered -ail and its corresponding registr& receipt as proof of receiving the notice of

dishonor.

Per)sing over the records, what is clear is that petitioners did not ta7e advantage of all the

opport)nities to present their evidence in the proceedings 1efore the co)rts 1elow. The&

-isera1l& failed to prod)ce the original cash deposit slips proving pa&-ent of the -onthl&

a-ortiorse, petitioners

were not a1le to -a7e a for-al offer of evidence considering that the& have not -ar7ed an&

doc)-entar& evidence d)ring the presentation of Deo Agner=s testi-on&.$'

)rispr)dence a1o)nds that, in civil cases, one who pleads pa&-ent has the 1)rden of proving

it5 the 1)rden rests on the defendant to prove pa&-ent, rather than on the plaintiff to prove non@

pa&-ent."!>hen the creditor is in possession of the doc)-ent of credit, proof of non@pa&-ent

is not needed for it is pres)-ed."$RespondentFs possession of the Pro-issor& Note with Chattel

%ortgage strongl& 1)ttresses its clai- that the o1ligation has not 1een e2ting)ished. As held in

/an7 of the Philippine Islands v. Spo)ses Ro&eca3""

2 2 2 The creditorFs possession of the evidence of de1t is proof that the de1t has not 1een

discharged 1& pa&-ent. A pro-issor& note in the hands of the creditor is a proof of

inde1tedness rather than proof of pa&-ent. In an action for replevin 1& a -ortgagee, it is pri-afacie evidence that the pro-issor& note has not 1een paid. ?i7ewise, an )ncanceled -ortgage

in the possession of the -ortgagee gives rise to the pres)-ption that the -ortgage de1t is

)npaid."

Indeed, when the e2istence of a de1t is f)ll& esta1lished 1& the evidence contained in the

record, the 1)rden of proving that it has 1een e2ting)ished 1& pa&-ent devolves )pon the

http://www.lawphil.net/judjuris/juri2013/jun2013/gr_182963_2013.html#fnt16http://www.lawphil.net/judjuris/juri2013/jun2013/gr_182963_2013.html#fnt17http://www.lawphil.net/judjuris/juri2013/jun2013/gr_182963_2013.html#fnt18http://www.lawphil.net/judjuris/juri2013/jun2013/gr_182963_2013.html#fnt19http://www.lawphil.net/judjuris/juri2013/jun2013/gr_182963_2013.html#fnt20http://www.lawphil.net/judjuris/juri2013/jun2013/gr_182963_2013.html#fnt20http://www.lawphil.net/judjuris/juri2013/jun2013/gr_182963_2013.html#fnt21http://www.lawphil.net/judjuris/juri2013/jun2013/gr_182963_2013.html#fnt21http://www.lawphil.net/judjuris/juri2013/jun2013/gr_182963_2013.html#fnt22http://www.lawphil.net/judjuris/juri2013/jun2013/gr_182963_2013.html#fnt23http://www.lawphil.net/judjuris/juri2013/jun2013/gr_182963_2013.html#fnt16http://www.lawphil.net/judjuris/juri2013/jun2013/gr_182963_2013.html#fnt17http://www.lawphil.net/judjuris/juri2013/jun2013/gr_182963_2013.html#fnt18http://www.lawphil.net/judjuris/juri2013/jun2013/gr_182963_2013.html#fnt19http://www.lawphil.net/judjuris/juri2013/jun2013/gr_182963_2013.html#fnt20http://www.lawphil.net/judjuris/juri2013/jun2013/gr_182963_2013.html#fnt21http://www.lawphil.net/judjuris/juri2013/jun2013/gr_182963_2013.html#fnt22http://www.lawphil.net/judjuris/juri2013/jun2013/gr_182963_2013.html#fnt23

8/9/2019 1232-1240 cases

4/41

de1tor who offers s)ch defense to the clai- of the creditor."4The de1tor has the 1)rden of

showing with legal certaint& that the o1ligation has 1een discharged 1& pa&-ent. "

?astl&, there is no violation of Article $4(4 of the Civil Code and the Co)rt=s decision in Elisco

Tool %an)fact)ring Corporation v. Co)rt of Appeals."

In Elisco, petitionerFs co-plaint contained the following pra&er3

>BERE0ORE, plaintiffs pra& that ;)dg-ent 1e rendered as follows3

ON TBE 0IRST CAGSE O0 ACTION

Ordering defendant Rolando ?antan to pa& the plaintiff the s)- of P',!4.( pl)s legal interest

fro- the date of de-and )ntil the whole o1ligation is f)ll& paid5

ON TBE SECOND CAGSE O0 ACTION

To forthwith iss)e a >rit of Replevin ordering the sei

8/9/2019 1232-1240 cases

5/41

car was not ret)rned to private respondent )ntil April $, $'(', after two 8"9 &ears and eight 8(9

-onths, )pon iss)ance 1& the Co)rt of Appeals of a writ of e2ec)tion.

Petitioner pra&ed that private respondents 1e -ade to pa& the s)- of P',!4.(, the a-o)nt

that the& were s)pposed to pa& as of %a& $'(, pl)s interest at the legal rate. At the sa-e ti-e,

it pra&ed for the iss)ance of a writ of replevin or the deliver& to it of the -otor vehicle co-plete

with accessories and e:)ip-ent. In the event the car co)ld not 1e delivered to petitioner, it was

pra&ed that private respondent Rolando ?antan 1e -ade to pa& petitioner the a-o)nt

of P!,!!!.!!, the esti-ated act)al val)e of the car, pl)s accr)ed -onthl& rentals thereof

with interests at the rate of fo)rteen percent 8$469 per ann)- )ntil f)ll& paid. This pra&er of

co)rse cannot 1e granted, even ass)-ing that private respondents have defa)lted in the

pa&-ent of their o1ligation. This led the trial co)rt to sa& that petitioner wanted to eat its ca7e

and have it too."(

In contrast, respondent in this case pra&ed3

8a9 /efore trial, and )pon filing and approval of the 1ond, to forthwith iss)e a >rit of

Replevin ordering the sei

8/9/2019 1232-1240 cases

6/41

All the foregoing notwithstanding, >e are of the opinion that the interest of 6 per -onth sho)ld

1e e:)ita1l& red)ced to one percent 8$69 per -onth or twelve percent 8$"69 per ann)-, to 1e

rec7oned fro- %a& $, "!!" )ntil f)ll pa&-ent and with the re-aining o)tstanding 1alance of

their car loan as of %a& $, "!!" as the 1ase a-o)nt.

Settled is the principle which this Co)rt has affir-ed in a n)-1er of cases that stip)latedinterest rates of three percent 869 per -onth and higher are e2cessive, ini:)ito)s,

)nconsciona1le, and e2or1itant.$>hile Central /an7 Circ)lar No. '!@(", which too7 effect on

an)ar& $, $'(, effectivel& re-oved the ceiling on interest rates for 1oth sec)red and

)nsec)red loans, regardless of -at)rit&, nothing in the said circ)lar co)ld possi1l& 1e read as

granting carte 1lanche a)thorit& to lenders to raise interest rates to levels which wo)ld either

enslave their 1orrowers or lead to a he-orrhaging of their assets."Since the stip)lation on the

interest rate is void for 1eing contrar& to -orals, if not against the law, it is as if there was no

e2press contract on said interest rate5 th)s, the interest rate -a& 1e red)ced as reason and

e:)it& de-and.

>BERE0ORE, the petition is DENIED and the Co)rt A00IR%S >ITB %ODI0ICATION the April

!, "!!# Decision and %a& $', "!!( Resol)tion of the Co)rt of Appeals in CA@*.R. C+ No.

(!"$. Petitioners spo)ses Deo Agner and %aricon Agner are ORDERED to pa&, ;ointl& and

severall&, respondent /PI 0a-il& Savings /an7, Inc. 8 $9 the re-aining o)tstanding 1alance of

their a)to loan o1ligation as of %a& $, "!!" with interest at one percent 8 $ oo9 per -onth fro-

%a& $, "!!" )ntil f)ll& paid5 and 8"9 costs of s)it.

SO ORDERED.

EFFECT OF DEATH

STRONGHOLD INSURANCE COMPANY, INC., Petitioner,

vs.

REPUBLIC-ASAHI GLASS CORPORATION, Respondent.

D E C I S I O N

PANGANIBAN, CJ:

As)ret& co-pan&=s lia1ilit& )nder the perfor-ance 1ond it iss)es is solidar&. The death of the

principal o1ligor does not, as a r)le, e2ting)ish the o1ligation and the solidar& nat)re of that

lia1ilit&.

The Case

/efore )s is a Petition for Review$)nder R)le 4 of the R)les of Co)rt, see7ing to reverse the

%arch $, "!!$ Decision"of the Co)rt of Appeals 8CA9 in CA@*R C+ No. 4$!. The assailed

Decision disposed as follows3

http://www.lawphil.net/judjuris/juri2013/jun2013/gr_182963_2013.html#fnt31http://www.lawphil.net/judjuris/juri2013/jun2013/gr_182963_2013.html#fnt32http://www.lawphil.net/judjuris/juri2013/jun2013/gr_182963_2013.html#fnt33http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt1http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt2http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt2http://www.lawphil.net/judjuris/juri2013/jun2013/gr_182963_2013.html#fnt31http://www.lawphil.net/judjuris/juri2013/jun2013/gr_182963_2013.html#fnt32http://www.lawphil.net/judjuris/juri2013/jun2013/gr_182963_2013.html#fnt33http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt1http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt2

8/9/2019 1232-1240 cases

7/41

>BERE0ORE, the Order dated an)ar& "(, $'' iss)ed 1& the lower co)rt is RE+ERSED and

SET ASIDE. ?et the records of the instant case 1e RE%ANDED to the lower co)rt for the

reception of evidence of all parties.

