Case List 1 Cases

8/10/2019 Case List 1 Cases

1/63

FIRST DIVISION

HERMOJINA ESTORES, Petitioner, - versus - SPOUSES ARTURO and LAURASUPANAN, Res!ondents"

D E # I S I O N

DEL #ASTILLO,J"$

The only issue posed before us is the propriety of the imposition of interest and

attorneys fees.

Assailed in this Petition for Review[1]led under Rule 4 of the Rules of !ourt is the"ay 1#$ #%%& 'e(ision[#]of the !ourt of Appeals )!A* in !A+,.R. !- o. /01#0$ the dispositiveportion of whi(h reads

23R56R$ the appealed de(ision is "6'757'. The rate ofinterest shall be si8 per(ent )&9* per annum$ (omputed from :eptember#;$ #%%% until its full payment before nality of the


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a* "oral dama=es in the amount of P1%%$%%%.%%I

b* A(tual dama=es in the amount of P1%%$%%%.%%I

(* 8emplary dama=es in the amountof P1%%$%%%.%%I

d* [Attorneys] fee in the amount of P%$%%%.%% plus#%9 of re(overable amount from the [petitioner].

e* [!]ost of suit.[11]

7n their Answer with !ounter(laim$[1#]petitioner and Arias averred that they arewillin= to return the prin(ipal amount of P0. million but without any interest as the same wasnot a=reed upon. 7n their Pre+Trial Hrief$[10] they reiterated that the only remainin= issuebetween the parties is the imposition of interest. They ar=ued that sin(e the !onditional 'eedof :ale provided only for the return of the downpayment in (ase of brea(h$ they (annot beheld liable to pay le=al interest as well. [14]

7n its Pre+Trial 6rder[1]dated June #>$ #%%1$ the RT! noted that Lthe parties a=reedthat the prin(ipal amount of 0. million pesos should be returned to the [respondent+spouses]by the [petitioner] and the issue remainin= [is] whether 8 8 8 [respondent+spouses] are entitledto le=al interest thereon$ dama=es and attorneys fees.M[1&]

Trial ensued thereafter. After the presentation of the respondent+spouses eviden(e$

the trial (ourt set the presentation of Arias and petitioners eviden(e on :eptember 0$ #%%0.[1;]3owever$ despite several postponements$ petitioner and Arias failed to appear hen(e theywere deemed to have waived the presentation of their eviden(e. !onseBuently$ the (ase wasdeemed submitted for de(ision.[1/]

Ruling of the Regional Trial Court

6n "ay ;$ #%%4$ the RT! rendered its 'e(ision [1>]ndin= respondent+spouses entitledto interest but only at the rate of &9 per annum and not 1#9 as prayed by them. [#%] 7t alsofound respondent+spouses entitled to attorneys fees as they were (ompelled to liti=ate toprote(t their interest.[#1]

The dispositive portion of the RT! 'e(ision reads

23R56R$ premises (onsidered$


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Respondent-spouses Arguments

Respondent+spouses aver that it is only fair that interest be imposed on the amountthey paid (onsiderin= that petitioner failed to return the amount upon demand and had beenusin= theP0. million for her benet. "oreover$ it is undisputed that petitioner failed to performher obli=ations to relo(ate the house outside the perimeter of the sub


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." '(en t(e o/%i&ation is /rea)(ed, and it

)onsists in t(e !a*ent o a su o one*, i"e",a %oan or or/earan)e o one*, t(e interest dues(ou%d /e t(at +(i)( a* (ave /een sti!u%atedin +ritin&" Furt(erore, t(e interest due s(a%%itse% earn %e&a% interest ro t(e tie it is0udi)ia%%* deanded" In t(e a/sen)e osti!u%ation, t(e rate o interest s(a%% /e .12 !er

annu to /e )o!uted ro deau%t, i"e", ro0udi)ia% or e3tra0udi)ia% deand under andsu/0e)t to t(e !rovisions o Arti)%e ..45 o t(e#ivi% #ode"

#. 2hen an obli=ation$ not (onstitutin= a loan or

forbearan(e of money$ is brea(hed$ an interest on theamount of dama=es awarded may be imposed at thedis(retion of the (ourt at the rate of &9 perannum. o interest$ however$ shall be ad


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This is a petition for (ertiorari$ prohibition$ and mandamus with preliminaryin;>$ we reBuired respondents to (omment in thepetition and issued a temporary restrainin= order a=ainst the respondent ;$ liewise states that the P%$%%%.%% was a simple businessloan whi(h earned interest and was ori=inally demandable si8 )&* months from July1#$ 1>;0. )Anne8 of the petition.*

7n !riminal !ase o. "+1/0$ respondent Tan !hu ao (har=es petitioners Sam !heeion=$ Jose S.!. Sam$ Ampan= "ah and Anita Sam$ alias Son= Tay$ with estafa throu=h

misappropriation of the amount of P0%$%%%.%%. ?iewise$ the (omplaint states on itsfa(e that the P0%$%%%.%% was a simple loan. :o does the (omplaint in !ivil !ase o.+/ led by respondent Tan !hu ao on April &$ 1>;& with the !ourt of 5irst 7nstan(eof :ulu for the (olle(tion of the same amount. )Anne8 ' of the petition.*.

7n !riminal !ase o. "+#%/$ respondent Au=usto :a$1>;&$ submitted to respondent


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Art. 1>00. U Hy the (ontra(t of loan$ one of the parties delivers toanother$ either somethin= not (onsumable so that the latter mayuse the same for a (ertain time and return it$ in whi(h (ase the(ontra(t is (alled a (ommodatumI or money or other (onsumablethin= upon the (ondition that the same amount of the same indand Buality shall be paid$ in whi(h (ase the (ontra(t is simply (alleda loan or mutuum.

!ommodatum is essentially =ratuitous.

:imple loan may be =ratuitous or with a stipulation to pay interest.

7n (ommodatum the bailor retains the ownership of the thin=loaned$ while in simple loam ownership passes to the borrower.

Art. 1>0. U A person who re(eives a loan of money or any otherfun=ible thin= a(Buires the ownership thereof$ and is bound to payto the (reditor an eBual amount of the same ind and Buality.

7t (an be readily noted from the above+Buoted provisions that in simple loan)mutuum*$ as (ontrasted to (ommodatum$ the borrower a(Buires ownership of themoney$ =oods or personal property borrowed. Hein= the owner$ the borrower (andispose of the thin= borrowed )Arti(le #4/$ !ivil !ode* and his a(t will not be(onsidered misappropriation thereof.

7n U.S. vs. Ibae!$ 1> Phil. >$ &% )1>11*$ this !ourt held that it is not estafa for aperson to refuse to nay his debt or to deny its e8isten(e.

2e are of the opinion and so de(ide that when the relation is purelythat of debtor and (reditor$ the debtor (an not be held liable for the(rime of estafa$ under said arti(le$ by merely refusin= to pay or bydenyin= the indebtedness.

7t appears that respondent /#$ by virtue of a (ourt resolution issued by this !ourt on the same

date$ a temporary restrainin= order was duly issued orderin= the respondents$ theiroC(ers$ a=ents$ representatives andEor person or persons a(tin= upon their)respondentsV* orders or in their pla(e or stead to refrain from pro(eedin= with thepreliminary investi=ation in !ase o. /101>0/ of the 6C(e of the !ity 5is(al of "anila)pp. 4;+4/$ re(.*. 6n January #4$ 1>/0$ private respondent !lement 'avid led amotion to lift restrainin= order whi(h was denied in the resolution of this !ourt dated"ay 1/$ 1>/0.

As (an be =leaned from the above$ the instant petition sees to prohibit publi(respondents from pro(eedin= with the preliminary investi=ation of 7.:. o. /1+01>0/$

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in whi(h petitioners were (har=ed by private respondent !lement 'avid$ with estafaand violation of !entral Han !ir(ular o. 0&4 and related re=ulations re=ardin=forei=n e8(han=e transa(tions prin(ipally$ on the =round of la( of /#$ as followst".#$h%&'#

6n 'e(ember #0$1>/1$ private respondent 'avid led 7.:. o. /1+01>0/ in the 6C(e of the !ity 5is(al of "anila$ whi(h (ase wasassi=ned to respondent ?ota for preliminary investi=ation )Petition$p. /*.

7n 7.:. o. /1+01>0/$ 'avid (har=ed petitioners )to=ether with oneRobert "arshall and the followin= dire(tors of the ation :avin=sand ?oan Asso(iation$ 7n(.$ namely 3omero ,onNales$ Juan "erino$5lavio "a(asaet$ -i(tor ,omeN$ Jr.$ Perfe(to "anala($ Jaime -. PaN$Paulino H. 'ionisio$ and one John 'oe* with estafa and violation of!entral Han !ir(ular o. 0&4 and related !entral Han re=ulationson forei=n e8(han=e transa(tions$ alle=edly (ommitted as follows)Petition$ Anne8 A*t".#$h%&'#

5rom "ar(h #%$ 1>;> to "ar(h$ 1>/1$ 'avidinvested with the ation :avin=s and ?oanAsso(iation$ )hereinafter (alled :?A* the sum ofP1$14$4&.#% on nine deposits$ P10$01.>4 onsavin=s a((ount deposits )/1 'avid re(eived a report from the!entral Han that only P0%$/#1.># of thoseinvestments were entered in the re(ords of :?AIthat$ therefore$ the respondents in 7.:. o. /1+01>0/ misappropriated the balan(e of theinvestments$ at the same time violatin= !entral

Han !ir(ular o. 0&4 and related !entral Hanre=ulations on forei=n e8(han=e transa(tionsIthat after demands$ petitioner ,uin=ona Jr. paidonly P#%%$%%%.%%$ thereby redu(in= the amountsmisappropriated to P>>$%;/.14 andF:W;$%%%.%%.

Petitioners$ "artin and :antos$ led a /%I that be(ause :?A was ur=ently in need offunds and at 'avidVs insisten(e$ his investmentswere treated as spe(ial+ a((ounts with interestabove the le=al rate$ an re(orded in separate(ondential do(uments only a portion of whi(hwere to be reported be(ause he did not want theAustralian =overnment to ta8 his total earnin=s)nor* to now his total investmentsI that alltransa(tions with 'avid were re(orded e8(ept thesum of F:W1$%%%.%% whi(h was a personal loan

of :antosI that 'avidVs (he( for F:W%$%%%.%%was (leared throu=h ,uin=ona$ Jr.Vs dollar a((ountbe(ause :?A did not have one$ that a draft ofF:W0%$%%%.%% was pla(ed in the name of one PaNRo(es be(ause of a pendin= transa(tion with herIthat the Philippine 'eposit 7nsuran(e !orporationhad already reimbursed 'avid within the le=allimitsI that ma in the!ourt of 5irst 7nstan(e to (ontest its ):?AVs*(losureI that after :?A was pla(ed underre(eivership$ "artin e8e(uted a promissory notein 'avidVs favor and (aused the transfer to him ofa nine and on behalf )> 1E#* (arat diamond rin=with a net value of P1%$%%%.%%I and$ that theliabilities of :?A to 'avid were (ivil in nature.

Petitioner$ ,uin=ona$ Jr.$ in his (ounter+aCdavit )Petition$ Anne8V !V*stated the followin=t".#$h%&'#

That he had no hand whatsoever in thetransa(tions between 'avid and :?A sin(e he),uin=ona Jr.* had resi=ned as :?A president in"ar(h 1>;/$ or prior to those transa(tionsI thathe assumed a portion oI the liabilities of :?A to

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'avid be(ause of the latterVs insisten(e that hepla(ed his investments with :?A be(ause of hisfaith in ,uin=ona$ Jr.I that in a Promissory otedated June 1;$ 1>/1 )Petition$ Anne8 '* he),uin=ona$ Jr.* bound himself to pay 'avid thesums of P&&/.0%;.%1 and F:W0;$%%.%% in statedinstallmentsI that he ),uin=ona$ Jr.* se(uredpayment of those amounts with se(ondmort=a=es over two )#* par(els of land under a

deed of :e(ond Real state "ort=a=e )Petition$Anne8 * in whi(h it was provided that themort=a=e over one )1* par(el shall be (an(elledupon payment of one+half of the obli=ation to'avidI that he ),uin=ona$ Jr.* paid P#%%$%%%.%%and tendered another P0%%$%%%.%% whi(h 'avidrefused to a((ept$ hen(e$ he ),uin=ona$ Jr.* led!ivil !ase o. X+00/& in the !ourt of 5irst7nstan(e of RiNal at XueNon !ity$ to e@e(t therelease of the mort=a=e over one )1* of the twopar(els of land (onveyed to 'avid under se(ondmort=a=es.

At the in(eption of the preliminary investi=ation before respondent?ota$ petitioners moved to dismiss the (har=es a=ainst them forla( of 4 on savin=s a((ount deposits(overed by passboo nos. &+&0# and #>+;4#$ or a total of P1$1>$%;/.14 )pp. 1+1&$ro(.*. 7t appears further that private respondent 'avid$ to=ether with his sister$ madeinvestments in the aforesaid ban in the amount of F:W;$%%%.%% )p. 1;$ re(.*.

"oreover$ the re(ords reveal that when the aforesaid ban was pla(ed underre(eivership on "ar(h #1$ 1>/1$ petitioners ,uin=ona and "artin$ upon the reBuestof private respondent 'avid$ assumed the obli=ation of the ban to privaterespondent 'avid by e8e(utin= on June 1;$ 1>/1 a /1 prepared by the private respondent )p. /1$ re(.*. Theamount of indebtedness assumed appears to be bi==er than the ori=inal (laimbe(ause of the added interest and the in(lusion of other deposits of private

respondentVs sister in the amount of P11&$&10.#%.

Thereafter$ or on July 1;$ 1>/1$ petitioners ,uin=ona and "artin a=reed to divide thesaid indebtedness$ and petitioner ,uin=ona e8e(uted another promissory noteantedated to June 1;$ 1>/1 whereby he personally a(nowled=ed an indebtedness ofP&&/$0%;.%1 )1E# of P1$00&$&14.%#* and F:W0;$%%.%% )1E# of F:W;$%%%.%%* in favorof private respondent )p. #$ re(.*. The aforesaid promissory notes were e8e(uted asa result of deposits made by !lement 'avid and 'enise uhne with the ation:avin=s and ?oan Asso(iation.

5urthermore$ the various pleadin=s and do(uments led by private respondent 'avid$before this !ourt indisputably show that he has indeed invested his money on timeand savin=s deposits with the ation :avin=s and ?oan Asso(iation.

7t must be pointed out that when private respondent 'avid invested his money onnine. and savin=s deposits with the aforesaid ban$ the (ontra(t that was perfe(tedwas a (ontra(t of simple loan or mutuumand not a (ontra(t of deposit. Thus$ Arti(le1>/% of the ew !ivil !ode provides that t".#$h%&'#

Arti(le 1>/%. 5i8ed$ savin=s$ and (urrent deposits of+money inbans and similar institutions shall be =overned by the provisions(on(ernin= simple loan.

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7n the (ase of Central (an) of the *hilippines vs. +orfe)&0 :!RA 114$11> [1>;]$ 2esaidt".#$h%&'#

7t should be noted that 8ed$ savin=s$ and (urrent deposits ofmoney in bans and similar institutions are hat true deposits. are(onsidered simple loans and$ as su(h$ are not preferred (redits )Art.1>/% !ivil !odeI 7n re ?iBuidation of "er(antile Hati of !hina Tan

Tion= Ti( vs. Ameri(an Apothe(aries !o.$ && Phil 414I Pa(i( !oastHis(uit !o. vs. !hinese ,ro(ers Asso(iation & Phil. 0;I 5let(her

Ameri(an ational Han vs. An= !hon= F" && P2? 0/I Pa(i(!ommer(ial !o. vs. Ameri(an Apothe(aries !o.$ & Phi? 4#>I,opo(o ,ro(ery vs. Pa(i( !oast His(uit !6.$& Phil. 440*.

This !ourt also de(lared in the re(ent (ase of Serrano vs. Central (an) of the*hilippines)>& :!RA 1%# [1>/%]* thatt".#$h%&'#

Han deposits are in the nature of irre=ular deposits. They arereally Vloans be(ause they earn interest. All inds of ban deposits$whether 8ed$ savin=s$ or (urrent are to be treated as loans andare to be (overed by the law on loans )Art. 1>/% !ivil !ode ,ullasvs. Phil. ational Han$ Phil. 1>*. Current an saving eposits,are loans to a ban) because it can use the same. The petitionerhere in main= time deposits that earn interests will respondent6verseas Han of "anila was in reality a (reditor of the respondentHan and not a depositor. The respondent Han was in turn adebtor of petitioner. -ailure of the responent (an) to honor thetime eposit is failure to pa its obligation as a ebtor an not abreach of trustarising from a epositar/s failure to return thesub0ect matter of the eposit)mphasis supplied*.

3en(e$ the relationship between the private respondent and the ation :avin=s and?oan Asso(iation is that of (reditor anddebtorI (onseBuently$ the ownership of theamount deposited was transmitted to the Han upon the perfe(tion of the (ontra(tand it (an mae use of the amount deposited for its banin= operations$ su(h as topay interests on deposits and to pay withdrawals. 2hile the Han has the obli=ationto return the amount eposite, it has$ however$ no obli=ation to return or deliverthe same mone that was deposited. And$ the failure of the Han to return theamount deposited will not (onstitute estafa throu=h misappropriation punishableunder Arti(le 01$ par. l)b* of the Revised Penal !ode$ but it will only =ive rise to (ivil

liability over whi(h the publi( respondents have no+


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obli=ation arisin= from deposit into a (ontra(t of loan and (onvertin= the ori=inaltrust relation between the ban and private respondent 'avid into an ordinarydebtor+(reditor relation between the petitioners and private respondent.!onseBuently$ the failure of the ban or petitioners ,uin=ona and "artin to pay thedeposits of private respondent would not (onstitute a brea(h of trust but wouldmerely be a failure to pay the obli=ation as a debtor.

"oreover$ while it is true that novation does not e8tin=uish (riminal liability$ it mayhowever$ prevent the rise of (riminal liability as lon= as it o((urs prior to the lin= of

the (riminal information in (ourt. Thus$ in Gon!ales vs. Serrano) # :!RA &4$ &>[1>&/]* 2e held thatt".#$h%&'#

As pointed out in *eople vs. 7er$ novation prior to the lin= of the(riminal information U as in the (ase at bar U may (onvert therelation between the parties into an ordinary (reditor+debtorrelation$ and pla(e the (omplainant in estoppel to insist on theori=inal transa(tion or (ast doubt on the true nature thereof.

A=ain$ in the latest (ase of 8ng vs. Court of Appeals)?+/4;&$ 1#4 :!RA ;/$ /%+/1 [1>/0] *$ this !ourt reiterated the rulin= in *eople vs. 7er) 1% :!RA #44[1>&4] *$ de(larin= thatt".#$h%&'#

The novation theory may perhaps apply prior to the llin= of the

(riminal information in (ourt by the state prose(utors be(ause upto that time the ori=inal trust relation may be (onverted by theparties into an ordinary (reditor+debtor situation$ thereby pla(in=the (omplainant in estoppel to insist on the ori=inal trust. Hut afterthe /I People vs. -elas(o$ 4# Phil. ;&I F.:. vs. "ontanes$ / Phil.%*.

7t may be observed in this re=ard that novation is not one of themeans re(o=niNed by the Penal !ode whereby (riminal liability (anbe e8tin=uishedI hen(e$ the role of novation may only be to either

prevent the rise of (riminal habihty or to (ast doubt on the truenature of the ori=inal basi( transa(tion$ whether or not it was su(hthat its brea(h would not =ive rise to penal responsibility$ as whenmoney loaned is made to appear as a deposit$ or other similardis=uise is resorted to )(f. Abeto vs. People$ >% Phil. /1I F.:. vs.-illareal$ #; Phil. 4/1*.

7n the (ase at bar$ there is no dispute that petitioners ,uin=ona and "artin e8e(uteda promissory note on June 1;$ 1>/1 assumin= the obli=ation of the ban to privaterespondent 'avidI while the (riminal (omplaint for estafa was led on 'e(ember #0$

1>/1 with the 6C(e of the !ity 5is(al. 3en(e$ it is (lear that novation o((urred lon=before the lin= of the (riminal (omplaint with the 6C(e of the !ity 5is(al.

!onseBuently$ as aforestated$ any in(ipient (riminal liability would be avoided butthere will still be a (ivil liability on the part of petitioners ,uin=ona and "artin to paythe assumed obli=ation.

Petitioners herein were liewise (har=ed with violation of :e(tion 0 of !entral Han

!ir(ular o. 0&4 and other related re=ulations re=ardin= forei=n e8(han=etransa(tions by a((eptin= forei=n (urren(y deposit in the amount of F:W;$%%%.%%without authority from the !entral Han. They (ontend however$ that the F: dollarsintended by respondent 'avid for deposit were all (onverted into Philippine (urren(ybefore a((eptan(e and deposit into ation :avin=s and ?oan Asso(iation.