The 0acts

The facts of the case are narrated 1& the CA in this wise3

On %a& "4, $'(', respondentJ Rep)1lic@Asahi *lass Corporation 8Rep)1lic@Asahi9 entered

into a contract with 2 2 2 ose D. Santos, r., the proprietor of DS Constr)ction 8DS9, for the

constr)ction of roadwa&s and a drainage s&ste- in Rep)1lic@Asahi=s co-po)nd in /arrio

Pinag1)hatan, Pasig Cit&, where respondentJ was to pa& 2 2 2 DS five -illion three h)ndred

tho)sand pesos 8P,!!,!!!.!!9 incl)sive of val)e added ta2 for said constr)ction, which was

s)pposed to 1e co-pleted within a period of two h)ndred fort& 8"4!9 da&s 1eginning %a& (,

$'('. In order Kto g)arantee the faithf)l and satisfactor& perfor-ance of its )nderta7ings= 2 2 2

DS, shall post a perfor-ance 1ond of seven h)ndred ninet& five tho)sand pesos

8P#',!!!.!!9. 2 2 2 DS e2ec)ted, ;ointl& and severall& with petitionerJ Stronghold Ins)rance

Co., Inc. 8SICI9 Perfor-ance /ond No. SICI@"(4'g8$9'#'.

On %a& ", $'(', respondentJ paid to 2 2 2 DS seven h)ndred ninet& five tho)sand pesos

8P#',!!!.!!9 1& wa& of downpa&-ent.

Two progress 1illings dated A)g)st $4, $'(' and Septe-1er $, $'(', for the total a-o)nt of

two h)ndred sevent& fo)r tho)sand si2 h)ndred twent& one pesos and one centavo

8P"#4,"$.!$9 were s)1-itted 1& 2 2 2 DS to respondentJ, which the latter paid. According to

respondentJ, these two progress 1illings acco)nted for onl& #.!$6 of the wor7 s)pposed to 1e

)nderta7en 1& 2 2 2 DS )nder the ter-s of the contract.

Several ti-es prior to Nove-1er of $'(', respondent=sJ engineers called the attention of 2 2 2

DS to the alleged alar-ingl& slow pace of the constr)ction, which res)lted in the fear that the

constr)ction will not 1e finished within the stip)lated "4!@da& period. Bowever, said re-inders

went )nheeded 1& 2 2 2 DS.

On Nove-1er "4, $'(', dissatisfied with the progress of the wor7 )nderta7en 1& 2 2 2 DS,

respondentJ Rep)1lic@Asahi e2tra;)diciall& rescinded the contract p)rs)ant to Article LIII of said

contract, and wrote a letter to 2 2 2 DS infor-ing the latter of s)ch rescission. S)ch rescission,

according to Article L+ of the contract shall not 1e constr)ed as a waiver of respondent=sJ right

to recover da-ages fro- 2 2 2 DS and the latter=s s)reties.

RespondentJ alleged that, as a res)lt of 2 2 2 DS=s fail)re to co-pl& with the provisions of thecontract, which res)lted in the said contract=s rescission, it had to hire another contractor to

finish the pro;ect, for which it inc)rred an additional e2pense of three -illion two h)ndred fift& si2

tho)sand, eight h)ndred sevent& fo)r pesos 8P,",(#4.!!9.

On an)ar& , $''!, respondentJ sent a letter to petitionerJ SICI filing its clai- )nder the 1ond

for not less thanP#',!!!.!!. On %arch "", $''$, respondentJ again sent another letter

http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt3http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt3

8/9/2019 1232-1240 cases

8/41

reiterating its de-and for pa&-ent )nder the afore-entioned 1ond. /oth letters allegedl& went

)nheeded.

RespondentJ then filed aJ co-plaint against 2 2 2 DS and SICI. It so)ght fro- 2 2 2 DS

pa&-ent ofP,",(#4.!! representing the additional e2penses inc)rred 1& respondentJ for the

co-pletion of the pro;ect )sing another contractor, and fro- 2 2 2 DS and SICI, ;ointl& andseverall&, pa&-ent of P#!,!!!.!! as da-ages in accordance with the perfor-ance 1ond5

e2e-plar& da-ages in the a-o)nt of P$!!,!!!.!! and attorne&=s fees in the a-o)nt of at

least P$!!,!!!.!!.

According to the Sheriff=s Ret)rn dated )ne $4, $''$, s)1-itted to the lower co)rt 1& Dep)t&

Sheriff Rene R. Salvador, s)--ons were d)l& served on defendant@appellee SICI. Bowever, 2 2

2 ose D. Santos, r. died the previo)s &ear 8$''!9, and 2 2 2 DS Constr)ction was no longer

at its address at "nd 0loor, Roo- "!(@A, San /)ena /ldg. Cor. Pioneer St., Pasig, %etro

%anila, and its wherea1o)ts were )n7nown.

On )l& $!, $''$, petitionerJ SICI filed its answer, alleging that the respondent=sJ -one&

clai-s against petitioner and DSJ have 1een e2ting)ished 1& the death of ose D. Santos, r.

Even if this were not the case, petitionerJ SICI had 1een released fro- its lia1ilit& )nder the

perfor-ance 1ond 1eca)se there was no li:)idation, with the active participation andor

involve-ent, p)rs)ant to proced)ral d)e process, of herein s)ret& and contractor ose D.

Santos, r., hence, there was no ascertain-ent of the corresponding lia1ilities of Santos and

SICI )nder the perfor-ance 1ond. At this point in ti-e, said li:)idation was i-possi1le 1eca)se

of the death of Santos, who as s)ch can no longer participate in an& li:)idation. The )nilateral

li:)idation on the part& 8sic9 of respondentJ of the wor7 acco-plish-ents did not 1ind SICI for

1eing violative of proced)ral d)e process. The clai- of respondentJ for the forfeit)re of the

perfor-ance 1ond in the a-o)nt of P#',!!!.!! had no fact)al and legal 1asis, as pa&-ent of

said 1ond was conditioned on the pa&-ent of da-ages which respondentJ -a& s)stain in the

event 2 2 2 DS failed to co-plete the contracted wor7s. RespondentJ can no longer prove itsclai- for da-ages in view of the death of Santos. SICI was not infor-ed 1& respondentJ of the

death of Santos. SICI was not infor-ed 1& respondentJ of the )nilateral rescission of its

contract with DS, th)s SICI was deprived of its right to protect its interests as s)ret& )nder the

perfor-ance 1ond, and therefore it was released fro- all lia1ilit&. SICI was li7ewise denied d)e

process when it was not notified of plaintiff@appellant=s process of deter-ining and fi2ing the

a-o)nt to 1e spent in the co-pletion of the )nfinished pro;ect. The proced)re contained in

Article L+ of the contract is against p)1lic polic& in that it denies SICI the right to proced)ral d)e

process. 0inall&, SICI alleged that respondentJ deviated fro- the ter-s and conditions of the

contract witho)t the written consent of SICI, th)s the latter was released fro- all lia1ilit&. SICI

also pra&ed for the award of P',#!.!! as attorne&=s fees, and P,!!!.!! as litigation

e2penses.

On A)g)st $, $''$, the lower co)rt iss)ed an order dis-issing the co-plaint of respondentJ

against 2 2 2 DS and SICI, on the gro)nd that the clai- against DS did not s)rvive the death

of its sole proprietor, ose D. Santos, r. The dispositive portion of the OJrder reads as follows3

8/9/2019 1232-1240 cases

9/41

KACCORDIN*?H, the co-plaint against the defendants ose D. Santos, r., doing 1)siness

)nder trade and st&le, KDS Constr)ction= and Stronghold Ins)rance Co-pan&, Inc. is ordered

DIS%ISSED.

KSO ORDERED.=

On Septe-1er 4, $''$, respondentJ filed a %otion for Reconsideration see7ing

reconsideration of the lower co)rt=s A)g)st $, $''$ order dis-issing its co-plaint. PetitionerJ

SICI field its KCo--ent andor Opposition to the %otion for Reconsideration.= On Octo1er $,

$''$, the lower co)rt iss)ed an Order, the dispositive portion of which reads as follows3

K>BERE0ORE, pre-ises considered, the %otion for Reconsideration is here1& given d)e

co)rse. The Order dated $ A)g)st $''$ for the dis-issal of the case against Stronghold

Ins)rance Co-pan&, Inc., is reconsidered and here1& reinstated 8sic9. Bowever, the case

against defendant ose D. Santos, r. 8deceased9 re-ains )ndist)r1ed.

K%otion for Preli-inar& hearing and %anifestation with %otion filed 1& StrongholdJ Ins)rance

Co-pan& Inc., are set for hearing on Nove-1er #, $''$ at "3!! o=cloc7 in the afternoon.

KSO ORDERED.=

On )ne 4, $''", petitionerJ SICI filed its K%e-orand)- for /onds-anDefendant SICI 8Re3

Effect of Death of defendant ose D. Santos, r.9= reiterating its pra&er for the dis-issal of

respondent=sJ co-plaint.

On an)ar& "(, $'', the lower co)rt iss)ed the assailed Order reconsidering its Order dated

Octo1er $, $''$, and ordered the case, insofar as SICI is concerned, dis-issed. RespondentJ

filed its -otion for reconsideration which was opposed 1& petitionerJ SICI. On April $, $'',

the lower co)rt denied respondent=sJ -otion for reconsideration. 2 2 2.4

R)ling of the Co)rt of Appeals

The CA r)led that SICI=s o1ligation )nder the s)ret& agree-ent was not e2ting)ished 1& the

death of ose D. Santos, r. Conse:)entl&, Rep)1lic@Asahi co)ld still go after SICI for the 1ond.

The appellate co)rt also fo)nd that the lower co)rt had erred in prono)ncing that the

perfor-ance of the Contract in :)estion had 1eco-e i-possi1le 1& respondent=s act of

rescission. The Contract was rescinded 1eca)se of the dissatisfaction of respondent with the

slow pace of wor7 and p)rs)ant to Article LIII of its Contract with DS.

The CA r)led that pJerfor-ance of the CJontract was i-possi1le, not 1eca)se of

respondent=sJ fa)lt, 1)t 1eca)se of the fa)lt of DS Constr)ction and ose D. Santos, r. for

fail)re on their part to -a7e satisfactor& progress on the pro;ect, which a-o)nted to non@

perfor-ance of the sa-e. 2 2 2 PJ)rs)ant to the SJ)ret& CJontract, SICI is lia1le for the non@

perfor-ance of said CJontract on the part of DS Constr)ction.

Bence, this Petition.

http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt4http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt5http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt6http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt4http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt5http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt6

8/9/2019 1232-1240 cases

10/41

Iss)e

Petitioner states the iss)e for the Co)rt=s consideration in the following -anner3

Death is a defense of Santos= heirs which Stronghold co)ld also adopt as its defense against

o1ligee=s clai-.