PetitionersV (ontention is worthy of behelf for the followin= reasons

1. 7t appears from the re(ords that when respondent 'avid was about to mae adeposit of ban draft issued in his name in the amount of F:W%$%%%.%% with theation :avin=s and ?oan Asso(iation$ the same had to be (leared rst and (onvertedinto Philippine (urren(y. A((ordin=ly$ the ban draft was endorsed by respondent'avid to petitioner ,uin=ona$ who in turn deposited it to his dollar a((ount with the:e(urity Han and Trust !ompany. Petitioner ,uin=ona merely a((ommodated thereBuest of the ation :avin=s and loan Asso(iation in order to (lear the ban draft

throu=h his dollar a((ount be(ause the ban did not have a dollar a((ount.7mmediately after the ban draft was (leared$ petitioner ,uin=ona authoriNed ation:avin=s and ?oan Asso(iation to withdraw the same in order to be utiliNed by theban for its operations.

#. 7t is safe to assume that the F.:. dollars were (onverted rst into Philippine pesosbefore they were a((epted and deposited in ation :avin=s and ?oan Asso(iation$be(ause the ban is presumed to have followed the ordinary (ourse of the businesswhi(h is to a((ept deposits in Philippine (urren(y only$ and that the transa(tion wasre=ular and fair$ in the absen(e of a (lear and (onvin(in= eviden(e to the (ontrary)see para=raphspand %,:e(. $ Rule 101$ Rules of !ourt*.

0. Respondent 'avid has not denied the aforesaid (ontention of herein petitionersdespite the fa(t that it was raised. in petitionersV reply led on "ay ;$ 1>/# to privaterespondentVs (omment and in the July #;$ 1>/# reply to publi( respondentsV (omment

and reiterated in petitionersV memorandum led on 6(tober 0%$ 1>/#$ thereby addin=more support to the (on(lusion that the F:W;$%%%.%% were really (onverted intoPhilippine (urren(y before they were a((epted and deposited into ation :avin=s and?oan Asso(iation. !onsiderin= that this mi=ht adversely a@e(t his (ase$ respondent'avid should have promptly denied petitionersV alle=ation.

7n (on(lusion$ (onsiderin= that the liability of the petitioners is purely (ivil in natureand that there is no (lear showin= that they en=a=ed in forei=n e8(han=etransa(tions$ 2e hold that the publi( respondents a(ted without


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they investi=ated the (har=es a=ainst the petitioners. !onseBuently$ publi(respondents should be restrained from further pro(eedin= with the (riminal (ase forto allow the (ase to (ontinue$ even if the petitioners (ould have appealed to the"inistry of Justi(e$ would wor =reat in


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6n 1> 6(tober 1>//$ the !ourt resolved to reBuire the respondents to (omment onthe petition for review. The :oli(itor ,eneral led his !omment on #% January 1>/>$after several =rants of e8tensions of time to le the same.

7n his !omment$ the :oli(itor ,eneral prayed for the dismissal of the instant petitionon the =round that$ as provided for under :e(tion ##$ Hatas Pambansa 1#>$ :e(tion## of the 7nterim Rules and ,uidelines$ and :e(tion 0$ Rule 1#0 of the 1>/ Rules of!riminal Pro(edure$ the petitioner should have led a petition for review with thethen 7ntermediate Appellate !ourt instead of a noti(e of appeal with the Re=ional Trial

!ourt$ in perfe(tin= his appeal from the RT! to the 7ntermediate Appellate !ourt$sin(e the RT! >% a Re(ommendation for A(Buittal in lieu ofthe reBuired memorandum.

Two )#* issues are raised by petitioner to wit

7. 23T3R 6R 6T T3 '!7:76 )sic* 65 T3 "F7!7PA?!7R!F7T TR7A? !6FRT ),F7"HA?$ 7?67?6* A' T3 R,76A? TR7A?!6FRT$ HRA!3 #/ )7?67?6 !7TS* AR :FPP6RT' HS T3 5A!T:A' -7'! 6R !6TRARS T6 ?A2 A' T3AT T3 T26!6FRT:A >U83A- A!T' 27T3 ,RA- AHF: 65 '7:!RT76A"6FT7, T6 ?A! 65 JFR7:'7!T76 6R 3A- A!T' 27T36FT6R 7 !:: 65 JFR7:'7!T76.

77. 23T3R 6R 6T T3 '!7:76 65 T3 366RAH? !6FRT 65APPA?: 7: !6TRARS T6 ?A2$ :TAH?7:3' JFR7:PRF'!$XF7TS A' 'F PR6!::.

The se(ond issue has been resolved in our Resolution dated 1% Au=ust 1>>%$ whenwe =ranted petitionerVs se(ond motion for re(onsideration. 2e shall now pro(eed tothe rst issue.

2e nd merit in the petition.

7t is undisputed that petitioner re(eived a (ash advan(e from private respondent:A5'! to defray his travel e8penses under T.6. ####. 7t is liewise admitted thatwithin the period (overed by T.6. ####$ petitioner was re(alled to the head station in

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7loilo and =iven another assi=nment whi(h was (overed by T.6. ##&/. The disputearose when petitioner alle=edly failed to return P1$#0%.%% out of the (ash advan(ewhi(h he re(eived under T.6. ####. 5or the alle=ed failure of petitioner to return theamount of P1$#0%.%%$ he was (har=ed with the (rime of stafa under Arti(le 01$ par.1)b* of the Revised Penal !ode$ whi(h reads as follows

Art. 01. S&inling 2Estafa3.Any person who shall defraud anotherby any of the means mentioned herein below shall be punished by

888 888 888

1. 2ith unfaithfulness or abuse of (onden(e$ namely

)a* 888 888 888

)b* Hy misappropriatin= or (onvertin=$ to the pre/%provides as follows

H. !ash Advan(e for Travel

888 888 888

4. All (ash advan(es must be liBuidated within 0% days after date of

pro00 and Arti(le 1>0 of the !ivil !ode dene the nature of a simple loan.

Art. 1>00. Hy the (ontra(t of loan$ one of the parties delivers to

another$ either somethin= not (onsumable so that the latter mayuse the same for a (ertain time and return it$ in whi(h (ase the(ontra(t is (alled a commoatumI or money or other (onsumablethin=$ upon the (ondition that the same amount of the same indand Buality shall be paid$ in whi(h (ase the (ontra(t is simply (alleda loan or mutuum.

Commoatumis essentially =ratuitous.

:imple loan may be =ratuitous or with a stipulation to pay interest.

7n commoatumthe bailor retains the ownership of the thin=loaned$ while in simple loan$ ownership passes to the borrower.

Art. 1>0.U A person who re(eives a loan of money or any otherfun=ible thin= a(Buires the ownership thereof$ and is bound to payto the (reditor an eBual amount of the same ind and Buality.

The rulin= of the trial


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said the (ash advan(e =iven to the a((used is hisown money. 7n other words$ at the time youdeparted with the money it belon=s already tothe a((usedO

A Ses$ but sub/$promul=ated on 0% July 1>/; are both hereby :T A:7'. Petitioner is A!XF7TT' of(riminal (har=e led a=ainst him.

:6 6R'R'.

57R:T '7-7:76

"R" No" .4796@ Januar* .6, 17.?

DEVELOPMENT ;&$ ,uariZa !orporation applied for a loan from 'HP to nan(e thedevelopment of its resort (omple8 situated in Trapi(he$ 6ton$ 7loilo. The loan$ in theamount of P0$0/;$%%%.%%$ was approved on Au=ust $ 1>;&.0,uariZa !orporatione8e(uted a promissory note that would be due on ovember 0$ 1>//.46n 6(tober $1>;&$ ,uariZa !orporation e8e(uted a real estate mort=a=e over several realproperties in favor of 'HP as se(urity for the repayment of the loan. 6n "ay 1;$1>;;$ ,uariZa !orporation e8e(uted a (hattel mort=a=e over the personal propertiese8istin= at the resort (omple8 and those yet to be a(Buired out of the pro(eeds of theloan$ also to se(ure the performan(e of the obli=ation. Prior to the release of theloan$ 'HP reBuired ,uariZa !orporation to put up a (ash eBuity of P1$4;%$>1.%% forthe (onstru(tion of the buildin=s and other improvements on the resort (omple8.

The loan was released in several instalments$ and ,uariZa !orporation used thepro(eeds to defray the (ost of additional improvements in the resort (omple8. 7n all$the amount released totalled P0$%%0$&1;.4>$ from whi(h 'HP withheld P14/$1%#.>/as interest.&

,uariZa !orporation demanded the release of the balan(e of the loan$ but 'HPrefused. 7nstead$ 'HP dire(tly paid some suppliers of ,uariZa !orporation over the

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latterVs ob;> 14to see thenulli(ation of the fore(losure pro(eedin=s and the (an(ellation of the (erti(ate ofsale. 'HP led its answer on 'e(ember 1;$ 1>;>$ 1and trial followed upon thetermination of the pre+trial without any a=reement bein= rea(hed by the parties. 1&

7n the meantime$ 'HP applied for the issuan(e of a writ of possession by the RT!. Atrst$ the RT! denied the appli(ation but later =ranted it upon 'HPVs motion forre(onsideration. A==rieved$ ,uariZa !orporation assailed the =rantin= of theappli(ation before the !A on (ertiorari )!.A.+,.R. o. 1#&;%+:P entitled ,uariZaA=ri(ultural and Realty 'evelopment !orporation v. 'evelopment Han of thePhilippines*. After the !A dismissed the petition for (ertiorari$ 'HP sou=ht theimplementation of the order for the issuan(e of the writ of possession. 6ver ,uariZa!orporationVs opposition$ the RT! issued the writ of possession on June 1&$ 1>/#. 1;

Jud=ment of the RT!

6n January &$ 1>>/$ the RT! rendered its are null and void$ so with the (onseBuent issuan(e of(erti(ates of sale to the defendant of said properties$ the re=istration thereof withthe Re=istry of 'eeds and the issuan(e of the transfer (erti(ates of title involvin=the real property in its name.

7t is also resolved that defendant =ive ba( to the plainti@ or its representative thea(tual possession and en


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T3 TR7A? !6FRT RR' 7 A2AR'7, ATT6RSV: 5: A,A7:T 'HP 237!3"R?S R!7:' 7T: R7,3T: F'R T3 "6RT,A, !6TRA!T.1>

7n its de(ision promul=ated on "ar(h #&$ #%%0$#%however$ the !A sustained the RT!Vs


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be performed simultaneously su(h that the performan(e of one is (onditioned uponthe simultaneous fullment of the other )Jaime 6n= vs. !ourt of Appeals$ 01% :!RA1*. The promise of appellee to pay the loan upon due date as well as to e8e(utesuC(ient se(urity for said loan by way of mort=a=e =ave rise to a re(ipro(alobli=ation on the part of appellant to release the entire approved loan amount. Thus$appellees are entitled to re(eive the total loan amount as a=reed upon and not anin(omplete amount.

The appellant did not release the total amount of the approved loan. Appellant

therefore (ould not have made a demand for payment of the loan sin(e it had yet tofull its own obli=ation. "oreover$ the fa(t that appellee was not yet in defaultrendered the fore(losure pro(eedin=s premature and improper.

The properties whi(h stood as se(urity for the loan were fore(losed without anydemand havin= been made on the prin(ipal obli=ation. 5or an obli=ation to be(omedue$ there must =enerally be a demand. 'efault =enerally be=ins from the momentthe (reditor demands the performan(e of the obli=ation. 2ithout su(h demand$


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Hein= a banin= institution$ 'HP owed it to ,uariZa !orporation to e8er(ise thehi=hest de=ree of dili=en(e$ as well as to observe the hi=h standards of inte=rity andperforman(e in all its transa(tions be(ause its business was imbued with publi(interest.0/The hi=h standards were also ne(essary to ensure publi( (onden(e in thebanin= system$ for$ a((ordin= to Philippine ational Han v. Pie 0>The stability ofbans lar=ely depends on the (onden(e of the people in the honesty and eC(ien(yof bans. Thus$ 'HP had to a(t with =reat (are in applyin= the stipulations of itsa=reement with ,uariZa !orporation$ lest it erodes su(h publi( (onden(e. Set$ 'HPfailed in its duty to e8er(ise the hi=hest de=ree of dili=en(e by prematurely

fore(losin= the mort=a=es and unwarrantedly (ausin= the fore(losure sale of themort=a=ed properties despite ,uariZa !orporation not bein= yet in default. 'HPwron=ly relied on :tipulation o. #& as its basis to a((elerate the obli=ation of,uariZa !orporation$ for the stipulation was relevant to an 6mnibus A=ri(ultural?oan$ to ,uariZa !orporationVs loan whi(h was intended for a pro4>1 di@erently.

,uariZa !orporation (ounters that the rulin= in !.A.+,.R. o. 1#&;%+:P did not(onstitute the law of the (ase be(ause !.A.+,.R. o. 1#&;%+:P (on(erned the issue ofpossession by 'HP as the winnin= bidder in the fore(losure sale$ and had no bearin=whatsoever to the le=al issues presented in !.A.+,.R. !- o. >4>1.

?aw of the (ase has been dened as the opinion delivered on a former appeal$ andmeans$ more spe(i(ally$ that whatever is on(e irrevo(ably established as the(ontrollin= le=al rule of de(ision between the same parties in the same (ase(ontinues to be the law of the (ase$ whether (orre(t on =eneral prin(iples or not$ solon= as the fa(ts on whi(h su(h de(ision was predi(ated (ontinue to be the fa(ts ofthe (ase before the (ourt.4%

The (on(ept of law of the (ase is well e8plained in "an=old v. Ha(on$41an Ameri(an(ase$ thusly

The =eneral rule$ naedly and boldly put$ is that le=al (on(lusions announ(ed on arst appeal$ whether on the =eneral law or the law as applied to the (on(rete fa(ts$

not only pres(ribe the duty and limit the power of the trial (ourt to stri(t obedien(eand (onformity thereto$ but they be(ome and remain the law of the (ase in all othersteps below or above on subseBuent appeal. The rule is =rounded on (onvenien(e$e8perien(e$ and reason. 2ithout the rule there would be no end to (riti(ism$rea=itation$ ree8amination$ and reformulation. 7n short$ there would be endlessliti=ation. 7t would be intolerable if parties liti=ants were allowed to spe(ulate on(han=es in the personnel of a (ourt$ or on the (han(e of our rewritin= propositionson(e =ravely ruled on solemn ar=ument and handed down as the law of a =iven (ase.An it(h to reopen Buestions fore(losed on a rst appeal would result in the

foolishness of the inBuisitive youth who pulled up his (orn to see how it =rew. !ourtsare allowed$ if they so (hoose$ to a(t lie ordinary sensible persons. Theadministration of 1$ whi(h was the appeal to determine whether or not 'HPVsfore(losure was valid and e@e(tual. And$ se(ondly$ the rulin= in !.A.+,.R. o. 1#&;%+:P did not settle any Buestion of law involved herein be(ause this (ase for spe(i(performan(e was not a (ontinuation of !.A.+,.R. o. 1#&;%+:P )whi(h was limited tothe propriety of the issuan(e of the writ of possession in favor of 'HP*$ and vi(eversa.

0.,uaria !orporation is le=ally entitled to the

restoration of the possession of the resort (omple8and payment of reasonable rentals by 'HP

3avin= found and pronoun(ed that the e8tra


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payment of reasonable rentals for the use of the resort. The !A properly held that thepremature and invalid fore(losure had un/>1$ and the Resolution #dated6(tober >$ #%%> denyin= petitioners motion for re(onsideration.

The fa(tual ante(edents are undisputed.

Petitioner 'ario a(ar led a (omplaint for (onstru(tive dismissal before theArbitration Hran(h of the ational ?abor Relations !ommission )?R!* a=ainstrespondents ,allery 5rames ),5* andEor 5elipe Hordey$ Jr.$ do(eted as ?R! !R!ase o. %1+%%1>+>;.

6n 6(tober 1$ 1>>/$ the ?abor Arbiter rendered a 'e(ision 0in favor of petitionerand found that he was dismissed from employment without a valid or 1>.>#. The dispositive portion of the de(ision$ reads

2ith the fore=oin=$ we nd and so rule that respondents failed to dis(har=e theburden of showin= that (omplainant was dismissed from employment for a


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8 8 8 8

23R56R$ premises (onsidered$ 00.0&* representin= his ba(wa=esI and

All other (laims are hereby dismissed for la( of merit.

:6 6R'R'.4

Respondents appealed to the ?R!$ but it was dismissed for la( of merit in theResolutiondated 5ebruary #>$ #%%%. A((ordin=ly$ the ?R! sustained the de(ision ofthe ?abor Arbiter. Respondents led a motion for re(onsideration$ but it was denied. &

'issatised$ respondents led a Petition for Review on !ertiorari before the !A. 6nAu=ust #4$ #%%%$ the !A issued a Resolution dismissin= the petition. Respondents

led a "otion for Re(onsideration$ but it was liewise denied in a Resolution dated"ay /$ #%%1.;

Respondents then sou=ht relief before the :upreme !ourt$ do(eted as ,.R. o.1100#. 5indin= no reversible error on the part of the !A$ this !ourt denied thepetition in the Resolution dated April 1;$ #%%#. /

An ntry of Jud=ment was later issued (ertifyin= that the resolution be(ame nal ande8e(utory on "ay #;$ #%%#.>The (ase was$ thereafter$ referred ba( to the ?aborArbiter. A pre+e8e(ution (onferen(e was (onseBuently s(heduled$ but respondentsfailed to appear.1%

6n ovember $ #%%#$ petitioner led a "otion for !orre(t !omputation$ prayin= thathis ba(wa=es be (omputed from the date of his dismissal on January #4$ 1>>; up to

the nality of the Resolution of the :upreme !ourt on "ay #;$ #%%#.11

Fponre(omputation$ the !omputation and 8amination Fnit of the ?R! arrived at anupdated amount in the sum of P4;1$0#%.01.1#

6n 'e(ember #$ #%%#$ a 2rit of 8e(ution10was issued by the ?abor Arbiter orderin=the :heri@ to (olle(t from respondents the total amount of P4;1$0#%.01. Respondentsled a "otion to Xuash 2rit of 8e(ution$ ar=uin=$ amon= other thin=s$ that sin(e the?abor Arbiter awarded separation pay of P$>/&.& and limited ba(wa=esofP>$>00.0&$ no more re(omputation is reBuired to be made of the said awards.

They (laimed that after the de(ision be(omes nal and e8e(utory$ the same (annotbe altered or amended anymore.146n January 10$ #%%0$ the ?abor Arbiter issued an6rder1denyin= the motion. Thus$ an Alias 2rit of 8e(ution 1&was issued on January14$ #%%0.

Respondents a=ain appealed before the ?R!$ whi(h on June 0%$ #%%0 issued aResolution1;=rantin= the appeal in favor of the respondents and ordered there(omputation of the .;0. The ?abor Arbiter reasoned that it is the 6(tober 1$1>>/ 'e(ision that should be enfor(ed (onsiderin= that it was the one that be(amenal and e8e(utory. 3owever$ the ?abor Arbiter reasoned that sin(e the de(isionstates that the separation pay and ba(wa=es are (omputed only up to thepromul=ation of the said de(ision$ it is the amount of P1/$>1>.># that should bee8e(uted. Thus$ sin(e petitioner already re(eivedP14;$&%.1>$ he is only entitled tothe balan(e of P11$4>.;0.

Petitioner then appealed before the ?R!$#1whi(h appeal was denied by the ?R! inits Resolution##dated :eptember #;$ #%%&. Petitioner led a "otion forRe(onsideration$ but it was liewise denied in the Resolution #0dated January 01$ #%%;.

A==rieved$ petitioner then sou=ht re(ourse before the !A$ do(eted as !A+,.R. :P o.>/>1.

!redTrans + :JHPrior K #1
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6n :eptember #0$ #%%/$ the !A rendered a 'e(ision#4denyin= the petition. The !Aopined that sin(e petitioner no lon=er appealed the 6(tober 1$ 1>>/ 'e(ision of the?abor Arbiter$ whi(h already be(ame nal and e8e(utory$ a belated (orre(tion thereofis no lon=er allowed. The !A stated that there is nothin= left to be done e8(ept toenfor(e the said >/ '!7:76 65 ?AH6R ARH7TR?F:TR7A :FH:R-7T T6 A 6P776 PR::' 7 T3 H6'S 65 T3 :A"'!7:76.#&

Petitioner ar=ues that notwithstandin= the fa(t that there was a (omputation of

ba(wa=es in the ?abor Arbiters de(ision$ the same is not nal until reinstatement ismade or until nality of the de(ision$ in (ase of an award of separation pay. Petitionermaintains that (onsiderin= that the 6(tober 1$ 1>>/ de(ision of the ?abor Arbiterdid not be(ome nal and e8e(utory until the April 1;$ #%%# Resolution of the:upreme !ourt in ,.R. o. 1100# was entered in the Hoo of ntries on "ay #;$#%%#$ the re(onin= point for the (omputation of the ba(wa=es and separation payshould be on "ay #;$ #%%# and not when the de(ision of the ?abor Arbiter wasrendered on 6(tober 1$ 1>>/. 5urther$ petitioner posits that he is also entitled to thepayment of interest from the nality of the de(ision until full payment by therespondents.

6n their part$ respondents assert that sin(e only separation pay and limitedba(wa=es were awarded to petitioner by the 6(tober 1$ 1>>/ de(ision of the ?aborArbiter$ no more re(omputation is reBuired to be made of said awards. Respondentsinsist that sin(e the de(ision (learly stated that the separation pay and ba(wa=es

are (omputed only up to [the] promul=ation of this de(ision$ and (onsiderin= thatpetitioner no lon=er appealed the de(ision$ petitioner is only entitled to the award as(omputed by the ?abor Arbiter in the total amount ofP1/$>1>.>#. Respondentsadded that it was only durin= the e8e(ution pro(eedin=s that the petitionerBuestioned the award$ lon= after the de(ision had be(ome nal and e8e(utory.Respondents (ontend that to allow the further re(omputation of the ba(wa=es to beawarded to petitioner at this point of the pro(eedin=s would substantially vary thede(ision of the ?abor Arbiter as it violates the rule on immutability of


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[T]he ?abor Arbiter of ori=in$ in (ases involvin= monetary awards and at all events$ asfar as pra(ti(able$ shall embody in any su(h de(ision or order the detailed and fullamount awarded.