#

%ore precisel&, the iss)e is whether petitioner=s lia1ilit& )nder the perfor-ance 1ond was

a)to-aticall& e2ting)ished 1& the death of Santos, the principal.

The Co)rt=s R)ling

The Petition has no -erit.

Sole Iss)e3

Effect of Death on the S)ret&=s ?ia1ilit&

Petitioner contends that the death of Santos, the 1ond principal, e2ting)ished his lia1ilit& )nder

the s)ret& 1ond. Conse:)entl&, it sa&s, it is a)to-aticall& released fro- an& lia1ilit& )nder the

1ond.

As a general r)le, the death of either the creditor or the de1tor does not e2ting)ish the

o1ligation.(O1ligations are trans-issi1le to the heirs, e2cept when the trans-ission is

prevented 1& the law, the stip)lations of the parties, or the nat)re of the o1ligation. 'Onl&

o1ligations that are personal$!or are identified with the persons the-selves are e2ting)ished 1&

death.$$

Section of R)le ($"of the R)les of Co)rt e2pressl& allows the prosec)tion of -one& clai-s

arising fro- a contract against the estate of a deceased de1tor. Evidentl&, those clai-s are not

act)all& e2ting)ished.$>hat is e2ting)ished is onl& the o1ligee=s action or s)it filed 1efore the

co)rt, which is not then acting as a pro1ate co)rt.$4

In the present case, whatever -onetar& lia1ilities or o1ligations Santos had )nder his contracts

with respondent were not intrans-issi1le 1& their nat)re, 1& stip)lation, or 1& provision of law.

Bence, his death did not res)lt in the e2ting)ish-ent of those o1ligations or lia1ilities, which

-erel& passed on to his estate.$Death is not a defense that he or his estate can set )p to wipe

o)t the o1ligations )nder the perfor-ance 1ond. Conse:)entl&, petitioner as s)ret& cannot )se

his death to escape its -onetar& o1ligation )nder its perfor-ance 1ond.

The lia1ilit& of petitioner is contract)al in nat)re, 1eca)se it e2ec)ted a perfor-ance 1ond

worded as follows3

MNO> A?? %EN /H TBESE PRESENTS3

That we, DS CONSTRGCTION of "!(@A San /)ena /)ilding, contractor, of Shaw /lvd.,

Pasig, %% Philippines, as principal and the STRON*BO?D INSGRANCE CO%PANH, INC. a

http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt7http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt8http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt9http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt10http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt10http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt10http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt11http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt11http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt12http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt13http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt13http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt14http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt15http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt7http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt8http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt9http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt10http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt11http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt12http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt13http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt14http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt15

8/9/2019 1232-1240 cases

11/41

corporation d)l& organiBEREAS, the lia1ilit& of the S)ret& Co-pan& )nder this 1ond shall in no case e2ceed the

s)- of PESOS SE+EN BGNDRED NINETH 0I+E TBOGSAND 8P#',!!!.!!9 Philippine

C)rrenc&, incl)sive of interest, attorne&=s fee, and other da-ages, and shall not 1e lia1le for an&

advances of the o1ligee to the principal.

>BEREAS, said contract re:)ires the said principal to give a good and s)fficient 1ond in the

a1ove@stated s)- to sec)re the f)ll and faithf)ll perfor-ance on its part of said contract, and the

satisfaction of o1ligations for -aterials )sed and la1or e-plo&ed )pon the wor75

NO> TBERE0ORE, if the principal shall perfor- well and tr)l& and f)lfill all the )nderta7ings,

covenants, ter-s, conditions, and agree-ents of said contract d)ring the original ter- of said

contract and an& e2tension thereof that -a& 1e granted 1& the o1ligee, with notice to the s)ret&

and d)ring the life of an& g)arant& re:)ired )nder the contract, and shall also perfor- well and

tr)l& and f)lfill all the )nderta7ings, covenants, ter-s, conditions, and agree-ents of an& and all

d)l& a)thori

8/9/2019 1232-1240 cases

12/41

Art. "!4#. /& g)arant& a person, called the g)arantor, 1inds hi-self to the creditor to f)lfill the

o1ligation of the principal de1tor in case the latter sho)ld fail to do so.

If a person 1inds hi-self solidaril& with the principal de1tor, the provisions of Section

4,$#Chapter , Title I of this /oo7 shall 1e o1served. In s)ch case the contract is called a

s)ret&ship.

2 2 2 2 2 2 2 2 2

Art. $"$. The creditor -a& proceed against an& one of the solidar& de1tors or so-e or all of

the- si-)ltaneo)sl&. The de-and -ade against one of the- shall not 1e an o1stacle to those

which -a& s)1se:)entl& 1e directed against the others, so long as the de1t has not 1een f)ll&

collected.

El)cidating on these provisions, the Co)rt in *arcia v. Co)rt of Appeals$(stated th)s3

2 2 2. The s)ret&=s o1ligation is not an original and direct one for the perfor-ance of his own

act, 1)t -erel& accessor& or collateral to the o1ligation contracted 1& the principal.

Nevertheless, altho)gh the contract of a s)ret& is in essence secondar& onl& to a valid principal

o1ligation, his lia1ilit& to the creditor or pro-isee of the principal is said to 1e direct, pri-ar& and

a1sol)te5 in other words, he is directl& and e:)all& 1o)nd with the principal. 2 2 2.$'

Gnder the law and ;)rispr)dence, respondent -a& s)e, separatel& or together, the principal

de1tor and the petitioner herein, in view of the solidar& nat)re of their lia1ilit&. The death of the

principal de1tor will not wor7 to convert, decrease or n)llif& the s)1stantive right of the solidar&

creditor. Evidentl&, despite the death of the principal de1tor, respondent -a& still s)e petitioner

alone, in accordance with the solidar& nat)re of the latter=s lia1ilit& )nder the perfor-ance 1ond.

>BERE0ORE, the Petition is DENIED and the Decision of the Co)rt of Appeals A00IR%ED.

Costs against petitioner.

SO ORDERED.

TO WHOM PAYMENT SHALL BE MADE ART.12!

PHILIPPINE NATIONAL BANK, petitioner, vs. COURT OF APPEALS and

LORETO TAN,respondents.

SYLLABUS

1. CIVIL LAW" OBLIGATIONS AND CONTRACTS" A DEBT IS PAID BY COMPLETE

DELIVERY OF THE THING OR RENDITION OF SERVICE. - There is no :)estion that no

pa&-ent had ever 1een -ade to private respondent as the chec7 was never delivered to

hi-. >hen the co)rt ordered petitioner to pa& private respondent the a-o)nt of

P",4(!.!!, it had the o1ligation to deliver the sa-e to hi-. Gnder Art. $" of the Civil

http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt17http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt17http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt18http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt18http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt19http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt17http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt18http://www.lawphil.net/judjuris/juri2006/jun2006/gr_147561_2006.html#fnt19

8/9/2019 1232-1240 cases

13/41

Code, a de1t shall not 1e )nderstood to have 1een paid )nless the thing or service in which

the o1ligation consists has 1een co-pletel& delivered or rendered, as the case -a& 1e.

2. REMEDIAL LAW" EVIDENCE" BURDEN OF PROOF OF PAYMENT OF OBLIGATION

LIES WITH THE DEBTOR" PAYMENT NOT PROVED IN CASE AT BAR. - The 1)rden of

proof of s)ch pa&-ent lies with the de1tor. In the instant case, neither the SPA nor thechec7 iss)ed 1& petitioner was ever presented in co)rt. The testi-onies of petitioner=s own

witnesses regarding the chec7 were conflicting. Taga-olila testified that the chec7 was

iss)ed to the order of Sonia *on

8/9/2019 1232-1240 cases

14/41

clai-ant5 . the act -)st 1e acco-panied 1& 1ad faith or done in a wanton, fra)d)lent,

oppressive or -alevolent -anner.

*. ID." ID." ID." CANNOT BE RECOVERED WHERE THERE IS NO CLEAR BREACH OF

OBLIGATION TO PAY OR THAT A PARTY ACTED IN FRAUDULENT, WANTON,

RECKLESS OR OPPRESSIVE MANNER. -As for the award of e2e-plar& da-ages, weagree with the appellate co)rt that the sa-e sho)ld 1e deleted. In the case at 1ench, while

there is a clear 1reach of petitioner=s o1ligation to pa& private respondents, there is no

evidence that it acted in a fra)d)lent, wanton, rec7less or oppressive -anner. 0)rther-ore,

there is no award of co-pensator& da-ages which is a prere:)isite 1efore e2e-plar&

da-ages -a& 1e awarded. Therefore, the award 1& the trial co)rt of P,!!!.!! as

e2e-plar& da-ages is 1aseless.

APPEARANCES OF COUNSEL

Santiago, Jr., Vidad, Corpus & Associatesfor petitioner.

Jose G. Jover, Jr. for private respondent.

D E C I S I O N

ROMERO, J.:

Petitioner Philippine National /an7 8PN/9 :)estions the decision$of the Co)rt of Appeals

partiall& affir-ing the ;)dg-ent of the Regional Trial Co)rt, /ranch 44, /acolod Cit&. The

dispositive portion of the trial co)rt=s decision states3

WHEREFORE, premises considered, the Court hereby renders judgment in favor of the plaintiff and

against the defendants as follos!

"# Ordering defendants to pay plaintiff jointly and severally the sum of $%&,'()*)), ith legal rate of

interest to be computed from +ay &, "-, date of filing of this complaint until fully paid.

Ordering defendants to pay plaintiff jointly and severally the sum of $/,)))*)) as e0emplary

damages.

%# Ordering defendants to pay plaintiff jointly and severally the sum of $/,)))*)) as attorney1s fees.

'# 2o pay the costs of this suit*

3O OR4ERE4*5&

The facts are the following3

Private respondent ?oreto Tan 8Tan9 is the owner of a parcel of land a1)tting the national

highwa& in %andalagan, /acolod Cit&. E2propriation proceedings were instit)ted 1& the

http://sc.judiciary.gov.ph/jurisprudence/1996/apr1996/108630.htm#_ftn1http://sc.judiciary.gov.ph/jurisprudence/1996/apr1996/108630.htm#_ftn2http://sc.judiciary.gov.ph/jurisprudence/1996/apr1996/108630.htm#_ftn1http://sc.judiciary.gov.ph/jurisprudence/1996/apr1996/108630.htm#_ftn2

8/9/2019 1232-1240 cases

15/41

govern-ent against private respondent Tan and other propert& owners 1efore the then Co)rt of

0irst Instance of Negros Occidental, /ranch I+, doc7eted as Civil Case No. $"'"4.