!learly implied from this ori=inal (omputation is its (urren(y up to the nality of thelabor arbiterVs de(ision. As we noted above$ this impli(ation is apparent from theterms of the (omputation itself$ and no Buestion would have arisen had the partiesterminated the (ase and implemented the de(ision at that point.

3owever$ the petitioner disa=reed with the labor arbiterVs ndin=s on all (ounts + i.e.$on the ndin= of ille=ality as well as on all the (onseBuent awards made. 3en(e$ thepetitioner appealed the (ase to the ?R! whi(h$ in turn$ aCrmed the labor arbiterVsde(ision. Hy law$ the ?R! de(ision is nal$ reviewable only by the !A on

Are(omputation )or an ori=inal (omputation$ if no previous (omputation has beenmade* is a part of the law D spe(i(ally$ Arti(le #;> of the ?abor !ode and theestablished of the ?abor !ode. The re(omputation of the(onseBuen(es of ille=al dismissal upon e8e(ution of the de(ision does not (onstitutean alteration or amendment of the nal de(ision bein= implemented. The ille=aldismissal rulin= standsI only the (omputation of monetary (onseBuen(es of thisdismissal is a@e(ted$ and this is not a violation of the prin(iple of immutability of nal

provides for the (onseBuen(es ofille=al dismissal in no un(ertain terms$ Bualied only by


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0. 2hen the & dated "ay 1&$ #%10$ approved the amendment of :e(tion #04of!ir(ular o. >%$ :eries of 1>/# and$ a((ordin=ly$ issued !ir(ular o. ;>>$ 0:eries of

#%10$ e@e(tive July 1$ #%10$ the pertinent portion of whi(h reads

The "onetary Hoard$ in its Resolution o. ;>& dated 1& "ay #%10$ approved thefollowin= revisions =overnin= the rate of interest in the absen(e of stipulation in loan(ontra(ts$ thereby amendin= :e(tion # of !ir(ular o. >%$ :eries of 1>/#

:e(tion 1. The rate of interest for the loan or forbearan(e of any money$ =oods or(redits and the rate allowed in >$ as follows

7. 2hen an obli=ation$ re=ardless of its sour(e$ i.e.$ law$ (ontra(ts$ Buasi+(ontra(ts$ deli(ts or Buasi+deli(ts is brea(hed$ the (ontravenor (an be heldliable for dama=es. The provisions under Title -777 on 'ama=es of the!ivil !ode =overn in determinin= the measure of re(overabledama=es.?'&phi?

77. 2ith re=ard parti(ularly to an award of interest in the (on(ept of a(tualand (ompensatory dama=es$ the rate of interest$ as well as the a((rualthereof$ is imposed$ as follows

2hen the obli=ation is brea(hed$ and it (onsists in the payment of a sum of money$i.e.$ a loan or forbearan(e of money$ the interest due should be that whi(h may havebeen stipulated in writin=. 5urthermore$ the interest due shall itself earn le=al interestfrom the time it is


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And$ in addition to the above$ >1$ the RT! rendered


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Appeals promul=ated the de(ision now assailed before us that aCrmed in toto theRT! de(ision. 3en(e$ the present petition.

a=uiat Buestions the ndin=s of fa(ts made by the !ourt of Appeals$ espe(ially onthe issue of whether XueaZo had a(tually re(eived the loan pro(eeds whi(h weresupposed to be (overed by the two (he(s a=uiat had issued or indorsed. a=uiat(laims that bein= a notarial instrument or publi( do(ument$ the mort=a=e deeden04 of the !ivil !ode provides

An a((epted promise to deliver somethin= by way of (ommodatum or simple loan isbindin= upon the parties$ but the (ommodatum or simple loan itself shall not beperfe(ted until the delivery of the ob


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All told$ we nd no (ompellin= reason to disturb the ndin= of the (ourts a Buo thatthe lender did not remit and the borrower did not re(eive the pro(eeds of the loan.

That bein= the (ase$ it follows that the mort=a=e whi(h is supposed to se(ure theloan is null and void. The (onsideration of the mort=a=e (ontra(t is the same as thatof the prin(ipal (ontra(t from whi(h it re(eives life$ and without whi(h it (annot e8istas an independent (ontra(t.#/A mort=a=e (ontra(t bein= a mere a((essory (ontra(t$its validity would depend on the validity of the loan se(ured by it.#>

23R56R$ the petition is denied and the assailed de(ision is aCrmed. !osts

a=ainst petitioner.

:6 6R'R'.

57R:T '7-7:76

"R" No" @715?-56 Se!te/er 1., .5@@

#ATHOLI# VI#AR APOSTOLI# OF THE MOUNTAIN PROVIN#E, petitioner$vs.#OURT OF APPEALS, HEIRS OF EMIDIO O#TAVIANO AND JUANVALDE, respondents.

AN#A;#O,J%

The prin(ipal issue in this (ase is whether or not a de(ision of the !ourt of Appealspromul=ated a lon= time a=o (an properly be (onsidered res 0uicataby respondent!ourt of Appeals in the present two (ases between petitioner and two privaterespondents.

Petitioner Buestions as alle=edly erroneous the 'e(ision dated Au=ust 01$ 1>/; of theinth 'ivision of Respondent !ourt of Appeals .in !A+,.R. o. %14/ [!ivil !ase o.0&%; )41>*] and !A+,.R. o. %14> [!ivil !ase o. 0& )4#>*]$ both for Re(overy ofPossession$ whi(h aCrmed the 'e(ision of the 3onorable i(odemo T. 5errer$ Jud=eof the Re=ional Trial !ourt of Ha=uio and Hen=uet in !ivil !ase o. 0&%; )41>* and!ivil !ase o. 0& )4#>*$ with the dispositive portion as follows

23R56R$ Jud=ment is hereby rendered orderin= the defendant$

!atholi( -i(ar Apostoli( of the "ountain Provin(e to return andsurrender ?ot # of Plan Psu+1>40; to the plainti@s. 3eirs of Juan-aldeN$ and ?ot 0 of the same Plan to the other set of plainti@s$ the3eirs of =midio 6(taviano )?eonardo -aldeN$ et al.*. 5or la( orinsuC(ien(y of eviden(e$ the plainti@sV (laim or dama=es is herebydenied. :aid defendant is ordered to pay (osts. )p. 0&$ Rollo*

Respondent !ourt of Appeals$ in aCrmin= the trial (ourtVs de(ision$ sustained the trial(ourtVs (on(lusions that the 'e(ision of the !ourt of Appeals$ dated "ay 4$1>;; in

!A+,.R. o. 0//0%+R$ in the two (ases aCrmed by the :upreme !ourt$ tou(hed onthe ownership of lots # and 0 in BuestionI that the two lots were possessed by theprede(essors+in+interest of private respondents under (laim of ownership in =oodfaith from 1>%& to 1>1I that petitioner had been in possession of the same lots asbailee in (ommodatum up to 1>1$ when petitioner repudiated the trust and when itapplied for re=istration in 1>I that petitioner had &$ (onrmin= the re=istrabletitle of -7!AR to ?ots 1$ #$ 0$ and 4.

The 3eirs of Juan -aldeN )plainti@s in the herein

!ivil !ase o. 0&* and the 3eirs of =midio6(taviano )plainti@s in the herein !ivil !ase o.0&%;* appealed the de(ision of the landre=istration (ourt to the then !ourt of Appeals$do(eted as !A+,.R. o. 0//0%+R. The !ourt ofAppeals rendered its de(ision$ dated "ay >$ 1>;;$reversin= the de(ision of the land re=istration(ourt and dismissin= the -7!ARVs appli(ation as to?ots # and 0$ the lots (laimed by the two sets ofoppositors in the land re=istration (ase )and two

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sets of plainti@s in the two (ases now at bar*$ therst lot bein= presently o((upied by the (onventand the se(ond by the womenVs dormitory andthe sisterVs (onvent.

6n "ay >$ 1>;;$ the 3eirs of 6(taviano led amotion for re(onsideration prayin= the !ourt ofAppeals to order the re=istration of ?ot 0 in thenames of the 3eirs of =midio 6(taviano$ and on

"ay 1;$ 1>;;$ the 3eirs of Juan -aldeN and Pa(ita-aldeN led their motion for re(onsiderationprayin= that both ?ots # and 0 be orderedre=istered in the names of the 3eirs of Juan-aldeN and Pa(ita -aldeN. 6n Au=ust 1#$1>;;$ the!ourt of Appeals denied the motion forre(onsideration led by the 3eirs of Juan -aldeNon the =round that there was no suC(ient meritto >+#%1$ 6ri=.Re(.*.

7n !ivil !ase o. 0&%; )41>* trial was held. The plainti@s 3eirs of=midio 6(taviano presented one )1* witness$ 5ru(tuoso -aldeN$

who testied on the alle=ed ownership of the land in Buestion )?ot0* by their prede(essor+in+interest$ =midio 6(taviano )8h. ! *I hiswritten demand )8h. HUH+4 * to defendant -i(ar for the return ofthe land to themI and the reasonable rentals for the use of the landat P1%$%%%.%% per month. 6n the other hand$ defendant -i(arpresented the Re=ister of 'eeds for the Provin(e of Hen=uet$ Atty.i(anor :ison$ who testied that the land in Buestion is not (overedby any title in the name of =midio 6(taviano or any of theplainti@s )8h. /*. The defendant dispensed with the testimony of"ons.2illiam Hrasseur when the plainti@s admitted that thewitness if (alled to the witness stand$ would testify that defendant-i(ar has been in possession of ?ot 0$ for seventy+ve );* years(ontinuously and pea(efully and has (onstru(ted permanentstru(tures thereon.

7n !ivil !ase o. 0&$ the parties admittin= that the material fa(tsare not in dispute$ submitted the (ase on the sole issue of whetheror not the de(isions of the !ourt of Appeals and the :upreme !ourttou(hin= on the ownership of ?ot #$ whi(h in e@e(t de(lared theplainti@s the owners of the land (onstitute res 0uicata.

7n these two (ases $ the plainti@s arBue that the defendant -i(ar isbarred from settin= up the defense of ownership andEor lon= and(ontinuous possession of the two lots in Buestion sin(e this is

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barred by prior ;;$ 5irst 'ivision 6in!A+,.R. o. 0//0%+R$ shows that it reversed the trial (ourtVs 'e(ision 4ndin=petitioner to be entitled to re=ister the lands in Buestion under its ownership$ on itsevaluation of eviden(e and (on(lusion of fa(ts.