Tan filed a -otion dated %a& $!, $'#( re:)esting iss)ance of an order for the release to

hi- of the e2propriation price of P ",4(!.!!.

On %a& "", $'#(, petitioner PN/ 8/acolod /ranch9 was re:)ired 1& the trial co)rt to

release to Tan the a-o)nt of P",4(!.!! deposited with it 1& the govern-ent.

On %a& "4, $'#(, petitioner, thro)gh its Assistant /ranch %anager )an Taga-olila, iss)ed

a -anager=s chec7 for P ",4(!.!! and delivered the sa-e to one Sonia *on

8/9/2019 1232-1240 cases

16/41

In its defense, petitioner contended that private respondent had d)l& a)thorihen the co)rt ordered petitioner to pa& private respondent

the a-o)nt of P ",4(!.!!, it had the o1ligation to deliver the sa-e to hi-. Gnder Art. $" of

the Civil Code, a de1t shall not 1e )nderstood to have 1een paid )nless the thing or service in

which the o1ligation consists has 1een co-pletel& delivered or rendered, as the case -a& 1e.

The 1)rden of proof of s)ch pa&-ent lies with the de1tor.In the instant case, neither the

SPA nor the chec7 iss)ed 1& petitioner was ever presented in co)rt.

The testi-onies of petitioner=s own witnesses regarding the chec7 were conflicting.

Taga-olila testified that the chec7 was iss)ed to the order of Sonia *on

8/9/2019 1232-1240 cases

17/41

of ?oreto Tan,4while Elvira Ti1on, assistant cashier of PN/ 8/acolod /ranch9, stated that the

chec7 was iss)ed to the order of ?oreto Tan.

0)rther-ore, contrar& to petitioner=s contention that all that is needed to 1e proved is the

e2istence of the SPA, it is also necessar& for evidence to 1e presented regarding the nat)re and

e2tent of the alleged powers and a)thorit& granted to Sonia *on

8/9/2019 1232-1240 cases

18/41

co-pelled to litigate with third persons or to inc)r e2penses to protect his interest 1& reason of

an )n;)stified act or o-ission of the part& fro- who- it is so)ght.

In Rasona1le v. N?RC, et al.,#we held that when a part& is forced to litigate to protect his

rights, he is entitled to an award of attorne&=s fees.

As for the award of e2e-plar& da-ages, we agree with the appellate co)rt that the sa-e

sho)ld 1e deleted.

Gnder Art. """ of the Civil Code, e2e-plar& da-ages -a& 1e awarded if a part& acted in a

wanton, fra)d)lent, rec7less, oppressive, or -alevolent -anner. Bowever, the& cannot 1e

recovered as a -atter of right5 the co)rt has &et to decide whether or not the& sho)ld 1e

ad;)dicated.(

)rispr)dence has set down the re:)ire-ents for e2e-plar& da-ages to 1e awarded3

"* they may be imposed by ay of e0ample in addition to compensatory damages, and only after the

claimant1s right to them has been established.

&* they cannot be recovered as a matter of right, their determination depending upon the amount of

compensatory damages that may be aarded to the claimant.

%* the act must be accompanied by bad faith or done in a anton, fraudulent, oppressive or malevolent

manner*

In the case at 1ench, while there is a clear 1reach of petitioner=s o1ligation to pa& private

respondents, there is no evidence that it acted in a fra)d)lent, wanton, rec7less or oppressive

-anner. 0)rther-ore, there is no award to co-pensator& da-ages which is a prere:)isite

1efore e2e-plar& da-ages -a& 1e awarded. Therefore, the award 1& the trial co)rt of

P,!!!.!! as e2e-plar& da-ages is 1aseless.

WHEREFORE, the decision of the Co)rt of Appeals is A00IR%ED with the -odification that

the award 1& the Regional Trial Co)rt of P,!!!.!! as attorne&=s fees is REINSTATED.

SO ORDERED.

FRANCISCO CULABA and DEMETRIA CULABA, d+n /0n00 /nd 34 na5 and

0367 8C/7aa S3+8,petitioners,vs.COURT OF APPEALS and SAN MIGUEL CORPORATION,respondents.

D E C I S I O N

CALLE9O, SR., J.:

http://sc.judiciary.gov.ph/jurisprudence/1996/apr1996/108630.htm#_ftn6http://sc.judiciary.gov.ph/jurisprudence/1996/apr1996/108630.htm#_ftn7http://sc.judiciary.gov.ph/jurisprudence/1996/apr1996/108630.htm#_ftn8http://sc.judiciary.gov.ph/jurisprudence/1996/apr1996/108630.htm#_ftn9http://sc.judiciary.gov.ph/jurisprudence/1996/apr1996/108630.htm#_ftn9http://sc.judiciary.gov.ph/jurisprudence/1996/apr1996/108630.htm#_ftn6http://sc.judiciary.gov.ph/jurisprudence/1996/apr1996/108630.htm#_ftn7http://sc.judiciary.gov.ph/jurisprudence/1996/apr1996/108630.htm#_ftn8http://sc.judiciary.gov.ph/jurisprudence/1996/apr1996/108630.htm#_ftn9

8/9/2019 1232-1240 cases

19/41

This is a petition for review )nder R)le 4 of the Revised R)les of Civil Proced)re of theDecision$of the Co)rt of Appeals in CA@*.R. C+ No. $'( affir-ing in toto the Decision "of theRegional Trial Co)rt of %a7ati, /ranch $(, in Civil Case No. $! for collection of s)- of-one&, and the Resol)tionden&ing the -otion for reconsideration of the said decision.

T4 Und0;/3d Fa

8/9/2019 1232-1240 cases

20/41

ANH TRANSACTION, TBERE0ORE, ENTERED INTO >ITB TBE GSE O0 TBE A/O+ERECEIPTS >I?? NOT /E BONORED.

SAN %I*GE? CORPORATION/EER DI+ISION

%a7ati /eer Region$!

T4 Ta7 C+/3%0 R/7n

After trial on the -erits, the trial co)rt rendered ;)dg-ent in favor of S%C, and held the C)la1aspo)ses lia1le on the 1alance of its o1ligation, th)s3

>herefore, ;)dg-ent is here1& rendered in favor of the plaintiff, as follows3

$. Ordering defendants to pa& the a-o)nt of P"4,'$!.!! pl)s legal interest of 6 perann)- fro- April $", $'( )ntil the whole a-o)nt is f)ll& paid5

". Ordering defendants to pa& "!6 of the a-o)nt d)e to plaintiff as and for attorne&=sfees pl)s costs.

SO ORDERED.$$

According to the trial co)rt, it was )n)s)al that defendant 0rancisco C)la1a forgot the na-e ofthe collector to who- he -ade the pa&-ents and that he did not re:)ire the said collector toprint his na-e on the receipts. The co)rt also noted that altho)gh the& were part of a single1oo7let, the TCS ?i:)idation Receipts s)1-itted 1& the defendants did not appear to have 1eeniss)ed in their nat)ral se:)ence. 0)rther-ore, the& were part of the lost 1oo7let receipts, whichthe p)1lic was d)l& warned of thro)gh the Notice of ?oss the plaintiff ca)sed to 1e p)1lished ina dail& newspaper. This confir-ed the plaintiff=s clai- that the receipts presented 1& the

defendants were sp)rio)s ones.

T4 Ca0 +n A;;a7

On appeal, the appellants interposed the following assign-ent of errors3

I

TBE TRIA? COGRT ERRED IN 0INDIN* TBAT TBE RECEIPTS PRESENTED /HDE0ENDANTS E+IDENCIN* BIS PAH%ENTS TO P?AINTI00 SAN %I*GE?CORPORATION, ARE SPGRIOGS.

II

TBE TRIA? COGRT ERRED IN CONC?GDIN* TBAT P?AINTI00@APPE??EE BASSG00ICIENT?H PRO+ED ITS CAGSE O0 ACTION A*AINST TBE DE0ENDANTS.

III

http://www.lawphil.net/judjuris/juri2004/apr2004/gr_125862_2004.html#fnt10http://www.lawphil.net/judjuris/juri2004/apr2004/gr_125862_2004.html#fnt11http://www.lawphil.net/judjuris/juri2004/apr2004/gr_125862_2004.html#fnt10http://www.lawphil.net/judjuris/juri2004/apr2004/gr_125862_2004.html#fnt11

8/9/2019 1232-1240 cases

21/41

TBE TRIA? COGRT ERRED IN ORDERIN* DE0ENDANTS TO PAH "!6 O0 TBEA%OGNT DGE TO P?AINTI00 AS ATTORNEH=S 0EES.$"

The appellants asserted that while the trial co)rt=s o1servations were tr)e, it was the )s)al1)siness practice in previo)s transactions 1etween the- and S%C. The S%C previo)sl&honored receipts not 1earing the sales-an=s na-e. According to appellant 0rancisco C)la1a,

he even lost so-e of the receipts, 1)t did not enco)nter an& pro1le-s.

According to appellant 0rancisco, he co)ld not 1e fa)lted for pa&ing the S%C collector whoca-e in a van and was in )nifor-, and that an& reg)lar c)sto-er wo)ld, witho)t an&apprehension, transact with s)ch an S%C e-plo&ee. 0)rther-ore, the respective receiptsiss)ed to hi- at the ti-e he paid on the fo)r occasions -entioned had not &et then 1eendeclared lost. Th)s, the s)1se:)ent p)1lication in a dail& newspaper declaring the 1oo7lets lostdid not affect the validit& and legalit& of the pa&-ents -ade. Accordingl&, 1& its act)ations, theS%C was estopped fro- :)estioning the legalit& of the pa&-ents and had no ca)se of actionagainst the appellants.