The !ourt of Appeals found that petitioner did not meet the reBuirement of 0% years

possession for a(Buisitive pres(ription over ?ots # and 0. either did it satisfy thereBuirement of 1% years possession for ordinary a(Buisitive pres(ription be(ause ofthe absen(e of


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Hy the very admission of petitioner -i(ar$ ?ots # and 0 were owned by -aldeN and6(taviano. Hoth -aldeN and 6(taviano had 5ree Patent Appli(ation for those lots sin(e1>%&. The prede(essors of private respondents$ not petitioner -i(ar$ were inpossession of the Buestioned lots sin(e 1>%&.

There is eviden(e that petitioner -i(ar o((upied ?ots 1 and 4$ whi(h are not inBuestion$ but not ?ots # and 0$ be(ause the buildin=s standin= thereon were only(onstru(ted after liberation in 1>4. Petitioner -i(ar only de(lared ?ots # and 0 forta8ation purposes in 1>1. The improvements oil ?ots 1$ #$ 0$ 4 were paid for by the

Hishop but said Hishop was appointed only in 1>4;$ the (hur(h was (onstru(ted onlyin 1>1 and the new (onvent only # years before the trial in 1>&0.

2hen petitioner -i(ar was notied of the oppositorVs (laims$ the parish priest o@eredto buy the lot from 5ru(tuoso -aldeN. ?ots # and 0 were surveyed by reBuest ofpetitioner -i(ar only in 1>.

Private respondents were able to prove that their prede(essorsV house was borrowedby petitioner -i(ar after the (hur(h and the (onvent were destroyed. They neverased for the return of the house$ but when they allowed its free use$ they be(amebailors in commoatumand the petitioner the bailee. The baileesV failure to returnthe sub1.

2e nd no reason to disre=ard or reverse the rulin= of the !ourt of Appeals in !A+,.R. o. 0//0%+R. 7ts ndin=s of fa(t have be(ome in(ontestible. This !ourt de(linedto review said de(ision$ thereby in e@e(t$ aCrmin= it. 7t has be(ome nal ande8e(utory a lon= time a=o.

Respondent appellate (ourt did not (ommit any reversible error$ mu(h less =rave

abuse of dis(retion$ when it held that the 'e(ision of the !ourt of Appeals in !A+,.R.o. 0//0%+R is =overnin=$ under the prin(iple of res . The fa(ts as supported byeviden(e established in that de(ision may no lon=er be altered.

23R56R A' HS RA:6 65 T3 56R,67,$ this petition is '7' for la( ofmerit$ the 'e(ision dated Au=. 01$ 1>/; in !A+,.R. os. %14/ and %14>$ byrespondent !ourt of Appeals is A557R"'$ with (osts a=ainst petitioner.

:6 6R'R'.

THIRD DIVISION


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#. P4>/$>;0.#0 representin= the balan(e on [5ran(os] savin=sa((ount as of "ay 1/$ 1>>%$ to=ether with the interest thereon ina((ordan(e with the bans =uidelines on the payment thereforI0. P0%$%%%.%% by way of attorneys feesI and4. P1%$%%%.%% as nominal dama=es.

The (ounter(laim of the defendant is '7:"7::' for la( of

fa(tual and le=al an(hor.

!osts a=ainst [HP7+5H].

:6 6R'R'.[#/]

Fnsatised with the de(ision$ both parties led their respe(tive appeals beforethe !A. 5ran(o (onned his appeal to the "anila RT!s denial of his (laim for moraland e8emplary dama=es$ and the diminutive award of attorneys fees. 7n aCrmin=with modi(ation the lower (ourts de(ision$ the appellate (ourt de(reed$ to wit

23R56R$ fore=oin= (onsidered$ the appealed de(ision ishereby A557R"' with modi(ation orderin= [HP7+5H] to pay[5ran(o] P&0$1/>.%% representin= the interest dedu(ted from thetime deposit of plainti@+appellant. P#%%$%%%.%% as moral dama=esand P1%%$%%%.%% as e8emplary dama=es$ deletin= the award ofnominal dama=es )in view of the award of moral and e8emplarydama=es* and in(reasin= the award of attorneys feesfrom P0%$%%%.%% to P;$%%%.%%.

!ost a=ainst [HP7+5H].

SO ORDERED"[#>]

7n this re(ourse$ HP7+5H as(ribes error to the !A when it ruled that )1* 5ran(ohad a better ri=ht to the deposits in the sub


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had passed throu=h various transa(tions in the =eneral (ourse of banin= business$even if of tra(eable ori=in$ is no e8(eption.

Thus$ inasmu(h as what is involved is not a spe(i( or determinate personal

property$ HP7+5Hs illustrative e8ample$ ostensibly based on Arti(le >$ isinappli(able to the instant (ase.

There is no doubt that HP7+5H owns the deposited monies in the a((ounts of

5ran(o$ but not as a le=al (onseBuen(e of its unauthoriNed transfer of 5"7!s depositsto Teveste(os a((ount. HP7+5H (onveniently for=ets that the deposit of money in

bans is =overned by the !ivil !ode provisions on simple loan or mutuum. [0&]As thereis a debtor+(reditor relationship between a ban and its depositor$ HP7+5H ultimatelya(Buired ownership of 5ran(os deposits$ but su(h ownership is (oupled with a(orrespondin= obli=ation to pay him an eBual amount on demand. [0;]Althou=h HP7+5Howns the deposits in 5ran(os a((ounts$ it (annot prevent him from demandin=payment of HP7+5Hs obli=ation by drawin= (he(s a=ainst his (urrent a((ount$ orasin= for the release of the funds in his savin=s a((ount. Thus$ when 5ran(o issued(he(s drawn a=ainst his (urrent a((ount$ he had every ri=ht as (reditor to e8pe(tthat those (he(s would be honored by HP7+5H as debtor.

"ore importantly$ HP7+5H does not have a unilateral ri=ht to freeNe thea((ounts of 5ran(o based on its mere suspi(ion that the funds therein were pro(eedsof the multi+million peso s(am 5ran(o was alle=edly involved in. To =rant HP7+5H$ orany ban for that matter$ the ri=ht to tae whatever a(tion it pleases on depositswhi(h it supposes are derived from shady transa(tions$ would open the Yood=ates ofpubli( distrust in the banin= industry.

6ur pronoun(ement in SimeD International 2+anila3, Inc. v. Court of

Appeals[0/](ontinues to resonate$ thus

The banin= system is an indispensable institution in themodern world and plays a vital role in the e(onomi( life of every(iviliNed nation. 2hether as mere passive entities for thesafeeepin= and savin= of money or as a(tive instruments ofbusiness and (ommer(e$ bans have be(ome an ubiBuitouspresen(e amon= the people$ who have (ome to re=ard them withrespe(t and even =ratitude and$ most of all$ (onden(e. Thus$ eventhe humble wa=e+earner has not hesitated to entrust his lifessavin=s to the ban of his (hoi(e$ nowin= that they will be safe inits (ustody and will even earn some interest for him. The ordinaryperson$ with eBual faith$ usually maintains a modest (he(in=

a((ount for se(urity and (onvenien(e in the settlin= of his monthlybills and the payment of ordinary e8penses. 8 8 8.

7n every (ase$ the depositor e8pe(ts the ban to treat hisa((ount with the utmost delity$ whether su(h a((ount (onsistsonly of a few hundred pesos or of millions. The ban must re(ordevery sin=le transa(tion a((urately$ down to the last (entavo$ andas promptly as possible. This has to be done if the a((ount is toreYe(t at any =iven time the amount of money the depositor (andispose of as he sees t$ (ondent that the ban will deliver it as

and to whomever dire(ts. A blunder on the part of the ban$ su(has the dishonor of the (he( without =ood reason$ (an (ause thedepositor not a little embarrassment if not also nan(ial loss andperhaps even (ivil and (riminal liti=ation.

The point is that as a business a@e(ted with publi( interestand be(ause of the nature of its fun(tions$ the ban is underobli=ation to treat the a((ounts of its depositors with meti(ulous(are$ always havin= in mind the du(iary nature of theirrelationship. 8 8 8.

7nelu(tably$ HP7+5H$ as the trustee in the du(iary relationship$ is duty bound tonow the si=natures of its (ustomers. 3avin= failed to dete(t the for=ery in theAuthority to 'ebit and in the pro(ess inadvertently fa(ilitate the 5"7!+Teveste(otransfer$ HP7+5H (annot now shift liability thereon to 5ran(o and the other payees of(he(s issued by Teveste(o$ or prevent withdrawals from their respe(tive a((ountswithout the appropriate (ourt writ or a favorable nal


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oteworthy is the fa(t that Xuiaoit himself testied that the deposits in hisa((ount are a(tually owned by 5ran(o who simply a((ommodated Jaime :ebastiansreBuest to temporarily transfer P4%%$%%%.%% from 5ran(os savin=s a((ount toXuiaoits a((ount.[4%]3is testimony (annot be (hara(teriNed as hearsay as the re(ordsreveal that he had personal nowled=e of the arran=ement made between 5ran(o$:ebastian and himself.[41]

HP7+5H maes (apital of 5ran(os belated alle=ation relative to this parti(ular

arran=ement. 7t insists that the transa(tion with Xuiaoit was not spe(i(ally alle=edin 5ran(os (omplaint before the "anila RT!. 3owever$ it appears that HP7+5H had

impliedly (onsented to the trial of this issue =iven its e8tensive (ross+e8amination ofXuiaoit.

:e(tion $ Rule 1% of the Rules of !ourt provides

:e(tion . Amenment to conform to or authori!epresentation of evience.U '(en issues not raised /* t(e!%eadin&s are tried +it( t(e e3!ress or i!%ied )onsent ot(e !arties, t(e* s(a%% /e treated in a%% res!e)ts as i t(e*(ad /een raised in t(e !%eadin&s" Su)( aendent o t(e!%eadin&s as a* /e ne)essar* to )ause t(e to )onor tot(e eviden)e and to raise t(ese issues a* /e ade u!onotion o an* !art* at an* tie, even ater 0ud&ent /utai%ure to aend does not ae)t t(e resu%t o t(e tria% ot(ese issues"7f eviden(e is ob was

le=ally in order in view of the "aati RT!s supplemental writ of atta(hment issuedon :eptember 14$ 1>/>. 7t posits that as the party that applied for the writ ofatta(hment before the "aati RT!$ it need not be served with the oti(e of,arnishment before it (ould pla(e 5ran(os a((ounts under =arnishment.

The ar=ument is spe(ious. 7n this ar=ument$ we per(eive HP7+5Hs (lever buttransparent ploy to (ir(umvent :e(tion 4$[4#]Rule 10 of the Rules of !ourt. 7t shouldbe noted that the stri(t reBuirement on servi(e of (ourt papers upon the partiesa@e(ted is desi=ned to (omply with the elementary reBuisites of due pro(ess. 5ran(owas entitled$ as a matter of ri=ht$ to noti(e$ if the reBuirements of due pro(ess are to

be observed. Set$ he re(eived a (opy of the oti(e of ,arnishment onlyon :eptember #;$ 1>/>$ several days after the two (he(s he issued were dishonoredby HP7+5H on :eptember #% and #1$ 1>/>. -erily$ it was premature for HP7+5H tofreeNe 5ran(os a((ounts without even awaitin= servi(e of the "aati RT!s oti(e of,arnishment on 5ran(o.

Additionally$ it should be remembered that the enfor(ement of a writ ofatta(hment (annot be made without in(ludin= in the main suit the owner of theproperty atta(hed by virtue thereof. :e(tion $ Rule 10 of the Rules of !ourtspe(i(ally provides that Lno levy or atta(hment pursuant to the writ issued 8 8 8

shall be enfor(ed unless it is pre(eded$ or (ontemporaneously a((ompanied$ byservi(e of summons$ to=ether with a (opy of the (omplaint$ the appli(ation foratta(hment$ on the defendant within the Philippines.M

5ran(o was impleaded as party+defendant only on "ay 1$ 1>>%. The "aatiRT! had yet to a(Buire


35/63

now bein= imputed to it for its brea(h of obli=ation. 5or the same reason$ it is notliable for the unearned interest on the time deposit.

Had faith does not simply (onnote bad of the !ivil !ode$ [%]upon whi(h to base his (laim for moral dama=es.

Thus$ not havin= a(ted in bad faith$ HP7+5H (annot be held liable for moraldama=es under Arti(le ###% of the !ivil !ode for brea(h of (ontra(t. [1]

2e also deny the (laim for e8emplary dama=es. 5ran(o should show that he is

entitled to moral$ temperate$ or (ompensatory dama=es before the (ourt may even(onsider the Buestion of whether e8emplary dama=es should be awarded to him.[#]As there is no basis for the award of moral dama=es$ neither (an e8emplarydama=es be =ranted.

2hile it is a sound poli(y not to set a premium on the ri=ht to liti=ate$ [0]we$

however$ nd that 5ran(o is entitled to reasonable attorneys fees for havin= been(ompelled to =o to (ourt in order to assert his ri=ht. Thus$ we aCrm the !As =rantof P;$%%%.%% as attorneys fees.

Attorneys fees may be awarded when a party is (ompelled to liti=ate or in(ure8penses to prote(t his interest$ [4]or when the (ourt deems it $ 1>> is AFFIRMEDwith the MODIFI#ATIONthat theaward of unearned interest on the time deposit and of moral and e8emplary dama=esis DELETED.

o pronoun(ement as to (osts.

SO ORDERED.

HA!

"R" No" L-918? Ma* 1., .566

THE PEOPLE OF THE PHILIPPINES, plainti@+appellant$vs.PA M" DEL ROSARIO, defendant+appellee.

Assistant Solicitor General, Guillermo E. Torres an Solicitor *acico *. e Castro forappellant.

A. +eno!a, E. el Rosario an G. Romero for appellee.

LA0$ an information was led in the "uni(ipal !ourt of Pasay !ity(har=in= PaN ". del Rosario with sli=ht physi(al in


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:!6' '7-7:76

"R" No" .5?17. Nove/er 19, 17.8

SPOUSES 1#%. The (hallen=ed 'e(ision dismissed the appeal of herein respondent Philippineational Han )respondent ban* and aCrmed the de(ision of the Re=ional Trial!ourt )RT!*$ Hran(h /4$ Hatan=as !ity with the modi(ation that the interest rate tobe applied by respondent ban on the prin(ipal loan obli=ation of petitioners :pousesHayani 3. Andal and ,ra(ia ,. Andal )petitioners spouses* shall be 1#9 per annum$to be (omputed from default.

As found by the !A$ the fa(ts of this (ase are as follows

8 8 8 on :eptember ;$ 1>>$ [petitioners+spouses] obtained a loan from [respondentban] in the amount ofP#1$/%$%%%.%%$ for whi(h they e8e(uted twelve )1#*promissory notes 8 8 8 [undertain=] to pay [respondent ban] the prin(ipal loan withvaryin= interest rates of 1;.9 to #;9 per interest period. 7t was a=reed upon by theparties that the rate of interest may be in(reased or de(reased for the subseBuentinterest periods$ with prior noti(e to [petitioners+spouses]$ in the event of (han=es ininterest rates pres(ribed by law or the "onetary Hoard 8 8 8$ or in the bans overall(ost of funds.

To se(ure the payment of the said loan$ [petitioners+spouses] e8e(uted in favor of[respondent ban] a real estate mort=a=e usin= as (ollateral ve )* par(els of landin(ludin= all improvements therein$ all situated in Hatan=as !ity and (overed by

Transfer !erti(ate of Title )T!T* os. T+&41$ T+0#%0;$ T+1&;0%$ T+011>0 and RT 0&0)001* of the Re=istry of 'eeds of Hatan=as !ity$ in the name of [petitioners+spouses].

:ubseBuently$ [respondent ban] advised [petitioners+spouses] to pay their loanobli=ation$ otherwise the former will de(lare the latters loan due and demandable.6n July 1;$ #%%1$ [petitioners+spouses] paid P14$/%%$%%%.%% to [respondent ban] toavoid fore(losure of the properties sub0 and RT+0&0 )001*. 3owever$ despite payment 8 88$ [respondent ban] pro(eeded to fore(lose the real estate mort=a=e$ parti(ularlywith respe(t to the three )0* par(els of land (overed by T!T os. T+&41$ T+0#%0; and

T+1&;0% 8 8 8.

8 8 8 [A] publi( au(tion sale of the properties pro(eeded$ with the [respondent ban]emer=in= as the hi=hest and winnin= bidder. A((ordin=ly$ on Au=ust 0%$ #%%#$ a(erti(ate of sale of the properties involved was issued. [Respondent ban](onsolidated its ownership over the said properties and T!T os. T+#//>$ T+#/>%$

and T+#/>1 were issued in lieu of the (an(elled T!T[s] 8 8 8. This prompted[petitioners+spouses] to le 8 8 8 a (omplaint for annulment of mort=a=e$ sheri@s(erti(ate of sale$ de(laration of nullity of the in(reased interest rates and penalty(har=es plus dama=es$ with the RT! of Hatan=as !ity.

7n their amended (omplaint$ [petitioners+spouses] alle=ed that they tried toreli=iously pay their loan obli=ation to [respondent ban]$ but the e8orbitant rate ofinterest unilaterally determined and imposed by the latter prevented the former frompayin= their obli=ation. [Petitioners+spouses] also alle=ed that they si=ned thepromissory notes in blan$ relyin= on the representation of [respondent ban] thatthey were merely proforma [si(] ban reBuirements. 5urther$ [petitioners+spouses]alle=ed that the unilateral in(rease of interest rates and e8orbitant penalty (har=esare ain to un&%$&00./;I assumin= ar=uendo that the imposition was improper$ thefore(losure of the mort=a=ed properties is in order sin(e [respondent bans] bid inthe amount of P#/$>&$1%%.%% was based on the a==re=ate appraised rates of thefore(losed properties. 8 8 84

After trial$ the RT! rendered of the !ivil !ode e@e(tive the ne8t 0%$ 01 and 1/% daysrespe(tively from the date of the twelve )1#* promissory notes 8 8 8 (overed by thereal estate 8 8 8 mort=a=es$ to be applied on a de(linin= balan(e of the prin(ipalafter the partial payments of P14$/%%$%%.%% )paid July 1;$ #%%1*and P#$%%%$%%%.%%&)payments of P0%%$%%%.%% on 6(tober 1$ 1>>>$ P1$/%%$%%%.%% as[of] 'e(ember 1$ 1>>>$ P;%%$%%%.%% [on] January 01$ #%%%* per (erti(ation of[respondent ban] to be re(oned at )si(* the dates the said payments were made$thus the (orre(ted amounts of the liability for prin(ipal balan(e and the said &9

!redTrans + :JHPrior K 0;
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(har=es per annum shall be the new basis for the [petitioners+spouses] to maepayments to the [respondent ban] 8 8 8 whi(h shall automati(ally e8tin=uish andrelease the mort=a=e (ontra(ts and the outstandin= liabilities of the [petitioners+spouses]I [respondent ban] shall then surrender the new transfer (erti(ates of title8 8 8 in its name to the [(]ourt 8 8 8$ [(]an(elin= the penalty (har=es.

8 8 8 8

0. 'e(larin= as ille=al and void the fore(losure sales 8 8 8$ the !erti(ates of :ales

and the (onsolidation of titles of the sub


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Respondent ban appealed the above of the !ivil !ode$ these obli=ations arisin= from su(h (ontra(ts have thefor(e of law between the parties and should be (omplied with in =ood faith. 8 8 8.

8 8 8 8

7n the (ase at bar$ [respondent ban] and [petitioners+spouses] e8pressly stipulated

in the promissory notes the rate of interest to be applied to the loan obtained by thelatter from the former$ 8 8 8.

8 8 8 8

[Respondent ban] insists that [petitioner+spouses] a=reed to the interest ratesstated in the promissory notes sin(e the latter voluntarily si=ned the same. 3owever$we nd more (redible and believable the version of [petitioners+spouses] that theywere made to si=n the said promissory notes in blan with respe(t to the rate ofinterest and penalty (har=es$ and subseBuently$ [respondent] ban lled in theblans$ imposin= hi=h interest rate beyond whi(h they were made to understand atthe time of the si=nin= of the promissory notes.

8 8 8 8

The si=nin= by [petitioners+spouses] of the promissory notes in blan enabled[respondent] ban to impose interest rates on the loan obli=ation without prior noti(eto [petitioners+spouses]. The unilateral determination and imposition of interest ratesby [respondent] ban without [petitioners+spouses] assent is obviously violative ofthe prin(iple of mutuality of (ontra(ts ordained in Arti(le 10%/ of the !ivil !ode 8 8 8.

8 8 8 8

[Respondent bans] a(t (onverted the loan a=reement into a (ontra(t of adhesionwhere the parties do not bar=ain on eBual footin=$ the weaer partys parti(ipation$herein [petitioners+spouses]$ bein= redu(ed to the alternative to tae it or leave it.[Respondent] ban tried to sidestep this issue by averrin= that [petitioners+spouses]$as businessmen$ were on eBual footin= with [respondent ban] as far as the sub
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the rulin= of the :upreme !ourt in the re(ent (ase of 'ario a(ar v. ,allery 5ramesandEor 5elipe Hordey$ Jr.$#%e@e(tive 1 July #%10$ the rate of interest for the loan orforbearan(e of any money$ =oods or (redits and the rate allowed in


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substantial ri=ht. Therefore$ the (laim that the rst order of dismissal had be(omenal and unappealable must be overruled.