Anent the iss)e of attorne&=s fees, the order of the trial co)rt for pa&-ent thereof is witho)t1asis. According to the appellant, the provision for attorne&=s fees is a contingent fee, alread&provided for in the S%C=s contract with the law fir-. To f)rther order the- to pa& "!6 of thea-o)nt d)e as attorne&=s fees is do)1le pa&-ent, tanta-o)nt to )nd)e enrich-ent andtherefore i-proper.$

The appellee, for its part, contended that the pri-ar& iss)e in the case at 1ar revolved aro)ndthe 1asic and f)nda-ental principles of agenc&.$4It was inc)-1ent )pon the defendants@appellants to e2ercise ordinar& pr)dence and reasona1le diligence to verif& and identif& thee2tent of the alleged agent=s a)thorit&. It was their 1)rden to esta1lish the tr)e identit& of theass)-ed agent, and this co)ld not 1e esta1lished 1& -ere representation, r)-or or generalrep)tation. As the& )tterl& failed in this regard, the appellants -)st s)ffer the conse:)ences.

The Co)rt of Appeals affir-ed the decision of the trial co)rt, th)s3

In the face of the so-ewhat ten)o)s evidence presented 1& the appellants, we cannotfa)lt the lower co)rt for giving -ore weight to appellee=s testi-onial and doc)-entar&evidence, all of which esta1lish with so-e degree of preponderance the e2istence of theacco)nt s)ed )pon.

ALL CONSIDERED, we cannot find an& ;)stification to re;ect the fact)al findings of thelower co)rt to which we -)st accord respect, for which reason, the ;)dg-ent appealedfro- is here1& A00IR%ED in all respects.

SO ORDERED.$

Bence, the instant petition.

The petitioners pose the following iss)es for the Co)rt=s resol)tion3

I. >BETBER OR NOT TBE RESPONDENT BAD PRO+EN /H PREPONDERANTE+IDENCE TBAT IT BAD PROPER?H AND TI%E?H NOTI0IED PETITIONER O0 ?OST/OOM?ET O0 RECEIPTS

http://www.lawphil.net/judjuris/juri2004/apr2004/gr_125862_2004.html#fnt12http://www.lawphil.net/judjuris/juri2004/apr2004/gr_125862_2004.html#fnt13http://www.lawphil.net/judjuris/juri2004/apr2004/gr_125862_2004.html#fnt14http://www.lawphil.net/judjuris/juri2004/apr2004/gr_125862_2004.html#fnt14http://www.lawphil.net/judjuris/juri2004/apr2004/gr_125862_2004.html#fnt15http://www.lawphil.net/judjuris/juri2004/apr2004/gr_125862_2004.html#fnt12http://www.lawphil.net/judjuris/juri2004/apr2004/gr_125862_2004.html#fnt13http://www.lawphil.net/judjuris/juri2004/apr2004/gr_125862_2004.html#fnt14http://www.lawphil.net/judjuris/juri2004/apr2004/gr_125862_2004.html#fnt15

8/9/2019 1232-1240 cases

22/41

II. >BETBER OR NOT RESPONDENT BAD PRO+EN /H PREPONDERANTE+IDENCE TBAT PETITIONER >AS RE%ISS IN TBE PAH%ENT O0 BIS ACCOGNTSTO ITS A*ENT.$

According to the petitioners, receiving receipts fro- the private respondent=s agents instead ofits sales-en was a )s)al occ)rrence, as the& had 1een operating the store since $'#'. Th)s,

on fo)r occasions in April $'(, when an agent of the respondent ca-e to the store wearing anS%C )nifor- and driving an S%C van, petitioner 0rancisco C)la1a, witho)t :)estion, paid hisacco)nts. Be received the receipts witho)t fear, as the& were si-ilar to what he )sed to receive1efore. 0)rther-ore, the petitioners assert that, co--on e2perience will attest that )nless theattention of the c)sto-ers is called for, the& wo)ld not ta7e note of the serial n)-1er of thereceipts.

The petitioners contend that the private respondent advertised its warning to the p)1lic onl&after the da-age was done, or on )l& ', $''. Its 1elated notice showed its glaring lac7 ofinterest or concern for its c)sto-ers= welfare, and, in s)-, its negligence.

Anent the second iss)e, petitioner 0rancisco C)la1a avers that the agent to who- the acco)ntswere paid had all the ph&sical and -aterial attri1)tes or indications of a representative of theprivate respondent, leaving no do)1t that he was d)l& a)thori

8/9/2019 1232-1240 cases

23/41

To reiterate, the iss)e 1eing raised 1& the petitioners does not involve a :)estion of law, 1)t a:)estion of fact, not cogni

8/9/2019 1232-1240 cases

24/41

Negligence is the o-ission to do so-ething which a reasona1le -an, g)ided 1& thoseconsiderations which ordinaril& reg)late the cond)ct of h)-an affairs, wo)ld do, or the doing ofso-ething, which a pr)dent and reasona1le -an wo)ld not do."In the case at 1ar, the -ostpr)dent thing the petitioners sho)ld have done was to ascertain the identit& and a)thorit& of theperson who collected their pa&-ents. 0ailing this, the petitioners cannot clai- that the& acted ingood faith when the& -ade s)ch pa&-ents. Their clai- therefor is negated 1& their negligence,

and the& are 1o)nd 1& its conse:)ences. /eing negligent in this regard, the petitioners cannotsee7 relief on the 1asis of a s)pposed agenc&."

WHEREFORE, the instant petition is here1& DENIED. The assailed Decision dated April $,$'', and the Resol)tion dated )l& $', $'' of the Co)rt of Appeals are A00IR%ED. Costsagainst the petitioners.

SO ORDERED.

ALLIED BANKING CORPORATION,Petitioner,

vs.LIM SIO WAN, METROPOLITAN BANK AND TRUST CO., and PRODUCERS

BANK,Respondents.

D E C I S I O N

VELASCO, 9R., J.:

To ingratiate the-selves to their val)ed depositors, so-e 1an7s at ti-es 1end over 1ac7wards

that the& )nwittingl& e2pose the-selves to great ris7s.

The Case

This Petition for Review on Certiorari )nder R)le 4 see7s to reverse the Co)rt of Appeals=

8CA=s9 Decision pro-)lgated on %arch $(, $''($in CA@*.R. C+ No. 4"'! entitled ?i- Sio

>an v. Allied /an7ing Corporation, et al. The CA Decision -odified the Decision dated

Nove-1er $, $''"of the Regional Trial Co)rt 8RTC9, /ranch in %a7ati Cit& rendered in

Civil Case No. ##.

The 0acts

The facts as fo)nd 1& the RTC and affir-ed 1& the CA are as follows3

On Nove-1er $4, $'(, respondent ?i- Sio >an deposited with petitioner Allied /an7ing

Corporation 8Allied9 at its Q)intin Paredes /ranch in %anila a -one& -ar7et place-ent of PhP

$,$",'#. for a ter- of $ da&s to -at)re on Dece-1er $, $'(, as evidenced 1&

Provisional Receipt No. $ dated Nove-1er $4, $'(.4

On Dece-1er , $'(, a person clai-ing to 1e ?i- Sio >an called )p Cristina So, an officer of

Allied, and instr)cted the latter to pre@ter-inate ?i- Sio >an=s -one& -ar7et place-ent, to

http://www.lawphil.net/judjuris/juri2004/apr2004/gr_125862_2004.html#fnt25http://www.lawphil.net/judjuris/juri2004/apr2004/gr_125862_2004.html#fnt26http://www.lawphil.net/judjuris/juri2004/apr2004/gr_125862_2004.html#fnt26http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt1http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt2http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt2http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt3http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt4http://www.lawphil.net/judjuris/juri2004/apr2004/gr_125862_2004.html#fnt25http://www.lawphil.net/judjuris/juri2004/apr2004/gr_125862_2004.html#fnt26http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt1http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt2http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt3http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt4

8/9/2019 1232-1240 cases

25/41

iss)e a -anager=s chec7 representing the proceeds of the place-ent, and to give the chec7 to

one De1orah Dee Santos who wo)ld pic7 )p the chec7.?i- Sio >an descri1ed the

appearance of Santos so that So co)ld easil& identif& her.

?ater, Santos arrived at the 1an7 and signed the application for- for a -anager=s chec7 to 1e

iss)ed.

#

The 1an7 iss)ed %anager=s Chec7 No. !' for PhP $,$(,4(.4', representing theproceeds of ?i- Sio >an=s -one& -ar7et place-ent in the na-e of ?i- Sio >an, as

pa&ee.(The chec7 was cross@chec7ed 0or Pa&ee=s Acco)nt Onl& and given to Santos.'

Thereafter, the -anager=s chec7 was deposited in the acco)nt of 0ilipinas Ce-ent Corporation

80CC9 at respondent %etropolitan /an7 and Tr)st Co. 8%etro1an79,$!with the forged signat)re

of ?i- Sio >an as indorser.$$

Earlier, on Septe-1er "$, $'(, 0CC had deposited a -one& -ar7et place-ent for PhP "

-illion with respondent Prod)cers /an7. Santos was the -one& -ar7et trader assigned to

handle 0CC=s acco)nt.$"S)ch deposit is evidenced 1& Official Receipt No. $#($and a

?etter dated Septe-1er "$, $'( of Santos addressed to Angie ?aan=s place-ent, the -anager=s chec7 in the na-e of ?i- Sio >an was

deposited in the acco)nt of 0CC, p)rportedl& representing the proceeds of 0CC=s -one& -ar7et

place-ent with Prod)cers /an7.$#In other words, the Allied chec7 was deposited with

%etro1an7 in the acco)nt of 0CC as Prod)cers /an7=s pa&-ent of its o1ligation to 0CC.

To clear the chec7 and in co-pliance with the re:)ire-ents of the Philippine Clearing Bo)se

Corporation 8PCBC9 R)les and Reg)lations, %etro1an7 sta-ped a g)arant& on the chec7,

which reads3 All prior endorse-ents andor lac7 of endorse-ent g)aranteed.$(

The chec7 was sent to Allied thro)gh the PCBC. Gpon the present-ent of the chec7, Allied

f)nded the chec7 even witho)t chec7ing the a)thenticit& of ?i- Sio >an=s p)rported

indorse-ent. Th)s, the a-o)nt on the face of the chec7 was credited to the acco)nt of 0CC. $'

On Dece-1er ', $'(, ?i- Sio >an deposited with Allied a second -one& -ar7et place-ent to

-at)re on an)ar& ', $'(4."!