7t is well to observe in this re=ard that sin(e a motion to dismiss is not a responsivepleadin=$ the plainti@+petitioner was entitled as of ri=ht to amend the ori=inaldismissed (omplaint. 7n *aeste vs. 9aurigue>4 Phil. 1;>$ 1/1$ this !ourt ruled asfollows

Appellants (ontend that the lower (ourt erred in not admittin= their

amended (omplaint and in holdin= that their a(tion had already pres(ribed.Appellants are ri=ht on both (ounts.

Amendments to pleadin=s are favored and should be liberally allowed in thefurtheran(e of Phil. >10*. "oreover$ underse(tion 1 of Rule 1;$ Rules of !ourt$ a party may amend his pleadin= on(e asa matter of (ourse$ that is$ without leave of (ourt$ at any time before aresponsive pleadin= is served. A motion to dismiss is not a responsivepleadin=. )"oran on the Rules of !ourt$ vol. 1$ 1>#$ ed.$ p. 0;&*. Asplainti@s amended their (omplaint before it was answered$ the motion toadmit the amendment should not have been denied. 7t is true that theamendment was presented after the ori=inal (omplaint had been ordereddismissed. Hut that order was not yet nal for it was still underre(onsideration.

The fore=oin= observations leave this !ourt free to dis(uss the main issue in thispetition. 'id the (ourt below abuse its dis(retion in rulin= that a (ontra(t for personalservi(es involvin= more than P%%.%% was either invalid of unenfor(eable under thelast para=raph of Arti(le 10/ of the !ivil !ode of the PhilippinesO

2e hold that there was abuse$ sin(e the rulin= herein (ontested betrays a basi( andlamentable misunderstandin= of the role of the written form in (ontra(ts$ as ordainedin the present !ivil !ode.

7n the matter of formalities$ the (ontra(tual system of our !ivil !ode still follows thatof the :panish !ivil !ode of 1//> and of the 6rdenamiento de Al(ala # of upholdin=the spirit and intent of the parties over formalities hen(e$ in =eneral$ (ontra(ts arevalid and bindin= from their perfe(tion re=ardless of form whether they be oral orwritten. This is plain from Arti(les 101 and 10& of the present !ivil !ode. Thus$ therst (ited provision pres(ribes

ART. 101. Contracts are perfecte b mere consent$ and from that momentthe parties are bound not only to the fulllment of what has been e8presslystipulated but also to all the (onseBuen(es whi(h$ a((ordin= to their nature$may be in eepin= with =ood faith$ usa=e and law. )mphasis supplied*

!on(ordantly$ the rst part of Arti(le 10& of the !ode Provides

ART. 10&. !ontra(ts shall be obli=atory in &hatever form the ma havebeen entere into$ provided all the essential reBuisites for their validity arepresent.... )mphasis supplied*

These essential reBuisites last mentioned are normally )1* (onsent )#* proper sub


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ART. 10;. 7f the law reBuires a do(ument or other spe(ial form$ as in thea(ts and contracts enumerate in the follo&ing article$ the (ontra(tin=parties may (ompel ea(h other to observe that form$ on(e the (ontra(t hasbeen perfe(ted. This ri=ht may be e8er(ised simultaneousl &ith the actionthe contract. )mphasis supplied* .

7t thus be(omes inevitable to (on(lude that both the (ourt a %uo as well as theprivate respondents herein were =rossly mistaen in holdin= that be(ause petitioner'audenVs (ontra(t for servi(es was not in writin= the same (ould not be sued upon$

or that her (omplaint should be dismissed for failure to state a (ause of a(tionbe(ause it did not plead any written a=reement.

The basi( error in the (ourtVs de(ision lies in overlooin= that in our (ontra(tualsystem it is not enou=h that the law should reBuire that the (ontra(t be in writin=$ asit does in Arti(le 10/. The law must further pres(ribe that without the writin= the(ontra(t is not valid or not enfor(eable by a(tion.

23R56R$ the order dismissin= the (omplaint is set aside$ and the (ase is orderedremanded to the (ourt of ori=in for further pro(eedin=s not at varian(e with thisde(ision.

!osts to be solidarity paid by private respondents 3ollywood 5ar ast Produ(tions$7n(.$ and Ramon -alenNuela.

T37R' '7-7:76

"R" No" .?..@. A!ri% 19, 1779

SAMSON #HIN, Petitioner$vs.#LARITA NI#DAO and HON" #OURT OF APPEALS, Respondents.

' ! 7 : 7 6

#ALLEJO, SR",J%

Hefore the !ourt is a petition for review on certiorari led by :amson !hin= of the'e(ision1dated ovember ##$ 1>>> of the !ourt of Appeals )!A* in !A+,.R. !R o.#0%. The assailed de(ision a(Buitted respondent !larita i(dao of eleven )11*(ounts of violation of (atas *ambansa (ilang )HP*##$ otherwise nown as TheHoun(in= !he(s ?aw. The instant petition pertains and is limited to the (ivil aspe(tof the (ase as it submits that notwithstandin= respondent i(daos a(Buittal$ sheshould be held liable to pay petitioner !hin= the amounts of the dishonored (he(s inthe a==re=ate sum of P#%$>%$%%%.%%.

5a(tual and Pro(edural Ante(edents

6n 6(tober #1$ 1>>;$ petitioner !hin=$ a !hinese national$ instituted (riminal(omplaints for eleven )11* (ounts of violation of HP ## a=ainst respondent i(dao.!onseBuently$ eleven )11* 7nformations were led with the 5irst "uni(ipal !ir(uit Trial!ourt )"!T!* of 'inalupihan+3ermosa$ Provin(e of Hataan$ whi(h$ e8(ept as to theamounts and (he( numbers$ uniformly read as follows

The undersi=ned a((uses !larita :. i(dao of a -76?AT76 65 HATA: PA"HA:A

H7?A, ##$ (ommitted as follows

That on or about 6(tober %&$ 1>>;$ at 'inalupihan$ Hataan$ Philippines$ and withinthe >; in the amount of [P#%$%%%$%%%.%%] in payment ofher obli=ation with (omplainant :amson T.S. !hin=$ the said a((used nowin= fullywell that at the time she issued the said (he( she did not have suC(ient funds in or(redit with the drawee ban for the payment in full of the said (he( uponpresentment$ whi(h (he( when presented for payment within ninety )>%* days fromthe date thereof$ was dishonored by the drawee ban for the reason that it wasdrawn a=ainst insuC(ient funds and notwithstandin= re(eipt of noti(e of su(hdishonor the said a((used failed and refused and still fails and refuses to pay thevalue of the said (he( in the amount of [P#%$%%%$%%%.%%] or to mae arran=ementwith the drawee ban for the payment in full of the same within ve )* banin= days

after re(eivin= the said noti(e$ to the dama=e and pre>;

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%1#14#4 1%%$%%%6(t. &$1>>;

%%401 %$%%%6(t. &$1>>;

%%##4& 1%%$%%%6(t. &$1>>;

%%//;; 1%%$%%%6(t. &$

1>>;

%%/>0&/ %$%%%6(t. &$1>>;

%%##;0> %$%%%6(t. &$1>>;

%%/>4/1% 1%$%%%6(t. &$1>>;

%%/>011 1%%$%%%6(t. &$1>>;

%1%0;;1# 1%%$%%%6(t. &$1>>;

At about the same time$ fourteen )14* other (riminal (omplaints$ also for violation ofHP ##$ were led a=ainst respondent i(dao by mma u=uid$ said to be the(ommon law spouse of petitioner !hin=. Alle=edly fourteen )14* (he(s$ amountin=to P1$1%$%%%.%%$ were issued by respondent i(dao to u=uid but were dishonoredfor la( of suC(ient funds. The 7nformations were led with the same "!T! anddo(eted as !riminal !ases os. >4/ up to >4;1.

At her arrai=nment$ respondent i(dao entered the plea of not =uilty to all the(har=es. A 400+>440 and>4/+>4;1.

5or the prose(ution in !riminal !ases os. >400+>440$ petitioner !hin= and 7meldaSando($ an employee of the 3ermosa :avin=s \ ?oan Han$ 7n(.$ were presented toprove the (har=es a=ainst respondent i(dao. 6n dire(t+e8amination$10petitioner

!hin= preliminarily identied ea(h of the eleven )11* 3ermosa :avin=s \ ?oan Han)3:?H* (he(s that were alle=edly issued to him by respondent i(dao amountin=to P#%$>%$%%%.%%. 3e identied the si=natures appearin= on the (he(s as those ofrespondent i(dao. 3e re(o=niNed her si=natures be(ause respondent i(daoalle=edly si=ned the (he(s in his presen(e. 2hen petitioner !hin= presented these(he(s for payment$ they were dishonored by the ban$ 3:?H$ for bein= 'A75 ordrawn a=ainst insuC(ient funds.

Petitioner !hin= averred that the (he(s were issued to him by respondent i(dao asse(urity for the loans that she obtained from him. Their transa(tion be=an sometimein 6(tober 1>> when respondent i(dao$ proprietorEmana=er of -i=nette:uperstore$ to=ether with her husband$ approa(hed him to borrow money in order forthem to settle their nan(ial obli=ations. They a=reed that respondent i(dao wouldleave the (he(s undated and that she would pay the loans within one year.3owever$ when petitioner !hin= went to see her after the lapse of one year to as forpayment$ respondent i(dao alle=edly said that she had no (ash.

Petitioner !hin= (laimed that he went ba( to respondent i(dao several times morebut every time$ she would tell him that she had no money. Then in :eptember 1>>;$respondent i(dao alle=edly =ot mad at him for bein= insistent and (hallen=ed himabout seein= ea(h other in (ourt. He(ause of respondent i(daoVs alle=ed refusal topay her obli=ations$ on 6(tober &$ 1>>;$ petitioner !hin= deposited the (he(s thatshe issued to him. As he earlier stated$ the (he(s were dishonored by the ban forbein= 'A75. :hortly thereafter$ petitioner !hin=$ to=ether with mma u=uid$ wrotea demand letter to respondent i(dao whi(h$ however$ went unheeded. A((ordin=ly$they separately led the (riminal (omplaints a=ainst the latter.

6n (ross+e8amination$14petitioner !hin= (laimed that he had been a salesman of the?a :uerte !i=ar and !i=arette "anufa(turin= for almost ten )1%* years already. Assu(h$ he delivered the =oods and had a warehouse. 3e re(eived salary and(ommissions. 3e (ould not$ however$ state his e8a(t =ross in(ome. A((ordin= to him$it in(reased every year be(ause of his business. 3e asserted that aside from bein= asalesman$ he was also in the business of e8tendin= loans to other people at an

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