On Dece-1er $4, $'(, )pon the -at)rit& date of the first -one& -ar7et place-ent, ?i- Sio

>an went to Allied to withdraw it."$She was then infor-ed that the place-ent had 1een pre@

ter-inated )pon her instr)ctions. She denied giving an& instr)ctions and receiving the proceedsthereof. She desisted fro- f)rther co-plaints when she was ass)red 1& the 1an7=s -anager

that her -one& wo)ld 1e recovered.""

>hen ?i- Sio >an=s second place-ent -at)red on an)ar& ', $'(4, So called ?i- Sio >an to

as7 for the latter=s instr)ctions on the second place-ent. ?i- Sio >an instr)cted So to roll@over

the place-ent for another ! da&s."On an)ar& "4, $'(4, ?i- Sio >an, reali

8/9/2019 1232-1240 cases

26/41

Allied as7ing for the pa&-ent of the first place-ent."4Allied ref)sed to pa& ?i- Sio >an,

clai-ing that the latter had a)thori

8/9/2019 1232-1240 cases

27/41

SO ORDERED.

The Decision of the Co)rt of Appeals

Allied appealed to the CA, which in t)rn iss)ed the assailed Decision on %arch $(, $''(,

-odif&ing the RTC Decision, as follows3

>BERE0ORE, pre-ises considered, the decision appealed fro- is %ODI0IED. )dg-ent is

rendered ordering and sentencing defendant@appellant Allied /an7ing Corporation to pa& si2t&

8!69 percent and defendant@appellee %etropolitan /an7 and Tr)st Co-pan& fort& 84!69 of the

a-o)nt of P$,$(,4(.4' pl)s $"6 interest per ann)- fro- %arch $, $'(4 )ntil f)ll& paid. The

-oral da-ages, attorne&=s fees and costs of s)it ad;)dged shall li7ewise 1e paid 1& defendant@

appellant Allied /an7ing Corporation and defendant@appellee %etropolitan /an7 and Tr)st

Co-pan& in the sa-e proportion of !@4!. E2cept as th)s -odified, the decision appealed fro-

is A00IR%ED.

SO ORDERED.#

Bence, Allied filed the instant petition.

The Iss)es

Allied raises the following iss)es for o)r consideration3

The Bonora1le Co)rt of Appeals erred in holding that ?i- Sio >an did not a)thorihen the CA affir-s the findings of fact of the RTC, the fact)al findings of

1oth co)rts are 1inding on this Co)rt.'

>e also agree with the CA when it said that it co)ld not dist)r1 the trial co)rt=s findings on the

credi1ilit& of witness So inas-)ch as it was the trial co)rt that heard the witness and had the

opport)nit& to o1serve closel& her deport-ent and -anner of testif&ing. Gnless the trial co)rt

had plainl& overloo7ed facts of s)1stance or val)e, which, if considered, -ight affect the res)lt

http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt36http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt37http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt38http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt39http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt36http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt37http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt38http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt39

8/9/2019 1232-1240 cases

28/41

of the case,4!we find it 1est to defer to the trial co)rt on -atters pertaining to credi1ilit& of

witnesses.

Additionall&, this Co)rt has held that the -atter of negligence is also a fact)al :)estion.4$Th)s,

the finding of the RTC, affir-ed 1& the CA, that the respective parties were negligent in the

e2ercise of their o1ligations is also concl)sive )pon this Co)rt.

The ?ia1ilit& of the Parties

As to the lia1ilit& of the parties, we find that Allied is lia1le to ?i- Sio >an. 0)nda-ental and

fa-iliar is the doctrine that the relationship 1etween a 1an7 and a client is one of de1tor@creditor.

Articles $' and $'(! of the Civil Code provide3

Art. $'. A person who receives a loan of -one& or an& other f)ngi1le thing ac:)ires the

ownership thereof, and is 1o)nd to pa& to the creditor an e:)al a-o)nt of the sa-e 7ind and

:)alit&.

Art. $'(!. 0i2ed, savings, and c)rrent deposits of -one& in 1an7s and si-ilar instit)tions shall

1e governed 1& the provisions concerning si-ple loan.

Th)s, we have r)led in a line of cases that a 1an7 deposit is in the nat)re of a si-ple loan or

-)t))-.4"%ore s)ccinctl&, in Citi1an7, N.A. 80or-erl& 0irst National Cit& /an79 v. Sa1eniano,

this Co)rt r)led that a -one& -ar7et place-ent is a si-ple loan or -)t))-.40)rther, we

defined a -one& -ar7et in Ce1) International 0inance Corporation v. Co)rt of Appeals, as

follows3

AJ -one& -ar7et is a -ar7et dealing in standardian, as creditor of the 1an7 for her -one& -ar7et place-ent, is entitled to pa&-ent

)pon her re:)est, or )pon -at)rit& of the place-ent, or )ntil the 1an7 is released fro- its

o1ligation as de1tor. Gntil an& s)ch event, the o1ligation of Allied to ?i- Sio >an re-ains

)ne2ting)ished.

Art. $"$ of the Civil Code en)-erates the instances when o1ligations are considered

e2ting)ished, th)s3

Art. $"$. O1ligations are e2ting)ished3

8$9 /& pa&-ent or perfor-ance5

http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt40http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt41http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt42http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt43http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt44http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt44http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt40http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt41http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt42http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt43http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt44

8/9/2019 1232-1240 cases

29/41

8"9 /& the loss of the thing d)e5

89 /& the condonation or re-ission of the de1t5

849 /& the conf)sion or -erger of the rights of creditor and de1tor5

89 /& co-pensation5

89 /& novation.

Other ca)ses of e2ting)ish-ent of o1ligations, s)ch as ann)l-ent, rescission, f)lfill-ent of a

resol)tor& condition, and prescription, are governed elsewhere in this Code. 8E-phasis

s)pplied.9

0ro- the fact)al findings of the trial and appellate co)rts that ?i- Sio >an did not a)thorian had not 1een e2ting)ished.

Art. $"4! of the Code states that pa&-ent shall 1e -ade to the person in whose favor the

o1ligation has 1een constit)ted, or his s)ccessor in interest, or an& person a)thori

8/9/2019 1232-1240 cases

30/41

Pro2i-ate ca)se is that ca)se, which, in nat)ral and contin)o)s se:)ence, )n1ro7en 1& an&

efficient intervening ca)se, prod)ces the in;)r& and witho)t which the res)lt wo)ld not have

occ)rred.4#Th)s, there is an efficient s)pervening event if the event 1rea7s the se:)ence

leading fro- the ca)se to the )lti-ate res)lt. To deter-ine the pro2i-ate ca)se of a

controvers&, the :)estion that needs to 1e as7ed is3 If the event did not happen, wo)ld the in;)r&

have res)lted If the answer is NO, then the event is the pro2i-ate ca)se.

In the instant case, Allied avers that even if it had not iss)ed the chec7 pa&-ent, the -one&

represented 1& the chec7 wo)ld still 1e lost 1eca)se of %etro1an7=s negligence in indorsing the

chec7 witho)t verif&ing the gen)ineness of the indorse-ent thereon.

Section in relation to Sec. of the Negotia1le Instr)-ents ?aw provides3

Section . ?ia1ilit& of general indorser.Ever& indorser who indorses witho)t :)alification,

warrants to all s)1se:)ent holders in d)e co)rse5

a9 The -atters and things -entioned in s)1divisions 8a9, 819 and 8c9 of the ne2t

preceding section5 and

19 That the instr)-ent is at the ti-e of his indorse-ent valid and s)1sisting5

And in addition, he engages that on d)e present-ent, it shall 1e accepted or paid, or 1oth, as

the case -a& 1e according to its tenor, and that if it 1e dishonored, and the necessar&

proceedings on dishonor 1e d)l& ta7en, he will pa& the a-o)nt thereof to the holder, or to an&

s)1se:)ent indorser who -a& 1e co-pelled to pa& it.

Section . >arrant& where negotiation 1& deliver&, so forth.Ever& person negotiating an

instr)-ent 1& deliver& or 1& a :)alified indorse-ent, warrants3

a9 That the instr)-ent is gen)ine and in all respects what it p)rports to 1e5

19 That he has a good title of it5

c9 That all prior parties had capacit& to contract5

d9 That he has no 7nowledge of an& fact which wo)ld i-pair the validit& of the instr)-ent

or render it val)eless.

/)t when the negotiation is 1& deliver& onl&, the warrant& e2tends in favor of no holder other

than the i--ediate transferee.

The provisions of s)1division 8c9 of this section do not appl& to persons negotiating p)1lic or

corporation sec)rities, other than 1ills and notes. 8E-phasis s)pplied.9

The warrant& that the instr)-ent is gen)ine and in all respects what it p)rports to 1e covers all

the defects in the instr)-ent affecting the validit& thereof, incl)ding a forged indorse-ent. Th)s,

the last indorser will 1e lia1le for the a-o)nt indicated in the negotia1le instr)-ent even if a

http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt47http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt47

8/9/2019 1232-1240 cases

31/41

previo)s indorse-ent was forged. >e held in a line of cases that a collecting 1an7 which

indorses a chec7 1earing a forged indorse-ent and presents it to the drawee 1an7 g)arantees

all prior indorse-ents, incl)ding the forged indorse-ent itself, and )lti-atel& sho)ld 1e held

lia1le therefor.4(

Bowever, this general r)le is s)1;ect to e2ceptions. One s)ch e2ception is when the iss)ance ofthe chec7 itself was attended with negligence. Th)s, in the cases cited a1ove where the

collecting 1an7 is generall& held lia1le, in two of the cases where the chec7s were negligentl&

iss)ed, this Co)rt held the instit)tion iss)ing the chec7 ;)st as lia1le as or -ore lia1le than the

collecting 1an7.

In isolated cases where the chec7s were deposited in an acco)nt other than that of the pa&ees

on the strength of forged indorse-ents, we held the collecting 1an7 solel& lia1le for the whole

a-o)nt of the chec7s involved for having indorsed the sa-e. In Rep)1lic /an7 v. E1rada ,4'the

chec7 was properl& iss)ed 1& the /)rea) of Treas)r&. >hile in /anco de Oro Savings and

%ortgage /an7 8/anco de Oro9 v. E:)ita1le /an7ing Corporation, !/anco de Oro ad-ittedl&

iss)ed the chec7s in the na-e of the correct pa&ees. And in Traders Ro&al /an7 v. Radio

Philippines Networ7, Inc.,$the chec7s were iss)ed at the re:)est of Radio Philippines Networ7,

Inc. fro- Traders Ro&al /an7.1avvphi1

Bowever, in /an7 of the Philippine Islands v. Co)rt of Appeals, we said that the drawee 1an7 is

lia1le for !6 of the a-o)nt on the face of the negotia1le instr)-ent and the collecting 1an7 is

lia1le for 4!6. >e also noted the relative negligence e2hi1ited 1& two 1an7s, to wit3

/oth 1an7s were negligent in the selection and s)pervision of their e-plo&ees res)lting in the

encash-ent of the forged chec7s 1& an i-postor. /oth 1an7s were not a1le to overco-e the

pres)-ption of negligence in the selection and s)pervision of their e-plo&ees. It was the gross

negligence of the e-plo&ees of 1oth 1an7s which res)lted in the fra)d and the s)1se:)ent loss.

>hile it is tr)e that petitioner /PI=s negligence -a& have 1een the pro2i-ate ca)se of the loss,

respondent C/C=s negligence contributed e:)all& to the s)ccess of the i-postor in encashing

the proceeds of the forged chec7s. Gnder these circ)-stances, we appl& Article "$#' of the

Civil Code to the effect that while respondent C/C -a& recover its losses, s)ch losses are

s)1;ect to -itigation 1& the co)rts. 8SeePhoeni2 Constr)ction Inc. v. Inter-ediate Appellate

Co)rts, $4( SCRA $'(#J9.

Considering the co-parative negligence of the two 8"9 1an7s, we r)le that the de-ands of

s)1stantial ;)stice are satisfied 1& allocating the loss of P",4$,"$.$ and the costs of the

ar1itration proceeding in the a-o)nt of P#,"!.!! and the cost of litigation on a !@4! ratio."

Si-ilarl&, we r)led in Associated /an7 v. Co)rt of Appeals that the iss)ing instit)tion and thecollecting 1an7 sho)ld e:)all& share the lia1ilit& for the loss of a-o)nt represented 1& the

chec7s concerned d)e to the negligence of 1oth parties3

The Co)rt finds as reasona1le, the proportionate sharing of fift& percent@fift& percent 8!6@

!69. D)e to the negligence of the Province of Tarlac in releasing the chec7s to an

)na)thori

8/9/2019 1232-1240 cases

32/41

wh& the retired hospital cashier was collecting chec7s for the pa&ee hospital in addition to the

hospital=s real cashier, respondent Province contri1)ted to the loss a-o)nting to P"!,!!.!!

and shall 1e lia1le to the PN/ for fift& 8!69 percent thereof. In effect, the Province of Tarlac can

onl& recover fift& percent 8!69 of P"!,!!.!! fro- PN/.

The collecting 1an7, Associated /an7, shall 1e lia1le to PN/ for fift& 8!69 percent ofP"!,!!.!!. It is lia1le on its warranties as indorser of the chec7s which were deposited 1&

0a)sto Pangilinan, having g)aranteed the gen)ineness of all prior indorse-ents, incl)ding that

of the chief of the pa&ee hospital, Dr. Adena Canlas. Associated /an7 was also re-iss in its

d)t& to ascertain the gen)ineness of the pa&ee=s indorse-ent.

A reading of the facts of the two i--ediatel& preceding cases wo)ld reveal that the reason wh&

the 1an7 or instit)tion which iss)ed the chec7 was held partiall& lia1le for the a-o)nt of the

chec7 was 1eca)se of the negligence of these parties which res)lted in the iss)ance of the

chec7s.

In the instant case, the trial co)rt correctl& fo)nd Allied negligent in iss)ing the -anager=s chec7

and in trans-itting it to Santos witho)t even a written a)thorian at her

residence or office to confir- her instr)ctions. /oth actions co)ld have prevented the whole

fra)d)lent transaction fro- )nfolding. Allied=s negligence -)st 1e considered as the pro2i-ate

ca)se of the res)lting loss.

To reiterate, had Allied e2ercised the diligence d)e fro- a financial instit)tion, the chec7 wo)ld

not have 1een iss)ed and no loss of f)nds wo)ld have res)lted. In fact, there wo)ld have 1een

no iss)ance of indorse-ent had there 1een no chec7 in the first place.

The lia1ilit& of Allied, however, is conc)rrent with that of %etro1an7 as the last indorser of the

chec7. >hen %etro1an7 indorsed the chec7 in co-pliance with the PCBC R)les and

Reg)lationswitho)t verif&ing the a)thenticit& of ?i- Sio >an=s indorse-ent and when it

accepted the chec7 despite the fact that it was cross@chec7ed pa&a1le to pa&ee=s acco)nt

onl&,its negligent and cavalier indorse-ent contri1)ted to the easier release of ?i- Sio >an=s

-one& and perpet)ation of the fra)d. *iven the relative participation of Allied and %etro1an7 to

the instant case, 1oth 1an7s cannot 1e ad;)dged as e:)all& lia1le. Bence, the !34! ratio of the

lia1ilities of Allied and %etro1an7, as r)led 1& the CA, -)st 1e )pheld.

0CC, having no participation in the negotiation of the chec7 and in the forger& of ?i- Sio >an=s

indorse-ent, can raise the real defense of forger& as against 1oth 1an7s.#

As to Prod)cers /an7, Allied /an7=s arg)-ent that Prod)cers /an7 -)st 1e held lia1le ase-plo&er of Santos )nder Art. "$(! of the Civil Code is erroneo)s. Art. "$(! pertains to the

vicario)s lia1ilit& of an e-plo&er for :)asi@delicts that an e-plo&ee has co--itted. S)ch

provision of law does not appl& to civil lia1ilit& arising fro- delict.

One also cannot appl& the principle of s)1sidiar& lia1ilit& in Art. $! of the Revised Penal Code

in the instant case. S)ch lia1ilit& on the part of the e-plo&er for the civil aspect of the cri-inal

http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt53http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt54http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt55http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt56http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt56http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt57http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt53http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt54http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt55http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt56http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt57

8/9/2019 1232-1240 cases

33/41

act of the e-plo&ee is 1ased on the conviction of the e-plo&ee for a cri-e. Bere, there has

1een no conviction for an& cri-e.

As to the clai- that there was )n;)st enrich-ent on the part of Prod)cers /an7, the sa-e is

correct. Allied correctl& clai-s in its petition that Prod)cers /an7 sho)ld rei-1)rse Allied for

whatever ;)dg-ent that -a& 1e rendered against it p)rs)ant to Art. "" of the Civil Code, whichprovides3 Ever& person who thro)gh an act of perfor-ance 1& another, or an& other -eans,

ac:)ires or co-es into possession of so-ething at the e2pense of the latter witho)t ;)st ca)se

or legal gro)nd, shall ret)rn the sa-e to hi-.1avvphi1

The a1ove provision of law was clarified in Re&es v. ?i-, where we r)led that tJhere is )n;)st

enrich-ent when a person )n;)stl& retains a 1enefit to the loss of another, or when a person

retains -one& or propert& of another against the f)nda-ental principles of ;)stice, e:)it& and

good conscience.(

In Ta-io v. Ticson, we f)rther clarified the principle of )n;)st enrich-ent, th)s3 Gnder Article ""

of the Civil Code, there is )n;)st enrich-ent when 8$9 a person is )n;)stl& 1enefited, and 8"9

s)ch 1enefit is derived at the e2pense of or with da-ages to another.'

In the instant case, ?i- Sio >an=s -one& -ar7et place-ent in Allied /an7 was pre@ter-inated

and withdrawn witho)t her consent. %oreover, the proceeds of the place-ent were deposited in

Prod)cers /an7=s acco)nt in %etro1an7 witho)t an& ;)stification. In other words, there is no

reason that the proceeds of ?i- Sio >ans= place-ent sho)ld 1e deposited in 0CC=s acco)nt

p)rportedl& as pa&-ent for 0CC=s -one& -ar7et place-ent and interest in Prod)cers

/an7.avvphi>ith s)ch pa&-ent, Prod)cers /an7=s inde1tedness to 0CC was e2ting)ished,

there1& 1enefitting the for-er. Clearl&, Prod)cers /an7 was )n;)stl& enriched at the e2pense of

?i- Sio >an. /ased on the facts and circ)-stances of the case, Prod)cers /an7 sho)ld

rei-1)rse Allied and %etro1an7 for the a-o)nts the two latter 1an7s are ordered to pa& ?i- Sio

>an.

It cannot 1e validl& clai-ed that 0CC, and not Prod)cers /an7, sho)ld 1e considered as having

1een )n;)stl& enriched. It -)st 1e re-e-1ered that 0CC=s -one& -ar7et place-ent with

Prod)cers /an7 was alread& d)e and de-anda1le5 th)s, Prod)cers /an7=s pa&-ent thereof

was ;)stified. 0CC was entitled to s)ch pa&-ent. As earlier stated, the fact that the indorse-ent

on the chec7 was forged cannot 1e raised against 0CC which was not a part in an& stage of the

negotiation of the chec7. 0CC was not )n;)stl& enriched.

0ro- the facts of the instant case, we see that Santos co)ld 1e the architect of the entire

controvers&. Gnfort)natel&, since s)--ons had not 1een served on Santos, the co)rts have not

ac:)ired ;)risdiction over her.!>e, therefore, cannot ascri1e to her lia1ilit& in the instant case.

Clearl&, Prod)cers /an7 -)st 1e held lia1le to Allied and %etro1an7 for the a-o)nt of the chec7

pl)s $"6 interest per ann)-, -oral da-ages, attorne&=s fees, and costs of s)it which Allied and

%etro1an7 are ad;)dged to pa& ?i- Sio >an 1ased on a proportion of !34!.

http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt58http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt59http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt60http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt58http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt59http://www.lawphil.net/judjuris/juri2008/mar2008/gr_133179_2008.html#fnt60

8/9/2019 1232-1240 cases

34/41

>BERE0ORE, the petition is PART?H *RANTED. The %arch $(, $''( CA Decision in CA@*.R.

C+ No. 4"'! and the Nove-1er $, $'' RTC Decision in Civil Case No. ## are

A00IR%ED with %ODI0ICATION.

Th)s, the CA Decision is A00IR%ED, the fallo of which is reprod)ced, as follows3

>BERE0ORE, pre-ises considered, the decision appealed fro- is %ODI0IED. )dg-ent is

rendered ordering and sentencing defendant@appellant Allied /an7ing Corporation to pa& si2t&

8!69 percent and defendant@appellee %etropolitan /an7 and Tr)st Co-pan& fort& 84!69 of the

a-o)nt of P$,$(,4(.4' pl)s $"6 interest per ann)- fro- %arch $, $'(4 )ntil f)ll& paid. The

-oral da-ages, attorne&=s fees and costs of s)it ad;)dged shall li7ewise 1e paid 1& defendant@

appellant Allied /an7ing Corporation and defendant@appellee %etropolitan /an7 and Tr)st

Co-pan& in the sa-e proportion of !@4!. E2cept as th)s -odified, the decision appealed fro-

is A00IR%ED.

SO ORDERED.

Additionall& and 1& wa& of %ODI0ICATION, Prod)cers /an7 is here1& ordered to pa& Allied and

%etro1an7 the afore-entioned a-o)nts. The lia1ilities of the parties are conc)rrent and

independent of each other.

SO ORDERED.

SPOUSES MINIANO B. DELA CRU> and LETA L. DELA CRU>,Petitioners,

vs.

ANA MARIE CONCEPCION,Respondent.

D E C I S I O N

PERALTA, J.:

Assailed in this petition for review on certiorari )nder R)le 4 of the R)les of Co)rt filed 1&

petitioners spo)ses %iniano /. Dela Cr)< and ?eta ?. Dela Cr)< against respondent Ana %arie

Concepcion are the Co)rt of Appeals 8CA9 Decision$dated %arch $, "!! and

Resol)tion"dated %a& "4, "!! in CA@*.R. C+ No. (!!.

The facts of the case are as follows3

On %arch ", $'', petitioners 8as vendors9 entered into a Contract to Sellwith respondent 8as

vendee9 involving a ho)se and lot in C&press St., Phase I, Town and Co)ntr& E2ec)tive +illage,

Antipolo Cit& for a consideration of P",!!!,!!!.!! s)1;ect to the following ter-s and conditions3

a9 That an earnest -one& of P$!!,!!!.!! shall 1e paid i--ediatel&5

http://www.lawphil.net/judjuris/juri2012/oct2012/gr_172825_2012.html#fnt1http://www.lawphil.net/judjuris/juri2012/oct2012/gr_172825_2012.html#fnt1http://www.lawphil.net/judjuris/juri2012/oct2012/gr_172825_2012.html#fnt2http://www.lawphil.net/judjuris/juri2012/oct2012/gr_172825_2012.html#fnt3http://www.lawphil.net/judjuris/juri2012/oct2012/gr_172825_2012.html#fnt1http://www.lawphil.net/judjuris/juri2012/oct2012/gr_172825_2012.html#fnt2http://www.lawphil.net/judjuris/juri2012/oct2012/gr_172825_2012.html#fnt3

8/9/2019 1232-1240 cases

35/41

19 That a f)ll down pa&-ent of 0o)r B)ndred Tho)sand Pesos 8P4!!,!!!.!!9 shall 1e

paid on 0e1r)ar& "', $''5

c9 That 0ive B)ndred Tho)sand Pesos 8P!!,!!!.!!9 shall 1e paid on or 1efore %a& ,

$''5 and

d9 That the 1alance of One %illion Pesos 8P$,!!!,!!!.!!9 shall 1e paid on install-ent

with interest of Eighteen Percent 8$(69 per ann)- or One and a half percent 8$@$" 69

interest per -onth, 1ased on the di-inishing 1alance, co-po)nded -onthl&, effective

%a& , $''. The interest shall contin)e to r)n )ntil the whole o1ligation shall have 1een

f)ll& paid. The whole One %illion Pesos shall 1e paid within three &ears fro- %a& ,

$''5

e9 That the agreed -onthl& a-orti

8/9/2019 1232-1240 cases

36/41

the presentation of the parties= evidence, in addition to doc)-ents showing the state-ent of her

paid o1ligations, respondent presented a receipt p)rportedl& indicating pa&-ent of the

re-aining 1alance of P"!!,!!!.!! to Adoracion ?osloso 8?osloso9 who allegedl& received the

sa-e on 1ehalf of petitioners.$

On %arch (, "!!4, the RTC rendered a Decision

$4

in favor of respondent, the dispositive portionof which reads3

>BERE0ORE, pre-ises considered, this case is here1& DIS%ISSED. The plaintiff is here1&

ordered to pa& the defendant=s co)nterclai-, a-o)nting to wit3

a9 P!!,!!! as -oral da-ages5 and

19 P$!!,!!! pl)s P",!!! per co)rt appearance as attorne&=s fees.

SO ORDERED.$

The RTC noted that the evidence for-all& offered 1& petitioners have not act)all& 1een -ar7ed

as none of the -ar7ings were recorded. Th)s, it fo)nd no 1asis to grant their clai-s, especiall&

since the a-o)nt clai-ed in the co-plaint is different fro- that testified to. The co)rt, on the

other hand, granted respondent=s co)nterclai-.$

On appeal, the CA affir-ed the decision with -odification 1& deleting the award of -oral

da-ages and attorne&=s fees in favor of respondent.$#It agreed with the RTC that the evidence

presented 1& petitioners cannot 1e given credence in deter-ining the correct lia1ilit& of

respondent.$(Considering that the p)rchase price had 1een f)ll& paid 1& respondent ahead of

the sched)led date agreed )pon 1& the parties, petitioners were not awarded the e2cessive

penalties and interests.$'The CA th)s -aintained that respondent=s lia1ilit& is li-ited to

P"!!,!!!.!! as clai-ed 1& respondent and originall& ad-itted 1& petitioners."!This a-o)nt,

however, had alread& 1een paid 1& respondent and received 1& petitioners=

representative."$0inall&, the CA pointed o)t that the RTC did not e2plain in its decision wh&

-oral da-ages and attorne&=s fees were awarded. Considering also that 1ad faith cannot 1e

attri1)ted to petitioners when the& instit)ted the collection s)it, the CA deleted the grant of their

co)nterclai-s.""

Aggrieved, petitioners co-e 1efore the Co)rt in this petition for review on certiorari )nder R)le

4 of the R)les of Co)rt raising the following errors3

I.

TBE TRIA? COGRT ERRED IN DIS%ISSIN* TBE CO%P?AINT ON TBE *ROGND

TBAT P?AINTI00 0AI?ED TO 0OR%A??H O00ER TBEIR E+IDENCE AS DE0ENDANT

GDICIA??H AD%ITTED IN BER ANS>ER >ITB CO%PG?SOJRH COGNTERC?AI%

BER OGTSTANDIN* O/?I*ATION STI?? DGE TO P?AINTI00S AND NEED NO

PROO0.

II.

http://www.lawphil.net/judjuris/juri2012/oct2012/gr_172825_2012.html#fnt13http://www.lawphil.net/judjuris/juri2012/oct2012/gr_172825_2012.html#fnt14http://www.lawphil.net/judjuris/juri2012/oct2012/gr_172825_2012.html#fnt15http://www.lawphil.net/judjuris/juri2012/oct2012/gr_172825_2012.html#fnt16http://www.lawphil.net/judjuris/juri2012/oct2012/gr_172825_2012.html#fnt17http://www.lawphil.net/judjuris/juri2012/oct2012/gr_172825_2012.html#fnt17http://www.lawphil.net/judjuris/juri2012/oct2012/gr_172825_2012.html#fnt18http://www.lawphil.net/judjuris/juri2012/oct2012/gr_172825_2012.html#fnt19http://www.lawphil.net/judjuris/juri2012/oct2012/gr_172825_2012.html#fnt19http://www.lawphil.net/judjuris/juri2012/oct2012/gr_172825_2012.html#fnt20http://www.lawphil.net/judjuris/juri2012/oct2012/gr_172825_2012.html#fnt21http://www.lawphil.net/judjuris/juri2012/oct2012/gr_172825_2012.html#fnt22http://www.lawphil.net/judjuris/juri2012/oct2012/gr_172825_2012.html#fnt13http://www.lawphil.net/judjuris/juri2012/oct2012/gr_172825_2012.html#fnt14http://www.lawphil.net/judjuris/juri2012/oct2012/gr_172825_2012.html#fnt15http://www.lawphil.net/judjuris/juri2012/oct2012/gr_172825_2012.html#fnt16http://www.lawphil.net/judjuris/juri2012/oct2012/gr_172825_2012.html#fnt17http://www.lawphil.net/judjuris/juri2012/oct2012/gr_172825_2012.html#fnt18http://www.lawphil.net/judjuris/juri2012/oct2012/gr_172825_2012.html#fnt19http://www.lawphil.net/judjuris/juri2012/oct2012/gr_172825_2012.html#fnt20http://www.lawphil.net/judjuris/juri2012/oct2012/gr_172825_2012.html#fnt21http://www.lawphil.net/judjuris/juri2012/oct2012/gr_172825_2012.html#fnt22

8/9/2019 1232-1240 cases

37/41

TBE TRIA? COGRT ERRED IN DIS%ISSIN* TBE CO%P?AINT 0OR A??E*ED

0AI?GRE O0 P?AINTI00S TO PRESENT CO%PGTATION O0 TBE A%OGNT /EIN*

C?AI%ED AS DE0ENDANT GDICIA??H AD%ITTED BA+IN* RECEI+ED TBE

DE%AND ?ETTER DATED OCTO/ER "", $''# >ITB CO%PGTATION O0 TBE

/A?ANCE DGE.

III.

TBE TRIA? COGRT ERRED IN DIS%ISSIN* TBE CO%P?AINT ON TBE *ROGND

TBAT TBE DE0ENDANT 0G??H PAID TBE C?AI%S O0 P?AINTI00S /ASED ON TBE

A??E*ED RECEIPT O0 PAH%ENT /H ADORACION ?OS?OSO 0RO% ANA %ARIE

CONCEPCION %A*?ASAN* >BICB BAS NOTBIN* TO DO >ITB TBE GDICIA??H

AD%ITTED O/?I*ATION O0 APPE??EE."

Invo7ing the r)le on ;)dicial ad-ission, petitioners insist that respond